Dreyfus Variable Investment Fund, Money Market 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
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Money Market Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Money Market 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 period, including a discussion with the senior
portfolio manager, Patricia A. Larkin.
After remaining relatively steady during the first quarter of 1999, yields on
money market securities generally rose in the second quarter in response to
expectations that the Federal Reserve Board would raise short-term interest
rates at their June meeting. On June 30, the Federal Reserve raised rates amid
stronger-than-expected global and domestic economic growth. Their objective was
to forestall a potential resurgence of inflationary pressures.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Money Market
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Patricia A. Larkin, Senior Portfolio Manager
How did Dreyfus Variable Investment Fund, Money Market Portfolio perform during
the period?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Money Market Portfolio produced an annualized yield of 4.50% which, taking into
account the effect of compounding, the annualized effective yield was 4.59%.(1)
The portfolio provided a total return of 2.25% (2) compared to the Lipper
Variable Annuity Money Market Funds category average total return of 2.21% for
the same period.(3)
We attribute the portfolio' s yield to the fact that we owned longer-term
securities, while maintaining an average dollar-weighted portfolio maturity of
90 days or less, which enabled us to lock in higher returns in an environment
characterized, for all but the end of the period, by declining or stable
interest rates.
What is the portfolio's investment approach?
There are many factors we consider in managing the portfolio. We closely monitor
the outlook for growth and inflation. We follow overseas developments for any
influence they may have on the domestic economy. The posture of the Federal
Reserve Board (the "Fed") is a key determinant in our decision on how best to
structure the portfolio.
In addition, we actively manage the average maturity of the portfolio in an
attempt to take advantage of expected interest rate changes based upon our
economic outlook. If we believe that interest rates will fall, we typically
lengthen average maturity to lock in the then-current rates. Conversely, in a
rising rate environment, we typically shorten maturities to be able to reinvest
at anticipated higher rates in the future.
As a money market portfolio, the portfolio only buys securities rated in one of
the two highest rating categories for debt obligations, or of The Portfoli
DISCUSSION OF PERFORMANCE (continued)
comparable credit quality. The portfolio must also maintain an average
dollar-weighted portfolio maturity of 90 days or less and may buy only
securities with remaining maturities of 13 months or less.
What other factors influenced the portfolio's performance?
Last fall, in the wake of Asian market turmoil, the Open Market Committee of the
Fed cut short-term interest rates three times in an attempt to provide liquidity
and improve investor confidence. Since then, there have been concerns that
global and domestic factors might push the United States economy towards
unsustainable growth.
As of June 30, 1999, Asian economies appear to have stabilized. What's more, the
outlook for growth in the major industrialized nations has been improving. The
domestic economy continued to move ahead briskly, evidenced by a strong rebound
in manufacturing output that shows signs of gaining momentum. Consumer
confidence was at a 30-year high. Employment was strong, with hourly wages
rising. Despite concerns that overly rapid economic growth might lead to
destructive inflationary pressure, the Fed held interest rates steady through
all but the very end of the period. Because we managed the portfolio at a
relatively longer average maturity, investors have been able to benefit from
stable rates and the Fed's long held accommodative stance during the reporting
period.
What is the portfolio's current strategy?
Throughout the reporting period, as the economy showed robust growth, bond and
money markets anticipated a tightening of monetary policy by the Fed. Such
tightening was signaled by Chairman Alan Greenspan's mid-May announcement of a
shift in policy towards a bias to increase rates. The bias changed in fact just
prior to the end of the reporting period, when the Fed raised the target Federal
Funds rates by one-quarter point to five percent with an accompanying return to
a neutral stance on future Federal Funds rate movement. An initial relief rally
has been replaced by a cautious "wait and see" market view.
Over the reporting period, the portfolio benefited from our commitment to a
longer maturity structure. When rates did not rise as quickly as markets
expected, longer maturities enhanced return. However, over the past few months,
we have taken a somewhat less aggressive stance, slowly reducing the average
maturity of our investments. In an uncertain market with the potential for
further tightening, we have adopted this approach, while still seeking
opportunities to capture additional yield as such opportunities arise.
July 15, 1999
(1) Annualized effective yield is based upon dividends declared daily and
reinvested monthly. Past performance is no guarantee of future result. Yields
fluctuate. An investment in the portfolio is not insured or guaranteed by the
FDIC or any other government agency. Although the portfolio seeks to preserve
the value of your investment at $1.00 per share, it is possible to lose money by
investing in the portfolio.
(2) Total return includes reinvestment of dividends. The portfolio's
performance does not reflect the deduction of additional charges and expenses
imposed in connection with investing in variable insurance contracts, which will
reduce return.
(3) Source: Lipper Analytical Services, Inc.
The Portfolio
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--11.2% Amount ($) Value ($)
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<S> <C> <C>
Branch Bank & Trust Co.
5.04%, 1/10/00 2,500,000 2,499,619
First National Bank of Maryland
5.14%, 2/23/00 4,000,000 3,999,124
Royal Bank of Canada
4.94%, 4/27/00 5,000,000 (a) 4,997,944
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $11,496,687) 11,496,687
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COMMERCIAL PAPER--44.2%
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Abbey National North America
4.97%, 12/1/99 3,000,000 2,938,418
Associates First Capital Corp.
5.60%, 7/1/99 3,000,000 3,000,000
DaimlerChrysler North America Holdings Corp.
4.90%, 7/29/99 3,000,000 2,988,730
FINOVA Capital Corp.
5.06%, 10/22/99 5,000,000 4,922,940
General Electric Capital Services Inc.
4.97%, 10/20/99 1,500,000 1,477,754
Hertz Corp.
4.94%, 7/23/99 2,000,000 1,994,084
Lehman Brothers Holdings Inc.
5.40%, 8/5/99 4,000,000 3,979,544
Merita North America Inc.
5.04%, 8/11/99 5,000,000 4,971,528
Monsanto Co.
4.94%, 10/19/99 5,000,000 4,926,361
Paine Webber Group Inc.
5.08%, 7/6/99 3,000,000 2,997,938
Prudential Funding Corp.
5.50%, 7/1/99 3,000,000 3,000,000
Spintab AB
5.04%, 10/4/99 5,000,000 4,935,347
UBS Finance (DE) Inc.
5.60%, 7/1/99 3,000,000 3,000,000
TOTAL COMMERCIAL PAPER
(cost $45,132,644) 45,132,644
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CORPORATE NOTES--22.6%
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Bear Stearns Companies Inc.
5.09%, 2/22/00 4,000,000 (a) 4,001,408
Principal
CORPORATE NOTES (CONTINUED) Amount ($) Value ($)
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CIT Group Holdings Inc.
4.87%, 9/21/99 3,000,000 (a) 2,999,803
Ford Motor Credit Corp.
4.95%, 5/5/00 5,000,000 (a) 5,000,000
GTE Corporation
5.20%, 6/12/00 5,000,000 (a) 4,996,948
Heller Financial Inc.
5.24%, 11/1/99 1,050,000 (a) 1,058,306
Paine Webber Group Inc.
5.22%, 4/20/00 2,000,000 (a) 2,000,000
Salomon Smith Barney Holdings, Inc.
5.00%, 10/28/99 3,000,000 (a) 3,000,000
TOTAL CORPORATE NOTES
(cost $23,056,465) 23,056,465
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SHORT-TERM BANK NOTES--19.3%
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First Union National Bank
5.21%, 9/24/99 3,000,000 3,000,000
Key Bank N.A.
4.97%, 10/15/99 4,000,000 (a) 4,000,460
LaSalle National Bank
4.91%, 10/12/99 5,000,000 5,000,000
Norwest Corp.
5.09%, 10/15/99 2,685,000 2,702,120
Old Kent Bank and Trust Co.
4.96%, 6/2/00 5,000,000 (a) 4,997,337
TOTAL SHORT-TERM BANK NOTES
(cost $19,699,917) 19,699,917
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TIME DEPOSITS--4.2%
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Chase Manhattan Bank NA (Nassau)
4.75%, 7/1/99 1,282,000 1,282,000
Westdeutsche Landesbank Girozentrale (Grand Cayman)
5.56%, 7/1/99 3,000,000 3,000,000
TOTAL TIME DEPOSITS
(cost $4,282,000) 4,282,000
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TOTAL INVESTMENTS
(cost $103,667,713) 101.5% 103,667,713
LIABILITIES, LESS CASH AND RECEIVABLES (1.5)% (1,500,623)
NET ASSETS 100.0% 102,167,090
(a) Variable interest rate--subject to periodic change.
See notes to financial statements.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 103,667,713 103,667,713
Interest receivable 576,616
Prepaid expenses and other assets 1,193
104,245,522
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 40,983
Cash overdraft due to Custodian 2,030,520
Accrued expenses and other liabilities 6,929
2,078,432
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NET ASSETS ($) 102,167,090
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 102,171,676
Accumulated net realized gain (loss) on investments (4,586)
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NET ASSETS ($) 102,167,090
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares
of Beneficial Interest authorized) 102,171,676
NET ASSET VALUE, offering and redemption price per share ($) 1.00
See notes to financial statements.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INTEREST INCOME 2,526,593
EXPENSES:
Investment advisory fee--Note 2(a) 249,402
Custodian fees 12,384
Professional fees 7,236
Registration fees 4,101
Prospectus and shareholders' reports 1,275
Trustees' fees and expenses--Note 2(b) 568
Shareholder servicing costs 205
Miscellaneous 8,964
TOTAL EXPENSES 284,135
INVESTMENT INCOME--NET 2,242,458
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NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (477)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,241,981
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 ($):
Investment income--net 2,242,458 3,724,324
Net realized gain (loss) on investments (477) (2,038)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,241,981 3,722,286
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (2,242,458) (3,724,324)
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BENEFICIAL INTEREST TRANSACTIONS ($1 per share):
Net proceeds from shares sold 51,293,766 98,705,448
Dividends reinvested 2,242,458 3,724,324
Cost of shares redeemed (40,393,363) (78,031,019)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 13,142,861 24,398,753
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,142,384 24,396,715
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NET ASSETS ($):
Beginning of Period 89,024,706 64,627,991
END OF PERIOD 102,167,090 89,024,706
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,
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(Unaudited) 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .022 .050 .050 .050 .055 .043
Distributions:
Dividends from investment
income--net (.022) (.050) (.050) (.050) (.055) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 4.54((+)) 5.12 5.19 5.10 5.66 4.37
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .57((+)) .56 .61 .62 .62 --
Ratio of net investment income
to average net assets 4.50((+)) 5.01 5.08 4.96 5.51 4.62
Decrease reflected in above
expense ratios due to
undertakings by Dreyfus -- -- -- -- .03 .88
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Net Assets, end of period
($ x 1,000) 102,167 89,025 64,628 56,186 45,249 34,728
((+)) Annualized.
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 Money Market 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 diversified series. The portfolio's investment
objective is to provide as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. 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.
It is the portfolio's policy to maintain a continuous net asset value per share
of $1.00; the portfolio has adopted certain investment, portfolio valuation and
dividend and distribution policies to enable it to do so. There is no assurance,
however, that the portfolio will be able to maintain a stable net asset value
per share of $1.00.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' 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 are valued at amortized cost, which has
been determined by the fund's Board of Trustees to represent the fair value of
the portfolio's investments.
(B) 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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
Under the terms of the custody agreement, the portfolio received net earnings
credits of $1,427 during the period ended June 30, 1999 based on available cash
balances left on deposit. Income earned under this arrangement is included in
interest income.
The portfolio may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the portfolio's Manager, subject to the seller's
agreement to repurchase and the portfolio's agreement to resell such securities
at a mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the portfolio's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value greater
than or equal to the terms of the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the portfolio will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the portfolio maintains its right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the portfolio to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, 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 a net realized capital gain can be
offset by a capital loss carryovers, it is the policy of the portfolio not to
distribute such gain.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(D) 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 $3,550
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
to December 31, 1998 which are treated, for Federal income tax purposes, as
arising in fiscal 1999. If not applied, $850 of the carryover expires in fiscal
2004, $1,300 expires in fiscal 2005 and $1,400 expires in fiscal 2006.
NOTE 2--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 .50 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. During the
period ended June 30, 1999, the portfolio was charged $54, pursuant to the
transfer agency agreement.
(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.
NOTES
For More Information
Dreyfus Variable Investment Fund,
Money Market 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 117SA996
