Dreyfus Variable Investment Fund, Small Company Stock 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
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, Small Company Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Small Company Stock 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 managers, Anthony Galise and James Wadsworth.
The past six months have been rewarding for many equity investors, including
those who own small-cap stocks. Strong U.S. economic growth, low inflation and
high levels of consumer spending supported continued strength in many broad
measures of stock market performance. As a result, several major U.S. market
indices set new records, including the technology-laden NASDAQ Index.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including small-cap stocks, as investors became increasingly attracted
to their high growth rates. 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 large- and
small-capitalization sectors of the stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Small Company
Stock Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Anthony Galise and James Wadsworth, Portfolio Managers
How did Dreyfus Variable Investment Fund, Small Company Stock Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Small Company Stock Portfolio produced a total return of 2.45%.(1 )This
performance fell short of the Russell 2500 Index's 10.88% total return for the
same period.(2)
We attribute the portfolio's disappointing performance primarily to the sharp
underperformance of a small number of individual holdings. Other factors had a
negative impact on performance as well. First, the portfolio's relative return
suffered from our decision to avoid investing in the Index's largest-cap stocks
for the first half of the period. Second, we avoided many of the high-flying,
Internet-related momentum growth stocks that accounted for a disproportionate
share of the Index' s advance.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, Small Company Stock Portfolio invests
primarily in a diversified portfolio of small- and mid-sized domestic companies.
We identify potential investments through a computer modeling process that ranks
stocks within an industry or sector based on value, growth and financial health.
Our management team then conducts fundamental analysis to select the most
attractive of the top-ranked securities.
In addition to identifying attractive investment opportunities, our approach is
designed to manage the risks associated with sector and industry exposure.
Generally speaking, we do not believe that the advantages of attempting to
rotate in and out of various industries and sectors outweigh the risks of such
moves. Instead, we look to neutralize these risks by remaining sector neutral in
relation to the Russell 2500 Index.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
The result of our approach during the recent six-month period was a broadly
diversified portfolio of carefully selected stocks. Although many of these
stocks performed well, a handful of stocks in the health care and technology
sectors underperformed so sharply that they had a significant impact on the
portfolio's overall performance.
The portfolio suffered its most disappointing results in health care. Many
stocks in this sector declined as a result of an increasingly restrictive
regulatory environment and the prospect for further government-imposed
limitations on Medicare and Medicaid reimbursements. In addition, several of the
portfolio's health care investments lost value due to company-specific problems.
For example, the stocks of Covance and Steris declined over concerns regarding
the impact of major acquisitions on near-term future earnings. Stocks of other
companies, such as generic drug manufacturers Mylan Laboratories and Watson
Pharmaceuticals, fell as a result of pricing and quality-related issues.
In the technology sector, the portfolio suffered losses from investments in
information technology services companies, such as Ciber. The market responded
negatively to these companies due to concerns about the impact of reduced Y2K
expenditures.
What other factors influenced the portfolio's performance?
Although several companies in the portfolio underperformed, others achieved
better-than-average results, even among our worst-performing sectors. In health
care, for example, we acquired Biogen in March, which performed well. And, in
the technology arena, the stock of PMC-Sierra benefited from improving
fundamentals among semiconductor chip makers and increasing demand for advanced
communications chips.
The portfolio also scored gains in the utilities and energy sectors. Utility
stocks benefited from the shift in market sentiment in favor of value stocks
that occurred during the middle of the period. The port
folio' s performance in the sector was led by Calpine, an independent power
producer that has positioned itself to benefit from the trend toward utility
deregulation. Energy stocks benefited from the market's shift toward value, as
well as rising energy prices and growing global demand. The portfolio scored
successes with investments in oil services companies, such as BJ Services, and
energy exploration companies, such as Devon Energy.
What is the portfolio's current strategy?
During the second half of the period we established positions in certain
relatively large companies, such as USA Networks, a major media company, and
Altera, a leading maker of advanced communications semiconductors. Both of these
investments proved profitable for the portfolio during the recent period.
We continue to adhere to our disciplined approach to stock selection, and our
sector-neutral approach to risk management in seeking to outperform the Russell
2500 Index.
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: THE FRANK RUSSELL COMPANY -- REFLECTS THE REINVESTMENT OF INCOME
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAINS DISTRIBUTIONS. THE RUSSELL 2500
INDEX IS AN UNMANAGED INDEX AND IS COMPOSED OF THE 2,500 SMALLEST COMPANIES IN
THE RUSSELL 3000 INDEX. THE RUSSELL 3000 INDEX IS COMPOSED OF THE LARGEST U.S.
COMPANIES BY MARKET CAPITALIZATION.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--99.4% Shares Value ($)
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<S> <C> <C>
ALCOHOL & TOBACCO--.4%
Canandaigua Brands, Cl. A 2,400 (a) 125,850
CONSUMER CYCLICAL--13.9%
Abercrombie & Fitch, Cl. A 4,400 (a) 211,200
Action Performance Cos. 4,300 (a) 141,900
Ames Department Stores 5,300 (a) 241,813
Applied Power, Cl. A 4,900 133,831
Bed Bath & Beyond 6,100 (a) 234,850
Borg-Warner Automotive 4,550 250,250
CKE Restaurants 3,220 52,325
Central Garden & Pet 7,700 (a) 78,925
Consolidated Stores 5,700 (a) 153,900
Continental Airlines, Cl. B 4,700 (a) 176,838
Darden Restaurants 7,600 165,775
Dollar Tree Stores 5,700 (a) 250,800
Ethan Allen Interiors 6,900 260,475
Interface, Cl. A 14,600 125,925
Lear 2,300 (a) 114,425
Ross Stores 4,800 241,800
Ryan's Family Steak House 18,550 (a) 215,644
Speedway Motorsports 5,800 (a) 228,013
Tommy Hilfiger 3,550 (a) 260,925
Tower Automotive 9,100 (a) 231,481
USA Networks 5,700 (a) 228,713
Warnaco Group, Cl. A 6,500 173,875
Zale 9,950 (a) 398,000
4,571,683
CONSUMER STAPLES--2.8%
Dial 9,500 353,281
Ralcorp Holdings 5,900 (a) 94,769
Richfood Holdings 4,575 80,634
Suiza Foods 6,617 (a) 277,087
United Natural Foods 4,800 (a) 118,800
924,571
ENERGY RELATED--4.5%
BJ Services 6,300 (a) 185,456
Devon Energy 5,500 196,625
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY RELATED (CONTINUED)
KN Energy 7,075 94,628
Newfield Exploration 6,200 (a) 176,313
Noble Affiliates 3,900 109,931
Sempra Energy 9,299 210,390
Transocean Offshore 6,300 165,375
Ultramar Diamond Shamrock 5,700 124,331
WICOR 7,700 215,119
1,478,168
HEALTH CARE--7.8%
AmeriSource Health, Cl. A 8,800 (a) 224,400
Bard (C.R.) 3,300 157,781
Bergen Brunswig, Cl. A 8,248 142,269
Biogen 3,200 (a) 205,800
Forest Laboratories 2,100 (a) 97,125
Genzyme 5,800 281,300
Genzyme Surgical Products 1,038 4,575
IDEXX Laboratories 4,600 (a) 107,238
Lincare Holdings 6,900 (a) 172,500
Mylan Laboratories 7,100 188,150
Orthodontic Centers of America 14,200 (a) 200,575
STERIS 9,300 (a) 180,188
Sybron International 6,000 (a) 165,375
Universal Health Services, Cl. B 4,400 (a) 210,100
Watson Pharmaceuticals 6,800 (a) 238,425
2,575,801
INTEREST SENSITIVE--15.6%
Ambac Financial Group 5,300 302,763
Bank United, Cl. A 5,700 229,069
City National 9,000 336,938
Clayton Homes 14,146 161,795
Everen Capital 8,640 257,580
FelCor Lodging Trust 4,200 87,150
Gallagher (Arthur J.) 3,200 158,400
GreenPoint Financial 4,200 137,813
Hambrecht & Quist Group 3,300 (a) 122,513
Health Care Property Investors 4,550 131,381
Hibernia, Cl. A 14,200 222,763
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
Investment Technology Group 4,731 (a) 153,166
M&T Bank 539 296,450
Mercantile Bankshares 7,800 275,925
Mutual Risk Management 8,466 282,553
Old Kent Financial 8,880 371,888
People's Bank 5,800 176,538
Peoples Heritage Financial Group 12,700 238,919
Protective Life 6,600 217,800
Radian Group 4,466 218,019
Reliance Group Holdings 14,600 108,588
Sovereign Bancorp 10,760 130,465
TCF Financial Corp. 8,400 234,150
Temple-Inland 2,200 150,150
Waddell & Reed Financial, Cl. A 4,300 117,981
5,120,757
PRODUCER GOODS & SERVICES--15.2%
Airborne Freight 5,200 143,975
Apartment Investment & Management, Cl. A 5,400 230,850
AptarGroup 6,400 192,000
Boston Properties 9,400 337,225
CNF Transportation 4,900 188,038
Cabot 8,300 200,756
Camden Property Trust 6,300 174,825
Caraustar Industries 4,250 104,922
Comfort Systems USA 4,400 (a) 79,200
Cordant Technologies 2,900 131,044
Crompton & Knowles 9,100 178,019
Cytec Industries 6,550 (a) 208,781
Duke Realty Investments 7,700 173,731
Equity Office Properties Trust 7,376 189,010
Fairchild, Cl. A 1,380 (a) 17,595
Franchise Finance Corp. of America 6,000 132,000
Gulfstream Aerospace 3,100 (a) 209,444
Highwoods Properties 4,700 128,956
Homestake Mining 10,600 86,788
IMCO Recycling 7,800 133,575
Jacobs Engineering Group 3,400 (a) 129,200
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER GOODS & SERVICES (CONTINUED)
Louisiana Pacific 7,700 182,875
Mack-Cali Realty 6,040 186,863
Mail-Well 15,400 (a) 249,288
Martin Marietta Materials 1,900 112,100
OmniQuip International 9,200 72,450
Pacific Gulf Properties 8,000 181,000
SPX 3,200 (a) 267,200
Southdown 3,176 204,058
Timken 4,700 91,650
USX-U.S. Steel Group 3,021 81,567
4,998,985
SERVICES--11.7%
Adelphia Communications, Cl. A 2,300 146,338
American Management Systems 3,900 (a) 125,044
At Home, Cl. A 3,750 (a) 202,287
Avis Rent A Car 6,500 (a) 189,313
CheckFree Holdings 2,026 (a) 55,842
Ciber 7,500 (a) 143,438
Concord EFS 3,800 (a) 160,788
DST Systems 2,300 (a) 144,613
Galileo International 7,200 384,750
Hispanic Broadcasting 3,900 295,913
Hollinger International, Cl. A 10,700 127,063
Outdoor Systems 8,000 (a) 292,000
Sinclar Broadcast Group, Cl. A 17,200 (a) 281,650
SunGuard Data Systems 8,700 (a) 300,150
Transaction Network Services 12,700 (a) 371,475
Valassis Communications 4,350 (a) 159,319
Wallace Computer Services 6,900 172,500
World Color Press 2,800 (a) 77,000
Young & Rubicam 4,700 (a) 213,556
3,843,039
TECHNOLOGY--20.8%
Altera 6,400 (a) 235,600
American Power Conversion 7,400 (a) 148,925
American Tower, Cl. A 3,600 (a) 86,400
Apple Computer 3,200 (a) 148,200
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY (CONTINUED)
Citrix Systems 3,600 (a) 203,400
Cognex 4,450 (a) 140,453
Cognos 7,300 (a) 158,775
Convergys 7,100 (a) 136,675
Dallas Semiconductor 4,750 239,875
ECI Telecommunications 8,800 292,050
Electronics For Imaging 7,600 (a) 390,450
General Instrument 6,300 (a) 267,750
Intuit 3,900 (a) 351,488
Jabil Circuit 7,400 (a) 333,910
Legato Systems 5,300 (a) 306,075
NCR 4,200 (a) 205,013
NeoMagic 11,000 (a) 92,469
Network Appliance 4,300 (a) 240,263
PMC-Sierra 5,100 (a) 300,581
Plantronics 6,200 (a) 403,775
SMART Modular Technologies 10,500 (a) 182,438
Sanmina 4,504 (a) 341,741
Sterling Commerce 9,772 (a) 356,678
Sterling Software 9,200 (a) 245,525
Synopsys 3,400 (a) 187,638
Vitesse Semiconductor 3,700 (a) 249,519
Waters 6,600 (a) 350,625
Zebra Technologies, Cl. A 6,400 (a) 246,000
6,842,291
UTILITIES--6.7%
Calpine 11,300 (a) 610,200
Cincinnati Bell 11,200 279,300
DQE 6,850 274,856
MidAmerican Energy Holding 8,800 304,700
Montana Power 4,100 289,050
NiSource 9,600 247,800
Pacific Gateway Exchange 6,600 (a) 192,225
2,198,131
TOTAL COMMON STOCKS
(cost $28,522,532) 32,679,276
Principal
SHORT-TERM INVESTMENTS--.7% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.48%, 8/26/1999 100,000 99,322
4.65%, 9/30/1999 151,000 149,224
TOTAL SHORT-TERM INVESTMENTS
(cost $248,528) 248,546
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TOTAL INVESTMENTS (cost $28,771,060) 100.1% 32,927,822
LIABILITIES, LESS CASH AND RECEIVABLES (.1%) (36,998)
NET ASSETS 100.0% 32,890,824
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 28,771,060 32,927,822
Cash 8,839
Dividends receivable 26,764
Receivable for investment securities sold 20,512
Prepaid expenses 726
32,984,663
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 23,873
Payable for investment securities purchased 41,288
Payable for shares of Beneficial Interest redeemed 13,636
Accrued expenses 15,042
93,839
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NET ASSETS ($) 32,890,824
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 32,304,755
Accumulated undistributed investment income--net 48,562
Accumulated net realized gain (loss) on investments (3,619,255)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 4,156,762
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NET ASSETS ($) 32,890,824
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 2,128,126
NET ASSET VALUE, offering and redemption price per share ($) 15.46
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
Cash dividends (net of $330 foreign taxes withheld at source) 189,802
Interest 6,511
TOTAL INCOME 196,313
EXPENSES:
Investment advisory fee--Note 3(a) 122,034
Auditing fees 14,335
Prospectus and shareholders' reports 9,704
Custodian fees--Note 3(a) 8,123
Legal fees 1,943
Shareholder servicing costs 1,896
Trustees' fees and expenses--Note 3(b) 284
Interest expense--Note 2 129
Loan commitment fees--Note 2 71
Miscellaneous 1,106
TOTAL EXPENSES 159,625
INVESTMENT INCOME--NET 36,688
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (1,332,930)
Net unrealized appreciation (depreciation) on investments 1,930,219
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 597,289
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 633,977
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 ($):
Investment income--net 36,688 87,021
Net realized gain (loss) on investments (1,332,930) (2,270,701)
Net unrealized appreciation (depreciation)
on investments 1,930,219 (273,737)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 633,977 (2,457,417)
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (84,817)
Net realized gain on investments -- (93,031)
TOTAL DIVIDENDS -- (177,848)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 3,446,557 15,037,525
Dividends reinvested -- 177,848
Cost of shares redeemed (6,046,312) (5,877,575)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (2,599,755) 9,337,798
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,965,778) 6,702,533
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NET ASSETS ($):
Beginning of Period 34,856,602 28,154,069
END OF PERIOD 32,890,824 34,856,602
Undistributed investment income--net 48,562 11,874
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 232,456 947,780
Shares issued for dividends reinvested -- 11,117
Shares redeemed (414,927) (394,173)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (182,471) 564,724
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(a)
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<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 15.09 16.13 13.52 12.50
Investment Operations:
Investment income--net .02(b) .04 .05 .05
Net realized and unrealized gain (loss)
on investments .35 (.99) 2.89 1.03
Total from Investment Operations .37 (.95) 2.94 1.08
Distributions:
Dividends from investment income--net -- (.04) (.04) (.05)
Dividends from net realized gain on
investments -- (.05) (.29) (.01)
Total Distributions -- (.09) (.33) (.06)
Net asset value, end of period 15.46 15.09 16.13 13.52
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TOTAL RETURN (%) 2.45(c) (5.97) 21.77 8.73(c,d)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .49(c) .98 1.12 .75(c)
Ratio of net investment income to average
net assets .11(c) .26 .53 .39(c)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation -- -- -- .19(c)
Portfolio Turnover Rate 23.10(c) 45.09 34.48 35.68(c)
Net Assets, end of period ($ x 1,000) 32,891 34,857 28,154 8,148
(A) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996 (COMMENCEMENT OF INITIAL OFFERING) TO
DECEMBER 31, 1996.
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 Small Company Stock 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 investment results that are greater than the total
return performance of publicly-traded common stocks in the aggregate, as
represented by the Russell 2500 Index. 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
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 may 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.
(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. 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
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and 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 net realized capital gain can be offset by capital loss
carryovers, it is the policy of the portfolio not to distribute such gain.
(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 $1,444,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to The Portfoli
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
December 31, 1998. The carryover does not include net realized securities losses
from November 1, 1998 through December 31, 1998 which are treated, for Federal
income tax purposes, as arising in fiscal 1999. 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.
The average daily amount of borrowings during the period ended June 30, 1999 was
approximately $5,000, with a related weighted average annualized interest rate
of 5.14%.
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.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999,
$8,123 was charged by Mellon 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:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999 amounted to
$7,545,059 and $9,667,234, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$4,156,762, consisting of $6,491,351 gross unrealized appreciation and
$2,334,589 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
NOTES
For More Information
Dreyfus Variable Investment Fund, Small Company Stock
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 151SA996
