Dreyfus Variable Investment Fund, International Equity Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the portfolio
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the portfolio's investments and its share price.
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund, International Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, International Equity Portfolio, covering the six-month period from January
1, 1999 through June 30, 1999. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Douglas Loeffler, CFA.
Many international economies showed marked improvement after many of the world's
central banks lowered key short-term interest rates last fall to stimulate
economic growth. Less restrictive monetary policies especially helped prevent
further economic deterioration in Japan, Asia, Latin America and Eastern Europe,
where the worst of the global currency and credit crisis appears to be behind
us. In contrast, some Western European economies slowed moderately after the
formation of the European Monetary Union (EMU) and the debut of a new currency,
the euro.
These economic conditions produced mixed results for international stocks. Stock
markets in Japan and Asia began to recover over the past six months, showing
their first signs of real strength in over a year. Latin America provided good
results after concerns about Brazil' s currency devaluation abated. European
markets, on the other hand, provided mixed performance.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, International
Equity Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Douglas Loeffler, CFA, Portfolio Manager
How did Dreyfus Variable Investment Fund, International Equity Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
International Equity Portfolio produced a total return of 7.17%.(1) This
compares favorably to the 3.97% total return provided by the portfolio's
benchmark, the Morgan Stanley Capital International Europe, Australasia, Far
East ("MSCI EAFE((reg.tm))") Index for the same time period.(2)
We attribute the portfolio's performance to our selective investments in stocks
located outside of the United States -- namely in Japan and the United Kingdom
- -- that the management team chose during the period based on what they believed
offered outstanding growth potential. Additionally, in February of this year,
the portfolio changed its management to a team headed by Douglas A. Loeffler,
CFA. Since then, the team has initiated several changes to the portfolio's
investment strategy, which they believed would be able to further enhance
overall performance.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, International Equity Portfolio seeks capital
growth by investing primarily in foreign companies whose fundamental strengths
indicate the potential for earnings growth. The portfolio's stock investments
may include common stocks, preferred stocks and convertible securities.
Rather than utilizing a "top-down" approach to stock selection, which relies on
forecasting stock market trends, the new management team has instead chosen to
focus exclusively on a "bottom-up" approach to stock selection, where stocks are
chosen based on their own individual merits. Stock selection is made on a
company-by-company basis, with particular emphasis given to the companies that
the management team believes are the best managed and best positioned within
their respective industries.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
While the portfolio typically invests in 15 to 25 markets around the world,
including emerging markets, there are no country allocation models or targets.
The management team is particularly alert to companies whose revenue and
earnings growth potential they believe appear faster than those of industry
peers or the local market.
What other factors influenced the portfolio's performance?
The primary factor influencing the portfolio's performance during the six-month
reporting period was its new management's shift from a "top-down" strategy to a
" bottom-up" investment approach. Based on this new enhanced focus on stock
selection, the portfolio increased its exposure to the Japanese and U.K.
markets. While we continue to add to these countries, as of the end of the
reporting period, the portfolio remains slightly underweighted to both countries
relative to the Index. Looking back, had we had a greater exposure to these
markets, we believe our performance would have been even stronger.
Almost all of the portfolio's Japanese stocks fared well, primarily because they
were driven by a surge in foreign-led buying. In fact, as a whole, the Japanese
companies held in the portfolio performed better than those Japanese companies
held in the Index. Some of the portfolio's best performing stocks included Kao,
a consumer products company with a strong U.S. sales base, Ryohin Keikaku, a
retailer that has been growing its sales substantially despite Japan's deep
recession, and Konami, an electronics concern whose contract to deliver the
newest generation of SONY "playstations" has proven successful. Within the U.K.,
our holdings in Vodaphone, a major mobile phone company, experienced significant
gains when it was purchased by AirTouch Communications in the U.S. The newly
created company, Vodaphone AirTouch, is now regarded as the world's largest
wireless communications company.
In addition, the portfolio's focus on emerging market-based companies that it
believes can thrive in most reasonable scenarios proved successful during the
period.
On the other hand, our heavy exposure to the European markets, relative to the
Index, served to dampen the portfolio's overall performance. While many European
companies did not perform as well as we had expected, the additional problems
encountered as a result of our exposure to the euro served to inhibit our
returns because of the euro's sluggish year-to-date performance.
As for specific sectors, the portfolio's performance was held back during the
period by its pharmaceuticals, financials, and consumer products stocks.
What is the portfolio's current strategy?
Consistent with the emphasis of our new management team's stock selection
strategy, the portfolio is currently invested to capture what we believe are
significant growth opportunities outside of the U.S. -- most notably within
select technology and telecommunications companies. In addition, as of June 30,
1999, the portfolio was emphasizing companies that seem particularly well-suited
to flourish within a strengthening Japan as well as emerging market countries.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT
THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (MSCI EAFE((reg.tm))) INDEX IS AN
UNMANAGED INDEX COMPOSED OF A SAMPLE OF COMPANIES REPRESENTATIVE OF THE MARKET
STRUCTURE OF EUROPEAN AND PACIFIC BASIN COUNTRIES AND INCLUDES NET DIVIDENDS
REINVESTED. THE INDEX IS THE PROPERTY OF MORGAN STANLEY & CO. INCORPORATED.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--94.0% Shares Value ($)
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<S> <C> <C>
BELGIUM--.5%
Lernout & Hauspie Speech Products, ADS 6,600 (a) 233,888
BRAZIL--1.9%
Petroleo Brasileiro 5,600 612,650
Tele Sudeste Celular, ADS 9,100 263,900
876,550
CANADA--5.1%
AT&T Canada 10,400 666,250
Le Groupe Videotron 13,400 213,090
Newbridge Networks 11,700 (a) 336,375
Telesystem International Wireless 26,500 (a) 483,808
Toronto-Dominion Bank 14,100 642,353
2,341,876
FINLAND--5.2%
Merita 115,000 655,511
Nokia, ADS 10,100 924,781
Tieto, Cl. B 14,500 606,010
UPM-Kymmene 8,000 230,073
2,416,375
FRANCE--8.1%
Accor 2,650 667,537
Altran Technologies 4,000 1,059,328
Canal Plus 2,200 619,272
Elf Aquitaine 4,500 662,442
Vivendi 8,854 719,476
3,728,055
GERMANY--5.4%
Continental 22,000 523,457
DePfa Deutsche Pfandbriefbank 5,300 482,491
Mannesmann 6,100 913,122
Preussag 11,125 599,609
2,518,679
HONG KONG--.7%
China Telecom (Hong Kong), ADS 5,900 (a) 336,300
IRELAND--3.2%
Allied Irish Banks 29,000 382,889
Elan, ADS 17,000 (a) 471,750
COMMON STOCKS (CONTINUED) Shares Value ($)
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(IRELAND (CONTINUED)
Esat Telecom, ADS 14,850 (a) 651,544
1,506,183
ITALY--7.0%
Alleanza Assicurazioni 58,000 668,411
Mondadori (Arnoldo) Editore 34,000 583,098
Seat Pagine Gialle 230,000 314,074
Seat Pagine Gialle-RNC 490,000 418,957
Telecom Italia 64,000 665,721
Telecom Italia Mobile-RNC 160,000 595,707
3,245,968
JAPAN--18.0%
Japan Telecom 39 554,151
Kao 35,500 997,109
Kita Kyushu Coca-Cola Bottling 12,300 699,083
Konami 21,000 867,410
NTT Mobile Communications Network 16 216,770
NTT Mobile Communications Network-Bonus Shares 64 (a) 856,506
Ryohin Keikaku 3,200 804,957
Shiseido 54,000 809,219
Softbank 4,500 911,152
TDK 7,000 640,149
Takefuji 9,500 981,784
8,338,290
LUXEMBOURG--.5%
Societe Europeenne des Satellites 1,500 218,021
MEXICO--1.4%
Telefonos de Mexico, ADR 7,850 634,378
NETHERLANDS--6.3%
ASM Lithography 11,600 (a) 688,750
Benckiser, Cl. B 9,800 524,647
ING Groep 4,200 228,107
STMicroelectronics 10,400 (a) 695,018
United Pan-Europe Communications 4,100 (a) 223,100
VNU 14,500 581,260
2,940,882
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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PORTUGAL--1.5%
Brisa-Auto Estradas de Portugal 16,500 682,770
SINGAPORE--1.4%
Development Bank of Singapore 53,000 648,280
SOUTH KOREA--1.4%
Korea Telecom, ADR 16,125 (a) 645,000
SPAIN--3.4%
Banco Santander Central Hispano 58,000 606,010
Telefonica 12,318 595,224
Telefonica Publicidad e Informacion 18,500 (a) 370,325
1,571,559
SWEDEN--5.0%
Electrolux, Cl. B 26,000 546,993
Ericsson (LM) Tel, Cl. B, ADR 15,500 510,531
Skandia Forsakrings 34,500 648,343
Skandinaviska Enskilda Banken 51,000 596,752
2,302,619
SWITZERLAND--1.2%
Swisscom 1,450 548,142
TAIWAN--.9%
Taiwan Semiconductor Manufacturing, ADS 13,000 (a) 442,000
UNITED KINGDOM--15.1%
BP Amoco, ADS 4,400 477,400
Compass 54,000 535,882
Diageo 62,240 650,549
Dixons 30,000 560,872
Energis 18,500 (a) 441,606
Glaxo Wellcome, ADR 4,000 226,500
Hilton 210,000 833,262
Pearson 48,000 976,155
Securicor 72,000 632,153
TeleWest Communications 78,000 (a) 350,107
Vodafone AirTouch 44,000 867,735
COMMON STOCKS (CONTINUED) Shares Value ($)
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UNITED KINGDOM (CONTINUED)
WPP 52,000 440,147
6,992,368
UNITED STATES--.8%
Global TeleSystems Group 4,750 (a) 384,750
TOTAL COMMON STOCKS
(cost $39,338,484) 43,552,933
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Principal
SHORT-TERM INVESTMENTS--5.2% Amount ($) Value ($)
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COMMERCIAL PAPER:
AI Credit, 5.70%, 7/1/99 1,000,000 1,000,000
Prudential Funding, 5.10%, 7/1/99 1,400,000 1,400,000
TOTAL SHORT-TERM INVESTMENTS
(cost $2,400,000) 2,400,000
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TOTAL INVESTMENTS (cost $41,738,484) 99.2% 45,952,933
CASH AND RECEIVABLES (NET) .8% 357,479
NET ASSETS 100.0% 46,310,412
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 41,738,484 45,952,933
Receivable for investment securities sold 1,007,122
Dividends receivable 175,387
Prepaid expenses 881
47,136,323
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 28,079
Cash overdraft due to Custodian 294,540
Payable for investment securities purchased 410,208
Payable for shares of Beneficial Interest redeemed 50,837
Accrued expenses 42,247
825,911
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NET ASSETS ($) 46,310,412
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 41,867,258
Accumulated undistributed investment income-net 456,920
Accumulated net realized gain (loss) on investments
and foreign currency transactions (209,529)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 4,195,763
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NET ASSETS ($) 46,310,412
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 2,980,868
NET ASSET VALUE, offering and redemption price per share ($) 15.54
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $72,491 foreign taxes withheld at source) 620,067
Interest 36,325
TOTAL INCOME 656,392
EXPENSES:
Investment advisory fee-Note 3(a) 167,488
Custodian fees 30,599
Auditing fees 12,781
Prospectus and shareholders' reports 6,533
Legal fees 1,364
Trustees' fees and expenses-Note 3(b) 382
Shareholder servicing costs 131
Loan commitment fees-Note 2 55
Miscellaneous 776
TOTAL EXPENSES 220,109
INVESTMENT INCOME-NET 436,283
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 3,628,385
Net realized gain (loss) on forward currency exchange contracts 49,125
NET REALIZED GAIN (LOSS) 3,677,510
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions (991,429)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 2,686,081
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,122,364
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 436,283 477,297
Net realized gain (loss) on investments 3,677,510 (2,215,561)
Net unrealized appreciation (depreciation)
on investments (991,429) 3,117,748
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,122,364 1,379,484
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET - (463,450)
- -------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 2,506,435 9,806,632
Dividends reinvested - 463,450
Cost of shares redeemed (5,129,497) (4,762,682)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (2,623,062) 5,507,400
TOTAL INCREASE (DECREASE) IN NET ASSETS 499,302 6,423,434
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NET ASSETS ($):
Beginning of Period 45,811,110 39,387,676
END OF PERIOD 46,310,412 45,811,110
Undistributed investment income--net 456,920 20,637
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 170,876 641,163
Shares issued for dividends reinvested - 32,302
Shares redeemed (350,354) (322,864)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (179,478) 350,601
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 Year Ended December 31,
-------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994(a)
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 14.50 14.02 13.76 12.82 12.02 12.50
Investment Operations:
Investment income--net .14(b) .15 .05 .10 .15 .15
Net realized and unrealized
gain (loss) on investments .90 .48 1.27 1.16 .74 (.40)
Total from Investment Operations 1.04 .63 1.32 1.26 .89 (.25)
Distributions:
Dividends from investment
income--net -- (.15) (.07) (.09) (.08) (.14)
Dividends in excess of
investment income-net -- -- -- -- (.01) (.09)
Dividends from net realized gain
on investments -- -- (.34) (.39) -- --
Dividends in excess of net
realized gain on investments -- -- (.65) (.06) -- --
Total Distributions -- (.15) (1.06) (.54) (.09) (.23)
Capital contribution from an affiliate
of the Advisor -- -- -- .22 -- --
Net asset value, end of period 15.54 14.50 14.02 13.76 12.82 12.02
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TOTAL RETURN (%) 7.17(c) 4.49 9.61 11.61(d) 7.39 (2.00)(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .49(c) .99 1.06 1.28 1.59 .23(c)
Ratio of net investment income
to average net assets .97(c) 1.04 .38 .92 1.13 1.11(c)
Decrease reflected in above expense
ratios due to undertakings
by Dreyfus -- -- -- -- .45 1.70(c)
Portfolio Turnover Rate 158.63(c) 204.50 165.75 181.13 70.22 16.75(c)
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Net Assets, end of period ($ x 1,000) 46,310 45,811 39,388 24,355 7,672 1,089
(A) FROM MAY 2, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) HAD THE PORTFOLIO NOT HAD A CAPITAL CONTRIBUTION BY AN AFFILIATE OF THE ADVSIOR DURING THE PERIOD, THE TOTAL RETURN WOULD
HAVE
BEEN 9.89%.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Variable Investment Fund (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the International Equity Portfolio (the "portfolio") and is
intended to be a funding vehicle for variable annuity contracts and variable
life insurance policies to be offered by the separate accounts of life insurance
companies. The portfolio is a non-diversified series. The portfolio's investment
objective is to maximize capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the portfolio's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. Premier Mutual Fund Services, Inc. is the distributor of the
portfolio's shares, which are sold without a sales charge.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
Portfolio' s operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio receives
net earnings credits based on available cash balances left on deposit
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the portfolio not to distribute such gain.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio has an unused capital loss carryover of approximately $3,410,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. If not
applied, the carryover expires in fiscal 2006.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended June 30, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio's average daily net assets and is payable monthly.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended June 30, 1999, amounted to $68,718,063 and $67,615,010,
respectively.
The portfolio enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. When executing forward currency exchange contracts, the
portfolio is obligated to buy or sell a foreign currency at a specified rate on
a certain date in the future. With respect to sales of forward currency exchange
contracts, the portfolio would incur a loss if the value of the contract
increases between the date the forward contract is opened and the date the
forward contract is closed. The portfolio realizes a gain if the value of the
contract decreases between those dates. With respect to purchases of forward
currency exchange contracts, the portfolio would incur a loss if the value of
the contract decreases between the date the forward contract is opened and the
date the forward contract is closed. The portfolio realizes a gain if the value
of the contract increases between those dates. The portfolio is also exposed to
credit risk associated with counter party nonperformance on these forward
currency exchange contracts which is typically limited to the unrealized gain on
each open contract. At June 30, 1999, there were no open forward currency
exchange contracts.
(B) At June 30, 1999, accumulated net unrealized appreciation on investments was
$4,214,449, consisting of $5,870,140 gross unrealized appreciation and
$1,655,691 gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
For More Information
Dreyfus Variable Investment Fund, International Equity
Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
(c) 1999 Dreyfus Service Corporation 109SA996
