Dreyfus Variable Investment Fund, Growth and Income 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
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Financial Futures
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
15 Financial Highlights
16 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Growth and Income Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Growth and Income 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
portfolio manager, Douglas D. Ramos, CFA.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader Standard & Poor's 500 Composite Stock
Price Index and the technology-laden NASDAQ Index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Growth and
Income Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Douglas D. Ramos, CFA, Portfolio Manager
How did Dreyfus Variable Investment Fund, Growth and Income Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Growth and Income Portfolio produced a strong positive total return of
11.08%. (1) These results were comparable to the Standard & Poor's 500 Composite
Stock Price Index's ("S&P 500") 12.38% total return for the same time period.(2)
We attribute this performance to the surprisingly rapid recovery of global
capital markets in the wake of last summer's decline, and to the broadening of
market strength that occurred during the second half of the reporting period.
This broadening of market strength drove an increase in the prices of many of
the value-oriented and midcap stocks in which the portfolio invests.
What is the portfolio's investment approach?
The portfolio invests primarily in mid- and large-sized companies that we
believe have above-average growth potential and are attractively valued relative
to the S& P 500. We generally avoid the risks associated with market timing by
remaining close to fully invested.
We gauge a stock's relative value primarily by looking at its price in relation
to the company's business prospects and intrinsic worth, as measured by a wide
range of financial and business data. By examining each company's fundamentals,
together with economic and industry trends, we typically look for factors that
could trigger a rise in the stock's price, such as new competitive opportunities
or internal operational improvements.
The result of our approach during the recent six-month period was a portfolio of
selected stocks in a variety of investment sectors and industries, some of which
showed notable strength. During the first three months of the year, when the
market's positive performance was
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
led by large-cap growth stocks, the portfolio enjoyed gains from its holdings in
financial companies, such as Citigroup and Chase Manhattan, and consumer-based
companies, such as General Motors and Carnival Cruise Lines. Technology also
proved to be a positive contributor to the portfolio's performance, with shares
of companies such as Sun Microsystems and International Business Machines rising
sharply in value.
During the second half of the period, investor sentiment shifted dramatically in
favor of value-oriented and midcap stocks. The portfolio clearly benefited from
this shift, particularly in the traditional value sectors of basic materials,
with companies such as Alcoa, and capital goods, with companies such as Tyco
International, exhibiting strong performance.
What other factors influenced the portfolio's performance?
We took advantage of the changing investment environment during the second half
of the period by allocating some assets away from financial and consumer-based
companies into basic industrial sectors. Specifically, we reduced our holdings
of investment banking concerns, such as Morgan Stanley Dean Witter; auto
companies, such as Ford Motor; and retailers, such as Dayton Hudson. In their
place, we added to our positions of basic materials companies, such as
International Paper and Dow Chemical. We also uncovered attractive investment
opportunities among software companies that had suffered as a result of
Y2K-related concerns about corporate spending. Stocks of some of these
companies, such as Oracle, started to show signs of recovery before the end of
the period, producing significant gains for the portfolio.
Of course not every company in the portfolio showed positive returns. Some
stocks lagged, even among our best-performing sectors. Among technology stocks,
for example, Compaq Computer performed disappointingly in the face of strong
competitive pressures. The portfolio also experienced weak performance from
utility stocks, which did not benefit from the mid-period shift in investment
sentiment as much as most other traditional value sectors. And while the
portfolio realized gains from investments in a few particularly strong
performers in the utility sector, such as AT&T, others, such as Duke Energy,
lost ground during the period.
What is the portfolio's current strategy?
We have adjusted our strategy in an effort to give the portfolio added
flexibility to hold stocks that are moderately valued relative to the benchmark,
as well as those that are undervalued. In the past, our investment discipline
often led us to avoid moderately valued stocks with excellent growth potential,
or to sell a stock relatively early in its growth cycle, causing the portfolio
to miss out on subsequent appreciation. We believe our current strategy can
better position the portfolio to meet its goals of providing investors with
long-term capital growth, current income and growth of income consistent with
reasonable investment risk.
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. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAINS DISTRIBUTIONS. THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED UNMANAGED
INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS--98.3% Shares Value ($)
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<S> <C> <C>
COMMERCIAL SERVICES--1.4%
Fortune Brands 11,000 455,125
McGraw-Hill Cos. 49,900 2,691,481
Outdoor Systems 30,000 1,095,000
Valassis Communications 58,500 (a) 2,142,562
6,384,168
CONSUMER DURABLES--3.5%
Black & Decker 57,400 3,623,375
Delphi Automotive Systems 23,064 428,126
Ford Motor 78,000 4,402,125
General Motors 33,000 2,178,000
Leggett & Platt 108,900 3,028,781
Newell Rubbermaid 47,700 2,218,050
15,878,457
CONSUMER NON-DURABLES--4.5%
Anheuser-Busch Cos. 67,000 4,752,812
Clorox 23,000 2,456,687
Kimberly-Clark 46,000 2,622,000
PepsiCo 152,000 5,880,500
Philip Morris Cos. 108,200 4,348,288
20,060,287
CONSUMER SERVICES--6.5%
CBS 60,000 2,606,250
Carnival 111,800 5,422,300
Cendant 382,600 (a) 7,843,300
Gannett 61,000 4,353,875
Hilton Hotel 81,000 1,149,188
McDonald's 108,000 4,461,750
Time Warner 42,300 3,109,050
28,945,713
ELECTRONIC TECHNOLOGY--15.1%
Applied Materials 37,000 (a) 2,733,375
Boeing 50,400 2,227,050
Cabletron Systems 67,300 (a) 874,900
Compaq Computer 56,000 1,326,500
Computer Sciences 22,000 (a) 1,522,125
Ericsson (LM) Telephone, Cl. B, A.D.R. 80,000 2,635,000
General Dynamics 20,000 (a) 1,370,000
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC TECHNOLOGY (CONTINUED)
Hewlett-Packard 45,600 4,582,800
Intel 117,900 7,015,050
International Business Machines 78,000 10,081,500
Lexmark International Group, Cl. A 69,400 (a) 4,584,737
Lockheed Martin 32,200 1,199,450
Motorola 37,000 3,505,750
NCR 51,000 2,489,438
National Semiconductor 40,000 (a) 1,012,500
Nortel Networks 32,000 2,778,000
Rockwell International 35,800 2,174,850
Silicon Graphics 104,000 1,703,000
Sun Microsystems 34,000 (a) 2,341,750
Teradyne 28,000 2,009,000
Texas Instruments 34,000 4,930,000
United Technologies 63,200 4,530,650
67,627,425
ENERGY MINERALS--4.9%
Burlington Resources 19,000 821,750
Exxon 58,000 4,473,250
Mobil 29,000 2,871,000
Royal Dutch Petroleum, A.D.R. 123,000 7,410,750
Texaco 69,200 4,325,000
USX-Marathon Group 64,000 2,084,000
21,985,750
FINANCE--16.3%
American Express 12,900 1,678,612
American General 29,100 2,193,412
American International Group 45,496 5,325,875
Associates First Capital, Cl. A 66,000 2,924,625
Bank One 38,000 2,263,375
BankAmerica 98,200 7,199,288
BankBoston 52,000 2,658,500
CIGNA 45,700 4,067,300
Chase Manhattan 69,000 5,977,125
Citigroup 154,100 7,319,750
Federal Home Loan Mortgage 85,000 4,930,000
Federal National Mortgage Association 93,400 6,386,225
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE (CONTINUED)
Fleet Financial Group 74,000 3,283,750
Household International 33,700 1,596,538
Morgan (J.P.) 17,000 2,388,500
Morgan Stanley Dean Witter 43,600 4,469,000
Washington Mutual 31,000 1,096,625
Wells Fargo 103,000 4,403,250
XL Capital, Cl. A 51,900 2,932,350
73,094,100
HEALTH SERVICES--2.6%
Columbia/HCA Healthcare 277,100 6,321,344
Wellpoint Health Networks 64,300 5,457,463
11,778,807
HEALTH TECHNOLOGY--5.6%
American Home Products 41,700 2,397,750
Astrazeneca 57,000 2,206,855
Becton, Dickinson & Co. 28,200 846,000
Bristol-Myers Squibb 64,000 4,508,000
Johnson & Johnson 49,000 4,802,000
Merck & Co. 74,000 5,476,000
Pharmacia & Upjohn 81,600 4,635,900
24,872,505
INDUSTRIAL SERVICES--1.4%
Schlumberger 74,000 4,712,875
Waste Management 31,950 1,717,312
6,430,187
NON-ENERGY MINERALS--.5%
Alcoa 39,000 2,413,125
PROCESS INDUSTRIES--3.4%
Air Products & Chemicals 15,900 639,975
Dow Chemical 36,000 4,567,500
duPont (E.I.) deNemours 34,000 2,322,625
International Paper 41,000 2,070,500
Lyondell Petrochemical 79,900 1,647,938
Mead 53,000 2,212,750
Rohm & Haas 38,800 1,663,550
15,124,838
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER MANUFACTURING--10.6%
AlliedSignal 85,000 5,355,000
Emerson Electric 36,000 2,263,500
General Electric 118,000 13,334,000
Honeywell 51,000 5,909,625
Ingersoll-Rand 25,000 1,615,625
Masco 169,300 4,888,538
Tyco International 101,000 9,569,750
Xerox 79,000 4,665,937
47,601,975
RETAIL TRADE--6.1%
Albertson's 68,733 3,544,045
Dayton Hudson 102,000 6,630,000
Federated Department Stores 93,000 (a) 4,923,188
Kroger 125,400 (a) 3,503,363
May Department Stores 97,900 4,001,662
TJX Cos. 141,800 4,723,712
27,325,970
TECHNOLOGY SERVICES--3.0%
BMC Software 22,000 1,188,000
Computer Associates International 42,000 2,310,000
Compuware 75,000 2,385,937
Electronic Data Systems 60,000 3,393,750
Oracle 75,000 2,784,375
Synopsys 27,000 1,490,063
13,552,125
TRANSPORTATION--.8%
AMR 26,000 1,774,500
Burlington Northern Santa Fe 56,000 1,736,000
3,510,500
UTILITIES--12.1%
AT&T 128,500 7,171,906
Bell Atlantic 89,000 5,818,375
Coastal 129,400 5,176,000
El Paso Energy 47,700 1,678,444
Enron 29,000 2,370,750
GTE 117,000 8,862,750
MCI WorldCom 83,800 (a) 7,227,750
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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UTILITIES (CONTINUED)
Niagara Mohawk Power 47,000 754,938
SBC Communications 122,000 7,076,000
Sprint 85,600 4,520,750
Texas Utilities 84,400 3,481,500
54,139,163
TOTAL COMMON STOCKS
(cost $359,805,301) 440,725,095
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Principal
SHORT-TERM INVESTMENTS--1.2% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.49%, 8/26/1999 4,417,000 4,118,871
4.57%, 9/23/1999 1,049,000 1,037,863
TOTAL SHORT-TERM INVESTMENTS
(cost $5,155,843) 5,156,734
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TOTAL INVESTMENTS (cost $364,961,144) 99.5% 445,881,829
CASH AND RECEIVABLES (NET) .5% 2,239,932
NET ASSETS 100.0% 448,121,761
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF FINANCIAL FUTURES
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
Market Value Unrealized
Covered by Appreciation
Contracts Contracts ($) Expiration at 6/30/99 ($)
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<S> <C> <C>
FINANCIAL FUTURES LONG
Standard & Poor's 500 16 5,526,800 September '99 159,550
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
</TABLE>
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 364,961,144 445,881,829
Cash 62,608
Receivable for investment securities sold 5,030,175
Receivable for shares of Beneficial Interest subscribed 516,481
Dividends receivable 432,676
Receivable for futures variation margin 100,000
Net unrealized appreciation on forward currency
exchange contracts--Note 4(a) 47,351
Prepaid expenses 3,787
452,074,907
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 275,801
Payable for investment securities purchased 2,958,935
Payable for shares of Beneficial Interest redeemed 709,468
Accrued expenses 8,942
3,953,146
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NET ASSETS ($) 448,121,761
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 352,767,328
Accumulated undistributed investment income--net 337,126
Accumulated net realized gain (loss) on investments 13,889,721
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions
(including $159,550 net unrealized appreciation on
financial futures)--Note 4(b) 81,127,586
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NET ASSETS ($) 448,121,761
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) 17,906,224
NET ASSET VALUE, offering and redemption price per share ($) 25.03
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $25,006 foreign taxes withheld at source) 2,989,574
Interest 532,264
TOTAL INCOME 3,521,838
EXPENSES:
Investment advisory fee--Note 3(a) 1,589,485
Custodian fees--Note 3(a) 25,246
Prospectus and shareholders' reports 15,874
Professional fees 15,864
Trustees' fees and expenses--Note 3(b) 2,929
Shareholder servicing costs 2,299
Loan commitment fees--Note 2 716
Miscellaneous 9,529
TOTAL EXPENSES 1,661,942
INVESTMENT INCOME--NET 1,859,896
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 23,294,777
Net realized gain (loss) on forward currency exchange contracts 109,129
Net realized gain (loss) on financial futures 4,196,741
NET REALIZED GAIN (LOSS) 27,600,647
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions [including ($1,151,950)
net unrealized (depreciation) on financial futures] 15,921,718
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 43,522,365
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 45,382,261
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 1,859,896 4,016,926
Net realized gain (loss) on investments 27,600,647 (12,202,953)
Net unrealized appreciation (depreciation)
on investments 15,921,718 51,292,044
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 45,382,261 43,106,017
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (1,856,538) (3,885,893)
Net realized gain on investments -- (7,167,070)
TOTAL DIVIDENDS (1,856,538) (11,052,963)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 16,834,556 98,659,399
Dividends reinvested 1,856,536 11,052,963
Cost of shares redeemed (44,796,905) (80,895,666)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (26,105,813) 28,816,696
TOTAL INCREASE (DECREASE) IN NET ASSETS 17,419,910 60,869,750
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NET ASSETS ($):
Beginning of Period 430,701,851 369,832,101
END OF PERIOD 448,121,761 430,701,851
Undistributed investment income--net 337,126 333,768
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 722,067 4,575,277
Shares issued for dividends reinvested 78,886 497,056
Shares redeemed (1,928,948) (3,835,536)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,127,995) 1,236,797
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
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<TABLE>
<CAPTION>
Six Months
Ended
June 30,
1999 Year Ended December 31,
--------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994(a)
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 22.63 20.78 19.55 18.33 11.98 12.50
Investment Operations:
Investment income--net .10(b) .21 .28 .36 .28 .28
Net realized and unrealized
gain (loss) on investments 2.40 2.23 2.79 3.43 7.07 (.43)
Total from Investment Operations 2.50 2.44 3.07 3.79 7.35 (.15)
Distributions:
Dividends from investment
income--net (.10) (.20) (.28) (.35) (.27) (.28)
Dividends from net realized gain
on investments -- (.39) (1.56) (2.22) (.73) (.09)
Total Distributions (.10) (.59) (1.84) (2.57) (1.00) (.37)
Net asset value, end of period 25.03 22.63 20.78 19.55 18.33 11.98
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TOTAL RETURN (%) 11.08(c) 11.81 16.21 20.75 61.89 (1.22)(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .39(c) .78 .80 .83 .92 .22(c)
Ratio of net investment income
to average net assets .43(c) 1.00 1.37 1.96 2.21 2.25(c)
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation -- -- -- -- .03 1.28(c)
Portfolio Turnover Rate 63.03(c) 126.18 180.73 237.44 255.42 237.09(c)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 448,122 430,702 369,832 225,935 71,161 1,040
(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.
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 Growth and Income 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 provide long-term capital growth, current income and growth of
income, consistent with reasonable investment risk. The Dreyfus Corporation
("Dreyfus") serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"). 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
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 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 the 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 amount 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 and 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 received
net earnings credits of $2,673 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.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend date.
The portfolio declares and pays dividends from investment income-net on a
quarterly basis. Dividends from net realized capital gain are normally declared
and paid annually, but the portfolio
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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.
(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 $11,768,000
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 provid
ing personnel and facilities to perform transfer agency services for the
portfolio. During the period ended June 30, 1999, the portfolio was charged $127
pursuant to the transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $25,246 pursuant to the custody 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.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, financial futures and forward currency exchange
contracts, during the period ended June 30, 1999, amounted to $271,449,175 and
$254,786,004, respectively.
The following summarizes open forward currency exchange contracts at June 30,
1999:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
CURRENCY APPRECIATION
FORWARD CURRENCY EXCHANGE CONTRACTS AMOUNTS PROCEEDS ($) VALUE ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES:
British Pounds,
expiring 7/15/99 1,319,265 2,128,898 2,081,547 47,351
</TABLE>
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
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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.
The portfolio may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The portfolio is exposed
to market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the portfolio to "mark to
market" on a daily basis, which reflects the change in market value of the
contracts at the close of each day's trading. Accordingly, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the portfolio recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board of
Trade on which the contract is traded and is subject to change. Contracts open
at June 30, 1999 are set forth in the Statement of Financial Futures.
(b) At June 30, 1999, accumulated net unrealized appreciation on investments,
financial futures and forward currency exchange contracts was $81,127,586,
consisting of $85,442,944 gross unrealized appreciation and $4,315,358 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).
For More Information
Dreyfus Variable Investment Fund,
Growth and Income Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
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 108SA996
