Dreyfus Variable
Investment Fund,
International
Equity Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 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, 2000 through June 30, 2000. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Douglas A. Loeffler, CFA.
When the reporting period began, it had become apparent that global economic
growth was substantially stronger than many analysts had expected. In fact, most
global markets had already rebounded sharply from 1998's currency and credit
crises in emerging market countries. The rally continued into the first quarter
of 2000, before peaking in early March.
In April, many developed and emerging market countries around the world
experienced heightened levels of volatility when expensively priced technology
stocks began to decline sharply in the wake of evidence that inflationary
pressures were building. This correction, combined with a strong U.S. dollar
relative to many foreign currencies, erased much of the reporting period's early
gains.
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 17, 2000
DISCUSSION OF PERFORMANCE
Douglas A. 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, 2000, the portfolio achieved a total
return of -1.94% .(1) This compares with a -4.06% return for the portfolio's
benchmark, the Morgan Stanley Capital International Europe, Australasia, Far
East (MSCI EAFE) Index, for the same period.(2)
We attribute the portfolio's modest outperformance to successful stock selection
in an environment that, for much of the reporting period, did not favor the
growth investment style.
What is the portfolio's investment approach?
The portfolio focuses on individual stock selection. We do not attempt to
predict interest rates or market movements nor do we have country allocation
models or targets. Rather, we choose investments on a company-by-company basis,
searching to find what we believe are well-managed, well-positioned companies,
wherever they may be.
Starting with roughly 1,000 of the largest companies outside the United States,
we perform rigorous stock-by-stock analyses. Generally, we look to identify
companies that we believe have achieved and can sustain growth through a
dominant brand name, growing market share, high barriers to entry or untapped
market opportunities. In our view, these factors are marks of companies whose
growth, in both revenues and earnings, can exceed that of global industry peers
as well as that of their local markets.
Currently, the portfolio holds approximately 60-80 stocks, broadly invested
across countries and industries, representing what we believe to be the most
promising growth ideas from around the world. We generally sell a stock when its
growth forecast is reduced, its valuation target is reached, or when we decide
to reduce its specific market weighting.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
As the reporting period began, the portfolio benefited from strong global demand
for growth stocks. After a brief January pause, the year-end 1999 stock market
rally continued into early 2000. The global advance was driven primarily by the
telecommunications, media and technology industries, on which the portfolio
placed a heavy investment emphasis.
From mid-March through the end of May, however, markets were marked by rapid
swings and shifts in investor sentiment. Investors grew concerned over stock
valuations that were extraordinarily high when compared to historical norms.
Overseas markets, especially the emerging markets, were highly vulnerable to
rising interest rates. While demand for stocks remained high, supply grew
rapidly as firms rushed new shares to market. Investors paused to rethink
valuations as central banks raised interest rates and markets grew glutted with
new issues. As a result, stock prices generally turned downward, negatively
affecting portfolio performance.
More specifically, Japan was weak through the entire reporting period; both the
market and economy continued to disappoint investors. However, our emphasis on
individual stock selection in Japan helped the portfolio's performance. European
markets moved slightly ahead in local currency terms, as countries continued to
move away from a centralized economic model and towards a competitive,
market-driven structure. However, weakness in the euro and British pound
relative to the U.S. dollar negatively affected the performance of the
portfolio's European investments.
What is the portfolio's current strategy?
We have maintained our focus during a challenging period for global growth
stocks, continuing our quest to uncover what we believe are promising growth
opportunities worldwide.
Since mid-March, we have worked to reduce overall volatility within the
portfolio. In particular, we have focused more attention on the price
we pay for stocks, looking for a clearer path from concept to profitability and
reducing our investment in stocks with no current earnings.
Accordingly, Continental Europe is currently our largest regional exposure. We
have reduced investment in European financial firms, concentrating instead on
companies that we believe are positioned to take advantage of convergence in the
telecommunications and entertainment industries. We deemphasized investment in
the United Kingdom, avoiding exposure to its weak financial service industry.
Japan continues to be the portfolio's largest single-country weighting. In our
Japanese investments, we continue to focus on selecting well-run companies that
we believe are positioned for growth, including telecommunications and high-end
consumer electronics manufacturers. We are also looking to take advantage of
selected opportunities in emerging market countries, particularly in Latin
American stocks that are closely tied to U.S. market performance, as well as
Asian manufacturers of semiconductors and telecommunications equipment. On the
other hand, we have sharply reduced emphasis on commodity telecommunications
providers, particularly in markets with many new entrants. In the media sector,
we are focusing more on company valuations and potential profitability
July 17, 2000
(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 INC. -- REFLECTS REINVESTMENT OF NET DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (MSCI EAFE) INDEX IS AN UNMANAGED INDEX COMPOSED
OF A SAMPLE OF COMPANIES REPRESENTATIVE OF THE MARKET STRUCTURE OF EUROPEAN AND
PACIFIC BASIN COUNTRIES.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--93.1% Shares Value ($)
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<S> <C> <C>
BRAZIL--1.3%
Aracruz Celulose, ADR 50,125 968,039
CANADA--1.0%
AT&T Canada, Cl. B, ADR 22,275 (a) 739,251
DENMARK--1.6%
Novo Nordisk, Cl. B 6,925 1,177,254
FINLAND--6.3%
HPY Holding 33,100 1,515,397
Nokia, ADS 28,525 1,424,467
Perlos 47,550 1,501,191
Tietoenator 8,275 275,850
4,716,905
FRANCE--11.1%
Accor 25,175 1,030,832
Alcatel 30,000 1,965,782
Altran Technologies 4,550 890,091
Bouygues 825 550,819
Dassault Systemes 10,975 1,022,719
Total Fina Elf 9,200 1,409,259
Vivendi 15,700 1,384,407
8,253,909
HONG KONG--1.9%
China Mobile (Hong Kong) 164,000 (a) 1,446,329
ISRAEL--2.1%
Check Point Software Technologies, ADR 4,050 (a) 857,588
Partner Communications, ADR 76,200 (a) 723,900
1,581,488
ITALY--5.3%
Alleanza Assicurazioni 124,300 1,637,277
Saipem 204,975 1,214,087
San Paolo-IMI 63,175 1,118,960
3,970,324
JAPAN--20.6%
Ajinomoto 85,000 1,092,111
Don Quijote 5,268 920,718
MURATA MANUFACTURING 5,866 843,463
Mitsubishi Electric 175,000 1,897,969
NEC 63,000 1,981,956
COMMON STOCKS (CONTINUED) Shares Value ($)
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JAPAN (CONTINUED)
NIPPON TELEGRAPH & TELEPHONE 95 1,265,470
Nippon Television Network 1,450 945,205
PIONEER 58,000 2,263,014
TOKYO GAS 421,000 1,185,243
TOYODA GOSEI 19,000 1,208,030
Taiyo Yuden 15,000 940,954
Takeda Chemical Industries 12,000 789,041
15,333,174
LUXEMBOURG--1.5%
Societe Europeenne des Satellites 6,500 1,091,147
MEXICO--3.1%
Cemex, ADR 43,500 1,016,813
Telefonos de Mexico, ADR 23,000 1,313,875
2,330,688
NETHERLANDS--9.3%
ASM Lithography, ADR 32,400 (a) 1,429,650
Heineken 16,375 995,678
Koninklijke (Royal) Philips Electronics, ADR 52,825 2,509,188
STMicroelectronics 11,625 731,803
TNT Post 47,200 1,271,797
6,938,116
SOUTH KOREA--2.4%
Samsung Electronics, GDR 9,275 (b) 1,822,537
SPAIN--3.2%
Altadis 84,250 1,292,955
Banco Santander Central Hispano 94,025 990,975
Grupo Prisa 4,150 (a) 96,186
2,380,116
SWEDEN--6.7%
Electrolux , Cl. B 55,800 866,538
ForeningsSparbanken 82,900 1,216,649
Nordic Baltic 176,425 1,334,759
Telefonaktiebolaget LM Ericsson, Cl. B, ADR 79,850 1,597,000
5,014,946
SWITZERLAND--2.8%
Swatch 875 1,111,162
Synthes-Stratec 2,200 (b) 1,002,210
2,113,372
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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UNITED KINGDOM--10.1%
BP Amoco, ADS 19,475 1,101,555
Cable & Wireless 89,600 1,520,680
Energis 14,975 (a) 562,818
Marconi 79,600 1,038,272
Nycomed Amersham 122,600 1,219,815
Scoot.com 212,100 (a) 495,406
Vodafone AirTouch 384,369 1,556,536
7,495,082
UNITED STATES--2.8%
Global TeleSystems 41,450 (a) 499,990
NTL 26,275 (a) 1,573,216
2,073,206
TOTAL COMMON STOCKS
(cost $61,446,808) 69,445,883
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PREFERRED STOCKS--1.0%
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GERMANY;
Marschollek, Lautenschlaeger
(cost $686,718) 1,475 737,192
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Principal
SHORT-TERM INVESTMENTS--5.3% Amount ($) Value ($)
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COMMERCIAL PAPER;
Federal Home Loan Banks, 6.48% 7/3/2000
(cost $3,998,560) 4,000,000 3,998,560
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TOTAL INVESTMENTS (cost $66,132,086) 99.4% 74,181,635
CASH AND RECEIVABLES (NET) .6% 437,208
NET ASSETS 100.0% 74,618,843
(A) NON-INCOME PRODUCING.
(B) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 2000, THESE SECURITIES
AMOUNTED TO $2,824,747 OR APPROXIAMATELY 3.8% OF NET ASSETS.
SEE NOTES TO FINANCIAL STATEMENT.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 66,132,086 74,181,635
Cash 762,889
Dividends receivable 85,268
Prepaid expenses 486
75,030,278
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 45,827
Payable for investment securities purchased 290,017
Payable for shares of Beneficial Interest redeemed 35,261
Accrued expenses 40,330
411,435
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NET ASSETS ($) 74,618,843
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 57,687,039
Accumulated undistributed investment income--net 191,068
Accumulated net realized gain (loss) on investments
and foreign currency transactions 8,695,837
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 8,044,899
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NET ASSETS ($) 74,618,843
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 3,700,031
NET ASSET VALUE, offering and redemption price per share ($) 20.17
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $72,337 foreign taxes withheld at source) 428,172
Interest 101,902
TOTAL INCOME 530,074
EXPENSES:
Investment advisory fee--Note 3(a) 274,134
Custodian fees 56,103
Professional fees 11,553
Prospectus and shareholders' reports 4,932
Trustees' fees and expenses--Note 3(b) 3,942
Registration fees 3,484
Shareholder servicing costs 279
Loan commitment fees--Note 2 187
Miscellaneous 4,756
TOTAL EXPENSES 359,370
INVESTMENT INCOME--NET 170,704
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and
foreign currency transactions 9,014,701
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions (10,570,797)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,556,096)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,385,392)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
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OPERATIONS ($):
Investment income--net 170,704 180,414
Net realized gain (loss) on investments 9,014,701 11,959,015
Net unrealized appreciation (depreciation)
on investments (10,570,797) 13,428,504
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (1,385,392) 25,567,933
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (180,687)
Net realized gain on investments (6,191,346) (2,199,494)
TOTAL DIVIDENDS (6,191,346) (2,380,181)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 13,062,414 8,091,298
Dividends reinvested 6,191,346 2,380,181
Cost of shares redeemed (6,266,107) (10,262,413)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 12,987,653 209,066
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,410,915 23,396,818
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NET ASSETS ($):
Beginning of Period 69,207,928 45,811,110
END OF PERIOD 74,618,843 69,207,928
Undistributed investment income--net 191,068 20,364
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 598,856 482,292
Shares issued for dividends reinvested 288,506 109,776
Shares redeemed (285,412) (654,333)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 601,950 (62,265)
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
---------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 22.34 14.50 14.02 13.76 12.82 12.02
Investment Operations:
Investment income--net .05(a) .06(a) .15 .05 .10 .15
Net realized and unrealized
gain (loss) on investments (.37) 8.58 .48 1.27 1.16 .74
Total from Investment Operations (.32) 8.64 .63 1.32 1.26 .89
Distributions:
Dividends from investment
income--net -- (.06) (.15) (.07) (.09) (.08)
Dividends in excess of
investment income--net -- -- -- -- -- (.01)
Dividends from net realized
gain on investments (1.85) (.74) -- (.34) (.39) --
Dividends in excess of net
realized gain on investments -- -- -- (.65) (.06) --
Total Distributions (1.85) (.80) (.15) (1.06) (.54) (.09)
Capital contribution from an
affiliate of the Advisor -- -- -- -- .22 --
Net asset value, end of period 20.17 22.34 14.50 14.02 13.76 12.82
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TOTAL RETURN (%) (1.94)(b) 59.76 4.49 9.61 11.61(c) 7.39
Six Months Ended
June 30, 2000 Year Ended December 31,
---------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .49(b) 1.02 .99 1.06 1.28 1.59
Ratio of net investment income
to average net assets .23(b) .38 1.04 .38 .92 1.13
Decrease reflected in above expense
ratios due to undertakings
by The Dreyfus Corporation -- -- -- -- -- .45
Portfolio Turnover Rate 115.98(b) 261.64 204.50 165.75 181.13 70.22
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Net Assets, end of period
($ x 1,000) 74,619 69,208 45,811 39,388 24,355 7,672
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
(C) HAD THE PORTFOLIO NOT HAD A CAPITAL CONTRIBUTION BY AN AFFILIATE OF THE
ADVISOR 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., which is a wholly-owned subsidiary of Mellon Financial
Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a
wholly-owned subsidiary of Dreyfus, became the distributor of the portfolio's
shares, which are sold to the public without a sales charge. Prior to March 22,
2000, Premier Mutual Fund Services, Inc. was the distributor.
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 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'
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 received
net earnings credits of $6,014 during the period ended June 30, 2000, based on
available cash The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
balances left on deposit. Interest earned under this arrangement is included in
interest income.
(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, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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, 2000, 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. During the
period ended June 30, 2000, the portfolio was charged $21 pursuant to the
transfer agency agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
NOTE 4-- Securities Transactions:
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, 2000, amounted to $84,647,200 and $80,011,662, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$8,049,549, consisting of $10,479,746 gross unrealized appreciation and
$2,430,197 gross unrealized depreciation.
At June 30, 2000, 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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 109SA006
Dreyfus Variable
Investment Fund,
Balanced Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
14 Statement of Financial Futures
15 Statement of Assets and Liabilities
16 Statement of Operations
17 Statement of Changes in Net Assets
18 Financial Highlights
19 Notes to Financial Statements
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Balanced Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Balanced Portfolio, covering the six-month period from January 1, 2000
through June 30, 2000. Inside, you'll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
the portfolio managers, Ronald P. Gala and Laurie A. Carroll.
The past six months have been highly volatile for investors in U.S. stocks and
bonds, primarily because of the effects of rising interest rates. In the stock
market, a substantial advance during February was led by technology companies in
a fast-growing economy. However, the stock market corrected sharply in
mid-March, causing large-capitalization stocks to generally underperform small-
and mid-cap stocks. Prices of young, untested technology stocks fell
particularly steeply and quickly. On the other hand, some long-neglected
value-oriented stocks gained ground amid renewed investor interest.
In the bond market, higher interest rates generally led to an erosion of bond
prices, especially those of corporate securities. However, long-term U.S.
Treasury bonds began to rally in 2000, primarily because of reduced supply amid
robust demand from domestic and foreign investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Balanced
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Ronald P. Gala and Laurie A. Carroll, Portfolio Managers
How did Dreyfus Variable Investment Fund, Balanced Portfolio perform relative to
its benchmark?
For the six-month period ended June 30, 2000, Dreyfus Variable Investment Fund,
Balanced Portfolio produced a total return of -0.81%.(1) In comparison, the
portfolio' s benchmark Hybrid Index, which is composed of 60% Standard & Poor's
500 Composite Stock Price Index ("S&P 500") and 40% Lehman Brothers Intermediate
Government/Credit Bond Index ("Intermediate Index"), provided a total return of
1.03% for the same period.(2)
We attribute the portfolio's underperformance to our stock selection strategy
within the equity component of the portfolio. In addition, within the
fixed-income component, our emphasis on corporate securities and government
agency bonds -- during a period in which U.S. Treasury bonds produced the
highest returns -- hindered returns slightly.
What is the portfolio's investment approach?
The portfolio is a balanced portfolio, with a "neutral" allocation of 60% stocks
and 40% bonds. However, the portfolio is permitted to invest up to 75%, and as
little as 40% , of its total assets in stocks, and up to 60%, and as little as
25%, of its total assets in bonds.
When allocating assets between stocks and bonds, we assess the relative return
and risks of each asset class using a model that analyzes several factors,
including interest-rate-adjusted price-to-earnings ratios, the valuation and
volatility levels of stocks relative to bonds, and economic factors such as
interest rates.
What other factors influenced the portfolio's performance?
The primary factors influencing the portfolio's performance over the past six
months have been the continued strength of the U.S. economy and the series of
short-term interest-rate hikes initiated by the Federal
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
Reserve Board (the "Fed") in an attempt to slow economic growth and forestall
the buildup of inflationary pressures. In three separate moves during the
reporting period, the Fed raised interest rates by a total of 1.00 percentage
points, creating uncertainty and heightened volatility for the portfolio and the
financial markets in general.
In response, the portfolio maintained a defensive asset-allocation position by
holding a larger portion of its assets in bonds, rather than stocks, believing
that the stock market was overvalued. That decision proved beneficial for the
portfolio as the bond market generally produced higher returns than the stock
market during the past six months. However, while we maintained a neutral
allocation to the various sectors of the S& P 500, our individual stock
selections within some of those areas curtailed portfolio performance.
For example, during the first three months of the period, the strongest gains
achieved by the stock market were primarily limited to technology stocks,
especially those stocks with the highest price-to-earnings ratios. We maintained
a significant exposure to technology stocks during this time, but the more
speculative Internet companies did not meet the portfolio's risk/reward criteria
and, as a result, we did not hold them. Instead, we favored what we believed
were large, well-established technology companies that provide products and
services for the Internet' s infrastructure. While the portfolio's technology
exposure helped drive our performance, the portfolio's tech gains were not as
strong as those achieved by the Hybrid Index.
Within the fixed-income portion of the portfolio, performance was affected by
the rising interest-rate environment and the U.S. Treasury buy-back program. In
mid-January the federal government announced that it would use a portion of the
budget surplus to buy back certain outstanding U.S. Treasury securities. This
announcement triggered a wave of purchases of long-term Treasury securities, a
move that drove down yields for 30-year Treasury bonds. As a result, the best
fixed-income returns for the portfolio over the past six months were gener ated
from U.S. Treasuries, followed by government agency bonds and corporate
securities. Our limited exposure to U.S. Treasuries ultimately hindered our
performance. However, when viewing the portfolio as a whole, the negative
results of the fixed-income portion had a relatively limited impact on the
portfolio's total returns.
What is the portfolio's current strategy?
We have continued to maintain a defensive asset-allocation strategy because we
believe that the U.S. stock market remains overvalued relative to bonds. That
said, however, we currently plan to continue to emphasize carefully selected
technology stocks as well as investments within other sectors as part of our
discipline of creating a diversified portfolio.
Within the portfolio' s fixed-income portion, we have continued to emphasize
corporate securities, followed by government agency bonds and U.S. Treasuries.
We currently plan to continue this strategy because, in our view, once the bond
market returns to more normal levels, as we believe it should, investors should
return to higher yielding securities, such as corporate securities and
government agency bonds. In the meantime, we believe these areas of investment
currently represent potentially attractive values.
July 17, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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 INC. -- REFLECTS THE REINVESTMENT OF INCOME DIVIDENDS, AND
WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE. THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND
INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF GOVERNMENT AND CORPORATE BOND
MARKET PERFORMANCE COMPOSED OF U.S. GOVERNMENT, TREASURY AND AGENCY SECURITIES,
FIXED-INCOME SECURITIES AND NONCONVERTIBLE INVESTMENT GRADE CORPORATE DEBT, WITH
AN AVERAGE MATURITY OF 1-10 YEARS.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--42.9% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL--3.4%
Albertson's 4,000 133,000
Bed Bath & Beyond 3,600 (a) 130,500
Best Buy 1,700 (a) 107,525
Delphi Automotive Systems 2,117 30,829
Delta Air Lines 2,900 146,631
Federated Department Stores 3,500 (a) 118,125
Ford Motor 7,700 331,100
General Motors 3,000 174,187
Home Depot 8,100 404,494
Limited 6,000 129,750
Sears, Roebuck & Co. 7,000 228,375
TJX Cos. 8,100 151,875
Target 2,500 145,000
Visteon 1,008 12,224
Wal-Mart Stores 14,700 847,087
Whirlpool 2,200 102,575
3,193,277
CONSUMER STAPLES--1.8%
Avon Products 4,500 200,250
Coca-Cola 3,500 201,031
Kellogg 6,400 190,400
Lauder (Estee) Cos., Cl. A 2,600 128,537
PepsiCo 9,300 413,269
Procter & Gamble 3,700 211,825
Ralston-Purina Group 7,900 157,506
SYSCO 4,400 185,350
1,688,168
ENERGY--2.6%
BJ Services 1,700 (a) 106,250
BP Amoco, ADS 2,500 141,406
Chevron 2,100 178,106
Conoco, Cl. B 4,900 120,356
Exxon Mobil 9,100 714,350
Kerr-McGee 2,000 117,875
KeySpan 3,500 107,625
Occidental Petroleum 9,400 197,988
Royal Dutch Petroleum (New York Shares) 10,900 671,031
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
Sunoco 3,700 108,919
2,463,906
HEALTH CARE--4.8%
Allergan 1,700 126,650
Amgen 1,700 (a) 119,425
Bausch & Lomb 1,600 123,800
Biomet 3,500 134,531
Bristol-Myers Squibb 4,600 267,950
Johnson & Johnson 6,700 682,563
Merck & Co. 11,100 850,537
Pfizer 26,025 1,249,200
Schering-Plough 12,100 611,050
UnitedHealth Group 1,900 162,925
Wellpoint Health Networks 2,400 (a) 173,850
4,502,481
INTEREST SENSITIVE--7.4%
Ambac Financial Group 2,400 131,550
American Express 8,400 437,850
American International Group 4,100 481,750
Bank of America 9,900 425,700
CIGNA 2,600 243,100
Citigroup 15,400 927,850
FleetBoston Financial 10,000 340,000
General Electric 33,000 1,749,000
MBNA 10,900 295,663
MGIC Investment 2,500 113,750
Marsh & McLennan Cos. 2,700 281,981
Merrill Lynch 2,600 299,000
Morgan (J.P.) 2,200 242,275
Morgan Stanley Dean Witter & Co. 5,600 466,200
St. Paul Cos. 6,200 211,575
State Street 1,600 169,700
SunTrust Banks 1,800 82,237
UnionBanCal 2,900 53,831
6,953,012
INTERNET RELATED--1.1%
America Online 10,800 (a) 569,700
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTERNET RELATED (CONTINUED)
Juniper Networks 800 116,450
Yahoo! 2,500 (a) 309,688
995,838
PRODUCER GOODS--2.7%
American Power Conversion 4,500 (a) 183,656
Boeing 5,200 217,425
Deere & Co. 4,400 162,800
Dow Chemical 7,500 226,406
duPont (E.I.) deNemours & Co. 1,900 83,125
Eastman Chemical 2,300 109,825
Georgia-Pacific Group 6,400 168,000
International Paper 3,800 113,288
Minnesota Mining & Manufacturing 2,700 222,750
Northrop Grumman 2,300 152,375
Pharmacia 4,100 211,919
Tyco International 7,200 341,100
USX-U.S. Steel Group 5,800 107,663
Union Carbide 1,800 89,100
United Parcel Service, Cl. B 1,600 94,400
United Technologies 2,000 117,750
2,601,582
SERVICES--2.3%
ALLTEL 2,900 179,619
Disney (Walt) 13,500 523,969
Dow Jones & Co. 1,800 131,850
Electronic Data Systems 2,200 90,750
Fox Entertainment Group, Cl. A 8,700 (a) 264,263
Gannett 1,900 113,644
Infinity Broadcasting, Cl. A 5,700 (a) 207,694
Sprint (PCS Group) 4,100 (a) 243,950
SunGard Data Systems 4,100 (a) 127,100
United States Cellular 1,900 (a) 119,700
Viacom, Cl. B 2,700 (a) 184,106
2,186,645
TECHNOLOGY--13.1%
ADC Telecommunications 5,000 (a) 419,375
Advanced Micro Devices 2,000 (a) 154,500
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Agilent Technologies 1,710 126,112
Analog Devices 3,000 (a) 228,000
Apple Computer 6,400 (a) 335,200
Applied Materials 4,000 (a) 362,500
Applied Micro Circuits 1,100 (a) 108,625
Brocade Communications Systems 900 (a) 165,136
CIENA 700 (a) 116,681
Cisco Systems 22,800 (a) 1,449,225
Computer Associates International 3,700 189,394
Corning 800 215,900
Dell Computer 9,400 (a) 463,537
EMC 3,200 (a) 246,200
Eaton 2,100 140,700
Hewlett-Packard 4,200 524,475
Intel 9,200 1,229,925
International Business Machines 4,000 438,250
KLA-Tencor 3,700 (a) 216,681
Micron Technology 2,600 (a) 228,963
Microsoft 16,600 (a) 1,328,000
NCR 3,200 (a) 124,600
Network Appliance 3,500 (a) 281,750
Nokia, ADS 3,200 159,800
Nortel Networks 7,800 532,350
Oracle 10,200 (a) 857,438
QUALCOMM 3,200 (a) 192,000
SDL 500 (a) 142,594
Siebel Systems 1,400 (a) 228,987
Sun Microsystems 6,500 (a) 591,094
Sycamore Networks 900 99,337
Teradyne 2,500 (a) 183,750
Texas Instruments 2,000 137,375
Vishay Intertechnology 3,200 (a) 121,400
12,339,854
UTILITIES--3.7%
AT&T 11,800 373,175
Ameren 3,700 124,875
BellSouth 13,100 558,387
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
Consolidated Edison 4,500 133,313
FPL Group 2,300 113,850
GTE 8,700 541,575
PG&E 4,500 110,813
SBC Communications 15,300 661,725
Sempra Energy 5,700 96,900
WorldCom 16,500 (a) 756,938
3,471,551
TOTAL COMMON STOCKS
(cost $32,938,649) 40,396,314
------------------------------------------------------------------------------------------------------------------------------------
Principal
BONDS AND NOTES--52.0% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE--13.5%
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 600,000 591,951
Atlantic Richfield, Notes,
5.55%, 4/15/2003 500,000 484,942
BSCH Issuance, Gtd. Notes,
7.625%, 11/3/2009 750,000 740,470
Bank of America, Sub. Notes,
7.80%, 2/15/2010 1,500,000 1,494,555
CIT Group, Unsub. Notes,
7.375%, 3/15/2003 1,000,000 987,534
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 600,000 595,875
Citigroup, Sr. Notes,
5.80%, 3/15/2004 900,000 858,772
Deutsche Telekom International Finance, Gtd. Notes,
7.75%, 6/15/2005 1,000,000 1,008,049
Ford Motor Credit, Notes,
6.70%, 7/16/2004 1,000,000 966,326
General Electric Capital, Notes,
7.50%, 6/5/2003 600,000 604,863
General Motors Acceptance Corp., Bonds,
6.15%, 4/5/2007 430,000 393,234
HSBC Holding, Sub. Notes,
7.50%, 7/15/2009 750,000 737,850
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Lehman Brothers Holdings, Notes,
7.50%, 9/1/2006 1,000,000 958,831
National Australia Bank, Sub. Notes,
8.60%, 5/19/2010 1,400,000 1,469,342
Norwest, Sr. Notes,
6.75%, 10/1/2006 350,000 337,714
Province of Ontario, Bonds,
7.75%, 6/4/2002 500,000 505,408
12,735,716
INDUSTRIAL--3.4%
Coca-Cola Enterprises, Notes,
5.75%, 11/1/2008 500,000 443,349
Conoco, Sr. Notes,
6.35%, 4/15/2009 500,000 466,683
DaimlerChrysler Holding, Notes,
7.40%, 1/20/2005 1,000,000 998,513
duPont (E.I.) deNemours & Co., Notes,
6.50%, 9/1/2002 500,000 495,651
Monsanto, Notes,
5.375%, 12/1/2001 300,000 292,049
PPG Industries, Notes,
6.25%, 2/15/2002 500,000 494,419
3,190,664
UTILITIES--3.6%
AT&T, Notes,
5.625%, 3/15/2004 750,000 706,236
Philadelphia Electric, Bonds,
6.625%, 3/1/2003 1,000,000 976,432
Wisconsin Electric Power, Bonds,
7.25%, 8/1/2004 700,000 705,728
WorldCom, Notes,
8%, 5/15/2006 1,000,000 1,012,238
3,400,634
U.S. GOVERNMENT & AGENCIES--31.5%
Federal Home Loan Bank, Bonds,
5.125%, 9/15/2003 600,000 569,124
Federal Home Loan Mortgage Corp., Notes:
5.75%, 7/15/2003 3,100,000 2,996,522
5%, 1/15/2004 600,000 562,600
5.75%, 3/15/2009 750,000 682,500
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES (CONTINUED)
Federal National Mortgage Association:
Bonds,
7.125%, 2/15/2005 5,500,000 5,524,409
Notes:
5.25%, 1/15/2003 1,300,000 1,250,738
4.75%, 11/14/2003 1,500,000 1,401,776
5.125%, 2/13/2004 1,300,000 1,222,330
5.625%, 5/14/2004 1,500,000 1,429,691
7.25%, 1/15/2010 1,700,000 1,716,801
U.S. Treasury Bonds,
11.125%, 8/15/2003 1,100,000 1,245,057
U.S. Treasury Notes:
5.25%, 1/31/2001 270,000 268,313
6.625%, 6/30/2001 1,950,000 1,953,646
5.50%, 7/31/2001 1,000,000 990,000
5.625%, 9/30/2001 1,500,000 1,484,520
6.50%, 3/31/2002 1,000,000 1,000,620
7.50%, 5/15/2002 1,430,000 1,456,812
5.75%, 10/31/2002 500,000 492,810
7.50%, 2/15/2005 835,000 875,965
7%, 7/15/2006 500,000 518,125
6.50%, 10/15/2006 250,000 252,788
5.625%, 5/15/2008 1,750,000 1,688,190
29,583,337
TOTAL BONDS AND NOTES
(cost $49,242,966) 48,910,351
Principal
SHORT-TERM INVESTMENTS-6.3% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--6.1%
Greenwich Capital Markets,Tri-Party
Repurchase Agreement, 6.58%, dated
6/30/2000, due 7/3/2000, in the amount
of $5,683,115 (fully collateralized by
$5,740,000 Federal Farm Credit Bank
Bonds, 6.875%, 5/1/2002, value $5,795,721) 5,680,000 5,680,000
U.S. TREASURY BILLS--.2%
5.63%, 7/20/2000 200,000 (b) 199,488
TOTAL SHORT-TERM INVESTMENTS
(cost $5,879,406) 5,879,488
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $88,061,021) 101.2% 95,186,153
LIABILITIES, LESS CASH AND RECEIVABLES (1.2%) (1,083,851)
NET ASSETS 100.0% 94,102,302
(A) NON-INCOME PRODUCING.
(B) HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN
FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF FINANCIAL FUTURES
<TABLE>
June 30, 2000 (Unaudited)
Market Value Unrealized
Covered by Appreciation
Contracts Contracts ($) Expiration at 6/30/2000 ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG
5 Year U.S. Treasury Notes 35 3,465,547 September 2000 56,422
FINANCIAL FUTURES SHORT
Standard & Poor's 500 2 734,050 September 2000 10,850
67,272
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(b) 88,061,021 95,186,153
Cash 83,798
Receivable for investment securities sold 1,261,634
Dividends and interest receivable 984,941
Prepaid expenses 100
97,516,626
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 62,556
Payable for investment securities purchased 3,326,298
Payable for futures variation margin--Note 4(a) 1,222
Loan commitment fees payable 135
Accrued expenses 24,113
3,414,324
--------------------------------------------------------------------------------
NET ASSETS ($) 94,102,302
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 86,964,242
Accumulated undistributed investment income--net 33,512
Accumulated net realized gain (loss) on investments (87,856)
Accumulated net unrealized appreciation (depreciation)
on investments (including $67,272 net unrealized
appreciation on financial futures)--Note 4(b) 7,192,404
--------------------------------------------------------------------------------
NET ASSETS ($) 94,102,302
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
6,057,060
NET ASSET VALUE, offering and redemption price per share ($) 15.54
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 1,683,176
Cash dividends (net of $1,587 foreign taxes withheld at source) 230,799
TOTAL INCOME 1,913,975
EXPENSES:
Investment advisory fee--Note 3(a) 333,879
Prospectus and shareholders' reports 13,885
Professional fees 13,565
Custodian fees--Note 3(a) 6,738
Trustees' fees and expenses--Note 3(b) 3,720
Registration fees 1,781
Loan commitment fees--Note 2 383
Shareholder servicing costs 165
Miscellaneous 2,884
TOTAL EXPENSES 377,000
INVESTMENT INCOME--NET 1,536,975
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (194,548)
Net realized gain (loss) on financial futures (5,292)
NET REALIZED GAIN (LOSS) (199,840)
Net unrealized appreciation (depreciation) on investments
(including $209,416 net unrealized appreciation on financial futures)
(2,066,356)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,266,196)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (729,221)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 1,536,975 2,248,362
Net realized gain (loss) on investments (199,840) 3,987,181
Net unrealized appreciation (depreciation)
on investments (2,066,356) (167,147)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (729,221) 6,068,396
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (1,516,752) (2,235,073)
Net realized gain on investments (526,036) (3,835,273)
TOTAL DIVIDENDS (2,042,788) (6,070,346)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 9,632,217 43,286,441
Dividends reinvested 2,042,788 6,070,346
Cost of shares redeemed (4,930,641) (19,065,662)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 6,744,364 30,291,125
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,972,355 30,289,175
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 90,129,947 59,840,772
END OF PERIOD 94,102,302 90,129,947
Undistributed investment income--net 33,512 13,289
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 617,967 2,665,579
Shares issued for dividends reinvested 129,967 378,221
Shares redeemed (316,311) (1,173,446)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 431,623 1,870,354
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Six Months Ended
June 30, 2000 Year Ended December 31,
------------------------------------------
(Unaudited) 1999 1998 1997(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 16.02 15.94 14.04 12.50
Investment Operations:
Investment income--net .27(b) .47(b) .43 .25
Net realized and unrealized gain (loss)
on investments (.40) .80 2.67 2.06
Total from Investment Operations (.13) 1.27 3.10 2.31
Distributions:
Dividends from investment income--net (.26) (.46) (.43) (.25)
Dividends from net realized gain
on investments (.09) (.73) (.77) (.52)
Total Distributions (.35) (1.19) (1.20) (.77)
Net asset value, end of period 15.54 16.02 15.94 14.04
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.81)(c) 8.13 22.34 18.48(c)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .42(c) .86 .87 .67(c)
Ratio of net investment income
to average net assets 1.72(c) 2.94 2.98 1.91(c)
Portfolio Turnover Rate 47.17(c) 98.61 111.75 45.78(c)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 94,102 90,130 59,841 41,144
(A) FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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 Balanced 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
common stocks and bonds in the aggregate, as represented by a hybrid index, 60%
of which is composed of the common stocks in the Standard & Poor's 500 Composite
Stock Price Index and 40% of which is composed of the bonds in the Lehman
Brothers Intermediate Government/Corporate Bond Index. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service
Corporation (" DSC" ), a wholly-owned subsidiary of Dreyfus, became the
distributor of the portfolio's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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. 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) 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 $1,345 during the period ended June 30, 2000 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 investment adviser, 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 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 the right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net are declared and paid quarterly. 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, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
charged to the portfolio at rates based on prevailing market rates in effect at
the time of borrowings. During the period ended June 30, 2000, 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. During the
period ended June 30, 2000, the portfolio was charged $10 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, 2000, the
portfolio was charged $6,738 pursuant to the custody agreement.
(B) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board Members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
June 30, 2000, amounted to $45,417,903 and $40,152,326, respectively.
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 the market value of the
contracts at the close of each day' s trading. Typically, 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, 2000 are set forth in the Statement of Financial Futures.
(B) At June 30, 2000, accumulated net unrealized appreciation on investments and
financial futures was $7,192,404, consisting of $9,971,743 gross unrealized
appreciation and $2,779,339 gross unrealized depreciation.
At June 30, 2000, 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, Balanced 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 154SA006
Dreyfus Variable
Investment Fund,
Appreciation Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Appreciation Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Appreciation Portfolio, covering the six-month period from January 1, 2000
through June 30, 2000. Inside, you'll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
Fayez Sarofim, of Fayez Sarofim & Co., the portfolio's sub-investment adviser.
While stock prices were little changed on average over the past six months, the
period was marked by high levels of volatility and dramatic shifts in investor
sentiment. Between January and mid-March, large-cap stocks generally continued
to advance, led by fast-growing technology stocks that, many investors believed,
would benefit most from the "new economy." Subsequently, however, technology
stocks corrected sharply over concerns about rising interest rates and extremely
high valuations. Other sectors of the large-cap stock market also declined,
erasing the gains achieved earlier in the year.
Also, primarily because of the precipitous drop in technology stock prices,
value-oriented stocks generally outperformed growth stocks during the reporting
period, a reversal of the trend established over the past several years. In
addition, small-capitalization stocks generally outperformed large-cap stocks,
particularly in the value-oriented segment of the market. In our view, these
short-term swings in investor sentiment highlight once again the importance of
broad diversification and a long-term perspective for most investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Appreciation
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Fayez Sarofim, Portfolio Manager Fayez Sarofim & Co., Sub-Investment Adviser
How did Dreyfus Variable Investment Fund, Appreciation Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000 the portfolio produced a total
return of 2.79%.(1) The Standard & Poor's 500 Composite Stock Price Index ("S&P
500 Index" ), the portfolio's benchmark, produced a total return of -0.43%, for
the same period.(2)
We attribute the portfolio's relatively good performance to a dramatic shift in
market sentiment away from a more speculative outlook and toward companies with
stronger fundamentals, such as consistent earnings growth and strong franchises.
Because these are the types of companies in which the portfolio invests, the
portfolio benefited from this return to more traditional investments.
What is the portfolio's investment approach?
The portfolio invests primarily in large, well-established, multinational growth
companies that we believe are well positioned to weather difficult economic
climates and thrive during favorable times. We focus on purchasing growth stocks
at a price we consider to be justified by a company's fundamentals. The result
is a portfolio of stocks in prominent companies selected for their sustained
patterns of profitability, strong balance sheets, expanding global presence and
above-average growth potential.
At the same time, we manage the portfolio in a manner particularly well suited
to long-term investors. Our investment approach is based on targeting long-term
growth rather than short-term profit. As a result, we generally buy and sell
relatively few stocks during the course of the year, helping to minimize
investors' tax liabilities and reduce trading costs. During the six-month
reporting period, the portfolio maintained a turnover rate that was well within
our goal of limiting annual turnover to below 15% during normal market
conditions.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
The portfolio' s performance was primarily influenced by a dramatic shift in
market sentiment that began toward the end of the first quarter of 2000. Before
this change, the stock market had been dominated by a relative handful of
technology stocks that had appreciated to levels far beyond their relative
earnings. In fact, some of these companies had little or no earnings, and
achieved high stock prices based on speculation regarding their future
prospects.
In mid-March, the speculative technology bubble began to burst. Investors became
concerned that the Federal Reserve Board's efforts to slow economic growth and
relieve a buildup of inflationary pressures might cause demand for new
technology to slacken. Faced with these concerns, a major measure of technology
stock performance, the Nasdaq Composite Index, fell substantially between
mid-March and the end of April, including a substantial single-day drop on April
14.
Subsequently, stock market investors appeared to become much more selective,
rewarding stocks with strong business fundamentals and positive earnings
reports, while avoiding those without such attributes. Accordingly, recoveries
ensued in previously neglected industry groups such as pharmaceutical companies
and multinational consumer products companies, both areas on which the portfolio
focused. While the portfolio had less exposure to technology companies than the
S&P 500 Index, our technology holdings fared relatively well during the shift in
sentiment, largely because holdings such as Intel and Cisco Systems enjoyed
strong business fundamentals.
A number of company-specific issues also affected the portfolio's performance.
Pfizer, a major drug manufacturer, was rewarded for its merger with
Warner-Lambert. Consumer non-durables company PepsiCo received strong results
from its Frito Lay unit. And financial powerhouse Citigroup's stock rose as
benefits of the merger between Travelers Group and Citicorp improved bottom-line
performance.
What is the portfolio's current strategy?
Much of the portfolio's strategy is based on our sector selection process, which
is designed to identify industries likely to enjoy long-term growth. For
example, current developments in biotechnology and demographic shifts toward an
aging population have created long-term trends favorable to the health care
industry. Trends toward a growing middle class in emerging market countries have
created opportunities for global financial services firms and consumer products
companies. These conditions have currently led us to maintain the portfolio's
emphasis on the health care, consumer staples and financial services industries,
and to de-emphasize commodities and basic industries. Our investment discipline
has also led us away from technology companies with stock prices higher than we
judge to be warranted by their financial strength and growth rates.
As of June 30, 2000, the long-term economic trends that have led us to emphasize
health care, financial services and consumer staples appear to remain in place.
Accordingly, we have seen little reason to alter our sector allocation strategy
July 17, 2000
(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 INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN 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
<TABLE>
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
COMMON STOCKS--97.5% Shares Value ($)
----------------------------------------------------------------------------------------------
<S> <C> <C>
AUTO RELATED--.1%
Visteon 62,205 (a) 754,241
AUTOMOTIVE--2.0%
Ford Motor 475,094 20,429,042
BANKING--4.1%
Bank of America 192,108 8,260,644
Chase Manhattan 450,000 20,728,125
SunTrust Banks 275,000 12,564,062
41,552,831
CAPITAL GOODS--7.8%
Emerson Electric 180,000 10,867,500
General Electric 975,000 51,675,000
Honeywell International 270,000 9,095,625
Rockwell International 270,000 8,505,000
80,143,125
COMMUNICATIONS SERVICES--4.4%
Bell Atlantic 175,000 8,892,188
BellSouth 430,000 18,328,750
SBC Communications 420,144 18,171,228
45,392,166
ELECTRONICS--9.8%
Agilent Technologies 83,908 (a) 6,188,215
Conexant Systems 125,000 (a) 6,078,125
Intel 650,000 86,896,875
Texas Instruments 25,600 1,758,400
100,921,615
ENERGY--6.0%
BP Amoco, ADS 370,000 20,928,125
Chevron 120,000 10,177,500
Exxon Mobil 340,332 26,716,062
Royal Dutch Petroleum, ADR 52,000 3,201,250
61,022,937
FINANCE-MISC.--8.3%
American Express 330,000 17,201,250
Associates First Capital, Cl. A 300,882 6,713,430
Citigroup 465,093 28,021,853
Federal National Mortgage Association 360,000 18,787,500
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------
FINANCE-MISC. (CONTINUED)
Goldman Sachs Group 35,000 3,320,625
Hertz, Cl. A 80,000 2,245,000
Merrill Lynch 80,000 9,200,000
85,489,658
FOOD & DRUGS--2.1%
Walgreen 670,000 21,565,625
FOOD, BEVERAGE & TOBACCO--6.7%
Anheuser-Busch Cos. 16,000 1,195,000
Coca-Cola 450,000 25,846,875
Nestle, ADR 35,000 3,500,000
PepsiCo 470,000 20,885,625
Philip Morris Cos. 650,000 17,265,625
68,693,125
HEALTH CARE--15.8%
Abbott Laboratories 370,000 16,488,125
Bristol-Myers Squibb 280,000 16,310,000
Johnson & Johnson 295,000 30,053,125
Merck & Co. 435,000 33,331,875
Pfizer 1,300,000 62,400,000
Roche Holdings, ADR 33,000 3,213,375
161,796,500
HOUSEHOLD PRODUCTS-MISC.--4.2%
Colgate-Palmolive 260,000 15,567,500
Estee Lauder, Cl. A 50,000 2,471,875
Gillette 350,000 12,228,125
Procter & Gamble 220,000 12,595,000
42,862,500
INSURANCE--3.6%
American General 35,000 2,135,000
Berkshire Hathaway, Cl. A 220 (a) 11,836,000
Berkshire Hathaway, Cl. B 15 (a) 26,400
Marsh & McLennan Cos. 215,000 22,454,063
36,451,463
MEDIA/ENTERTAINMENT--3.7%
Fox Entertainment Group, Cl. A 300,000 (a) 9,112,500
McDonald's 325,000 10,704,687
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
-------------------------------------------------------------------------------------------
MEDIA/ENTERTAINMENT (CONTINUED)
Seagram 45,000 2,610,000
Viacom, Cl. B 225,000 (a) 15,342,188
37,769,375
PUBLISHING--1.6%
McGraw-Hill Cos. 300,000 16,200,000
News Corp, ADR 5,000 272,500
16,472,500
RETAIL--2.1%
Wal-Mart Stores 370,000 21,321,250
TECHNOLOGY--13.1%
Cisco Systems 672,000 (a) 42,714,000
EMC 150,000 11,540,624
Hewlett-Packard 220,000 27,472,500
International Business Machines 220,000 24,103,750
Microsoft 350,000 (a) 28,000,000
133,830,874
TEXTILES-APPARREL--.6%
Christian Dior 20,000 4,530,550
Polo Ralph Lauren 150,000 (a) 2,137,500
6,668,050
TRANSPORTATION--1.5%
Norfolk Southern 400,000 5,950,000
United Parcel Service, Cl. B 157,700 9,304,300
15,254,300
TOTAL COMMON STOCKS
(cost $739,168,563) 998,391,177
-------------------------------------------------------------------------------------------
PREFERRED STOCKS--.8%
--------------------------------------------------------------------------------------------
PUBLISHING;
News, ADS, Cum., $.4428
(cost $3,947,389) 175,000 8,312,500
Principal
SHORT-TERM INVESTMENTS--1.8% Amount ($) Value ($)
-------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
5.54%, 8/17/2000 1,918,000 1,904,593
5.57%, 8/31/2000 6,880,000 6,817,048
5.61%, 9/7/2000 115,000 113,809
5.64%, 9/14/2000 6,573,000 6,497,805
5.72%, 10/5/2000 1,743,000 1,717,012
5.70%, 10/12/2000 1,400,000 1,377,530
TOTAL SHORT-TERM INVESTMENTS
(cost $18,420,146) 18,427,797
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $761,536,098) 100.1% 1,025,131,474
LIABILITIES, LESS CASH AND RECEIVABLES (.1%) (723,831)
NET ASSETS 100.0% 1,024,407,643
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
------------------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 761,536,098 1,025,131,47
Cash 308,733
Receivable for investment securities sold 2,224,866
Dividends receivable 613,375
Receivable for shares of Beneficial Interest subscribed 536,471
Prepaid expenses 1,497
1,028,816,416
------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 374,490
Due to Fayez Sarofim & Co. 276,800
Payable for investment securities purchased 3,478,458
Payable for shares of Beneficial Interest redeemed 240,274
Accrued expenses 38,751
4,408,773
------------------------------------------------------------------------------------------
NET ASSETS ($) 1,024,407,643
------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 747,259,241
Accumulated undistributed investment income--net 2,876,228
Accumulated net realized gain (loss) on investments 10,660,785
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 263,611,389
-----------------------------------------------------------------------------------------
NET ASSETS ($) 1,024,407,643
-----------------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 24,998,977
NET ASSET VALUE, offering and redemption price per share ($) 40.98
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $55,339 foreign taxes withheld at source) 6,535,725
Interest 177,303
TOTAL INCOME 6,713,028
EXPENSES:
Investment advisory fee--Note 3(a) 2,063,830
Sub-Investment advisory fee-Note 3(a) 1,616,289
Trustees' fees and expenses--Note 3(b) 40,063
Custodian fees--Note 3(a) 36,333
Interest expense--Note 2 20,595
Professional fees 15,072
Prospectus and shareholders' reports 11,494
Shareholder servicing costs 5,847
Loan commitment fees--Note 2 3,666
Miscellaneous 425
TOTAL EXPENSES 3,813,614
INVESTMENT INCOME--NET 2,899,414
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 14,329,061
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 8,614,822
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 22,943,883
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 25,843,297
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,899,414 5,733,105
Net realized gain (loss) on investments 14,329,061 584,225
Net unrealized appreciation (depreciation)
on investments 8,614,822 89,149,730
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,843,297 95,467,060
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS ($):
From investment income--net (49,322) (5,751,210)
From net realized gain on investments -- (180,086)
In excess of net realized gain on investments -- (3,668,276)
TOTAL DIVIDENDS (49,322) (9,599,572)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 136,380,307 463,853,413
Dividends reinvested 49,322 9,599,572
Cost of shares redeemed (165,612,690) (205,358,265)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (29,183,061) 268,094,720
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,389,086) 353,962,208
-------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,027,796,729 673,834,521
END OF PERIOD 1,024,407,643 1,027,796,729
Undistributed investment income--net 2,876,228 26,136
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 3,434,134 12,265,230
Shares issued for dividends reinvested 1,229 243,827
Shares redeemed (4,216,706) (5,391,753)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (781,343) 7,117,304
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 39.87 36.11 27.91 21.98 17.71 13.44
Investment Operations:
Investment income--net .12(a) .25(a) .20 .22 .23 .23
Net realized and unrealized
gain (loss) on investments .99 3.88 8.21 5.95 4.30 4.27
Total from Investment Operations 1.11 4.13 8.41 6.17 4.53 4.50
Distributions:
Dividends from investment
income--net (.00)(b) (.22) (.20) (.22) (.23) (.23)
Dividends from net realized
gain on investments -- (.01) (.01) (.02) (.03) --
Dividends in excess of net
realized gain on investments -- (.14) -- -- -- --
Total Distributions -- (.37) (.21) (.24) (.26) (.23)
Net asset value, end of period 40.98 39.87 36.11 27.91 21.98 17.71
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.79(c) 11.46 30.22 28.05 25.56 33.52
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .38(c) .78 .80 .80 .84 .85
Ratio of interest expense
and loan commitment fees
to average net assets .00(c,d) .00(d) .01 - - -
Ratio of net investment income
to average net assets .29(c) .64 .84 1.08 1.46 2.08
Decrease reflected in above expense
ratios due to undertakings
by The Dreyfus Corporation -- -- -- -- .02
Portfolio Turnover Rate 1.26(c) 3.87 1.34 1.69 2.47 2.81
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 1,024,408 1,027,797 673,835 247,011 103,745 46,930
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(C) NOT ANNUALIZED.
(D) AMOUNT REPRESENTS LESS THAN .01%.
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 Appreciation 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 long-term capital growth consistent with the
preservation of capital. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Fayez Sarofim & Co. (" Sarofim" ) serves as the portfolio' s
sub-investment adviser. Effective March 22, 2000, Dreyfus Service Corporation
(" DSC" ), a wholly-owned subsidiary of Dreyfus, became the distributor of the
portfolio's shares,which are sold to the public without a sales charge. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor.
On December 6, 1999, the fund's Board of Trustees approved, effective May 1,
2000, a change of the portfolio's name from "Capital Appreciation Portfolio" to
" Appreciation Portfolio."
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 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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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 outstanding during the period ended June
30, 2000 was approximately $591,300, with a related weighted average annualized
interest rate of 7.00%.
NOTE 3--Investment Advisory Fee, Sub-Investment Advisory Fee and Other
Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is based on the value of the portfolio's average daily net assets
and is computed at the following annual rates: .55 of 1% of the first $150
million; .50 of 1% of the next $150 million; and .375 of 1% over $300 million.
The fee is payable monthly. Pursuant to a Sub-Investment Advisory Agreement with
Sarofim, the sub-investment advisory fee is based upon the value of the
portfolio' s average daily net assets and is computed at the following annual
rates: .20 of 1% of the first $150 million; .25 of 1% of the next $150 million;
and .375 of 1% over $300 million. The fee 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, 2000, the portfolio was charged $249 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended June 30, 2000, $36,333 was
charged by Mellon pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
$6,000 for each in person meeting and $500 for telephone meetings. These fees
are allocated among the funds in the Fund Group. The Chairman of the Board
receives an additional 25% of such compensation. Subject to the fund's Emeritus
Program Guidelines, Emeritus Board members, if any, receive 50% of annual
retainer fees and per meeting fees paid at the time the Board member achieves
emeritus status.
(c) During the period ended June 30, 2000, the portfolio incurred total
brokerage commissions of $47,633, of which $6,500 was paid to Dreyfus Brokerage
Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$12,448,502 and $59,967,335, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$263,595,376, consisting of $310,179,250 gross unrealized appreciation and
$46,583,874 gross unrealized depreciation.
At June 30, 2000, 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).
18
NOTES
For More Information
Dreyfus Variable
Investment Fund,
Appreciation Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Sub-Investment Advisor
Fayez Sarofim & Co.
Two Houston Center
Suite 2907
Houston, TX 77010
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 112SA006
Dreyfus Variable
Investment Fund,
Disciplined Stock
Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Disciplined Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Disciplined Stock Portfolio, covering the six-month period from January 1,
2000 through June 30, 2000. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with the portfolio manager, Bert J. Mullins.
While stock prices were little changed on average over the past six months, the
period was marked by high levels of volatility and dramatic shifts in investor
sentiment. Between January and mid-March, large-cap stocks generally continued
to advance, led by fast-growing technology stocks that, many investors believed,
would benefit most from the "new economy." Subsequently, however, technology
stocks corrected sharply over concerns about rising interest rates and extremely
high valuations. Other sectors of the large-cap stock market also declined,
erasing the gains achieved earlier in the year.
Also, primarily because of the precipitous drop in technology stock prices,
value-oriented stocks generally outperformed growth stocks during the reporting
period, a reversal of the trend established over the past several years. In
addition, small-capitalization stocks generally outperformed large-cap stocks,
particularly in the value-oriented segment of the market. In our view, these
short-term swings in investor sentiment highlight once again the importance of
broad diversification and a long-term perspective for most investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Disciplined
Stock Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Bert J. Mullins, Portfolio Manager
How did Dreyfus Variable Investment Fund, Disciplined Stock Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio produced a total
return of 0.31% .(1) For the same period, the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index"), the portfolio's benchmark, produced a total
return of -0.43%.(2)
We attribute the portfolio' s performance to uncertainties regarding the
sustainability of economic growth in the United States in the face of rising
interest rates. These uncertainties caused sharp swings in investor sentiment,
driving stock prices to sharp highs and lows at various times during the first
six months of 2000. Prices for the types of large, high quality companies in
which the portfolio invests ended the period relatively unchanged. However,
individual stock selections and weightings enabled us to produce higher returns
than the S&P 500 Index.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, Disciplined Stock Portfolio invests in a
diversified group of large companies that meet strict standards for value and
growth. We identify potential investments through a quantitative analytical
process that sifts through a universe of approximately 2,000 stocks in search of
those that are not only undervalued according to our criteria, but that we
believe also exhibit good earnings potential. A team of experienced analysts
then examines the fundamentals of what it believes are the best candidates.
In addition to identifying attractive investment opportunities, our approach is
designed to manage the risks associated with market timing and sector and
industry exposure. Market timing refers to the practice of attempting to benefit
from gains and declines in the overall market by adjusting the percentage of a
portfolio' s assets invested in the market at any one time. We do not believe
that the advantages of
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
attempting to time the market or rotate in and out of various industry sectors
outweigh the risks of such moves. Instead, we seek to manage these risks
typically by being close to fully invested and remaining industry- and
sector-neutral in relation to the S& P 500 Index. The result is a broadly
diversified portfolio of carefully selected stocks.
What other factors influenced the portfolio's performance?
During the first few months of the period, the portfolio was affected by the
market's narrow emphasis on growth-oriented technology stocks, many of which had
little or no earnings. Because our portfolio management approach emphasizes
diversification and value, as well as growth investing, portfolio returns
suffered in this environment. Later in the period, however, investors generally
displayed renewed interest in company fundamentals and market strength broadened
to include a wider range of stocks, creating a more positive environment for the
portfolio.
The portfolio was also affected by the market's high level of volatility,
because the quantitative model that helps us choose the portfolio's securities
uses data from one month to identify stocks that appear likely to outperform
during the next. Sudden swings in stock prices undermine the model' s
effectiveness. When market volatility subsided somewhat in May and June 2000,
our quantitative investment model demonstrated better performance. For example,
even though the portfolio' s sector-neutral strategy guided us to hold
approximately the same percentage of technology stocks as the S&P 500 Index, we
succeeded in identifying several of the sector's strongest performers, such as
Corning, Micron Technology, PMC-Sierra and Applied Materials. We scored similar
success in the pharmaceutical sector, holding a significant position in
Warner-Lambert, which accepted an acquisition offer from Pfizer at a substantial
premium during the period.
What is the portfolio's current strategy?
We continue to adhere to our highly disciplined investment process, which seeks
to identify stocks that we believe have favorable value and growth
characteristics. We also continue to follow our strategy of investing the
portfolio's assets among industry groups typically in proportions that match the
composition of the S&P 500 Index.
As of the end of the reporting period, the portfolio held positions in 145
stocks across 11 economic sectors. Our 10 largest holdings accounted for only
28% of the portfolio, illustrating our diversified investment approach in which
performance is not overly dependent on any one stock, but rather is determined
by a large number of securities.
July 17, 2000
(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 INC. -- REFLECTS REINVESTMENT OF 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
<TABLE>
June 30, 2000 (Unaudited)
COMMON STOCKS--99.9% Shares Value ($)
---------------------------------------------------------------------------------------------
<S> <C> <C>
ALCOHOL & TOBACCO--.7%
Anheuser-Busch Cos. 20,000 1,493,750
CONSUMER CYCLICAL--8.1%
Best Buy 17,600 (a) 1,113,200
Costco Wholesale 27,500 (a) 907,500
Danaher 8,300 410,331
Ford Motor 45,900 1,973,700
Home Depot 37,700 1,882,644
Johnson Controls 6,900 354,056
Limited 48,300 1,044,487
Lowe's Cos. 25,400 1,042,987
RadioShack 25,300 1,198,588
Safeway 22,900 (a) 1,033,363
TJX Cos. 38,800 727,500
Target 21,500 1,247,000
US Airways Group 15,850 (a) 618,150
Visteon 5,944 72,075
Wal-Mart Stores 83,900 4,834,737
18,460,318
CONSUMER STAPLES--4.7%
Avon Products 19,800 881,100
Coca-Cola 24,550 1,410,091
General Mills 28,200 1,078,650
Heinz (H.J.) 19,627 858,681
Keebler Foods 9,000 334,125
Nabisco Holdings, Cl. A 10,313 541,433
PepsiCo 46,900 2,084,119
Procter & Gamble 31,750 1,817,687
Quaker Oats 13,800 1,036,725
Ralston-Purina Group 29,500 588,156
10,630,767
ELECTRONIC EQUIPMENT--6.7%
Corning 10,200 2,752,725
Harris 17,100 560,025
Lucent Technologies 17,800 1,054,650
Motorola 48,746 1,416,681
Nokia, ADS 26,000 1,298,375
Nortel Networks 69,400 4,736,550
COMMON STOCKS (CONTINUED) Shares Value ($)
-------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT (CONTINUED)
QUALCOMM 11,200 (a) 672,000
SCI Systems 17,960 (a) 703,807
Sanmina 8,200 (a) 701,100
Solectron 18,900 (a) 791,437
Tellabs 9,500 (a) 650,156
15,337,506
ENERGY--5.9%
BP Amoco, ADS 18,776 1,062,017
Baker Hughes 20,500 656,000
Coastal 12,400 754,850
Enron 23,200 1,496,400
Exxon Mobil 53,100 4,168,350
Kerr-McGee 15,770 929,444
Noble Drilling 16,000 (a) 659,000
Royal Dutch Petroleum (New York Shares) 40,000 2,462,500
Tosco 21,600 611,550
USX-Marathon Group 29,700 744,356
13,544,467
HEALTH CARE--11.4%
American Home Products 40,500 2,379,375
Amgen 31,800 (a) 2,233,950
Bausch & Lomb 10,500 812,437
Cardinal Health 11,100 821,400
Elan, ADS 20,200 (a) 978,438
Genentech 7,300 1,255,600
MedImmune 11,300 (a) 836,200
Medtronic 33,700 1,678,681
Merck & Co. 43,300 3,317,862
Pfizer 145,063 6,963,000
Pharmacia 32,500 1,679,844
Schering-Plough 40,400 2,040,200
UnitedHealth Group 12,200 1,046,150
26,043,137
INTEREST SENSITIVE--16.8%
ACE 21,300 596,400
Allstate 27,700 616,325
Ambac Financial Group 9,250 507,016
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
----------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
American General 17,900 1,091,900
Bank of America 50,200 2,158,600
CIGNA 8,850 827,475
Chase Manhattan 63,150 2,908,847
Citigroup 43,400 2,614,850
Fannie Mae 24,100 1,257,719
FleetBoston Financial 73,600 2,502,400
General Electric 187,750 9,950,750
Hartford Financial Services Group 38,000 2,125,625
Lehman Brothers Holdings 15,700 1,484,631
MBNA 59,450 1,612,581
Merrill Lynch 19,300 2,219,500
Morgan Stanley Dean Witter & Co. 12,300 1,023,975
PNC Financial Services Group 15,400 721,875
Providian Financial 11,200 1,008,000
SouthTrust 27,400 619,925
SunTrust Banks 10,800 493,425
Wells Fargo 52,800 2,046,000
38,387,819
INTERNET RELATED--1.1%
America Online 28,400 (a) 1,498,100
Yahoo! 8,800 (a) 1,090,100
2,588,200
PRODUCER GOODS--5.8%
Alcoa 28,800 835,200
Boeing 25,600 1,070,400
Burlington Northern Santa Fe 19,100 438,106
Canadian National Railway 12,500 364,844
International Paper 19,600 584,325
Martin Marietta Materials 8,000 323,500
Minnesota Mining & Manufacturing 17,300 1,427,250
PPG Industries 18,200 806,487
Southdown 13,400 773,850
Temple-Inland 8,400 352,800
Tyco International 75,100 3,557,862
Union Carbide 25,800 1,277,100
COMMON STOCKS (CONTINUED) Shares Value ($)
---------------------------------------------------------------------------------------------
PRODUCER GOODS (CONTINUED)
United Technologies 22,100 1,301,138
13,112,862
SERVICES--6.8%
AMFM 5,800 (a) 400,200
AT&T--Liberty Media, Cl. A 38,400 (a) 931,200
Automatic Data Processing 20,800 1,114,100
Clear Channel Communications 12,900 (a) 967,500
Disney (Walt) 38,400 1,490,400
Fox Entertainment Group, Cl. A 23,900 (a) 725,963
Hispanic Broadcasting 13,300 (a) 440,563
Infinity Broadcasting, Cl. A 22,700 (a) 827,131
Omnicom Group 13,000 1,157,813
Seagram 10,600 614,800
Time Warner 35,300 2,682,800
Viacom, Cl. B 32,900 (a) 2,243,369
Vodafone AirTouch, ADR 34,500 1,429,594
VoiceStream Wireless 4,000 (a) 465,188
15,490,621
TECHNOLOGY--24.5%
Altera 10,800 (a) 1,100,925
Amdocs 5,900 (a) 452,825
Analog Devices 16,800 (a) 1,276,800
Applied Materials 14,900 (a) 1,350,313
Cisco Systems 137,500 (a) 8,739,844
Citrix Systems 8,100 (a) 153,394
Computer Associates International 16,600 849,713
Dell Computer 57,400 (a) 2,830,537
EMC 45,100 (a) 3,469,881
Gateway 12,500 (a) 709,375
Intel 66,600 8,903,587
International Business Machines 28,500 3,122,531
Linear Technology 15,800 1,010,213
Maxim Integrated Products 13,100 (a) 889,981
Micron Technology 14,500 (a) 1,276,906
Microsoft 80,200 (a) 6,416,000
Network Appliance 12,000 (a) 966,000
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
----------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Oracle 65,500 (a) 5,506,094
Schlumberger 18,900 1,410,413
Siebel Systems 6,300 (a) 1,030,444
Sun Microsystems 39,100 (a) 3,555,656
Symantec 13,800 (a) 744,338
55,765,770
UTILITIES--7.4%
AT&T 81,065 2,563,681
Bell Atlantic 30,584 1,554,050
Calpine 11,200 (a) 736,400
Florida Progress 14,200 665,625
GPU 18,800 508,775
GTE 23,300 1,450,425
PECO Energy 15,100 608,719
Public Service Enterprise Group 14,700 508,987
Qwest Communications International 7,122 (a) 353,874
SBC Communications 57,426 2,483,675
Sprint (FON Group) 45,200 2,305,200
U S WEST 19,000 1,629,250
WorldCom 30,575 (a) 1,402,628
16,771,289
TOTAL COMMON STOCKS
(cost $173,437,681) 227,626,506
Principal
SHORT-TERM INVESTMENTS--1.3% Amount ($) Value ($)
---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Greenwich Capital Markets,Tri-Party
Repurchase Agreement, 6.58%, dated
6/30/2000, due 7/3/2000, in the amount
of $2,926,604 (fully collateralized by
$3,040,000 Federal Home Loan Bank
Bonds, 4.82%, 10/22/2001, value $2,985,993)
(cost $2,925,000) 2,925,000 2,925,000
--------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $176,362,681) 101.2% 230,551,506
LIABILITIES, LESS CASH AND RECEIVABLES (1.2%) (2,683,469)
NET ASSETS 100.0% 227,868,037
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 176,362,681 230,551,506
Cash 46,387
Receivable for investment securities sold 1,396,643
Dividends and interest receivable 389,278
Receivable for shares of Beneficial Interest subscribed 4,143
Prepaid expenses 2,157
232,390,114
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 149,033
Payable for investment securities purchased 3,983,603
Payable for shares of Beneficial Interest redeemed 372,241
Interest payable--Note 2 249
Accrued expenses 16,951
4,522,077
--------------------------------------------------------------------------------
NET ASSETS ($) 227,868,037
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 169,725,022
Accumulated undistributed investment income--net 492,708
Accumulated net realized gain (loss) on investments 3,461,482
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 54,188,825
--------------------------------------------------------------------------------
NET ASSETS ($) 227,868,037
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial
Interest authorized) 8,439,464
NET ASSET VALUE, offering and redemption price per share ($) 27.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $8,058 foreign taxes withheld at source) 1,317,510
Interest 46,756
TOTAL INCOME 1,364,266
EXPENSES:
Investment advisory fee--Note 3(a) 808,505
Prospectus and shareholders' reports 15,749
Professional fees 15,313
Custodian fees--Note 3(a) 10,714
Trustees' fees and expenses--Note 3(b) 8,319
Registration fees 3,357
Shareholder servicing costs--Note 3(a) 1,057
Loan commitment fees--Note 2 754
Interest expense--Note 2 249
Miscellaneous 988
TOTAL EXPENSES 865,005
INVESTMENT INCOME--NET 499,261
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 3,973,857
Net unrealized appreciation (depreciation) on investments (3,590,898)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 382,959
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 882,220
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 499,261 799,261
Net realized gain (loss) on investments 3,973,857 1,387,387
Net unrealized appreciation (depreciation)
on investments (3,590,898) 29,155,029
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 882,220 31,341,677
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (24,595) (781,219)
Net realized gain on investments -- (1,294,140)
TOTAL DIVIDENDS (24,595) (2,075,359)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 25,728,567 53,205,080
Dividends reinvested 24,595 2,075,359
Cost of shares redeemed (13,038,542) (11,147,782)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 12,714,620 44,132,657
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,572,245 73,398,975
-------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 214,295,792 140,896,817
END OF PERIOD 227,868,037 214,295,792
Undistributed investment income--net 492,708 18,042
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 972,202 2,194,684
Shares issued for dividends reinvested 890 77,381
Shares redeemed (493,612) (452,513)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 479,480 1,819,552
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
--------------------------------------------
(Unaudited) 1999 1998 1997 1996(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 26.92 22.95 18.30 14.79 12.50
Investment Operations:
Investment income--net .06(b .11(b) .08 .08 .07
Net realized and unrealized
gain (loss) on investments .02 4.12 4.80 4.53 2.29
Total from Investment Operations .08 4.23 4.88 4.61 2.36
Distributions:
Dividends from investment income--net (.00)(c) (.10) (.09) (.08) (.07)
Dividends from net realized gain
on investments -- (.16) (.14) (1.02) --
Total Distributions -- (.26) (.23) (1.10) (.07)
Net asset value, end of period 27.00 26.92 22.95 18.30 14.79
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) .31(d) 18.45 26.72 31.51 18.86(d,e)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .40(d) .81 .88 1.02 .80(d)
Ratio of net investment income
to average net assets .23(d) .45 .53 .68 .72(d)
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation -- -- -- -- .16(d)
Portfolio Turnover Rate 29.05(d) 48.95 56.28 79.74 30.62(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 227,868 214,296 140,897 53,317 17,722
A FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
B BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
C AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
D NOT ANNUALIZED.
E 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 Disciplined 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 Standard & Poor' s 500 Composite Stock Price Index. The
Dreyfus Corporation (" Dreyfus") serves as the portfolio's investment adviser.
Dreyfus is a direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a
wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22,
2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of Dreyfus,
became the distributor of the portfolio's shares, which are sold to the public
without a sales charge. Prior to March 22, 2000, Premier Mutual Fund Services,
Inc. was the distributor.
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 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. 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.
(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.
The portfolio may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the portfolio's investment adviser, 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 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 the right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(C) 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 real
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
ized capital gain can be offset by capital loss carryovers, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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 outstanding during the period ended June
30, 2000 was approximately $7,100, with a related weighted average annualized
interest rate of 7.01%.
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. During the
period ended June 30, 2000, the portfolio was charged $59 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, 2000, the
portfolio was charged $10,714 pursuant to the custody agreement.
(B) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$78,201,447 and $62,767,594, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$54,188,825, consisting of $64,713,662 gross unrealized appreciation and
$10,524,837 gross unrealized depreciation.
At June 30, 2000, 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,
Disciplined 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 150SA006
Dreyfus Variable
Investment Fund,
Growth and Income
Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
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
---------------------------------------------------------------------------
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,
2000 through June 30, 2000. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with the portfolio's manager, Douglas D. Ramos, CFA.
While stock prices were little changed on average over the past six months, the
period was marked by high levels of volatility and dramatic shifts in investor
sentiment. Between January and mid-March, large-cap stocks generally continued
to advance, led by fast-growing technology stocks that, many investors believed,
would benefit most from the "new economy." Subsequently, however, technology
stocks corrected sharply over concerns about rising interest rates and extremely
high valuations. Other sectors of the large-cap stock market also declined,
erasing the gains achieved earlier in the year.
Also, primarily because of the precipitous drop in technology stock prices,
value-oriented stocks generally outperformed growth stocks during the reporting
period, a reversal of the trend established over the past several years. In
addition, small-cap stocks generally outperformed large-cap stocks, particularly
in the value-oriented segment of the market. In our view, these short-term
swings in investor sentiment highlight once again the importance of broad
diversification and a long-term perspective for most investors.
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 17, 2000
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, 2000, Dreyfus Variable Investment Fund,
Growth and Income Portfolio produced a total return of -0.89%.(1) This compares
with a total return of -0.43% for the portfolio's benchmark, the Standard &
Poor' s 500 Composite Stock Price Index (" S& P 500 Index"), for the same
period.(2)
We attribute the portfolio' s performance to uncertainties regarding the
sustainability of economic growth in the United States in the face of rising
interest rates. These uncertainties created volatile market conditions. Rapid
swings in investor sentiment drove stock prices to sharp highs and lows at
various times during the first six months of 2000, but left them relatively
unchanged for the period as a whole. In addition, individual stock selections
and the percentage of our holdings allocated to various industrial sectors
affected our returns relative to the S&P 500 Index.
What is the portfolio's investment approach?
The portfolio focuses primarily on low- and moderately priced stocks, with
market capitalizations of $1 billion or more at the time of purchase, that we
believe have above-average growth potential and are attractively valued relative
to the S& P 500 Index. We generally look to avoid the risks associated with
market timing by remaining close to fully invested.
We typically measure a stock' s relative value by looking at its price in
relation to what we believe are 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
containing stocks from a number of different market sectors and industries.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
During the first few months of the period, the portfolio was affected by the
market' s narrow emphasis on growth-oriented technology companies, many of which
had little or no earnings. Because we emphasize a value-tilted investment
approach in managing the portfolio, our results suffered in this environment. In
mid-March, investors began focusing on company fundamentals in response to
rising interest rates and growing concerns about prospects for rising inflation
and slowing U.S. economic growth. These conditions created a more positive
environment for the portfolio through early May. However, late May and June saw
a repeat of the market's emphasis on growth-oriented technology stocks, which
hurt our performance.
Overall, technology emerged as one of the strongest sectors of the equities
market. Although we allocated a smaller percentage of the portfolio's assets to
technology than did the S& P 500 Index, our technology holdings generally
outperformed the Index' s mix of technology stocks. We particularly benefited
from investments in communications equipment companies, such as Nortel Networks,
and semiconductor makers, such as Intel. The utilities sector also helped power
the portfolio's returns, with strong performance generated by companies such as
Coastal and Enron that benefited from rising gas and oil prices. Health care
stocks made a positive contribution to the portfolio as well, but our failure to
hold some of the sector's best performers caused our returns to fall short of
those of the S&P 500 Index in this sector.
On the negative side, the portfolio' s returns were hurt most by the weak
performance of consumer cyclicals, communications services and basic materials,
all of which were undermined by rising interest rates. Among consumer cyclicals,
many retailers suffered from slowing sales. In addition, communications services
companies were hurt by concerns regarding declining revenue growth in
long-distance telecommunications markets. And basic materials companies, such as
chemical manufacturers, fell in response to rising prices for raw materials and
the prospect of slowing industrial demand.
What is the portfolio's current strategy?
As of the end of the period, we have trimmed our technology holdings because we
believe the prices of many technology stocks have risen too high too quickly.
Instead, we have allocated more of our assets to the financial services, energy
and utilities sectors. In the case of financial services, we have found what, in
our opinion, are several attractively priced, quality investments that we
believe may benefit from a more benign interest-rate environment. In the energy
and utilities sectors, we have focused on companies that appear well positioned
to take advantage of rising commodities prices.
We continue to adhere to our disciplined investment approach in seeking
attractively priced securities that we believe can offer above-average growth
potential.
July 17, 2000
(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 INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN 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
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--93.4% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL SERVICES-1.3%
McGraw-Hill Cos. 78,900 4,260,600
Valassis Communications 40,500 (a) 1,544,063
5,804,663
CONSUMER DURABLES-.5%
Ford Motor 31,000 1,333,010
Leggett & Platt 63,900 1,054,350
2,387,360
CONSUMER NON-DURABLES-4.7%
Anheuser-Busch Cos. 29,000 2,165,938
Coca-Cola 44,000 2,527,250
Estee Lauder, Cl. A 26,900 1,329,869
Intimate Brands 84,000 1,659,000
Kimberly-Clark 51,000 2,926,125
Nabisco Group Holdings 42,100 1,091,969
PepsiCo 116,000 5,154,750
Philip Morris Cos. 85,000 2,257,812
Procter & Gamble 46,000 2,633,500
21,746,213
CONSUMER SERVICES-6.3%
AMFM 32,000 (a) 2,208,000
Adelphia Communications, Cl. A 45,100 (a) 2,114,063
Cendant 478,600 (a) 6,700,400
Clear Channel Communications 17,000 (a) 1,275,000
Disney (Walt) 47,000 1,824,187
Gannett 33,000 1,973,812
Infinity Broadcasting, Cl. A 40,500 (a) 1,475,719
Time Warner 57,800 4,392,800
USA Networks 85,000 (a) 1,838,125
Viacom, Cl. B 78,120 (a) 5,326,808
29,128,914
ELECTRONIC TECHNOLOGY-17.6%
American Tower, Cl. A 76,200 3,176,588
Apple Computer 32,400 (a) 1,696,950
Applied Materials 61,000 (a) 5,528,125
Cabletron Systems 107,300 (a) 2,709,325
Compaq Computer 147,000 3,757,688
Ericsson (LM) Telephone, Cl. B, ADR 51,000 1,020,000
General Dynamics 30,000 1,567,500
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY (CONTINUED)
Hewlett-Packard 27,600 3,446,550
Intel 131,900 17,633,381
International Business Machines 70,000 7,669,375
LSI Logic 79,000 (a) 4,275,875
Lexmark International Group, Cl. A 25,300 (a) 1,701,425
Lucent Technologies 60,000 3,555,000
Motorola 60,000 1,743,750
National Semiconductor 88,800 (a) 5,039,400
Nortel Networks 84,000 5,733,000
Sun Microsystems 23,000 (a) 2,091,562
Teradyne 61,000 (a) 4,483,500
Texas Instruments 30,000 2,060,625
United Technologies 37,200 2,190,150
81,079,769
ENERGY MINERALS-5.9%
Anadarko Petroleum 48,000 2,367,000
Burlington Resources 53,000 2,027,250
Conoco, Cl. A 93,000 2,046,000
Exxon Mobil 111,223 8,731,005
Royal Dutch Petroleum, ADR 139,000 8,557,188
Texaco 46,200 2,460,150
USX-Marathon Group 38,000 952,375
27,140,968
FINANCE-15.4%
American Express 53,700 2,799,113
American General 33,100 2,019,100
American International Group 60,620 7,122,850
Associates First Capital, Cl. A 101,000 2,253,562
Bank of America 115,000 4,945,000
Bank of New York 97,000 4,510,500
Chase Manhattan 91,500 4,214,719
Citigroup 185,100 11,152,275
Federal Home Loan Mortgage 123,600 5,005,800
Federal National Mortgage Association 103,400 5,396,187
Fleet Boston Financial 105,588 3,589,992
Hartford Financial Services Group 28,000 1,566,250
Household International 24,700 1,026,594
John Hancock Financial Services 103,700 (a) 2,456,394
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Morgan (J.P.) 18,000 1,982,250
Morgan Stanley, Dean Witter 78,200 6,510,150
Wells Fargo 116,000 4,495,000
71,045,736
HEALTH SERVICES-3.0%
HCA-Healthcare 306,100 9,297,787
Wellpoint Health Networks 64,100 (a) 4,643,244
13,941,031
HEALTH TECHNOLOGY-9.4%
ALZA 23,000 (a) 1,359,875
American Home Products 87,000 5,111,250
Baxter International 26,000 1,828,125
Bristol-Myers Squibb 57,000 3,320,250
Guidant 32,000 (a) 1,584,000
Johnson & Johnson 30,000 3,056,250
Lilly (Eli) 30,900 3,086,137
Merck & Co. 120,000 9,195,000
Pfizer 150,500 7,224,000
Pharmacia 45,304 2,341,651
Schering-Plough 107,000 5,403,500
43,510,038
INDUSTRIAL SERVICES-1.5%
Schlumberger 93,000 6,940,125
NON-ENERGY MINERALS-.2%
Alcoa 36,000 1,044,000
PROCESS INDUSTRIES-1.2%
Dow Chemical 102,000 3,079,125
International Paper 56,000 1,669,500
PPG Industries 21,200 939,425
5,688,050
PRODUCER MANUFACTURING-7.0%
Emerson Electric 25,000 1,509,375
General Electric 367,000 19,451,000
Honeywell International 92,875 3,128,727
Ingersoll-Rand 21,900 881,475
Masco 103,300 1,865,856
Tyco International 115,400 5,467,075
32,303,508
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
RETAIL TRADE-2.7%
Federated Department Stores 15,400 (a) 519,750
Gap 63,000 1,968,750
Lowes 54,200 2,225,588
May Department Stores 51,900 1,245,600
TJX Cos. 144,800 2,715,000
Target 62,000 3,596,000
12,270,688
TECHNOLOGY SERVICES-6.6%
BMC Software 35,300 (a) 1,287,898
Charter Communications, Cl. A 223,100 (a) 3,667,206
Computer Associates International 99,900 5,113,631
Computer Sciences 73,200 (a) 5,467,125
Electronic Data Systems 101,500 4,186,875
First Data 50,000 2,481,250
Network Associates 107,000 (a) 2,180,125
Oracle 71,800 (a) 6,035,688
30,419,798
UTILITIES-10.1%
ALLTEL 41,600 2,576,600
AT&T 109,500 3,462,937
Bell Atlantic 33,000 1,676,812
Coastal 119,800 7,292,825
Duke Energy 69,000 3,889,875
Dynegy, Cl. A 63,200 4,317,350
El Paso Energy 17,700 901,594
Enron 21,000 1,354,500
GTE 76,000 4,731,000
Niagara Mohawk Holdings 66,000 (a) 919,875
SBC Communications 141,000 6,098,250
Sprint (FON Group) 74,600 3,804,600
TXU 14,400 424,800
WorldCom 113,700 (a) 5,215,988
46,667,006
TOTAL COMMON STOCKS
(cost $350,690,948) 431,117,867
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--5.4% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
5.60%, 7/13/2000 1,403,000 (b) 1,401,036
5.81%, 8/3/2000 2,883,000 2,869,306
5.96%, 8/17/2000 1,138,000 1,130,045
5.55%, 8/31/2000 2,656,000 2,631,698
5.72%, 9/7/2000 3,415,000 3,379,620
5.78%, 9/14/2000 7,229,000 7,146,300
5.65%, 10/5/2000 6,542,000 6,444,459
TOTAL SHORT-TERM INVESTMENTS
(cost $24,991,535) 25,002,464
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $375,682,483) 98.8% 456,120,331
CASH AND RECEIVABLES (NET) 1.2% 5,480,911
NET ASSETS 100.0% 461,601,242
(A) NON-INCOME PRODUCING.
(B) PARTIALLY HELD BY CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERIAL FOR OPEN
FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF FINANCIAL FUTURES
<TABLE>
June 30, 2000 (Unaudited)
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts ($) Expiration at 6/30/2000 ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG
Standard & Poor's 500 39 14,313,975 September 2000 (261,996)
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS:
Investments in securities--See Statement of
Investments 375,682,483 456,120,331
Cash 3,546,001
Receivable for investment securities sold 2,335,222
Dividends receivable 377,004
Receivable for futures variation margin--Note 4(a) 98,475
Receivable for shares of Beneficial Interest subscribed 21,316
Prepaid expenses 1,314
462,499,663
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 318,461
Payable for investment securities purchased 505,906
Payable for shares of Beneficial Interest redeemed 38,294
Accrued expenses 35,760
898,421
--------------------------------------------------------------------------------
NET ASSETS ($) 461,601,242
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 363,999,219
Accumulated undistributed investment income--net 503,396
Accumulated net realized gain (loss) on investments 16,922,775
Accumulated net unrealized appreciation (depreciation)
on investments [including ($261,996) net unrealized
(depreciation) on financial futures]--Note 4(b) 80,175,852
--------------------------------------------------------------------------------
NET ASSETS ($) 461,601,242
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
18,335,259
NET ASSET VALUE, offering and redemption price per share ($) 25.18
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $18,739 foreign taxes withheld at source) 2,358,845
Interest 685,991
TOTAL INCOME 3,044,836
EXPENSES:
Investment advisory fee--Note 3(a) 1,715,001
Custodian fees--Note 3(a) 20,862
Prospectus and shareholders' reports 19,918
Trustees' fees and expenses--Note 3(b) 18,862
Professional fees 18,087
Shareholder servicing costs 2,172
Registration fees 1,715
Loan commitment fees--Note 2 1,661
Miscellaneous 2,753
TOTAL EXPENSES 1,801,031
INVESTMENT INCOME--NET 1,243,805
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments:
Long transactions 17,882,787
Short sale transactions 651
Net realized gain (loss) on financial futures 960,795
NET REALIZED GAIN (LOSS) 18,844,233
Net unrealized appreciation (depreciation) on investments
[including ($746,646) net unrealized (depreciation) on financial
futures] (24,681,176)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (5,836,943)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,593,138)
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 1,243,805 2,897,817
Net realized gain (loss) on investments 18,844,233 25,859,263
Net unrealized appreciation (depreciation)
on investments (24,681,176) 39,651,160
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (4,593,138) 68,408,240
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS ($):
From investment income--net (1,257,345) (2,714,649)
From net realized gain on investments (108,788) (12,151,955)
In excess of net realized gain on investments -- (1,809,052)
TOTAL DIVIDENDS (1,366,133) (16,675,656)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 43,043,241 43,105,900
Dividends reinvested 1,366,133 16,675,656
Cost of shares redeemed (38,241,210) (80,823,642)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 6,168,164 (21,042,086)
TOTAL INCREASE (DECREASE) IN NET ASSETS 208,893 30,690,498
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 461,392,349 430,701,851
END OF PERIOD 461,601,242 461,392,349
Undistributed investment income--net 503,396 516,936
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,689,724 1,803,945
Shares issued for dividends reinvested 53,089 668,393
Shares redeemed (1,512,628) (3,401,483)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 230,185 (929,145)
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 25.48 22.63 20.78 19.55 18.33 11.98
Investment Operations:
Investment income--net .07(a) .16(a) .21 .28 .36 .28
Net realized and unrealized gain
(loss) on investments (.29) 3.64 2.23 2.79 3.43 7.07
Total from Investment Operations (.22) 3.80 2.44 3.07 3.79 7.35
Distributions:
Dividends from investment
income--net (.07) (.15) (.20) (.28) (.35) (.27)
Dividends from net realized gain
on investments (.01) (.70) (.39) (1.56) (2.22) (.73)
Dividends in excess of net realized
gain on investments -- (.10) -- -- -- --
Total Distributions (.08) (.95) (.59) (1.84) (2.57) (1.00)
Net asset value, end of period 25.18 25.48 22.63 20.78 19.55 18.33
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (.89)(b) 16.88 11.81 16.21 20.75 61.89
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net
assets .39(b) .79 .78 .80 .83 .92
Ratio of net investment income
to average net assets .27(b) .67 1.00 1.37 1.96 2.21
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- -- .03
Portfolio Turnover Rate 29.78(b) 96.26 126.18 180.73 237.44 255.42
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 461,601 461,392 430,702 369,832 225,935 71,161
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) 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 portfolios' investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service
Corporation (" DSC" ), a wholly-owned subsidiary of Dreyfus, became the
distributor of the portfolio's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc was the
distributor.
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 portfolios' 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 portfolios'
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 receives
net earnings credits based on available cash balances left on deposit.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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 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, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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, 2000, 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
portfolios' 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, 2000, the portfolio was charged $150 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended June 30, 2000, the portfolio
was charged $20,862 pursuant to the custody agreement.
(b) Each board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the Fund Group"). Each board member who is not an
" affiliated person" as defined in the Act receives an annual fee of $40,000 and
an attendance fee of $6,000 for each in person meeting and $500 for telephone
meetings. These fees are allocated among the funds in the Fund Group. The
Chairman of the Board receives an additional 25% of such compensation. Subject
to the fund' s guidelines, Emeritus Board members, if any, receives 50% of the
fund's annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(c) During the period ended June 30, 2000, the portfolio incurred total
brokerage commissions of $247,939, of which $15,026 was paid to Dreyfus
Brokerage Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
(a) The following summarizes the aggregate amount of purchases and sales of
investment securities and securities sold short, excluding short-term securities
and financial futures during the period ended June 30, 2000:
Purchases Sales
--------------------------------------------------------------------------------
Long transactions 129,749,383 135,237,478
Short sale transactions 1,986 2,637
TOTAL 129,751,369 135,240,115
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, 2000 are set forth in the Statement of Financial Futures.
(b) At June 30, 2000, accumulated net unrealized appreciation on investments and
financial futures was $80,175,852, consisting of $99,138,891 gross unrealized
appreciation and $18,963,039 gross unrealized depreciation.
At June 30, 2000, 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, 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 108SA006
Dreyfus Variable
Investment Fund,
International
Value Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund, International Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, International Value Portfolio, covering the six-month period from January
1, 2000 through June 30, 2000. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Sandor Cseh.
When the reporting period began, it had become apparent that global economic
growth was substantially stronger than many analysts had expected. In fact, most
global markets had already rebounded sharply from 1998's currency and credit
crises in emerging market countries. The rally continued into the first quarter
of 2000, before peaking in early March.
In April, many developed and emerging market countries around the world
experienced heightened levels of volatility when expensively priced technology
stocks began to decline sharply in the wake of evidence that inflationary
pressures were building. This correction, combined with a strong U.S. dollar
relative to many foreign currencies, erased much of the reporting period's early
gains.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, International
Value Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Sandor Cseh, Senior Portfolio Manager
How did Dreyfus Variable Investment Fund, International Value Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio achieved a total
return of -1.45% .(1) This compares with a -4.06% return for the portfolio's
benchmark, the Morgan Stanley Capital International Europe, Australasia, Far
East (MSCI EAFE) Index.(2)
We attribute this modest outperformance to a shift in investor preference. From
mid-March through the end of the reporting period, the value-investment style
outperformed the growth-investment style.
What is the portfolio's investment approach?
We invest in an internationally diversified selection of value stocks that we
define as selling at attractive prices relative to intrinsic worth based on
historical measures. These measures typically include price-to-earnings,
price-to-book value and price-to-cash flow ratios. Discrepancies from historical
norms are often the result of short-term factors that affect market perception.
Should a stock fall out of general market favor, creating what we perceive to be
a buying opportunity, we typically would look to purchase the security at the
depressed price, hoping to profit if and when perceptions change and the price
reverts to a historical norm.
When putting the value approach to work, we employ a two-step process. First, we
decide how much to invest in each of the countries represented in the MSCI EAFE
Index. We make a baseline determination by size of a country's gross domestic
product and the capitalization of its stock market compared to the world as a
whole. We can invest more or less than this neutral weighting, based on our
outlook for a country's economy and the specific number of value opportunities
that we see in a particular country's market.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
Second, we select individual securities using a process that blends quantitative
and qualitative analysis. Typically, after approximately 90% of purchase
candidates are eliminated, analysts perform extensive fundamental research and,
when they deem appropriate, conduct on-site visits to determine which securities
we will look to buy for the portfolio. Stocks in the portfolio typically are
sold when they reach a price at which we no longer consider them to hold
attractive value, or when our analysts determine that changes in market
sentiment that we had anticipated will probably not occur.
What other factors influenced the portfolio's performance?
Several factors, including financial information moving within the market more
freely and growth in the global perspective among investors, helped to create a
convergence of performance among world markets during the reporting period. At
certain times this convergence negatively impacted fund performance and at other
times it had a positive influence. At the beginning of the reporting period,
value stocks continued their slump in the U.S. markets and the international
value stocks that the fund invests also tended to perform poorly. When the
technology-rich NASDAQ stumbled in mid-March amid interest-rate concerns, both
U.S. and international value stock averages rebounded.
Local conditions within the overall market continued to influence their
respective national and regional markets. For example, Japan, which has long
been mired in recession and a stock market decline, in our opinion offered
exceptional value opportunities. While Japanese technology stocks performed well
at the beginning of the reporting period, they later became expensive by many
value measures. Instead, in our opinion new value opportunities arose in Japan's
chip manufacturing, cellular telephone and specialty chemical segments. While
Japan' s economic recovery remains fragile, steps towards fundamental change in
the nation' s corporate and financial sectors, and perhaps even political
restructuring, appear to be underway.
European stock markets advanced at the beginning of the period, and then
struggled. We continued to see market forces replacing government guidance in
shaping European economic life. This shift is prompting businesses to rethink
long-standing corporate values and place new emphasis on competitiveness,
creating significant value-oriented investment opportunities.
What is the portfolio's current strategy?
We recently made relatively small changes in country allocations. We have
modestly reduced our emphasis on Japan, continental Europe and the United
Kingdom. Our more positive outlook for the emerging markets led us to increase
exposure to Southeast Asia, Latin America and Eastern Europe. As a result, as of
the end of the reporting period, we are close to a neutral position relative to
our benchmark.
We made larger changes to our sector allocation strategy. Many of the
portfolio' s technology investments, particularly in Japan, reached prices at
which we no longer considered them value investments. We sold them, and instead
purchased financial services stocks that we believe have been depressed by
overblown concerns about higher interest rates. We also increased our
investments in pharmaceutical companies and other consumer non-durable
manufacturers, which we believe offer attractively priced value opportunities.
July 17, 2000
(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 INC. -- REFLECTS REINVESTMENT OF NET DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (MSCI EAFE) INDEX IS AN UNMANAGED INDEX COMPOSED
OF A SAMPLE OF COMPANIES REPRESENTATIVE OF THE MARKET STRUCTURE OF EUROPEAN AND
PACIFIC BASIN COUNTRIES.
The Portfolio
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--97.0% Shares Value ($)
--------------------------------------------------------------------------------
AUSTRALIA--1.3%
Australia & New Zealand Banking 39,605 303,136
Goodman Fielder 63,576 47,103
350,239
AUSTRIA--.9%
Bank Austria 5,000 243,314
BELGIUM--1.2%
Dexia 2,165 319,039
Dexia (Strips) 1,332 13
319,052
BRAZIL--.6%
Petroleo Brasileiro, ADR 3,000 91,125
Tele Norte Leste Participacoes, ADR 81 1,913
Telecomunicacoes Brasileiras, ADS 700 67,988
161,026
DENMARK--.5%
Jyske Bank 7,000 130,632
FINLAND--.4%
Kesko, Cl. B 11,500 116,817
FRANCE--9.6%
Air Liquide 2,425 316,016
Alstom 3,310 89,376
Assurances Generales de France 5,340 281,914
BNP Paribas 4,500 432,644
Bongrain 355 93,047
Compagnie de Saint--Gobain 1,100 148,564
Compagnie Generale des Etablissements Michelin, Cl. B 6,651 213,213
Societe Generale, Cl. A 2,432 146,137
Suez Lyonnaise des Eaux 700 122,516
Thompson CSF 2,424 95,393
Total Fina Elf, ADR 5,733 440,366
Usinor 12,100 147,494
2,526,680
GERMANY--8.3%
Bayer 9,000 350,235
Deutsche Bank 4,200 346,115
Deutsche Lufthansa 9,108 212,837
E.On 11,284 553,202
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
GERMANY (CONTINUED)
MG Technologies 10,080 138,926
Merck KGaA 10,900 330,606
Volkswagen 6,650 253,711
2,185,632
GREECE--1.3%
Hellenic Telecommunications Organization, ADR 27,100 330,281
HONG KONG--1.4%
Hongkong Electric 116,249 374,294
INDIA--.2%
Videsh Sanchar Nigam, ADR 4,000(b) 63,000
IRELAND--.8%
Bank of Ireland 31,550 198,610
ITALY--5.5%
Banca Popolare di Bergamo Credito Varesino 9,000 166,275
ENI 78,300 451,083
Finmeccanica 179,000(a) 245,169
San Paulo-IMI 11,436 202,555
Telecom Italia 59,230 391,670
1,456,752
JAPAN--25.3%
AIFUL 1,500 138,592
CANON 10,000 498,819
Credit Saison 18,400 427,624
Dai-Tokyo Fire & Marine Insurance 45,000 160,274
FUJI MACHINE MANUFACTURING 6,000 315,730
HONDA MOTOR 6,000 204,629
KATOKICHI 4,000 101,464
MABUCHI MOTOR 2,900 375,342
MINEBEA 29,000 364,384
Marubeni 102,000 351,724
Matsumotokiyoshi 4,400 462,239
Mitsubishi Heavy Industries 37,000 164,289
NAMCO 5,000 180,444
NIPPON TELEGRAPH AND TELEPHONE 8 106,566
Nichiei 5,050 83,014
Nippon Express 70,000 430,515
Nishimatsu Construction 29,000 114,521
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
JAPAN (CONTINUED)
RINNAI 10,000 223,429
ROHM 1,100 322,154
SANKYO COMPANY 8,000 181,011
SHOHKOH FUND & CO. 300 67,737
SONY 1,900 177,704
Sekisui Chemical 30,000 115,635
77 Bank 28,000 224,318
Shin-Etsu Chemical 4,000 203,307
TDK 2,000 287,955
Yamanouchi Pharmaceutical 7,000 382,900
6,666,320
MEXICO--.3%
Telefonos de Mexico, ADR 1,476 84,317
NETHERLANDS--7.5%
ABN AMRO 17,007 416,238
Akzo Nobel 5,000 212,221
Buhrmann 4,606 131,576
Fortis 12,200 354,793
Hunter Douglas 9,782 264,508
Stork 14,974 202,807
Vedior 13,168 162,647
Wolters Kluwer 9,003 239,579
1,984,369
NEW ZEALAND--.6%
Fletcher Challenge Paper 25,596 29,297
Telecom Corporation of New Zealand 38,449 134,372
163,669
NORWAY--1.4%
Norsk Hydro 4,200 176,023
Orkla 10,600 201,145
377,168
PHILIPPINES--.3%
Manila Electric, Cl. B 48,000 70,474
PORTUGAL--1.0%
Portugal Telecom 23,000 257,984
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
SINGAPORE--2.2%
NatSteel Electronics 34,000 104,258
Oversea-Chinese Banking 37,000 254,745
United Overseas Bank 31,960 208,949
567,952
SOUTH KOREA--1.0%
Korea Electric Power, ADR 8,500 156,719
Pohang Iron & Steel, ADR 4,000 96,000
252,719
SPAIN--3.9%
Banco Bilbao Vizcaya Argentaria 11,333 169,167
Banco Popular Espanol 6,600 203,961
Endesa 18,410 356,281
Repsol, ADR 14,600 289,263
1,018,672
SWEDEN--1.6%
Autoliv 10,500 258,026
Investor, Cl. B 12,200 167,251
425,277
SWITZERLAND--5.4%
Barry Callebaut 1,172 167,203
Forbo Holding 220 91,599
Novartis 273(a) 431,933
Sulzer 250(a) 166,085
Swisscom 500 172,973
UBS 2,700 395,114
1,424,907
UNITED KINGDOM--14.5%
BAE SYSTEMS 51,000 318,689
BOC 13,149 189,459
Barclays 8,744 217,895
Bunzl 62,116 333,508
Enterprise Oil 6,400 53,485
Laird 29,700 109,237
Morgan Crucible 65,890 217,859
PowerGen 26,296 225,340
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
--------------------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
Rexam 65,100 253,755
Rio Tinto 14,294 234,141
Royal & Sun Alliance Insurance 55,207 359,212
Royal Bank of Scotland 15,911 266,902
Safeway 50,233 195,804
Scottish & Southern Energy 18,400 169,118
Tomkins 39,893 129,936
Unilever 59,000 357,941
Wolseley 34,900 187,912
3,820,193
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $24,725,454) 97.0% 25,570,350
CASH AND RECEIVABLES (NET) 3.0% 803,621
NET ASSETS 100.0% 26,373,971
(A) NON-INCOME PRODUCING.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 2000, THIS SECURITY
AMOUNTED TO $63,000 OR APPROXIMATELY .2% OF NET ASSETS.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 24,725,454 25,570,350
Cash 128,712
Cash denominated in foreign currencies 635,486 646,208
Dividends receivable 147,153
Receivable for investment securities sold 67,223
Prepaid expenses 167
26,559,813
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 21,159
Payable for investment securities purchased 132,273
Payable for shares of Beneficial Interest redeemed 9,105
Accrued expenses 23,305
185,842
--------------------------------------------------------------------------------
NET ASSETS ($) 26,373,971
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 23,525,914
Accumulated undistributed investment income--net 222,311
Accumulated net realized gain (loss) on investments
and foreign currency transactions 1,774,481
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 851,265
--------------------------------------------------------------------------------
NET ASSETS ($) 26,373,971
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
1,747,111
NET ASSET VALUE, offering and redemption price per share ($) 15.10
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
CASH DIVIDENDS (net of $55,972 foreign taxes withheld at source) 368,298
EXPENSES:
Investment advisory fees--Note 3(a) 125,663
Custodian fees 19,160
Auditing fees 11,128
Prospectus and shareholders' reports 7,674
Shareholder servicing costs 848
Trustees' fees and expenses--Note 3(b) 791
Legal fees 102
Loan commitment fees--Note 2 93
Miscellaneous 9,773
TOTAL EXPENSES 175,232
INVESTMENT INCOME--NET 193,066
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 1,864,366
Net realized gain (loss) on forward currency exchange contracts (3,660)
NET REALIZED GAIN (LOSS) 1,860,706
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions (2,460,669)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (599,963)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (406,897)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 193,066 197,078
Net realized gain (loss) on investments 1,860,706 2,469,452
Net unrealized appreciation (depreciation)
on investments (2,460,669) 2,918,399
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (406,897) 5,584,929
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (8,500) (196,556)
Net realized gain on investments (554,206) (2,094,903)
TOTAL DIVIDENDS (562,706) (2,291,459)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 4,319,035 14,794,732
Dividends reinvested 562,706 2,291,459
Cost of shares redeemed (4,924,585) (13,673,233)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (42,844) 3,412,958
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,012,447) 6,706,428
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 27,386,418 20,679,990
END OF PERIOD 26,373,971 27,386,418
Undistributed investment income--net 222,311 37,745
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 295,175 1,006,730
Shares issued for dividends reinvested 38,621 152,939
Shares redeemed (334,801) (949,638)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,005) 210,031
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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.
Six Months Ended
June 30, 2000 Year Ended December 31,
----------------------------------------------
(Unaudited) 1999 1998 1997 1996(a)
------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 15.67 13.45 13.45 12.80 12.50
Investment Operations:
Investment income--net .11(b) .13(b) .14 .07 .08
Net realized and unrealized
gain (loss) on investments (.34) 3.52 1.01 1.03 .34
Total from Investment Operations (.23) 3.65 1.15 1.10 .42
Distributions:
Dividends from investment income--net (.01) (.13) (.12) (.07) (.08)
Dividends from net realized
gain on investments (.33) (1.30) (1.03) (.30) (.04)
Dividends in excess of net realized
gain on investments -- -- -- (.08) --
Total Distributions (.34) (1.43) (1.15) (.45) (.12)
Net asset value, end of period 15.10 15.67 13.45 13.45 12.80
------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (1.45)(c) 27.82 8.74 8.71 3.41(c,d)
------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .69(c) 1.35 1.29 1.42 1.01(c)
Ratio of net investment income
to average net assets .76(c) .90 .94 .74 .76(c)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- .34(c)
Portfolio Turnover Rate 20.41(c) 41.90 42.14 25.67 24.48(c)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 26,374 27,386 20,680 19,016 8,027
(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>
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 Value 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 long-term capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the portfolio's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial
Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a
wholly-owned subsidiary of Dreyfus became the distributor of the portfolio's
shares, which are sold to the public without a sales charge. Prior to March 22,
2000, Premier Mutual Fund Services, Inc. was the distributor.
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 The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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, 2000, 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 1% of the value of the
portfolio's average daily net assets and is payable monthly.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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, 2000, the portfolio was charged $89 pursuant to the
transfer agency agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
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, 2000, amounted to $5,095,509 and $6,339,035,
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 and to settle foreign currency
transactions. 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, 2000, there were no open forward currency
exchange contracts.
(b) At June 30, 2000, accumulated net unrealized appreciation on investments was
$844,896, consisting of $3,575,717 gross unrealized appreciation and $2,730,821
gross unrealized depreciation.
At June 30, 2000, 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,
International Value 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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 152SA006
Dreyfus Variable
Investment Fund,
Limited Term
High Income Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Limited Term High Income Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Limited Term High Income Portfolio, covering the six-month period from
January 1, 2000 through June 30, 2000. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Roger King.
Tighter monetary policy adversely affected most -- but not all -- sectors of the
bond market over the past six months. This was primarily a result of efforts by
the Federal Reserve Board (the "Fed" ) to forestall potential inflationary
pressures. The Fed raised short-term interest rates three times during the
reporting period, for a total increase of 1.00 percentage points. These rate
hikes contributed to a total interest-rate increase of 1.75 percentage points
since late June 1999, before the current reporting period began.
Higher interest rates led to an erosion of most bond prices, especially among
higher yielding securities. U.S. Treasury securities represented a notable
exception. Prices of these direct obligations of the federal government rose
primarily because of reduced supply amid robust demand from domestic and foreign
investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Limited Term
High Income Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Roger King, Portfolio Manager
How did Dreyfus Variable Investment Fund, Limited Term High Income Portfolio
perform relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio achieved a total
return of -2.82%.(1) This compares to a -1.00% total return for the portfolio's
benchmark, the Merrill Lynch High Yield Master II Index, for the same period.(2
Because the portfolio' s maturity and duration (a measure of sensitivity to
changing interest rates) are limited by its investment approach, as stated in
the prospectus, we also gauge the portfolio's performance against a shorter term
measure: the Customized Limited Term High Yield Index, which achieved a 0.27%
total return for the period.(3) This blended index is composed of four shorter
term subindices of the Merrill Lynch High Yield Master II Index.
We attribute the portfolio's underperformance relative to the indices primarily
to our investment strategy. While we continue to restructure the portfolio to
improve credit quality, a significant portion of the portfolio's holdings
remained concentrated in lower rated bonds. Because investors generally
continued to avoid credit risk during the reporting period, lower rated bonds
fell more sharply in price, and later recovered less fully, than those closer to
investment grade quality.
What is the portfolio's investment approach?
The portfolio seeks to maximize current income by investing in high yield
fixed-income securities. The average effective maturity and average effective
duration of the portfolio is limited to three years or less.
We normally invest most of the portfolio's assets in fixed-income securities of
below investment grade credit quality. Issuers of below investment grade
securities may be in early stages of development or may have highly leveraged
balance sheets. To compensate the buyer for
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
taking greater risk, these companies must offer higher yields than those offered
by more highly rated firms.
Our approach to selecting individual issues is based on careful credit analysis.
We thoroughly analyze the business, management and financial strength of each of
the companies whose bonds we buy, and then project each issuer's ability to
repay its debt.
What other factors influenced the portfolio's performance?
High yield, fixed-income investors began the year 2000 hoping to recover from an
extremely difficult 1999. In anticipation of potential Y2K market disruptions,
investor demand for high yield bonds almost completely halted as year-end
approached. Many investors withdrew from the market and the large supply of high
yield bonds was met by weak demand: bond prices and the value of the portfolio
inevitably fell.
Although the new year arrived uneventfully, the much anticipated post-Y2K rally
in the high yield bond market failed to materialize. Other factors, it seems,
continued to push bond prices down and dampened portfolio performance. The
Federal Reserve Board' s ongoing policy of interest-rate tightening had a
negative effect on investor psychology across the bond market as a whole. In
addition, default rates have risen, as some bonds issued under relatively lax
underwriting standards in 1997 and 1998 have not met interest and/or principal
payments. Finally, for much of the reporting period, investors seemed to show a
marked shift in sentiment. Previously, investors seeking high returns found high
yield bonds an attractive investment vehicle. However, in current markets, many
return-oriented investors appear to have shifted their preference, favoring
stocks over bonds. And those investors who have maintained an interest in bonds
have shown a strong preference for credit safety over risk, generally choosing
to avoid the high yield marketplace.
While the reporting period overall was difficult for the market in general and
the portfolio in particular, high yield bond prices rebounded in June. The
rebound, however, was generally concentrated in higher
rated bonds, as money managers remained cautious that the recovery would prove
temporary. While we are working to improve the overall credit quality of the
portfolio, we are not yet at the average credit quality we are trying to attain.
Hence, the portfolio did not fully participate in the period-end rally.
What is the portfolio's current strategy?
We have continued to reposition the portfolio, increase credit quality and
shorten average maturity, while also protecting it from volatility. In doing so,
we have de-emphasized lower rated bonds and have moved away from bonds with
complicated payment or maturity structures. Rather, our strategy for new
investments is to purchase domestic bonds rated near investment grade quality
that pay cash interest and have a final maturity within five years.
The high yield market, in its current distressed state, is trading at depressed
levels not seen in the past 10 years. We believe that, at these levels, the high
yield market may offer significant value. However, there is no telling if and
when a positive trigger event may occur, causing the high yield market to once
again gain favor with investors.
July 17, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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: BLOOMBERG L.P. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MERRILL LYNCH HIGH YIELD MASTER II
INDEX IS AN UNMANAGED PERFORMANCE BENCHMARK COMPOSED OF U.S. DOMESTIC AND YANKEE
BONDS RATED BELOW INVESTMENT GRADE WITH AT LEAST $100 MILLION PAR AMOUNTS
OUTSTANDING AND GREATER THAN OR EQUAL TO ONE YEAR TO MATURITY.
(3) SOURCE: BLOOMBERG L.P. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE CUSTOMIZED LIMITED TERM HIGH YIELD
INDEX IS COMPOSED OF FOUR SUBINDICES OF THE MERRILL LYNCH HIGH YIELD MASTER II
INDEX. THESE SUBINDICES, BLENDED AND MARKET WEIGHTED, ARE (I) BB-RATED, 1-3
YEARS, (II) B-RATED, 1-3 YEARS, (III) BB-RATED, 3-5 YEARS, AND (IV) B-RATED, 3-5
YEARS. UNLIKE THE CUSTOMIZED LIMITED TERM HIGH YIELD INDEX, WHICH IS COMPOSED OF
BONDS RATED NO LOWER THAN "B," THE PORTFOLIO CAN INVEST IN BONDS WITH LOWER
CREDIT RATINGS THAN "B" AND AS LOW AS "D."
The Portfolio
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
<TABLE>
STATEMENT OF INVESTMENTS
Principal
BONDS AND NOTES--101.3% Amount ($) Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
AIRCRAFT & AEROSPACE--7.4%
AM General, Ser. B,
Sr. Notes, 12.875%, 2002 456,000 402,420
Airplanes Pass-Through Trust,
Pass-Through Ctfs.,
Ser. 1, Cl. D, 10.875%, 2019 2,963,100 2,407,193
Midway Airlines,
Gtd. Pass-Through Ctfs.,
Ser. 1998-1, Cl. D, 8.86%, 2003 973,639 (a) 950,900
3,760,513
AUTOMOTIVE--4.3%
Aetna Industries,
Sr. Notes, 11.875%, 2006 1,500,000 1,207,500
Hayes Lemmerz International,
Sr. Sub. Notes, 11%, 2006 1,000,000 987,500
2,195,000
BROADCASTING--1.3%
Lin Holdings,
Sr. Discount Notes, 0/10%, 2008 1,000,000 (b) 662,500
CABLE TELEVISION--8.1%
Adelphia Communications:
Sr. Discount Notes, 0%, 2003 1,500,000 1,111,875
Sr. Notes, 9.25%, 2002 1,000,000 991,250
Diamond Cable Communications,
Sr. Discount Notes, 0/11.75%, 2005 1,000,000 (b) 953,750
Pegasus Communications, Ser. B,
Sr. Sub. Notes, 12.5%, 2007 1,000,000 1,070,000
4,126,875
CHEMICALS--2.5%
ISP Holdings, Ser. B,
Sr. Notes, 9.75%, 2002 1,328,000 1,298,120
COMMERCIAL MORTGAGE
PASS-THROUGH CTFS.--1.9%
GS Mortgage Securities II,
Ser. 1999-FL2A, Cl. G, 8.617%, 2013 1,000,000 (a,c) 961,680
CONSTRUCTION--3.3%
ICF Kaiser International,
Sr. Sub. Notes, 13%, 2003 2,000,000 (d) 965,000
McDermott,
Notes, 9.375%, 2002 1,000,000 713,682
1,678,682
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------
CONSUMER--8.0%
BPC Holding, Ser. B,
Sr. Secured Notes, 13.25%, 2006 568,443 (c) 452,133
Coinmach, Ser. D,
Sr. Notes, 11.75%, 2005 1,740,000 1,679,100
Hosiery Corp. of America,
Sr. Sub. Notes, 13.75%, 2002 1,000,000 895,000
Sharp Do Brazil,
Medium-Term Notes, 9.625%, 2000 1,500,000 (d,e) 123,750
Sweetheart Cup,
Sr. Sub. Notes, 9.625%, 2000 900,000 909,000
4,058,983
ENTERTAINMENT--5.0%
American Skiing, Ser. B,
Sr. Sub. Notes, 12%, 2006 3,000,000 2,535,000
FINANCIAL--3.9%
AmeriCredit,
Sr. Notes, 9.25%, 2004 1,000,000 970,000
Reliance Group Holdings:
Sr. Notes, 9%, 2000 2,000,000 860,000
Sr. Sub. Deb., 9.75%, 2003 500,000 140,000
1,970,000
FOOD & BEVERAGES--7.4%
CKE Restaurants,
Conv. Sub. Deb., 4.25%, 2004 763,000 355,749
Chiquita Brands International,
Conv. Sub. Deb., 7%, 2001 800,000 672,000
Envirodyne Industries,
Sr. Notes, 10.25%, 2001 180,000 99,900
Pilgrims Pride,
Sr. Sub. Notes, 10.875%, 2003 500,000 505,625
Sun World International, Ser. B,
First Mortgage, 11.25%, 2004 2,230,000 2,132,438
3,765,712
FOREST PRODUCTS--5.0%
Maxxam Group Holdings,
Sr. Secured Notes, 12%, 2003 2,730,000 2,532,075
HEALTH CARE--.6%
Eye Care Centers of America,
Floating Interest Rate Sub. Term
Securities, 10.593%, 2008 500,000 (c) 287,500
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------
INDUSTRIAL--3.0%
Applied Extrusion Technology, Ser. B,
Sr. Notes, 11.5%, 2002 750,000 755,625
Atlantis Group,
Sr. Notes, 11%, 2003 745,000 747,794
1,503,419
METALS--.9%
Oregon Steel Mills,
First Mortgage, 11%, 2003 375,000 253,125
Renco Metals,
Sr. Notes, 11.5%, 2003 560,000 226,800
479,925
REAL ESTATE--8.4%
Crescent Real Estate Equities,
Notes, 7%, 2002 2,350,000 2,165,245
Meditrust,
Medium-Term Notes, 7.77%, 2002 1,500,000 1,263,071
Rockefeller Center Properties,
Conv. Deb., 0%, 2000 1,000,000 845,000
4,273,316
RETAIL--4.9%
Cafeteria Operators
(Gtd. By Furrs/Bishops Speciality Group),
Sr. Secured Notes, 12%, 2001 1,000,000 990,000
Southland,
Deb., 5%, 2003 1,750,000 1,524,687
2,514,687
SHIPPING--1.6%
Eletson Holdings,
First Pfd. Ship Mortgage, 9.25%, 2003 900,000 841,500
TELECOMMUNICATION/CARRIERS--8.4%
Hermes Europe Railtel,
Sr. Notes, 11.5%, 2007 2,000,000 1,720,000
MJD Communications,
Floating Rate Notes, 10.8%, 2008 1,000,000 (c) 942,980
Qwest Communications International, Ser. B,
Sr. Notes, 10.875%, 2007 1,500,000 1,632,089
4,295,069
TEXTILES--.7%
Sassco Fashions,
Sr. Notes, 12.75%, 2004 500,000 322,500
Texfi Industries,
Sr. Sub. Deb., 8.75%, 1999 500,000 (d) 10,000
332,500
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------
TRANSPORTATION--8.5%
International Shipholding,
Sr. Notes, 9%, 2003 1,750,000 1,741,250
MTL, Ser. B,
Floating Interest Rate Sub. Term Securities,
11.62%, 2006 2,000,000 (c) 1,450,000
Union Pacific,
Sub. Deb, 5.5%, 2033 1,315,000 1,132,791
4,324,041
WIRELESS COMMUNICATIONS--6.2%
Comunicacion Celular,
Sr. Discount Notes, 0/14.125%, 2005 500,000 (a,b) 376,250
Microcell Telecommunications, Ser. B,
Sr. Discount Notes, 0/14%, 2006 1,000,000 (b) 927,500
Orion Network Systems,
Sr. Discount Notes, 0/12.5%, 2007 4,500,000 (b) 1,867,500
3,171,250
TOTAL BONDS AND NOTES
(cost $65,041,778) 51,568,347
------------------------------------------------------------------------------------------------------
COMMON STOCKS--.0% Shares Value ($)
------------------------------------------------------------------------------------------------------
ENTERTAINMENT;
Discovery Zone (warrants)
(cost $120,000) 2,000 (a,f) 2
------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--1.4%
------------------------------------------------------------------------------------------------------
PUBLISHING;
Newscorp Overseas, Ser. A,
Cum., $2.15625
(cost $819,075) 32,600 729,425
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $65,980,853) 102.7% 52,297,774
LIABILITIES, LESS CASH AND RECEIVABLES (2.7%) (1,388,081)
NET ASSETS 100.0% 50,909,693
(A) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 2000,
THESE SECURITIES AMOUNTED TO $2,288,832 OR 4.5% OF NET ASSETS.
(B) ZERO COUPON UNTIL A SPECIFIED DATE AT WHICH TIME THE STATED COUPON RATE
BECOMES EFFECTIVE UNTIL MATURITY.
(C) VARIABLE RATE SECURITY--INTEREST RATE SUBJECT TO PERIODIC CHANGE.
(D) NON-INCOME PRODUCING--SECURITY IN DEFAULT.
(E) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDER'S OPTION; THE STATED
MATURITY IS 10/30/2005.
(F) NON-INCOME PRODUCING SECURITY.
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 65,980,853 52,297,774
Dividends and interest receivable 1,529,831
Prepaid expenses 4,156
53,831,761
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 29,550
Cash overdraft due to Custodian 42,916
Bank loans payable--Note 2 2,800,000
Payable for shares of Beneficial Interest redeemed 18,455
Interest payable--Note 2 14,588
Accrued expenses 16,559
2,922,068
--------------------------------------------------------------------------------
NET ASSETS ($) 50,909,693
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid--in capital 72,254,861
Accumulated undistributed investment income--net 7,466
Accumulated net realized gain (loss) on investments (7,669,555)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (13,683,079)
--------------------------------------------------------------------------------
NET ASSETS ($) 50,909,693
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest authorized)
5,342,244
NET ASSET VALUE, offering and redemption price per share ($) 9.53
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
Interest 3,366,060
Cash dividends 35,147
TOTAL INCOME 3,401,207
EXPENSES:
Investment advisory--Note 3(a) 184,727
Interest expense--Note 2 91,818
Professional fees 10,443
Prospectus and shareholders' reports 7,723
Custodian fees--Note 3(a) 4,174
Trustees' fees and expenses--Note 3(b) 1,466
Shareholder servicing costs 184
Miscellaneous 6,571
TOTAL EXPENSES 307,106
INVESTMENT INCOME--NET 3,094,101
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (1,839,767)
Net unrealized appreciation (depreciation) on investments (2,776,198)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (4,615,965)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,521,864)
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,094,101 8,366,358
Net realized gain (loss) on investments (1,839,767) (5,298,109)
Net unrealized appreciation (depreciation)
on investments (2,776,198) (3,996,453)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (1,521,864) (928,204)
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (3,305,897) (8,228,436)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 1,845,923 13,764,126
Dividends reinvested 3,305,897 8,228,436
Cost of shares redeemed (15,771,593) (29,897,132)
INCREASE (DECREASE) IN NET ASSETS
FROM BENEFICIAL INTEREST TRANSACTIONS (10,619,773) (7,904,570)
TOTAL INCREASE (DECREASE) IN NET ASSETS (15,447,534) (17,061,210)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 66,357,227 83,418,437
END OF PERIOD 50,909,693 66,357,227
Undistributed investment income--net 7,466 219,262
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 176,989 1,189,786
Shares issued for dividends reinvested 336,896 748,768
Shares redeemed (1,524,667) (2,657,203)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,010,782) (718,649)
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
--------------------------
(Unaudited) 1999 1998 1997(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 10.44 11.80 12.88 12.50
Investment Operations:
Investment income--net .59 1.21 1.14 .78
Net realized and unrealized
gain (loss) on investments (.88) (1.38) (1.08) .41
Total from Investment Operations (.29) (.17) .06 1.19
Distributions:
Dividends from investment income--net (.62) (1.19) (1.14) (.77)
Dividends from net realized
gain on investments -- -- -- (.04)
Total Distributions (.62) (1.19) (1.14) (.81)
Net asset value, end of period 9.53 10.44 11.80 12.88
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (5.66)(b) (1.54) .29 14.27(b)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .76(b) .73 .77 .89(b)
Ratio of interest expense
to average net assets .32(b) .11 .32 .20(b)
Ratio of net investment
income to average net assets 10.86(b) 10.53 10.10 10.27(b)
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation -- -- -- .05(b)
Portfolio Turnover Rate 8.32(c) 52.08 50.18 37.98(c)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 50,910 66,357 83,418 31,454
(A) FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(B) ANNUALIZED.
(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 Limited Term High 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 diversified series. The portfolio's investment
objective is to maximize total return, consisting of capital appreciation and
current income. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A.
(" Mellon"), which is a wholly-owned subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of Dreyfus, became the distributor of the portfolio's shares, which
are sold to the public without a sales charge. Prior to March 22, 2000, Premier
Mutual Fund Services, Inc. was the distributor.
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 (excluding short-term
investments other than U.S. Treasury Bills) are valued each business day by an
independent pricing service (" Service" ) approved by the Board of Trustees.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market conditions.
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.
Short-term investments, excluding U.S. Treasury Bills, are carried at amortized
cost, which approximates value
(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 received
net earnings credits of $2,287 during the period ended June 30, 2000 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(c) Dividends to shareholders: It is the policy of the portfolio to declare and
pay dividends quarterly from investment income-net. 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
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
The portfolio has an unused capital loss carryover of approximately $5,771,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accordance with generally accepted accounting
principles. If not applied, $454,000 of the carryover expires in fiscal 2006 and
$5,317,000 expires in fiscal 2007.
NOTE 2--Bank Lines of Credit:
The portfolio may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other Dreyfus-managed
funds in a $100 million unsecured line of credit primarily to be utilized for
temporary or emergency purposes, including the financing of redemptions.
Interest is charged to the portfolio at rates which are related to the Federal
Funds rate in effect at the time of borrowings.
The average daily amount of borrowings outstanding under the leveraging
arrangement during the period ended June 30, 2000 was approximately $2,829,100,
with a related weighted average annualized interest rate of 6.51%.
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 .65 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, 2000, the portfolio was charged $39 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended June 30, 2000, the portfolio
was charged $4,174 pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective January 1, 2000,
each Board member who is not an "affiliated person" as defined in the Act
receives an annual fee of $40,000 and an attendance fee of $6,000 for each in
person meeting and $500 for telephone meetings. These fees are allocated among
the funds in the Fund Group. The Chairman of the Board receives an additional
25% of such compensation. Subject to the fund's Emeritus Program Guidelines,
Emeritus Board members, if any, receive 50% of the fund's annual retainer fee
and per meeting fee paid at the time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$4,748,956 and $6,994,706, respectively.
At June 30, 2000, accumulated net unrealized depreciation on investments was
$13,683,079, consisting of $99,936 gross unrealized appreciation and $13,783,015
gross unrealized depreciation.
At June 30, 2000, 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,
Limited Term
High 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 156SA006
Dreyfus Variable
Investment Fund,
Money Market Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
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, 2000
through June 30, 2000. Inside, you'll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
the portfolio manager, Thomas S. Riordan.
When the reporting period began, international and domestic economies were
growing rapidly, giving rise to concerns that long-dormant inflationary
pressures might reemerge. Consumers continued to spend heavily, unemployment
levels reached new lows and the stock market, while highly volatile, generally
continued to climb.
Because robust economic growth may trigger an acceleration of inflation, the
Federal Reserve Board raised key short-term interest rates three times during
the reporting period, for a total increase of 1.00 percentage points. These
interest-rate hikes contributed to a total interest-rate increase of 1.75
percentage points since late June 1999, before the current reporting period
began. While these economic influences generally adversely affected longer term
bonds, they positively influenced money market yields.
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 17, 2000
DISCUSSION OF PERFORMANCE
Thomas S. Riordan, Portfolio Manager
How did Dreyfus Variable Investment Fund, Money Market Portfolio perform during
the period?
For the six-month period ended June 30, 2000 the portfolio produced an
annualized yield of 5.57%, which, taking into account the effect of compounding,
created an annualized effective yield of 5.71%.(1)
What is the portfolio's investment approach?
The portfolio seeks a high level of income as is consistent with the
preservation of capital and the maintenance of liquidity. To pursue this goal,
the portfolio invests in a diversified selection of high quality, short-term
debt securities. These include securities issued or guaranteed by the U.S.
Government or its agencies, certificates of deposit, short-term securities
issued by domestic or foreign banks, repurchase agreements, asset-backed
securities, domestic and dollar-denominated foreign commercial paper and
dollar-denominated obligations issued or guaranteed by foreign governments.
Normally, the portfolio invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
What other factors influenced the portfolio's performance?
The money markets continued to digest mixed signals from the economy as the
reporting period began. The Open Market Committee of the Federal Reserve Board
(the "Fed" ) had acted to relieve inflationary pressures, taking a cautious,
measured approach. It had raised interest rates three times in 1999, each time
by 0.25 percentage points. Each tightening brought renewed debate as to whether
rates were sufficiently high to ease growth and head off inflation, or whether
further tightening would be necessary. Economic data released in early January
pointed toward the possibility of additional interest-rate increases in the near
future.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
Gross domestic product (" GDP" ) growth had quickened to a stunning 7.3% for
fourth quarter 1999. Concern mounted that economic growth was accelerating
considerably past a limit that could be sustained without triggering destructive
levels of inflation. In a continuing attempt to head off inflation, the Fed
raised interest rates for the fourth time in this cycle of tightening in early
February, and a fifth time in March.
Preliminary first quarter 2000 figures showed GDP growth at a less torrid, but
still strong 5.4% . Continuing indications that prices, most notably in the
energy sector, were moving higher added to the money markets' concerns. Greater
than expected domestic demand for goods and services continued. Events overseas
have also had an impact on inflation. Following the Asian economic crisis of
1998, demand outside the U.S. weakened, enabling the U.S. economy to grow at an
unusually fast pace without setting off commodity inflation. As overseas
economies have recovered, demand for raw materials has picked up as well,
creating upward price pressure.
Through much of early 2000, consumer confidence and consumer spending showed few
signs of abating in response to gradual and relatively mild rate hikes. Home and
auto sales continue at record paces through the first quarter and into the
second quarter of 2000. The tightest U.S. labor market in the past 30 years
added the threat of wage-driven inflation. Such price and wage factors led the
Fed to its largest rate hike in its current credit tightening cycle: a 0.50
percentage-point increase at its May 16th meeting.
More recently, we have seen signs that the Fed's series of rate hikes may have
begun to slow the economy. Retail sales declined in both April and May, housing
starts have slowed dramatically, and inflation figures through early 2000
appeared to be lower than market expectations. As a result, the Fed chose not to
tighten rates further at its June 28th meeting.
But economic signals remain contradictory; it is not clear that the economy has
yet cooled sufficiently for the Fed to consider its job done. Immediately
following the Fed' s June meeting, economic reports indicated that, although
growth may be slowing, inflation may be higher than previously thought. While
indexes measuring demand for housing and labor fell back in May, the personal
consumption expenditures price index for first quarter 2000 was adjusted upward,
from 3.1% to 3.5%. This measure, closely followed by Federal Reserve Chairman
Greenspan, is considered among the best gauges of inflation and could indicate
that Fed-described concerns over " heightened inflation pressure" may lead to a
further tightening when the Fed meets again in August.
What is the portfolio's current strategy?
In anticipation of rising interest rates throughout the six-month reporting
period, the portfolio adopted a somewhat defensive strategy. Most significantly,
we reduced the portfolio' s average maturity in order to increase our
flexibility. Shorter maturities were designed to help the portfolio take
advantage of potential opportunities from additional interest-rate increases.
As of June 30, 2000, the portfolio's average maturity remained relatively short.
We will continue to monitor the situation, including the economy and changes in
the Fed' s monetary policy, and we will look to take what we believe are
appropriate actions in response with respect to the portfolio's holdings.
July 17, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE
FDIC OR THE U.S. GOVERNMENT. ALTHOUGH THE PORTFOLIO SEEKS TO PRESERVE THE VALUE
OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING
IN THE PORTFOLIO. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF
ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE
INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--18.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Allfirst Bank
6.64%, 2/9/2001 5,000,000 (a) 4,998,172
American Express Centurion Bank
6.59%, 7/19/2000 4,000,000 4,000,000
First Tennessee Bank N.A.
6.67% 12/11/00 4,000,000 (a) 4,000,000
Union Bank California
5.98%, 8/1/2000 5,000,000 5,000,000
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $17,998,172) 17,998,172
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--53.7%
------------------------------------------------------------------------------------------------------------------------------------
Associates Corp. of North America
6.95%, 7/3/2000 4,000,000 3,998,456
BCI Funding Corp.
6.50%, 8/2/2000 4,000,000 3,977,262
Canadian Imperial Holdings Inc.
6.62%, 8/3/2000 4,000,000 3,976,130
Ciesco L.P.
6.56%, 7/10/2000 4,000,000 3,993,510
Den Danske Corp. Inc.
6.77%, 8/28/2000 4,000,000 3,957,144
General Electric Capital Corp.
6.67%, 9/14/2000 4,000,000 3,945,333
General Electric Capital Services Inc.
6.67%, 9/15/2000 4,000,000 3,944,604
Lehman Brothers Holdings Inc.
7.40%, 2/12/2001 4,000,000 3,823,971
San Paolo IMI U. S. Financial
6.60%, 8/4/2000 4,000,000 3,975,482
Santander Finance (DE) Inc.
6.68%, 9/5/2000 4,000,000 3,951,820
Spintab AB
6.25%, 7/20/2000 4,000,000 3,987,080
Swedbank Inc.
6.57%, 7/12/2000 4,000,000 3,992,057
UBS Finance (DE) Inc.
6.95%, 7/3/2000 4,000,000 3,998,456
TOTAL COMMERCIAL PAPER
(cost $51,521,305) 51,521,305
Principal
CORPORATE NOTES--18.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Heller Financial Inc.
6.90%, 8/7/2000 3,000,000 (a) 3,000,000
Merrill Lynch & Co. Inc.
6.63%, 3/28/2001 4,000,000 (a) 4,000,000
Morgan (J. P.) & Co. Inc.
6.67%, 3/6/2001 4,000,000 (a) 3,999,728
Morgan Stanley, Dean Witter Inc.
6.67%, 3/19/2001 4,000,000 (a) 4,000,000
Paine Webber Group Inc.
6.85%, 9/15/2000 3,000,000 (a) 3,000,000
TOTAL CORPORATE NOTES
(cost $17,999,728) 17,999,728
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--4.2%
------------------------------------------------------------------------------------------------------------------------------------
Bank of America N.A.
6.25%, 7/20/2000
(cost $4,000,000) 4,000,000 4,000,000
------------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--5.3%
------------------------------------------------------------------------------------------------------------------------------------
Bayerische Hypo-und Vereinsbank AG (Grand Cayman)
7.00%, 7/3/2000 2,000,000 2,000,000
HSBC Bank USA (London)
6.75%, 7/3/2000 3,056,000 3,056,000
TOTAL TIME DEPOSITS
(cost $5,056,000) 5,056,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $96,575,205) 100.8% 96,575,205
LIABILITIES, LESS CASH AND RECEIVABLES (.8%) (727,156)
NET ASSETS 100.0% 95,848,049
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 96,575,205 96,575,205
Interest receivable 388,694
Prepaid expenses 4,460
96,968,359
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 35,437
Cash overdraft due to Custodian 1,061,092
Accrued expenses 23,781
1,120,310
--------------------------------------------------------------------------------
NET ASSETS ($) 95,848,049
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 95,863,695
Accumulated net realized gain (loss) on investments (15,646)
--------------------------------------------------------------------------------
NET ASSETS ($) 95,848,049
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest authorized)
95,863,695
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 2,910,086
EXPENSES:
Investment advisory fee--Note 2(a) 235,565
Custodian fees 15,302
Prospectus and shareholders' reports 15,179
Professional fees 9,508
Trustees' fees and expenses--Note 2(b) 4,081
Shareholder servicing costs 660
Miscellaneous 1,003
TOTAL EXPENSES 281,298
INVESTMENT INCOME--NET 2,628,788
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (11,060)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,617,728
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,628,788 4,799,639
Net realized gain (loss) on investments (11,060) (477)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,617,728 4,799,162
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (2,628,788) (4,799,639)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 51,751,244 89,884,808
Dividends reinvested 2,628,788 4,799,639
Cost of shares redeemed (61,248,318) (80,981,281)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (6,868,286) 13,703,166
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,879,346) 13,702,689
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 102,727,395 89,024,706
END OF PERIOD 95,848,049 102,727,395
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
---------------------------------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .028 .047 .050 .050 .050 .055
Distributions:
Dividends from
investment income--net (.028) (.047) (.050) (.050) (.050) (.055)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.64(a) 4.78 5.12 5.19 5.10 5.66
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .59(a) .58 .56 .61 .62 .62
Ratio of net investment income
to average net assets 5.56(a) 4.69 5.01 5.08 4.96 5.51
Decrease reflected in
above expense ratios due
to undertakings by
The Dreyfus Corporation -- -- -- -- -- .03
------------------------------------------------------------------------------------------------------------------------------------
Net Assets,
end of period ($ x 1,000) 95,848 102,727 89,025 64,628 56,186 45,249
(A) 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, which is a wholly-owned subsidiary of
Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service
Corporation (" DSC" ), a wholly-owned subsidiary of Dreyfus, became the
distributor of the portfolio's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
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: Investment securities 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 $719 during the period ended June 30, 2000 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 investment advisor, 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
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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.
(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 $4,650
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. If not
applied, $850 of the carryover expires in fiscal 2004, $1,300 expires in fiscal
2005, $1,400 expires in fiscal 2006 and $1,100 expires in fiscal 2007.
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, 2000, the portfolio was charged $56 pursuant to the
transfer agency agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
The Portfolio
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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 117SA006
Dreyfus Variable
Investment Fund,
Quality Bond Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Quality Bond Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Quality Bond Portfolio, covering the six-month period from January 1, 2000
through June 30, 2000. Inside, you'll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
Dominick DeAlto, portfolio manager and a member of the Dreyfus Taxable Fixed
Income Team that manages the portfolio.
Tighter monetary policy adversely affected most -- but not all -- sectors of the
bond market over the past six months. This was primarily a result of efforts by
the Federal Reserve Board (the "Fed" ) to forestall potential inflationary
pressures. The Fed raised short-term interest rates three times during the
reporting period, for a total increase of 1.00 percentage points. These rate
hikes contributed to a total interest-rate increase of 1.75 percentage points
since late June 1999, before the current reporting period began.
Higher interest rates led to an erosion of most bond prices, especially among
higher yielding securities. U.S. Treasury securities represented a notable
exception. Prices of these direct obligations of the federal government rose
primarily because of reduced supply amid robust demand from domestic and foreign
investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Quality Bond
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Dominick DeAlto, Senior Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus Variable Investment Fund, Quality Bond Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio produced a total
return of 3.51% .(1) In comparison, the portfolio's new benchmark, the Lehman
Brother' s Aggregate Bond Index, produced a total return of 3.99% for the same
period.(2) The portfolio's former benchmark, the Merrill Lynch Domestic Master
Index (Subindex D010), produced a total return of 4.19% for the same period as
well.(3)
We attribute the portfolio's good absolute performance to our sector allocation
and duration management strategies, which enabled us to avoid declines due to
rising interest rates and other market forces.
What is the portfolio's investment approach?
The portfolio seeks to maximize current income while attempting to preserve
capital and maintain the portfolio' s liquidity. Accordingly, the portfolio
invests at least 80% of its assets in fixed-income securities, including
mortgage-related securities, collateralized mortgage obligations and
asset-backed securities. The portfolio may also invest up to 10% of its net
assets in foreign securities. In addition, the portfolio may invest in
high-grade commercial bonds issued by U.S. corporations, certificates of
deposit, time deposits and bankers' acceptances as well as municipal obligations
and zero coupon securities.
When selecting investments, we conduct extensive analyses to identify those bond
market sectors that we believe represent the most attractive relative values. We
strive to hold those securities until their true values are reached, or until
other market sectors become more attractively valued.
What other factors influenced the portfolio's performance?
The portfolio was influenced by inflation fears, rising interest rates and
unusual conditions in the U.S. Treasury securities marketplace. When The
Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
the reporting period began on January 1, 2000, investors were relieved that Y2K
concerns proved to be overblown. Yet they were becoming increasingly concerned
that robust economic growth might rekindle long-dormant inflationary pressures,
especially with rising wages in a tight job market. In an attempt to ease these
pressures and forestall a reacceleration of inflation, the Federal Reserve Board
(the "Fed" ) raised short-term interest rates three times during the reporting
period, causing most bond prices to fall.
Early in the reporting period, rising interest rates hurt higher yielding
fixed-income securities, such as corporate bonds, which were the most affected
of these types of securities. This was primarily due to investors worrying about
the likelihood of higher than average default rates if Fed policies were to
produce an economic slowdown. As a result, the portfolio's performance was hurt
by weakness among its corporate bond holdings. After we subsequently sold some
of our long-term corporate bonds and replaced them with short-term holdings in
the first quarter, we recouped some of our losses in the corporate sector.
U.S. Treasury securities represented one of the few market sectors to provide
attractive returns for the portfolio during the reporting period. This was due
to the fact that the U.S. Treasury Department announced its intention to use a
portion of the federal budget surplus to buy back higher yielding, long-term
bonds. With a reduced supply of U.S. Treasury bonds and strong demand from
domestic and foreign investors, the prices of 30-year U.S. Treasury bonds rose
sharply. The portfolio benefited from this rally through its holdings of 30-year
U.S. Treasury bonds before reducing that position in the second quarter.
What is the portfolio's current strategy?
We recently adopted a modestly defensive stance in anticipation of more
potential interest-rate increases. Accordingly, after maintaining the portfolio'
s average duration -- a measure of sensitivity to changing interest rates -- in
the neutral range for most of the reporting period, we recently reduced our
average duration to a position slightly shorter than that of our benchmark. This
duration management strategy is designed to help us take advantage of the
greater flexibility that a shorter duration can typically provide, potentially
enabling us to capture higher yields more quickly as they became available. Of
course, a shorter duration can result in underperformance during certain market
conditions, as when rates decline.
From a sector allocation standpoint, we increased our holdings of long-term U.S.
Treasury securities after taking profits in short-term securities during the
second quarter of 2000. In the wake of negative comments in Congress and the
U.S. Treasury Department, we reduced our exposure to U.S. agency securities that
are indirect obligations of the federal government, such as those issued by the
Federal National Home Mortgage Association ("Fannie Mae") and the Federal Home
Loan Corporation (" Freddie Mac" ). Instead, we have focused new purchases on
asset-backed securities, which offer good credit quality and competitive yields
in the prevailing environment.
July 17, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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 INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX
IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN INDEX OF CORPORATE, U.S. GOVERNMENT
AND U.S. GOVERNMENT AGENCY DEBT INSTRUMENTS, MORTGAGE-BACKED SECURITIES AND
ASSET-BACKED SECURITIES WITH AN AVERAGE MATURITY OF 1-10 YEARS.
(3) SOURCE: BLOOMBERG, L.P. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MERRILL LYNCH DOMESTIC MASTER INDEX
IS AN UNMANAGED PERFORMANCE BENCHMARK COMPOSED OF U.S. TREASURY AND AGENCY, AND
MORTGAGE AND INVESTMENT-GRADE CORPORATE SECURITIES WITH MATURITIES GREATER THAN
OR EQUAL TO ONE YEAR.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
Principal
BONDS AND NOTES--102.3% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE & AVIATION--1.9%
Raytheon,
Notes, 8.2%, 2006 2,500,000 (a) 2,541,643
ASSET-BACKED CTFS.--2.3%
Provident Auto Lease ABS Trust,
Ser. 1999-1, Cl. A-2, 7.025%, 2012 700,000 (a) 699,766
Residential Asset Securities,
Ser. 1999-KS1, Cl. AI-8, 6.32%, 2030 2,500,000 2,329,297
3,029,063
BANKING--1.4%
Capital One Bank,
Sr. Notes, 6.15%, 2001 1,800,000 1,782,056
CHEMICALS--.7%
ICI Wilmington,
Gtd. Notes, 7.05%, 2007 1,000,000 950,097
COMMERCIAL MORTGAGE PASS-THROUGH CTFS.--1.1%
Resolution Trust,
Ser. 1994-C2, Cl. D, 8%, 2025 1,442,729 1,437,081
ELECTRONICS--1.0%
Flextronics International,
Sr. Sub. Notes, 9.875%, 2010 1,355,000 (a) 1,371,938
FINANCIAL SERVICES--7.9%
DLJ,
Medium-Term Notes, .4%, 2000 6,500,000 (a) 6,782,217
Ford Motor Credit,
Notes, 7.375%, 2009 2,000,000 1,940,040
Morgan Stanley Dean Witter & Co.,
Notes, 7.75%, 2005 1,634,000 1,644,181
10,366,438
FOOD RETAILING--2.2%
Fred Meyer,
Gtd. Notes, 7.375%, 2005 3,000,000 2,928,561
FOREIGN--4.5%
Deutsche Telekom International Finance,
Gtd. Notes, 8.25%, 2030 1,610,000 1,640,577
Pemex Finance,
Ser. 2000-1, Cl. A-2,
Notes, 7.8%, 2013 (Insured; MBIA) 500,000 (a) 503,250
Petroleos Mexicanos, Ser. P,
Sr. Notes, 9.5%, 2006 2,000,000 (b) 2,025,000
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FOREIGN (CONTINUED)
State of Qatar,
Bonds, 9.75%, 2030 1,732,000 (a) 1,712,515
5,881,342
INDUSTRIAL--.4%
Eastman Kodak,
Deb., 9.95%, 2018 400,000 479,733
INSURANCE--4.5%
Everest Reinsurance Holdings,
Sr. Notes, 8.5%, 2005 2,000,000 2,018,172
Hartford Financial Services Group,
Sr. Notes, 7.9%, 2010 2,200,000 2,200,862
MONY Group,
Sr. Notes, 8.35%, 2010 1,729,000 1,700,665
5,919,699
OIL AND GAS--6.7%
K N Energy,
Sr. Notes, 6.65%, 2005 2,800,000 2,680,166
Valero Energy,
Notes, 8.75%, 2030 3,500,000 3,634,761
Yosemite Securities Trust I,
Deb., 8.25%, 2004 2,500,000 (a) 2,491,223
8,806,150
REAL ESTATE INVESTMENT TRUST--1.5%
Tanger Properties,
Gtd. Notes, 8.75%, 2001 2,000,000 1,973,242
RESIDENTIAL MORTGAGE PASS-THROUGH CTFS.--3.0%
Chase Mortgage Finance,
REMIC, Ser. 1998-S3, Cl. B-3, 6.5%, 2013 617,315 (a) 484,689
GE Capital Mortgage Services:
REMIC, Ser. 1996-14, Cl. 2B-1, 7.25%, 2011 689,064 669,640
REMIC, Ser. 1996-17, Cl. 2B-1, 7.25%, 2011 658,302 639,008
Norwest Asset Securities,
Ser. 1998-13, Cl. B-5, 6.25%, 2028 244,228 (a) 137,837
PNC Mortgage Securities,
Ser. 1997-3, Cl. 1B-3, 7%, 2027 323,181 310,341
Residential Funding Mortgage Securities I:
Ser. 1997-S19, Cl. M-2, 6.5%, 2012 1,029,928 960,676
Ser. 1997-S21, Cl. M-2, 6.5%, 2012 594,259 554,414
Ser. 1998-NS1, Cl. B-1, 6.375%, 2009 134,370 (a) 112,834
3,869,439
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--2.2%
Tricon Global Restaurants,
Sr. Notes, 7.45%, 2005 3,000,000 2,815,167
RETAIL--4.7%
Lowe's,
Notes, 8.25%, 2010 1,156,000 1,183,180
Saks,
Gtd. Notes, 8.25%, 2008 3,000,000 2,662,692
Wal-Mart Stores,
Sr. Notes, 6.55%, 2004 2,400,000 2,370,514
6,216,386
SPECIAL PURPOSE ENTITY--1.3%
Air 2 U.S., Ser. A,
Enhanced Equipment Notes, 8.027%, 2019 1,749,940 (a) 1,734,427
TELECOMMUNICATIONS--2.1%
Cable & Wireless Optus Finance,
Gtd. Notes, 8%, 2010 2,700,000 (a) 2,676,275
TRANSPORTATION--1.5%
Terminal Railroad Association,
First Mortgage, 4%, 2019 2,601,000 1,902,135
U. S. GOVERNMENTS--17.6%
U. S. Treasury Bonds:
6.25%, 5/15/2030 3,882,000 4,076,100
8.125%, 8/15/2021 2,079,000 2,535,715
U. S. Treasury Inflation Protection Securities,
3.875%, 4/15/2029 2,500,000 (c) 2,595,871
U. S. Treasury Notes:
5.25%, 5/31/2001 10,000,000 (c) 9,893,700
5.25%, 5/15/2004 1,100,000 1,061,500
5.875%, 11/15/2004 436,000 429,469
6.5%, 2/28/2002 2,500,000 2,500,775
23,093,130
U. S. GOVERNMENT AGENCIES/MORTGAGE-BACKED--33.8%
Federal Home Loan Mortgage Corp.:
8% 4,500,000 (d) 4,526,685
REMIC Trust, Gtd. Pass-Through Ctfs.,
Ser. 1916, Cl. PI, 7%, 12/15/2011
(Interest Only Obligation) 3,129,429 (e) 646,947
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT AGENCIES/MORTGAGE-BACKED (CONTINUED)
Federal National Mortgage Association:
Deb., 6.88%, 2028 1,367,894 1,297,907
7% 6/1/2029-9/1/2029 5,822,222 5,627,573
7.5% 5,685,000 (d) 5,603,250
8% 14,500,000 (d) 14,563,365
REMIC Trust, Gtd. Pass-Through Ctfs.,
Ser. 1993-20, Cl. GC, 7%, 9/25/2019
(Interest Only Obligation) 2,121,428 (e) 305,104
Government National Mortgage Association I:
8%, 9/15/2008 466,861 472,403
Project Loans,
6.9%, 11/15/2038 5,977,396 5,883,970
Government National Mortgage Association II:
7%, 9/20/2028-7/20/2029 517,709 502,097
7.5% 4,315,000 (d) 4,266,456
8% 530,000 (d) 532,977
44,228,734
TOTAL BONDS AND NOTES
(cost $134,645,353) 134,002,736
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-22.5%
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--13.5%
BMW U.S. Capital,
6.9%, 7/3/2000 6,300,000 6,297,585
Goldman Sachs Group,
6.95%, 7/3/2000 6,300,000 6,297,567
UBS Finance,
6.96%, 7/3/2000 5,150,000 5,148,009
17,743,161
TIME DEPOSIT--3.1%
Republic National Bank of New York (London),
6.625%, 7/3/2000 4,000,000 4,000,000
U. S. GOVERNMENTS--1.2%
U. S. Treasury Bills,
5.97%, 8/10/2000 1,600,000 1,590,576
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
SHORT-TERM INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT AGENCIES--4.7%
Federal Home Loan Banks,
Discount Notes,
6.2%, 7/3/2000 6,213,000 6,210,860
TOTAL SHORT-TERM INVESTMENTS
(cost $29,544,163) 29,544,597
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $164,189,516) 124.8% 163,547,333
LIABILITIES, LESS CASH AND RECEIVABLES (24.8%) (32,483,127)
NET ASSETS 100.0% 131,064,206
(A) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT
OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 2000,
THESE SECURITIES AMOUNTED $24,234,290 OR 18.5% OF NET ASSETS.
(B) REFLECTS DATE SECURITY CAN BE REDEEMED AT HOLDERS' OPTION; THE STATED
MATURITY IS 9/15/2027.
(C) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON
CHANGES TO THE CONSUMER PRICE INDEX.
(D) PURCHASED ON A FORWARD COMMITMENT BASIS.
(E) REFLECTS NOTIONAL FACE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS:
Investments in securities--See Statement of
Investments 164,189,516 163,547,333
Receivable for investment securities sold 1,290,551
Interest receivable 1,280,992
Prepaid expenses 9,299
166,128,175
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 75,137
Cash overdraft due to Custodian 1,181,028
Payable for investment securities purchased 33,777,726
Payable for shares of Beneficial Interest redeemed 2,744
Accrued expenses 27,334
35,063,969
--------------------------------------------------------------------------------
NET ASSETS ($) 131,064,206
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 137,479,185
Accumulated undistributed investment income--net 605,802
Accumulated net realized gain (loss) on investments (6,378,598)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (642,183)
--------------------------------------------------------------------------------
NET ASSETS ($) 131,064,206
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
11,922,309
NET ASSET VALUE, offering and redemption price per share ($) 10.99
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,361,593
EXPENSES:
Investment advisory fee--Note 3(a) 421,261
Professional fees 11,722
Prospectus and shareholders' reports 11,193
Custodian fees--Note 3(a) 4,865
Trustees' fees and expenses--Note 3(b) 3,949
Shareholder servicing costs 1,525
Miscellaneous 4,559
TOTAL EXPENSES 459,074
INVESTMENT INCOME--NET 3,902,519
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (646,092)
Net unrealized appreciation (depreciation) on investments 1,207,844
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 561,752
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,464,271
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,902,519 7,308,325
Net realized gain (loss) on investments (646,092) (5,309,843)
Net unrealized appreciation (depreciation)
on investments 1,207,844 (1,588,849)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 4,464,271 409,633
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (3,299,415) (7,305,627)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 14,223,361 39,622,759
Dividends reinvested 3,299,415 7,305,627
Cost of shares redeemed (23,445,742) (25,670,614)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (5,922,966) 21,257,772
TOTAL INCREASE (DECREASE) IN NET ASSETS (4,758,110) 14,361,778
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 135,822,316 121,460,538
END OF PERIOD 131,064,206 135,822,316
Undistributed investment income--net 605,802 2,698
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,306,564 3,556,512
Shares issued for dividends reinvested 304,448 660,895
Shares redeemed (2,166,365) (2,302,459)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (555,353) 1,914,948
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($)
Net asset value,
beginning of period 10.89 11.50 11.73 11.50 11.81 10.53
Investment Operations:
Investment income--net .33 .62 .67 .73 .66 .68
Net realized and unrealized gain
(loss) on investments .05 (.61) (.04) .32 (.31) 1.42
Total from Investment Operations .38 .01 .63 1.05 .35 2.10
Distributions:
Dividends from investment
income--net (.28) (.62) (.68) (.73) (.66) (.69)
Dividends from net realized gain
on investments -- -- (.18) (.09) -- (.13)
Total Distributions (.28) (.62) (.86) (.82) (.66) (.82)
Net asset value, end of period 10.99 10.89 11.50 11.73 11.50 11.81
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 7.06(a) .18 5.49 9.42 3.13 20.42
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .71(a) .74 .73 .75 .79 .81
Ratio of interest expense
to average net assets -- -- -- .02 -- --
Ratio of net investment income
to average net assets 6.01(a) 5.66 5.74 6.27 5.86 6.13
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- -- .04
Portfolio Turnover Rate 253.92(b) 521.51 244.95 374.76 258.36 263.53
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 131,064 135,822 121,461 88,292 60,936 37,447
(A) ANNUALIZED.
(B) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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 Quality Bond 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 the maximum amount of current income to the extent
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. ("Mellon"), which
is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March
22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of
Dreyfus, became the distributor of the portfolio's shares, which are sold to the
public without a sales charge. Prior to March 22, 2000 Premier Mutual Fund
Services, Inc. was the distributor.
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 (excluding short-term
investments other than U.S. Treasury Bills) are valued each business day by an
independent pricing service (" Service" ) approved by the Board of Trustees.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service are
valued at the mean between the
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority of
the portfolios' securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. 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. Short-term investments, excluding
U.S. Treasury Bills, are carried at amortized cost, which approximates value.
(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,
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 are declared and paid monthly. 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.
On June 30, 2000, the Board of Trustees declared a cash dividend of $.055 per
share from undistributed investment income-net, payable on July 3, 2000
(ex-dividend date) to shareholders of record as of the close of business on June
30, 2000.
(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 fund has an unused capital loss carryover of approximately $5,587,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. If not
applied, the carryover expires in fiscal 2007.
NOTE 2--Bank Lines of Credit:
The portfolio may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other Dreyfus-managed
funds in a $100 million unsecured line of credit primarily to be utilized for
temporary or emergency purposes, including the financing of redemptions.
Interest is charged to the portfolio at rates which are related to the Federal
Funds rate in effect at the time of borrowings. During the period ended June 30,
2000, the portfolio did not borrow under either line of credit.
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 .65 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, 2000, the portfolio was charged $90 pursuant to the
transfer agency agreement.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended June 30, 2000, the portfolio
was charged $4,865 pursuant to the custody agreement.
(b) Each board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the Fund Group"). Each Board member who is not an
" affiliated person" as defined in the Act receives an annual fee of $40,000 and
an attendance fee of $6,000 for each in person meeting and $500 for telephone
meetings. These fees are allocated among the funds in the Fund Group. The
Chairman of the Board receives an additional 25% of such compensation. Subject
to the fund' s Emeritus Program Guidelines, Emeritus Board members, if any,
receives 50% of the fund's annual retainer fee and per meeting fee paid at the
time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of investment
securities, excluding short-term securities, during the period ended June 30,
2000 amounted to $344,282,311 and $353,742,092, respectively.
At June 30, 2000, accumulated net unrealized depreciation on investments was
$642,183, consisting of $971,524 gross unrealized appreciation and $1,613,707
gross unrealized depreciation.
At June 30, 2000, 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).
NOTES
For More Information
Dreyfus Variable Investment Fund, Quality Bond Portfoli
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 120SA006
Dreyfus Variable
Investment Fund,
Small Cap Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Small Cap Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Small Cap Portfolio, covering the six-month period from January 1, 2000
through June 30, 2000. Inside, you'll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
the portfolio managers, Paul Kandel and Hilary Woods.
While small-cap stock prices were ultimately little changed over the past six
months, the period was marked by high levels of volatility and dramatic shifts
in investor sentiment. Between January and mid-March, both small- and large-cap
stocks generally continued to advance, led by fast-growing technology stocks
that, many investors believed, would benefit most from the "new economy."
Subsequently, however, technology stocks corrected sharply over concerns about
rising interest rates and extremely high valuations. Other sectors of the stock
market also declined, erasing most of the gains achieved earlier in the year.
Also primarily because of the precipitous drop in technology-stock prices,
small-capitalization stocks generally outperformed large-cap stocks,
particularly in the value-oriented segment of the market, a reversal of the
trends established over the past several years. In our view, these short-term
swings in investor sentiment highlight once again the importance of broad
diversification and a long-term perspective for most investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Small Cap
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Paul Kandel and Hilary Woods, Portfolio Managers
How did Dreyfus Variable Investment Fund, Small Cap Portfolio perform relative
to its benchmark?
For the six-month period ended June 30, 2000, Dreyfus Variable Investment Fund,
Small Cap Portfolio produced a total return of 14.71%.(1) This compares with a
total return of 3.04% for the portfolio's benchmark, the Russell 2000 Index, for
the same period.(2)
We attribute the portfolio's strong performance to our success in identifying
attractive individual investment opportunities among a wide range of sectors,
industries and investment styles. The portfolio also succeeded by emphasizing
investments in some of the market' s strongest sectors and de-emphasizing
investments in some of the market's weakest sectors.
What is the portfolio's investment approach?
The portfolio invests primarily in a diversified portfolio of small- and
mid-size companies, focusing on those believed to be new leaders in their
industries. Typically, these companies are characterized by new or innovative
products or services that have the potential to enhance earnings growth. We also
consider factors that we believe are likely to affect a stock's performance,
such as changes in a company's management or organizational structure.
Our investment approach targets both growth-oriented stocks (those of companies
with earnings that are expected to grow faster than the overall market),
value-oriented stocks (those that appear underpriced according to a variety of
financial measurements) , and stocks that exhibit both growth and value
characteristics. We further diversify among the market's various industries and
sectors, supervising a team of sector managers, each of whom makes buy-and-sell
decisions within their respective areas of expertise.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
Volatile market conditions prevailed during the first six months of 2000. Strong
economic growth in the United States generated concerns about prospects for
rising inflation, which prompted the Federal Reserve Board to raise short-term
interest rates. In this environment of uncertainty, the stock market rose and
fell rapidly, with both growth- and value-oriented stocks advancing and
retreating at various times. Technology emerged as the strongest sector of the
equities market, although prices of many of the most speculative technology
stocks fell sharply in mid-March as investors emphasized financial stability and
profitability. Energy stocks also climbed higher, boosted by rising prices for
oil and natural gas. Many other sectors fared less well. In particular, consumer
staples companies faced a highly competitive global environment that limited
their ability to increase prices and curtailed profitability.
These conditions affected our allocation of the portfolio's assets. We added to
our position in technology, a move that generally increased returns despite
losses among a few of our software and Internet-related holdings. Our best
performers in technology focused on optical networking companies helping to
provide broadband access to the Internet, such as SDL; software companies, such
as Rational Software, which provides development tools to the software industry;
and semiconductor companies, such as Novellus Systems, that are meeting rapidly
growing demand for semiconductor chips in a wide variety of applications.
We also held a larger percentage of stocks in the energy sector than the Russell
2000 Index, successfully capitalizing on rising commodity prices through
investments in oilfield construction, exploration and production companies, such
as Global Industries and Devon Energy. On the other hand, at the beginning of
the period we limited the portfolio's exposure to utilities, a sector that often
underperforms when energy prices rise. Although the utilities component of the
Russell 2000 Index performed poorly, the telecommunications utilities in which
we invested proved to be exceptionally strong performers.
The portfolio' s weakest performance came in the consumer staples sector, which
suffered from rising interest rates and the competitive pressures we noted
earlier. We also experienced poor performance from a few of our healthcare
holdings, such as IDX Systems and Total Renal Care, both of which posted
disappointing financial results during the period.
What is the portfolio's current strategy?
As of the end of the reporting period, we have reduced our exposure to most
types of cyclicals, such as housing, autos, industrial commodities and
machinery, in light of lower than expected employment and economic figures,
which indicate that the rate of U.S. economic growth may be slowing. Conversely,
we have initiated positions in cyclicals, which we anticipate may benefit from a
plateauing in energy prices.
We have also trimmed our holdings in the technology and energy sectors, bringing
the portfolio' s allocations in these sectors more in line with those of the
benchmark. Instead, we have replaced those holdings with consumer and financial
stocks, which have fallen to levels that we consider attractive. We have also
added to healthcare where we feel we have identified opportunities in both value
situations with improving fundamentals and companies with exciting growth
prospects. We continue to adhere to our blended growth-and-value investment
strategy in seeking to outperform the Russell 2000 Index.
July 17, 2000
(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 INC.-- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 2000 INDEX IS AN UNMANAGED
INDEX OF SMALL-CAP PERFORMANCE AND IS COMPOSED OF THE 2,000 SMALLEST COMPANIES
IN THE RUSSELL 3000 INDEX. THE RUSSELL 3000 INDEX IS COMPOSED OF THE 3,000
LARGEST U.S. COMPANIES BASED ON TOTAL MARKET CAPITALIZATION.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--93.0% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL SERVICES--3.5%
Dendrite International 600,000 (a) 19,987,500
Profit Recovery Group International 600,001 (a) 9,975,017
Strategic Distribution 945,000 (a) 1,830,938
Valassis Communications 500,000 (a) 19,062,500
50,855,955
CONSUMER NON-DURABLES--.8%
Dial 1,100,000 11,412,500
CONSUMER SERVICES--8.7%
Emmis Communications, Cl. A 490,000 (a) 20,273,750
Infinity Broadcasting, Cl. A 731,250 (a) 26,644,922
Mediacom Communications 700,000 10,762,500
Meredith 632,500 21,346,875
Premier Parks 650,000 (a) 14,787,500
SFX Entertainment, Cl. A 525,000 (a) 23,789,062
Sun International Hotels 495,000 (a) 9,900,000
127,504,609
ELECTRONIC TECHNOLOGY--18.8%
Conexant Systems 390,000 (a) 18,963,750
L-3 Communications Holdings 375,000 (a) 21,398,437
Lam Research 820,000 (a) 30,750,000
Lattice Semiconductor 630,000 (a) 43,548,750
Newport News Shipbuilding 550,000 20,212,500
Novellus Systems 640,000 (a) 36,200,000
SDL 210,000 (a) 59,889,375
Sanmina 530,000 (a) 45,315,000
276,277,812
ENERGY MINERALS--3.0%
Devon Energy 500,000 28,093,750
Ocean Energy 1,141,000 (a) 16,187,937
44,281,687
FINANCE--9.1%
Bank United, Cl. A 460,000 16,186,250
CCB Financial 225,000 8,325,000
Charter One Financial 715,005 16,445,115
Dime Bancorp 525,000 8,268,750
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCE (CONTINUED)
Everest Re Group 655,000 21,533,125
FBL Financial Group, Cl. A 650,000 10,237,500
First Virginia Banks 445,000 15,491,562
Gallagher (Arthur J.) & Co. 435,000 18,270,000
Protective Life 700,000 18,637,500
133,394,802
HEALTH SERVICES--4.9%
Foundation Health Systems, Cl. A 1,950,000 (a) 25,350,000
IDX Systems 675,000 (a) 9,534,375
Oxford Health Plans 900,000 (a) 21,431,250
Quest Diagnostics 225,000 (a) 16,101,562
72,417,187
HEALTH TECHNOLOGY--4.8%
Alkermes 400,000 (a) 18,850,000
Andrx 513,000 (a) 32,791,922
Gilead Sciences 260,000 (a) 18,492,500
70,134,422
INDUSTRIAL SERVICES--6.0%
Cooper Cameron 400,000 (a) 26,400,000
Global Industries 1,535,000 (a) 28,973,125
Granite Construction 675,000 16,537,500
Petroleum Geo-Services, ADR 950,000 (a) 16,209,375
88,120,000
NON-ENERGY MINERALS--3.1%
Bethlehem Steel 2,000,000 (a) 7,125,000
Freeport-McMoRan Copper & Gold, Cl. B 950,000 (a) 8,787,500
Martin Marietta Materials 300,000 12,131,250
Minerals Technologies 395,000 18,170,000
46,213,750
PROCESS INDUSTRIES--2.8%
Abitibi-Consolidated 1,425,000 13,359,375
Albany International, Cl. A 920,000 (a) 13,340,000
OM Group 350,000 15,400,000
42,099,375
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--3.8%
Crane 800,000 19,450,000
Harsco 530,000 13,515,000
MagneTek 750,000 (a) 6,000,000
Titan International 1,225,000 (b) 6,507,813
U.S. Can 654,000 (a) 11,363,250
56,836,063
RETAIL TRADE--3.2%
Fastenal 350,000 17,718,750
Tiffany & Co. 440,000 29,700,000
47,418,750
TECHNOLOGY SERVICES--11.1%
Art Technology Group 365,000 36,842,188
Intuit 485,000 (a) 20,066,875
National Data 600,000 13,800,000
Proxicom 445,000 (a) 21,304,375
Rational Software 435,000 (a) 40,427,813
VeriSign 175,000 (a) 30,887,500
163,328,751
TRANSPORTATION--1.5%
Expeditors International of Washington 474,000 22,515,000
UTILITIES--7.9%
IPALCO Enterprises 775,000 15,596,875
Metromedia Fiber Network, Cl. A 1,400,000 (a) 55,562,500
Minnesota Power 735,000 12,724,688
Montana Power 500,000 17,656,250
National Fuel Gas 295,000 14,381,250
115,921,563
TOTAL COMMON STOCKS
(cost $877,645,930) 1,368,732,226
Principal
SHORT-TERM INVESTMENTS--7.7% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S.TREASURY BILLS:
5.61%, 7/13/2000 19,214,000 19,187,100
5.72%, 8/3/2000 3,179,000 3,163,900
5.93%, 8/17/2000 40,736,000 40,451,255
5.58%, 8/31/2000 7,263,000 7,196,544
5.71%, 9/7/2000 1,312,000 1,298,408
5.82%, 9/14/2000 29,720,000 29,380,003
5.65%, 10/5/2000 6,604,000 6,505,534
5.69%, 10/12/2000 5,842,000 5,748,236
TOTAL SHORT-TERM INVESTMENTS
(cost $112,863,175) 112,930,980
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $990,509,105) 100.7% 1,481,663,206
LIABILITIES, LESS CASH AND RECEIVABLES (.7%) (10,474,075)
NET ASSETS 100.0% 1,471,189,131
(A) NON-INCOME PRODUCING.
(B) INVESTMENTS IN NON-CONTROLLED AFFILIATES (COST $15,690,801)--SEE NOTE 1(D).
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 990,509,105 1,481,663,206
Cash 48,476
Receivable for investment securities sold 1,427,390
Dividends receivable 932,995
Receivable for shares of Beneficial Interest subscribed 343,411
Prepaid expenses 40,253
1,484,455,731
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 917,777
Payable for investment securities purchased 9,247,045
Payable for shares of Beneficial Interest redeemed 3,023,843
Accrued expenses 77,935
13,266,600
--------------------------------------------------------------------------------
NET ASSETS ($) 1,471,189,131
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 841,089,273
Accumulated undistributed investment income--net 971,136
Accumulated net realized gain (loss) on investments 137,974,621
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 491,154,101
--------------------------------------------------------------------------------
NET ASSETS ($) 1,471,189,131
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 19,345,617
NET ASSET VALUE, offering and redemption price per share ($) 76.05
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $29,353 foreign taxes withheld at source):
Unaffiliated issuers 3,697,954
Affiliated issuers--Note 1(d) 81,513
Interest 2,499,629
TOTAL INCOME 6,279,096
EXPENSES:
Investment advisory fee--Note 3(a) 5,105,887
Custodian fees--Note 3(a) 60,318
Prospectus and shareholders' reports 56,852
Trustees' fees and expenses--Note 3(b) 53,708
Professional fees 17,852
Loan commitment fees--Note 2 4,508
Shareholder servicing costs 2,847
Miscellaneous 7,406
TOTAL EXPENSES 5,309,378
INVESTMENT INCOME--NET 969,718
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments:
Unaffiliated issuers 134,956,327
Affiliated issuers--Note 1(d) 19,151,862
NET REALIZED GAIN (LOSS) 154,108,189
Net unrealized appreciation (depreciation) on investments:
Unaffiliated issuers 65,407,485
Affiliated issuers --Note 1(d) (31,041,999)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 34,365,486
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 188,473,675
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 189,443,393
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
-------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 969,718 877,984
Net realized gain (loss) on investments 154,108,189 72,618,485
Net unrealized appreciation (depreciation)
on investments 34,365,486 177,189,417
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 189,443,393 250,685,886
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (871,441) (863,336)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 136,427,767 193,828,071
Dividends reinvested 871,441 863,336
Cost of shares redeemed (150,379,753) (395,620,128)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (13,080,545) (200,928,721)
TOTAL INCREASE (DECREASE) IN NET ASSETS 175,491,407 48,893,829
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,295,697,724 1,246,803,895
END OF PERIOD 1,471,189,131 1,295,697,724
Undistributed investment income--net 971,136 872,859
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,923,598 3,502,189
Shares issued for dividends reinvested 11,990 16,198
Shares redeemed (2,122,473) (7,114,605)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (186,885) (3,596,218)
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 66.34 53.91 57.14 52.08 46.13 36.52
Investment Operations:
Investment income--net .05(a) .04(a) .04 .07 .10 .16
Net realized and unrealized
gain (loss) on investments 9.71 12.43 (2.21) 8.49 7.53 10.54
Total from Investment Operations 9.76 12.47 (2.17) 8.56 7.63 10.70
Distributions:
Dividends from investment
income--net (.05) (.04) (.00)(b) (.07) (.10) (.18)
Dividends from net realized
gain on investments -- -- (1.06) (3.43) (1.51) (.91)
Dividends in excess of
net realized gain on investments -- -- -- -- (.07) --
Total Distributions (.05) (.04) (1.06) (3.50) (1.68) (1.09)
Net asset value, end of period 76.05 66.34 53.91 57.14 52.08 46.13
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 14.71(c) 23.15 (3.44) 16.75 16.60 29.38
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .39(c) .78 .77 .78 .79 .83
Ratio of net investment income
to average net assets .07(c) .07 .07 .12 .24 .54
Portfolio Turnover Rate 21.32(c) 40.60 75.04 79.00 89.10 99.02
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 1,471,189 1,295,698 1,246,804 1,274,292 960,365 543,281
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(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 Small Cap 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
maximize capital appreciation. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a
wholly-owned subsidiary of Dreyfus, became the distributor of the portfolio's
shares, which are sold to the public without a sales charge. Prior to March 22,
2000, Premier Mutual Fund Services, Inc. was the distributor.
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 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 received
net earnings credits of $9,920 during the period ended June 30, 2000 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(d) Affiliated issuers: Issuers in which the portfolio held 5% or more of the
outstanding voting securities are defined as "affiliated" in the Act. The
following summarizes affiliated issuers during the period ended June 30, 2000:
<TABLE>
Shares
-----------------------------------------
Beginning End of Dividend Market
Name of Issuer of Period Purchases Sales Period Income ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Duff & Phelps
Credit Rating* 280,000 -- 280,000 -- 8,400 --
Movado Group* 700,000 54,500 754,500 -- 36,363 --
Titan International 1,295,000 -- 70,000 1,225,000 36,750 6,507,813
TOTAL 81,513
* Not an affiliated issuer at June 30, 2000.
</TABLE>
(e) 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.
(f) 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 $3,588,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 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 $500 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, 2000, 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. During the
period ended June 30, 2000, the portfolio was charged $150 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, 2000, the
portfolio was charged $60,318 pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
are allocated among the funds in the Fund Group. The Chairman of the Board
receives an additional 25% of such compensation. Subject to the fund's Emeritus
Program Guidelines, Emeritus Board members, if any, receive 50% of the fund's
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
(c) During the period ended June 30, 2000, the portfolio incurred total
brokerage commissions of $702,666, of which $12,400 was paid to Dreyfus
Brokerage Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The following summarizes the aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the period ended
June 30, 2000:
Purchases ($) Sales ($)
--------------------------------------------------------------------------------
Unaffiliated issuers 273,895,340 335,303,599
Affiliated issuers 1,018,469 30,112,619
TOTAL 274,913,809 365,416,218
At June 30, 2000, accumulated net unrealized appreciation on investments was
$491,154,101, consisting of $579,652,724 gross unrealized appreciation and
$88,498,623 gross unrealized depreciation.
At June 30, 2000, 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).
NOTES
For More Information
Dreyfus Variable Investment Fund,
Small Cap 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 121SA006
Dreyfus Variable
Investment Fund,
Small Company
Stock Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
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, 2000 through June 30, 2000. Inside, you'll find valuable information about
how the portfolio was managed during the reporting period, including a
discussion with the portfolio managers, Anthony Galise and James Wadsworth.
While small-cap stock prices were ultimately little changed over the past six
months, the period was marked by high levels of volatility and dramatic shifts
in investor sentiment. Between January and mid-March, both small- and large-cap
stocks generally continued to advance, led by fast-growing technology stocks
that, many investors believed, would benefit most from the "new economy."
Subsequently, however, technology stocks corrected sharply over concerns about
rising interest rates and extremely high valuations. Other sectors of the stock
market also declined, erasing most of the gains achieved earlier in the year.
Also primarily because of the precipitous drop in technology stock prices,
small-capitalization stocks generally outperformed large-cap stocks,
particularly in the value-oriented segment of the market, a reversal of the
trends established over the past several years. In our view, these short-term
swings in investor sentiment highlight once again the importance of broad
diversification and a long-term perspective for most investors.
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 17, 2000
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, 2000, Dreyfus Variable Investment Fund,
Small Company Stock Portfolio produced a total return of 5.17%.(1) This compares
with a total return of 5.69% for the portfolio's benchmark, the Russell 2500
Index, during the same period.(2)
We attribute the portfolio' s performance to uncertainties regarding the
sustainability of economic growth in the United States in the face of rising
interest rates. These uncertainties created volatile market conditions in which
rapid swings in investor sentiment drove stock prices sharply higher and lower
at various times during the first six months of 2000. Stock prices of small- and
mid-cap companies in which the portfolio invests generally ended the period at
higher levels than at the start of 2000.
What is the portfolio's investment approach?
The portfolio invests primarily in a diversified selection of small- and
mid-size domestic companies, including growth and value stocks. The stocks are
chosen through a disciplined process that combines computer analysis with human
judgment.
The computer model identifies and ranks stocks within an industry based on three
broad concepts. The first is relative value, or how a stock is priced relative
to its perceived intrinsic worth. The second is relative growth, or how a
company' s profit growth compares to other companies in its industry. The third
factor is relative financial strength, which examines cash flow and debt level
of a company.
Using the insights our analysts gained from their fundamental analysis, we
select what we believe are the most attractive of the higher ranked securities
in the model. Finally, we use portfolio construction tech
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
niques in an effort to manage sector and industry risks. By way of example only,
if the Russell 2500 Index has a 10% weighting in a particular sector, typically
about 10% of the portfolio's assets also would be invested in that sector.
What other factors influenced the portfolio's performance?
Strong economic growth in the U.S. forced the Federal Reserve Board to increase
interest rates which raised concerns about prospects for rising inflation. In
this environment of uncertainty, stock prices were very volatile.
From the beginning of the period until mid-March, market strength was primarily
concentrated in technology and biotechnology companies that had little or no
earnings. Our investment process values strong relative earnings growth.
Although we missed the run-up in certain stocks at the beginning of the year,
our disciplined approach also enabled us to avoid the sharp downturn that
occurred in mid-March, when investors became concerned about the sky-high
valuations in technology and biotech. At that time, market strength shifted to
stocks that had lagged, typically "old economy" companies unrelated to the
Internet. Our relative performance for the balance of the reporting period
improved significantly, rising to nearly the same level as the Russell 2500
Index.
The portfolio' s best-performing stock during the period, Calpine, typifies our
strategy: the company has been profitable and has been a leader in its market
niche. As an independent power company, it has benefited from the shortage of
electric power supply nationwide. BJ Services, a portfolio holding that has
capitalized on higher oil and natural gas prices, has benefited from an increase
in drilling activity.
Some of our technology holdings had a positive impact on performance. Checkpoint
Software Technologies, which helps global corporations maintain Internet
security, was one of the portfolio's top performers. The portfolio's single most
disappointing holding was the technology com pany, Legato Systems. This was due
to the fact that the 1999 financial results of the company were restated because
of inflated sales figures. In addition, recent order trends were below analysts'
estimates.
What is the portfolio's current strategy?
As of the end of the reporting period, we continued to focus on companies that
we believe have strong earnings growth potential and are selling at what we
believe are reasonable valuation levels. These included companies serving the
fast-growing biotechnology industry. For example, one holding in the portfolio
is Waters, a company that provides equipment to drug development and genomics
research companies. We also owned stock in companies that offer exposure to the
Internet, but generally look to avoid those with low earnings and high
valuations. We continue to adhere to our disciplined investment process and
strive to outperform the Russell 2500 Index.
July 17, 2000
(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: FACTSET RESEARCH SYSTEMS, INC. -- REFLECTS REINVESTMENT OF
DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 2500
INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF SMALL- TO MID-CAP STOCK
PERFORMANCE AND IS COMPOSED OF THE 2,500 SMALLEST COMPANIES IN THE RUSSELL 3000
INDEX. THE RUSSELL 3000 INDEX IS COMPOSED OF THE 3,000 LARGEST U.S. COMPANIES BY
MARKET CAPITALIZATION.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
June 30, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
COMMON STOCKS--97.1% Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALCOHOL & TOBACCO--.6%
Canandaigua Brands, Cl. A 2,300 (a) 116,006
RJ Reynolds Tobacco Holdings 3,400 94,988
210,994
CONSUMER CYCLICAL--8.4%
Applied Power, Cl. A 4,400 147,400
Bed Bath & Beyond 5,400 (a) 195,750
BJ's Wholesale Club 5,630 (a) 185,790
Borg-Warner Automotive 4,150 145,769
Brinker International 4,800 (a) 140,400
Chico's FAS 4,100 (a) 82,000
Continental Airlines, Cl. B 4,200 (a) 197,400
Darden Restaurants 6,800 110,500
Dollar Tree Stores 5,400 (a) 213,638
Ethan Allen Interiors 6,300 151,200
Family Dollar Stores 9,400 183,888
Liz Claiborne 3,900 137,475
Michaels Stores 4,000 (a) 183,250
Miller (Herman) 4,700 121,613
Polaroid 4,100 74,056
Ross Stores 8,500 145,031
Ryan's Family Steak House 16,650 (a) 140,484
Tower Automotive 8,400 (a) 105,000
Zale 4,170 (a) 152,205
2,812,849
CONSUMER STAPLES--2.4%
Dial 8,500 88,188
Energizer Holdings 7,600 138,700
Pepsi Bottling Group 6,900 201,394
SUPERVALU 9,469 180,503
Suiza Foods 3,917 (a) 191,443
800,228
ENERGY--9.2%
BJ Services 8,900 (a) 556,250
Devon Energy 4,800 269,700
Kerr-McGee 3,390 199,798
KeySpan 6,200 190,650
Kinder Morgan 9,875 341,305
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
MCN Energy Group 8,600 183,825
Nabors Industries 6,700 (a) 278,469
Newfield Exploration 5,400 (a) 211,275
Noble Drilling 7,100 (a) 292,431
Smith International 4,300 (a) 313,094
Ultramar Diamond Shamrock 6,800 168,725
USX-U.S. Steel Group 5,200 96,525
3,102,047
HEALTH CARE--12.4%
AmeriSource Health, Cl. A 10,980 (a) 340,380
Bard (C.R.) 4,100 197,313
Chiron 2,500 (a) 118,750
Edwards Lifesciences 9,300 (a) 172,050
Forest Laboratories 3,000 (a) 303,000
Genzyme 5,100 (a) 303,131
Health Management Associates, Cl. A 11,489 (a) 150,075
IDEXX Laboratories 7,200 (a) 164,700
Lincare Holdings 6,300 (a) 155,138
MedImmune 3,200 (a) 236,800
Millennium Pharmaceuticals 3,200 (a) 358,000
Minimed 2,700 (a) 318,600
Orthodontic Centers of America 12,700 (a) 287,338
Regeneron Pharmaceuticals 3,500 (a) 104,344
St. Jude Medical 4,600 (a) 211,025
Waters 3,300 (a) 411,881
Watson Pharmaceuticals 6,300 (a) 338,625
4,171,150
INTEREST SENSITIVE--12.2%
Allmerica Financial 1,900 99,513
Ambac Financial Group 4,800 263,100
Bank United, Cl. A 5,100 179,456
Banknorth Group 11,600 177,625
Block (H&R) 4,690 151,839
Charter One Financial 9,300 213,900
City National 8,200 284,950
Edwards (A.G.) 6,110 238,290
Gallagher (Arthur J.) 6,100 256,200
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST SENSITIVE (CONTINUED)
GreenPoint Financial 3,800 71,250
Hibernia, Cl. A 12,600 137,025
Investment Technology Group 4,131 (a) 163,175
M&T Bank 539 242,550
Mercantile Bankshares 7,200 214,650
Metris 6,900 173,363
Mutual Risk Management 7,666 132,718
Old Kent Financial 4,914 131,450
People's Bank 5,200 95,550
Protective Life 6,000 159,750
Radian Group 6,066 313,916
TCF Financial 7,700 197,794
Waddell & Reed Financial, Cl. A 6,150 201,797
4,099,861
INTERNET--2.1%
GlobeSpan 2,900 (a) 354,027
Macromedia 2,000 (a) 193,375
SonicWALL 1,800 158,513
705,915
PRODUCER GOODS & SERVICES--8.0%
American Power Conversion 6,400 (a) 261,200
American Standard 4,700 (a) 192,700
AptarGroup 5,600 151,200
Bowater 1,600 70,600
CNF Transportation 5,900 134,225
CSX 8,500 180,094
Cabot 7,500 204,375
Caraustar Industries 3,950 59,744
Crompton 8,300 101,675
Cytec Industries 5,850 (a) 144,422
Martin Marietta Materials 2,800 113,225
Mead 2,400 60,600
Pentair 4,400 156,200
Placer Dome 6,510 62,252
Quanta Services 4,200 (a) 231,000
Southdown 2,976 171,864
Sybron International 5,400 (a) 106,988
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER GOODS & SERVICES (CONTINUED)
Temple-Inland 2,100 88,200
Terex 7,500 (a) 105,938
Timken 4,300 80,088
2,676,590
SERVICES--10.8%
American Management Systems 6,500 (a) 213,383
Avis Rent A Car 6,000 (a) 112,500
Convergys 6,600 (a) 342,375
DST Systems 2,900 (a) 220,763
Fiserv 4,800 (a) 207,600
Hispanic Broadcasting 6,800 225,250
Houghton Mifflin 2,200 102,713
Mail-Well 13,600 (a) 117,300
MarchFirst 5,841 (a) 106,598
Powertel 1,700 (a) 120,594
Republic Services 12,400 (a) 198,400
Robert Half International 9,400 (a) 267,900
SFX Entertainment 2,500 (a) 113,281
SunGuard Data Systems 8,000 (a) 248,000
Telephone & Data Systems 2,200 220,550
U.S. Interactive 8,000 103,500
Univision Communications, Cl. A 3,200 331,200
Western Wireless, Cl. A 3,500 (a) 190,750
Westwood One 5,200 (a) 177,450
3,620,107
TECHNOLOGY--22.6%
Allaire 3,600 132,300
American Tower, Cl. A 6,280 (a) 261,798
Brocade Communications Systems 1,300 (a) 238,530
CheckFree Holdings 4,700 (a) 242,344
Cognex 3,050 (a) 157,838
Dallas Semiconductor 8,600 350,450
Entrust Technologies 4,300 355,825
Flextronics International 1,800 (a) 123,638
Harmonic 1,900 (a) 47,025
Intergrated Device Technology 3,800 (a) 227,525
Kopin 4,200 290,850
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (CONTINUED)
Lattice Semiconductor 3,200 (a) 221,200
Micrel 5,000 (a) 217,188
Microchip Technology 5,500 320,461
Network Appliance 2,300 (a) 185,150
New Era of Networks 4,000 (a) 170,000
PMC-Sierra 1,502 (a) 266,887
Plantronics 2,100 (a) 242,550
Powerwave Technologies 6,000 (a) 264,000
RF Micro Devices 3,100 (a) 271,638
Rational Software 3,100 (a) 288,106
SCI Systems 8,300 (a) 325,256
Safeguard Scientific 4,400 141,075
Sawtek 3,600 207,225
Scientific-Atlanta 4,700 350,150
Semtech 4,000 (a) 305,938
TranSwitch 2,800 (a) 216,125
Triquint Semiconductor 2,800 267,925
Vignette 9,900 514,964
Vishay Intertechnology 5,700 (a) 216,244
Zebra Technologies, Cl. A 4,200 (a) 186,113
7,606,318
UTILITIES--8.4%
Allegheny Energy 6,600 180,675
Ameren 5,700 192,375
BroadWing 9,800 (a) 254,188
Calpine 16,400 (a) 1,078,300
DQE 6,150 242,925
Dynegy, Cl. A 6,100 416,706
Montana Power 7,400 261,313
TECO Energy 9,600 192,600
2,819,082
TOTAL COMMON STOCKS
(cost $27,510,681) 32,625,141
Principal
SHORT-TERM INVESTMENTS--2.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT;
Greenwich Capital Markets, 6.58%, dated
6/30/2000, due 7/3/2000 in the amount
of $940,515 (fully collateralized by
$980,000 Federal Home Loan Mortgage
Notes, 6.625%, 9/15/2009, value $962,624)
(cost $940,000) 940,000 940,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $28,450,681) 99.9% 33,565,141
CASH AND RECEIVABLES (NET) .1% 31,618
NET ASSETS 100.0% 33,596,759
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(b) 28,450,681 33,565,141
Cash 10,312
Receivable for investment securities sold 51,346
Dividends and interest receivable 16,020
Prepaid expenses 1,969
33,644,788
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 26,163
Accrued expenses 21,866
48,029
--------------------------------------------------------------------------------
NET ASSETS ($) 33,596,759
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 29,152,885
Accumulated undistributed investment income--net 33,367
Accumulated net realized gain (loss) on investments (703,953)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 5,114,460
--------------------------------------------------------------------------------
NET ASSETS ($) 33,596,759
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares
of Beneficial Interest authorized)
1,917,540
NET ASSET VALUE, offering and redemption price per share ($) 17.52
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $48 foreign taxes withheld at source) 141,318
Interest 24,244
TOTAL INCOME 165,562
EXPENSES:
Investment advisory fee--Note 3(a) 124,653
Auditing fees 14,734
Prospectus and shareholders' reports 9,722
Custodian fees--Note 3(a) 2,043
Legal fees 1,981
Shareholder servicing costs 1,643
Trustees' fees and expenses--Note 3(b) 1,348
Loan commitment fees--Note 2 118
Miscellaneous 619
TOTAL EXPENSES 156,861
INVESTMENT INCOME--NET 8,701
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 2,251,778
Net unrealized appreciation (depreciation) on investments (690,186)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,561,592
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,570,293
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 8,701 76,166
Net realized gain (loss) on investments 2,251,778 (669,406)
Net unrealized appreciation (depreciation)
on investments (690,186) 3,578,103
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,570,293 2,984,863
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (63,374) --
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 4,258,185 5,589,886
Dividends reinvested 63,374 --
Cost of shares redeemed (4,761,611) (10,901,459)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (440,052) (5,311,573)
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,066,867 (2,326,710)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 32,529,892 34,856,602
END OF PERIOD 33,596,759 32,529,892
Undistributed investment income--net 33,367 88,040
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 236,293 373,385
Shares issued for dividends reinvested 3,515 --
Shares redeemed (271,520) (734,730)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (31,712) (361,345)
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>
Six Months Ended
June 30, 2000 Year Ended December 31,
------------------------------
(Unaudited) 1999 1998 1997 1996(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 16.69 15.09 16.13 13.52 12.50
Investment Operations:
Investment income--net .00(b,c) .04(b) .04 .05 .05
Net realized and unrealized
gain (loss) on investments .86 1.56 (.99) 2.89 1.03
Total from Investment Operations .86 1.60 (.95) 2.94 1.08
Distributions:
Dividends from investment income--net (.03) -- (.04) (.04) (.05)
Dividends from net realized
gain on investments -- -- (.05) (.29) (.01)
Total Distributions (.03) -- (.09) (.33) (.06)
Net asset value, end of period 17.52 16.69 15.09 16.13 13.52
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.17(d) 10.60 (5.97) 21.77 8.73(d,e)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .47(d) .97 .98 1.12 .75(d)
Ratio of net investment income
to average net assets .03(d) .24 .26 .53 .39(d)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- .19(d)
Portfolio Turnover Rate 52.28(d) 47.01 45.09 34.48 35.68(d)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 33,597 32,530 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) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(D) NOT ANNUALIZED.
(E) 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. (" Mellon" ), which is a wholly-owned subsidiary of Mellon
Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation
(" DSC" ), a wholly-owned subsidiary of Dreyfus, became the distributor of the
portfolio' s shares, which are sold to the public without a sales charge. Prior
to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor.
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 received
net earnings credits of $2,058 during the period ended June 30, 2000 based on
available cash balances left on deposit. Interest earned under this arrangement
is included in interest income.
The portfolio may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by Dreyfus, 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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(c) 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.
(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 $2,792,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. If not
applied, $1,456,000 of the carryover expires in fiscal 2006 and $1,336,000
expires in fiscal 2007.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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, 2000, 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. During the
period ended June 30, 2000, the portfolio was charged $62 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, 2000, the
portfolio was charged $2,043 pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieves emeritus status.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$16,984,465 and $17,799,960, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$5,114,460, consisting of $8,043,098 gross unrealized appreciation and
$2,928,638 gross unrealized depreciation.
At June 30, 2000, 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,
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 151SA006
Dreyfus Variable
Investment Fund,
Special Value Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Special Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Special Value Portfolio, covering the six-month period from January 1,
2000 through June 30, 2000. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with the portfolio manager, Timothy M. Ghriskey.
While stock prices were little changed on average over the past six months, the
period was marked by high levels of volatility and dramatic shifts in investor
sentiment. Between January and mid-March, large-cap stocks generally continued
to advance, led by fast-growing technology stocks that, many investors believed,
would benefit most from the "new economy." Subsequently, however, technology
stocks corrected sharply over concerns about rising interest rates and extremely
high valuations. Other sectors of the large-cap stock market also declined,
erasing the gains achieved earlier in the year.
Although the market experienced a precipitous drop in technology stock prices,
growth-oriented stocks generally outperformed value stocks during the reporting
period. In addition, small-capitalization stocks generally outperformed
large-cap stocks, particularly in the value-oriented segment of the market. In
our view, these short-term swings in investor sentiment highlight once again the
importance of broad diversification and a long-term perspective for most
investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Special Value
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Timothy M. Ghriskey, Senior Portfolio Manager
How did Dreyfus Variable Investment Fund, Special Value Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio's total return was
-4.05% .(1) The Russell 1000 Value Index (the "Index" ), the portfolio's
benchmark, produced a total return of -4.23%.(2)
We attribute the portfolio's performance to a volatile investment environment
that generally favored growth-oriented stocks over value-oriented stocks.
Although growth and value stocks each showed strength and weakness at various
times, growth stocks generally outperformed value stocks during the reporting
period. As a result, prices for the types of well-established, value-oriented
companies in which the portfolio invests generally ended the period lower.
What is the portfolio's investment approach?
The portfolio invests in a diversified group of value-oriented companies. We
define a value stock as one that appears underpriced in relation to the
company's intrinsic value, as measured by a wide range of financial and business
data. To put it another way, we seek to buy growing companies at bargain prices
We select investments one stock and one company at a time. Our investment
process starts with computerized, quantitative analysis of the universe of
stocks. First we attempt to identify those stocks that meet our definition of
value, and then we focus on those value stocks we believe are best positioned to
grow in the current market environment. Our team of experienced analysts examine
the fundamentals of each top-ranked candidate. Armed with these analytical
insights, the portfolio manager decides which stocks to purchase, and whether
any current holdings should be sold.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
The market' s high level of volatility created challenging conditions for the
portfolio. During January and February 2000, the portfolio was hurt by the
market's narrow emphasis on growth-oriented technology stocks, many of which had
little or no earnings. Because our management discipline emphasizes
value-conscious investing, the portfolio's results suffered in this environment.
Beginning in mid-March, rising interest rates prompted investors to display
renewed interest in company fundamentals, creating a more positive environment
for the portfolio. Value stocks, which stood at historically unprecedented low
levels compared to growth stocks, began to perform more strongly. In fact,
value-oriented stocks generally outperformed growth-oriented stocks from
mid-March through late May. In June, however, the trend favoring growth
reasserted itself, and value underperformed through the remainder of the period
Although the portfolio's overall performance closely matched that of the Index,
we outperformed in some sectors and underperformed in others. Our best results
relative to the Index came in the utilities and consumer cyclicals sectors.
Among utilities, we achieved strong returns from investments in companies such
as Coastal and Dynegy that capitalized on rising oil and gas prices. The
portfolio also benefited from our decision to allocate a relatively small
percentage of assets to the weak-performing consumer cyclicals sector, which was
hurt by slowing sales among retailers. Our most disappointing results relative
to the Index came in the energy and financial sectors. Performance suffered as a
result of our relatively small allocation of assets to the energy service
industry within the energy sector, which benefited from rising oil and gas
prices. Our financial services holdings performed weakly for several reasons.
Insurers, such as John Hancock and American General, were hurt by a sharply
competitive environment that limited pricing flexibility. Banks, such as
FleetBoston Financial and First Union, fell in response to disappointing
earnings and a variety of company-specific problems.
What is the portfolio's current strategy?
As of the end of the period, we have emphasized investments in technology and
health care relative to the Index, two of the market's strongest performing
sectors of late. We have de-emphasized stocks in the consumer cyclicals and
consumer staples areas, both of which have suffered recently from competitive
pressures and disappointing earnings.
We believe that value-oriented stocks remain near all-time lows compared to
growth-oriented stocks. While it is impossible to predict if or when the gap
between value and growth will narrow, such disparities have closed in the past
when the relationships between various types of stocks have returned to their
historical norms. Furthermore, such shifts tend to happen rapidly and with
little warning, as occurred during the recent period. We will continue to adhere
to our disciplined investment strategy in seeking to outperform the Russell 1000
Value Index.
July 17, 2000
(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 INC. -- REFLECTS THE REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE RUSSELL 1000 VALUE INDEX IS AN
UNMANAGED INDEX WHICH MEASURES THE PERFORMANCE OF THOSE RUSSELL 1000 COMPANIES
WITH LOWER PRICE-TO-BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES.
The Portfolio
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
COMMON STOCKS--97.8% Shares Value ($)
--------------------------------------------------------------------------------
AUTO RELATED--.0%
Visteon 1,532 (a) 18,574
BANKING--17.8%
Bank of America 24,700 1,062,100
Bank of New York 18,600 864,900
Bank One 8,200 217,813
Chase Manhattan 13,350 614,934
Citigroup 38,600 2,325,650
First Union 29,700 736,930
FleetBoston Financial 27,400 931,600
Morgan (J.P.) 7,600 836,950
Wells Fargo 25,000 968,750
8,559,627
CONSUMER DURABLES--1.7%
Ford Motor 11,700 503,100
General Motors 5,313 308,486
811,586
CONSUMER NON--DURABLES--4.1%
Nabisco Holdings 17,800 461,687
PepsiCo 13,200 586,575
Philip Morris Cos. 34,600 919,062
1,967,324
CONSUMER SERVICES--4.0%
Cendant 12,600 (a) 176,400
Disney (Walt) 29,300 1,137,206
Viacom, Cl. B 8,700 (a) 593,231
1,906,837
ELECTRONIC TECHNOLOGY--7.3%
Agilent Technologies 762 (a) 56,198
Apple Computer 3,000 (a) 157,125
Boeing 7,800 326,137
Compaq Computer 17,800 455,013
Hewlett-Packard 2,000 249,750
International Business Machines 8,700 953,193
Micron Technology 5,200 (a) 457,925
Motorola 13,500 392,343
COMMON STOCKS (continued) Shares Value ($)
--------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY (CONTINUED)
Unisys 15,300 (a) 222,806
Xircom 5,600 (a) 266,000
3,536,490
ENERGY MINERALS--9.8%
BP Amoco, ADS 9,440 533,950
Burlington Resources 9,100 348,075
Chevron 2,200 186,587
Conoco, Cl. B 6,100 149,831
Exxon Mobil 34,748 2,727,718
Santa Fe International 13,400 468,163
Texaco 5,500 292,875
4,707,199
FINANCE--12.1%
American Express 9,300 484,763
American General 2,700 164,700
American International Group 11,700 1,374,750
Associates First Capital, Cl. A 37,900 845,643
Federal Home Loan Mortgage 6,800 275,400
Federal National Mortgage Association 5,400 281,813
Goldman Sachs Group 2,900 275,138
Lincoln National 6,700 242,038
Merrill Lynch 5,700 655,500
Morgan Stanley Dean Witter & Co. 11,300 940,725
XL Capital, Cl. A 5,100 276,038
5,816,508
HEALTH SERVICES--1.8%
HCA Healthcare 28,900 877,838
HEALTH TECHNOLOGY--6.6%
American Home Products 13,700 804,875
Pharmacia 5,983 309,246
Schering-Plough 13,700 691,850
Teva Pharmaceutical Industries, ADR 9,400 521,113
Watson Pharmaceuticals 16,100 (a) 865,375
3,192,459
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (continued) Shares Value ($)
--------------------------------------------------------------------------------
INDUSTRIAL SERVICES--1.0%
Cooper Cameron 7,500 (a) 495,000
NON--ENERGY MINERALS--1.0%
Alcoa 16,400 475,600
PROCESS INDUSTRIES--4.0%
Dow Chemical 7,200 217,350
duPont (E.I.) deNemours 8,600 376,250
Eastman Chemical 15,500 740,125
International Paper 4,000 119,250
Union Carbide 9,500 470,250
1,923,225
PRODUCER MANUFACTURING--3.5%
Caterpillar 3,900 132,113
Emerson Electric 8,600 519,225
Honeywell International 5,262 177,264
Minnesota Mining & Manufacturing 3,900 321,750
Tyco International 11,600 549,550
1,699,902
TECHNOLOGY SERVICES--1.0%
Computer Associates International 7,300 373,669
Electronic Data Systems 2,400 99,000
472,669
UTILITIES--22.1%
AES 9,200 (a) 419,750
AT&T 36,470 1,153,364
AT&T--Liberty Media Group, Cl. A 32,000 776,000
Bell Atlantic 4,100 208,331
BellSouth 18,600 792,825
Coastal 10,900 663,538
Duke Energy 4,000 225,500
Dynegy, Cl. A 17,000 1,161,313
Enron 7,400 477,300
COMMON STOCKS (continued) Shares Value ($)
--------------------------------------------------------------------------------
UTILITIES (CONTINUED)
GTE 19,000 1,182,750
SBC Communications 28,658 1,239,458
Sprint (FON Group) 6,800 346,800
Sprint (PCS Group) 6,600 (a) 392,700
U S WEST 14,300 1,226,225
Worldcom 7,500 (a) 344,063
10,609,917
TOTAL COMMON STOCKS
(cost $43,492,911) 47,070,755
--------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS--2.0% Amount ($) Value ($)
--------------------------------------------------------------------------------
U.S. TREASURY BILLS:
5.75%, 9/7/2000 9,000 8,907
5.68%, 10/5/2000 937,000 923,029
5.69%, 10/12/2000 20,000 19,679
(cost $951,389) 951,615
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $44,444,300) 99.8% 48,022,370
CASH AND RECEIVABLES (NET) .2% 109,253
NET ASSETS 100.0% 48,131,623
A NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 44,444,300 48,022,370
Cash 58,332
Dividends receivable 237,042
Receivable for investment securities sold 87,947
Prepaid expenses 48
48,405,739
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 35,608
Payable for investment securities purchased 207,353
Accrued expenses 31,155
274,116
--------------------------------------------------------------------------------
NET ASSETS ($) 48,131,623
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 42,461,282
Accumulated undistributed investment income--net 378,841
Accumulated net realized gain (loss) on investments 1,713,430
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 3,578,070
--------------------------------------------------------------------------------
NET ASSETS ($) 48,131,623
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest authorized)
3,444,025
NET ASSET VALUE, offering and redemption price per share ($) 13.98
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $1,498 foreign taxes withheld at source) 592,907
Interest 17,925
TOTAL INCOME 610,832
EXPENSES:
Investment advisory fee--Note 3(a) 193,162
Prospectus and shareholders' reports 16,176
Auditing fees 14,209
Custodian fees 5,961
Trustees' fees and expenses--Note 3(b) 2,460
Shareholder servicing costs--Note 3(a) 157
Legal fees 56
Miscellaneous 558
TOTAL EXPENSES 232,739
INVESTMENT INCOME--NET 378,093
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 1,904,468
Net unrealized appreciation (depreciation) on investments (4,539,021)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,634,553)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,256,460)
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 378,093 425,095
Net realized gain (loss) on investments 1,904,468 3,789,504
Net unrealized appreciation
(depreciation) on investments (4,539,021) (4,898)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (2,256,460) 4,209,701
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (53,426) (370,921)
Net realized gain on investments (199,456) (4,725,193)
TOTAL DIVIDENDS (252,882) (5,096,114)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 786,108 4,712,401
Dividends reinvested 252,882 5,096,114
Cost of shares redeemed (7,497,032) (15,087,532)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (6,458,042) (5,279,017)
TOTAL INCREASE (DECREASE) IN NET ASSETS (8,967,384) (6,165,430)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 57,099,007 63,264,437
END OF PERIOD 48,131,623 57,099,007
Undistributed investment income--net 378,841 54,174
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 54,556 311,362
Shares issued for dividends reinvested 17,144 350,784
Shares redeemed (527,209) (999,465)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (455,509) (337,319)
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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.
--------------------------------------------------------------------------------
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 14.64 14.93 12.99 10.60 11.70 12.37
Investment Operations:
Investment income--net .10(a) .11(a) .10 .06 .63 .51
Net realized and unrealized
gain (loss) on investments (.68) .95 1.94 2.40 (1.05) (.54)
Total from Investment Operations (.58) 1.06 2.04 2.46 (.42) (.03)
Distributions:
Dividends from investment
income--net (.02) (.10) (.10) (.01) (.56) (.64)
Dividends in excess of
investment income--net -- -- -- (.00) (.06) --
Dividends from net realized
gain on investments (.06) (1.25) -- (.06) -- --
Paid-in capital -- -- -- -- (.06) --
Total Distributions (.08) (1.35) (.10) (.07) (.68) (.64)
Net asset value, end of period 13.98 14.64 14.93 12.99 10.60 11.70
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (4.05)(c) 7.27 15.69 23.14 (3.62) (.26)
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .45(c) .86 .83 .99 .93 .94
Ratio of dividends on securities
sold short to average net assets -- -- -- .02 -- --
Ratio of net investment
income to average net assets .73(c) .70 .67 .38 4.12 3.56
Portfolio Turnover Rate 63.35(c) 171.41 252.24 188.57 124.19 53.88
-------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 48,132 57,099 63,264 52,981 21,101 25,272
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(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 Special Value 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 maximize total return, consisting of capital appreciation and
current income. The Dreyfus Corporation ("Dreyfus") serves as the portfolio's
investment adviser. Dreyfus is a direct subsidiary of Mellon Bank, N.A., which
is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March
22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of
Dreyfus, became the distributor of the portfolio's shares, which are sold to the
public without a sales charge. Prior to March 22, 2000, Premier Mutual Fund
Services, Inc. was the distributor.
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 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 The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
Code of 1986, as amended (the "Code"). To the extent that the net realized
capital gain can be offset by capital loss carryovers, if any, 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.
NOTE 2--Bank Line of Credit:
In accordance with an agreement with a bank, the portfolio may borrow up to $5
million under a short-term unsecured line of credit. Interest on borrowings is
charged at rates which are related to the Federal Funds rate in effect from time
to time. During the period ended June 30, 2000, the portfolio did not borrow
under the line of credit.
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. During the
period ended June 30, 2000, the portfolio was charged $44 pursuant to the
transfer agency agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to
the fund's Emeritus Program Guidelines, Emeritus Board Members, if any, receive
50% of the fund's annual retainer fee and per meeting fee paid at the time the
Board member achieves emeritus status.
(c) During the period ended June 30, 2000, the portfolio incurred total
brokerage commissions of $68,423, of which $2,255 was paid to Dreyfus Brokerage
Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$32,414,916 and $40,262,141, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$3,578,070, consisting of $7,227,490 gross unrealized appreciation and
$3,649,420 gross unrealized depreciation.
At June 30, 2000, 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,
Special Value 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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 118SA006
Dreyfus Variable
Investment Fund,
Zero Coupon 2000 Portfolio
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE PORTFOLIO
------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
7 Statement of Financial Futures
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
---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Zero Coupon 2000 Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Zero Coupon 2000 Portfolio, covering the six-month period from January 1,
2000 through June 30, 2000. Inside, you'll find valuable information about how
the portfolio was managed during the reporting period, including a discussion
with Gerald Thunelius, portfolio manager and a member of the Dreyfus Taxable
Fixed Income Team that manages the portfolio.
Tighter monetary policy adversely affected most -- but not all -- sectors of the
bond market over the past six months. This was primarily a result of efforts by
the Federal Reserve Board (the "Fed" ) to forestall potential inflationary
pressures. The Fed raised short-term interest rates three times during the
reporting period, for a total increase of 1.00 percentage points. These rate
hikes contributed to a total interest-rate increase of 1.75 percentage points
since late June 1999, before the current reporting period began.
Higher interest rates led to an erosion of most bond prices, especially among
higher yielding securities. U.S. Treasury securities represented a notable
exception. Prices of these direct obligations of the federal government rose
primarily because of reduced supply amid robust demand from domestic and foreign
investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Zero Coupon
2000 Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF PERFORMANCE
Gerald Thunelius, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus Variable Investment Fund, Zero Coupon 2000 Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 2000, the portfolio produced a total
return of 2.65%.(1) In comparison, the portfolio's benchmark, the Merrill Lynch
U.S. Treasury Coupon 1-Year Strips Index, produced a 3.44% total return for the
same period.(2)
We attribute the portfolio' s underperformance of the index to our duration
management strategy, which caused us to reduce the portfolio's sensitivity to
rising interest rates just prior to the beginning of the reporting period. This
strategy was implemented in view of the slated liquidation of the portfolio on
December 31, 2000.
What is the portfolio's investment strategy?
The portfolio seeks to maximize current income while attempting to preserve
capital. To pursue this goal, the portfolio invests primarily in debt
obligations issued by the U.S. Government and its agencies and instrumentalities
that have been stripped of their unmatured interest coupons, and interest
coupons that have been stripped from these debt obligations. Simply put,
"stripped securities" are debt obligations that do not entitle the holder to any
periodic payments of interest prior to maturity. They trade at a substantial
discount from their face amount, which varies depending on the time of maturity,
prevailing interest rates and the perceived credit quality of the issuer
At least 65% of the portfolio' s assets will be invested in zero coupon
securities that mature on or about December 31, 2000. On that date, the
portfolio will be liquidated. Prior to December 31, 2000, shareholders will be
notified of the impending liquidation of the portfolio and will be given the
opportunity to exchange their investment for another portfolio in Dreyfus
Variable Investment Fund. If the portfo The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
lio has not received instructions from its shareholders before the liquidation
date, their investment will automatically be invested in Dreyfus Variable
Investment Fund, Money Market Portfolio.
What other factors influenced the portfolio's performance?
The portfolio was primarily influenced by the approach of its liquidation date
of December 31, 2000. As the end of the portfolio's investment life nears, its
average duration has naturally contracted. This generally helped performance in
a rising interest-rate environment.
In addition, the portfolio's performance was affected by inflation fears, rising
interest rates and unusual conditions in the U.S. Treasury securities
marketplace. When the reporting period began on January 1, 2000, investors were
relieved that Y2K concerns proved to be overblown. Yet they were becoming
increasingly concerned that robust economic growth might rekindle long-dormant
inflationary pressures, especially rising wages in a tight job market. In an
attempt to ease these pressures and forestall a reacceleration of inflation, the
Federal Reserve Board raised short-term interest rates three times during the
reporting period, causing most bond prices to fall.
U.S. Treasury securities provided particularly attractive returns during the
reporting period. This was due to the U.S. Treasury Department announcing its
intention to use a portion of the federal budget surplus to buy back higher
yielding, long-term bonds. With a reduced supply of U.S. Treasury bonds and
strong demand from domestic and foreign investors, the prices of U.S. Treasury
securities rose. The fund benefited from this rally through its holdings of U.S.
Treasury securities.
What is the portfolio's current strategy?
We have begun to prepare for the portfolio's slated liquidation on December 31,
2000. Accordingly, we have virtually eliminated the portfolio's holdings of
non-government securities, including corporate bonds. Instead, we have focused
on U.S. Treasury and agency securities, which we expect to be easier to sell or
redeem for cash when the time comes.
As the liquidation date approaches, we plan to continue reducing the portfolio's
average duration. If interest rates continue to rise, this reduction should help
cushion the portfolio from potentially lower bond prices. If interest rates
reverse course and fall, however, the portfolio's short average duration may
prevent it from locking in higher yields.
July 17, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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: BLOOMBERG L.P. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MERRILL LYNCH U.S. TREASURY COUPON
1-YEAR STRIPS INDEX IS AN UNMANAGED ZERO COUPON INDEX WITH CONSTANT MATURITY AND
DURATION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES
The Portfolio
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
Principal
BONDS AND NOTES--82.6% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--4.4%
New Jersey Economic Development Authority,
State Pension Funding Bonds, Ser. 1997B,
Zero Coupon, 2001 1,500,000 1,438,095
U. S. GOVERNMENTS--38.4%
U. S. Treasury Principal Strips,
0%, 11/15/2000 13,000,000 12,708,540
U. S. GOVERNMENT AGENCIES--39.8%
FACO Coupon Strips,
Ser. 97-1, Zero Coupon, 7/21/2000 4,743,000 4,726,860
FICO Coupon Strips,
Ser. 1, Zero Coupon, 11/11/2000 1,132,000 1,106,862
Tennessee Valley Authority:
Coupon Strips, Zero Coupon, 11/1/2000 3,000,000 2,937,153
Principal Strips, Zero Coupon, 11/1/2000 4,500,000 4,397,720
13,168,595
TOTAL BONDS AND NOTES
(cost $27,357,133) 27,315,230
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--17.7%
--------------------------------------------------------------------------------
U. S. GOVERNMENTS--7.1%
U. S. Treasury Bills:
5.67%, 7/6/2000 200,000 199,916
5.64%, 7/27/2000 30,000 (a) 29,894
5.97%, 8/10/2000 1,150,000 1,143,227
5.97%, 8/17/2000 980,000 973,150
2,346,187
U. S. GOVERNMENT AGENCIES--10.6%
Federal Home Loan Banks,
Discount Notes,
6.5%, 7/3/2000 3,500,000 3,498,734
TOTAL SHORT-TERM INVESTMENTS
(cost $5,844,291) 5,844,921
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $33,201,424) 100.3% 33,160,151
LIABILITIES, LESS CASH AND RECEIVABLES (.3%) (103,389)
NET ASSETS 100.0% 33,056,762
(A) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF FINANCIAL FUTURES
June 30, 2000 (Unaudited)
Unrealized
Market Value Appreciation
Covered (Depreciation)
Contracts By Contracts ($) Expiration at 6/30/00 ($)
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL FUTURES LONG
U. S. Treasury 5 Year Notes 4 396,063 Sept. 2000 375
U. S. Treasury Bonds 8 778,750 Sept. 2000 1438
FINANCIAL FUTURES SHORT
U. S. Treasury 10 Year Notes 3 (295,453) Sept. 2000 (1,266)
547
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 33,201,424 33,160,151
Prepaid expenses 2,193
33,162,344
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 13,692
Cash overdraft due to Custodian 66,056
Payable for futures variation margin--Note 4(a) 1,141
Accrued expenses 24,693
105,582
--------------------------------------------------------------------------------
NET ASSETS ($) 33,056,762
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 33,287,310
Accumulated undistributed investment income--net 154,870
Accumulated net realized gain (loss) on
investments and financial futures (344,692)
Accumulated net unrealized appreciation (depreciation)
on investments (including $547 net unrealized
appreciation on financial futures)--Note 4(b) (40,726)
--------------------------------------------------------------------------------
NET ASSETS ($) 33,056,762
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares
of Beneficial Interest authorized)
2,704,144
NET ASSET VALUE, offering and redemption price per share ($) 12.22
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 1,020,387
EXPENSES:
Investment advisory fee--Note 3(a) 77,589
Auditing fees 12,433
Prospectus and shareholders' reports 10,438
Custodian fees--Note 3(a) 2,068
Shareholder servicing costs 1,110
Trustees' fees and expenses--Note 3(b) 1,098
Loan commitment fees--Note 2 147
Legal fees 102
Miscellaneous 1,442
TOTAL EXPENSES 106,427
INVESTMENT INCOME--NET 913,960
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (22,837)
Net realized gain (loss) on financial futures (62,370)
NET REALIZED GAIN (LOSS) (85,207)
Net unrealized appreciation (depreciation) on investments
(including $67,180 net unrealized
appreciation on financial futures) 89,515
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 4,308
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 918,268
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 913,960 2,039,253
Net realized gain (loss) on investments (85,207) (64,501)
Net unrealized appreciation (depreciation)
on investments 89,515 (965,706)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 918,268 1,009,046
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (764,288) (2,034,055)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 1,651,131 9,409,530
Dividends reinvested 764,288 2,034,055
Cost of shares redeemed (7,175,382) (11,283,823)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (4,759,963) 159,762
TOTAL INCREASE (DECREASE) IN NET ASSETS (4,605,983) (865,247)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 37,662,745 38,527,992
END OF PERIOD 33,056,762 37,662,745
Undistributed investment income--net 154,870 5,198
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 135,490 762,726
Shares issued for dividends reinvested 62,918 165,546
Shares redeemed (589,612) (915,601)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (391,204) 12,671
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 12.17 12.50 12.30 12.29 12.70 11.39
Investment Operations:
Investment income--net .32 .66 .67 .69 .68 .69
Net realized and unrealized
gain (loss) on investments (.00)(a (.33) .20 .14 (.36) 1.31
Total from Investment Operations .32 .33 .87 .83 .32 2.00
Distributions:
Dividends from investment
income--net (.27) (.66) (.67) (.69) (.68) (.69)
Dividends from net realized
gain on investments -- -- -- (.13) (.05) --
Total Distributions (.27) (.66) (.67) (.82) (.73) (.69)
Net asset value, end of period 12.22 12.17 12.50 12.30 12.29 12.70
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.31(b) 2.69 7.27 7.01 2.59 17.95
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .62(b) .64 .59 .61 .66 .68
Ratio of net investment income to
average net assets 5.29(b) 5.32 5.41 5.65 5.54 5.73
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- -- .03
Portfolio Turnover Rate 11.94(c) 57.23 84.71 200.54 98.28 49.43
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 33,057 37,663 38,528 35,106 31,796 22,291
(A) AMOUNT REPRESENTS LESS THAN $.01.
(B) ANNUALIZED.
(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 Zero Coupon 2000 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 an investment return as is consistent with the
preservation of capital. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a
wholly-owned subsidiary of Dreyfus, became the distributor of the portfolio's
shares, which are sold to the public without a sales charge. Prior to March 22,
2000, Premier Mutual Fund Services, Inc. was the distributor.
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 (excluding short-term
investments other than U.S. Treasury Bills and financial futures) are valued
each business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily available
and are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by the
Service from
dealers in such securities) and asked prices (as calculated by the Service based
upon its evaluation of the market for such securities). Other investments (which
constitute a majority of the portfolio's securities) are carried at fair value
as determined by the Service, based on methods which include consideration of:
yields or prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Securities
for which there are no such valuations are valued at fair value as determined in
good faith under the Board of Trustees. Short-term investments, excluding U. S.
Treasury Bills, are carried at amortized cost, which approximates value.
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 on each business day.
(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,
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 are declared and 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 net realized capital gain can be offset by
capital loss carryovers, it is the policy of the portfolio not to distribute
such gain.
On June 30, 2000, the Board of Trustees declared a cash dividend of $.054 per
share from undistributed investment income-net, payable on July 3, 2000
(ex-dividend date) to shareholders of record as of the close of business on June
30, 2000.
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 $221,000 available for Federal
income tax purposes to be applied against future net securities profits, if any,
realized subsequent to December 31, 1999. This amount is calculated based on
Federal income tax regulations which may differ from financial reporting in
accordance with generally accepted accounting principles. If not applied,
$146,000 of the carryover expires in fiscal 2005 and $75,000 expires in fiscal
2007.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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, 2000, 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 .45 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, 2000, the portfolio was charged $55 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended June 30, 2000, the portfolio
was charged $2,068 pursuant to the custody agreement.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $40,000
and an attendance fee of $6,000 for each in person meeting and $500 for
telephone meetings. These fees are allocated among the funds in the Fund Group.
The Chairman of the Board receives an additional 25% of such compensation.
Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if
any, receive 50% of the fund's annual retainer fee and per meeting fee paid at
the time the Board member achieved emeritus status.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
June 30, 2000, amounted to $3,942,402 and $14,941,522, respectively.
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 the market value of the
contract 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
June 30, 2000 are set forth in the Statement of Financial Futures.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(b) At June 30, 2000, accumulated net unrealized depreciation on investments and
financial futures, was $40,726, consisting of $5,225 gross unrealized
appreciation and $45,951 gross unrealized depreciation.
At June 30, 2000, 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,
Zero Coupon 2000
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 119SA006
