DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus Variable
Investment Fund, Quality Bond Portfolio. For its semi-annual reporting ended
June 30, 1997, the Portfolio produced a total return of 2.69% per share,
based upon net asset value,* compared to 3.05% for the Merrill Lynch Domestic
Master Index (Subindex D010).** Income dividends of $.354 per share were
declared during the period, which is equivalent to an annualized distribution
rate per share of 6.20%.***
ECONOMIC REVIEW
Despite recent moderation in the rate of new job creation, the latest
reported unemployment rate (5% in June) was the lowest since 1973. When the
unemployment rate was last at that level, the inflation rate was heading
toward double-digit territory. Now, inflation is subdued; the Consumer Price
Index rose at an annual rate of just 1.4% for the twelve-month period through
May. Producer prices have risen a minuscule 0.6% over the same time. It has
been unprecedented for the economy to have seven years of expansion, low
unemployment and low inflation at the same time.
Ever alert for signs of incipient inflation, the Federal Open Market
Committee, the policy-making arm of the Federal Reserve, has raised interest
rates just once in more than two years. That hike came in March 1997 when the
Federal Funds rate was increased by one quarter of a percentage point to
5.50%. (The Federal Funds rate is the rate of interest that banks charge one
another for overnight loans.) While there have been some signs that wages are
increasing (an area of particular concern to the Federal Reserve), there have
also been indications that the economy may be slowing from its torrid first
quarter pace when it surged at a 5.9% annual rate, the biggest advance since
the fourth quarter of 1987.
Indicating possible moderation in the rate of economic growth, retail
sales have been in decline all spring despite record levels of consumer
optimism about the economy. The latest report on retail sales through June
showed a decline at an annual rate of 5% over the previous three months. This
marked the first three-month decline since the fall of 1981. Yet, despite
their sluggish spending at checkout counters, consumers' confidence in the
economy continues to climb, heavily influenced by increased job security and
low inflation.
Throughout the seven-year economic expansion, the pattern of consumer
spending has been stop-and-go, alternating between spurts of spending and
retrenchment. The 5% decline for the three months through May was preceded by
a 15% advance over the previous three-month period. On the production side of
the economy, a survey of corporate buyers compiled by the National
Association of Purchasing Management reported that growth in factory activity
eased slightly during June. The much-observed supplier-delivery component of
the survey, a measure of how quickly orders are being satisfied and a
possible sign of production bottlenecks, also fell modestly. In further
evidence of a slowing economy during the second quarter, the Commerce
Department recently reported that factory orders fell in May.
Rising incomes, low unemployment and quiescent inflation have all
contributed to a feeling of confidence, as measured by the Conference Board's
Index of Consumer Sentiment, that has been unmatched for 28 years. Many
economists feel that the optimistic consumer sentiment indicators provide a
floor to economic growth and will spur consumer spending later in the year,
particularly if the unemployment rate remains low and job security worries
recede further. We are mindful of the potent role that consumers play in the
economy _ their spending accounts for about two thirds of economic output. So
we remain alert to signs of any strain on productive capacity caused by
increases in consumer spending that might, in turn, lead to another
tightening in monetary policy by the Federal Reserve.
MARKET ENVIRONMENT
The technical factors in the bond market are quite positive, and should
continue to push interest rates lower. A balanced budget amendment looks like
an achievable goal. U.S. interest rates are currently higher than almost all
other developed countries, making our rates attractive globally, and the dollar
continues to remain strong. Last, commodity prices have been drifting lower.
At the consumer level, the rate outlook looks positive too. Bank lending
criteria, especially in the credit card arena, are becoming more stringent.
The primary reason for that is the continued rise of consumer delinquencies.
Retail sales have been sluggish, and car sales have also turned sluggish. In
fact, some of the hottest selling vehicles last year now must offer
incentives to find buyers. These incentives include loans that carry 0%
interest for 2 years (Nissan). This shows that auto dealers are having
trouble clearing 1997 inventory, which is an indication that consumers have
turned the aggressive spending pattern down.
PORTFOLIO OVERVIEW
Currently, the maturity of the Portfolio is at a 12-year weighted average
life, which makes the effective duration 5.03. Going forward we plan on
maintaining this positioning for a declining rate environment in the
immediate foreseeable future. As for positioning on the interest rate curve,
we have avoided securities (where possible) that are spread from the 10-year
sector of the yield curve. The 10-year Treasury currently has become
expensive, due to technical reasons, versus the 5- and 30-year sectors.
We had written to you last time that both corporate and mortgage spreads
continued to tighten relative to Treasuries. As of now, this still continues
to be the case. As investors, worldwide, scramble for yield, higher yielding
investments, spreads have continued to drift tighter. The Portfolio continues
to benefit from this spread tightening (as mentioned last time we had
increased allocations to the bank sector and commercial mortgages). The major
change in portfolio holdings is the addition of high quality names in the
puttable bond arena. Merck & Co. and BellSouth Capital Funding are two
examples of puttable bonds that we have purchased. Both securities have
performed admirably well, as rates have declined since purchase.
As always, we will be monitoring these factors, as well as numerous other
indicators.
Very truly yours,
[Kevin McClintock signature logo]
Kevin McClintock
Head of Taxable Fixed Income
July 16, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid. The Portfolio's performance does not reflect the deduction of
additional charges imposed in connection with investing in variable annuity
contracts and variable life insurance policies.
** The Merrill Lynch Domestic Master Index is an unmanaged performance
benchmark for portfolios that include U.S. Government, mortgage and BBB or
higher-rated corporate securities with maturities greater than or equal to
one year.
*** Distribution rate per share is based upon dividends per share declared
from net investment income during the period (annualized), divided by the net
asset value per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
Principal
Bonds and Notes_102.4% Amount Value
___________ __________
<S> <C> <C> <C>
Asset-Backed_11.8%. Morgan Stanley Capital I,
Mortgage Pass-Through Ctfs.,
Ser. 1997-HF1, Cl. E, 7.55%, 2007.... $ 3,839,000 (a) $3,829,403
The Money Store Trust,
Asset-Backed Ctfs.,
Ser.1996-D, Cl. A-16, 7.11%, 2028.... 1,890,869 1,878,756
UCFC Loan Trust 1997-A1,
Home Equity Loan Pass-Through Ctfs.,
Cl. A6, 7.435%, 2024................. 2,600,000 2,636,563
__________
8,344,722
__________
Banking_4.9%.................. BNY Capital I,
Gtd. Capital Securities, Ser. B, 7.97%, 2026 1,000,000 999,987
Barnett Capital II,
Gtd. Capital Securities, 7.95%, 2026. 1,500,000 1,477,500
Colonial Capital I,
Gtd. Capital Securities, Ser. A, 8.92%, 2027 1,000,000 1,000,976
__________
3,478,463
__________
Commercial Mortgages_28.1% 277 Park Avenue Finance,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1997-C1, Cl. A2, 7.68%, 2007.... 2,250,000 (a) 2,323,828
Asset Securitization,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1996-MD VI, Cl. A7, 7.755%, 2026 2,500,000 (b) 2,516,406
CS First Boston Mortgage Securities,
Mortgage Pass-Through Ctfs.,
Ser. 1997-C1, Cl. E, 71\2%, 2011..... 3,000,000 (a) 2,983,125
DLJ Mortgage Acceptance,
Mortgage Pass-Through Ctfs.,
Ser. 1996-CF2, Cl. A-3, 7.38%, 2021.. 2,000,000 (a) 2,015,625
First Union-Lehman Brothers Commercial Mortgage Trust,
Mortgage Pass-Through Ctfs.,
Ser. 1997-C1, Cl. C, 7.44%, 2007..... 2,000,000 2,034,375
GMAC Commercial Mortgage Securities,
Mortgage Pass-Through Ctfs.,
Ser. 1996-C1, Cl. C, 7.43% 2006...... 2,000,000 2,025,313
Merrill Lynch Mortgage Investors,
Mortgage Pass-Through Ctfs.,
Ser. 1995-C3, Cl. C, 7.368%, 2025.... 2,200,000 (b) 2,214,781
Resolution Trust,
Commercial Mortgage Pass-Through Ctfs.:
Ser. 1994-C2, Cl. D, 8%, 2025....... 2,809,551 2,868,377
Ser. 1995-C2, Cl. C, 7%, 2027....... 911,976 897,442
__________
19,879,272
__________
Foreign_2.8% Wharf International Finance Ltd.,
Gtd. Notes, Ser. A, 7 5/8%, 2007...... 2,000,000 (a) 2,005,764
__________
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
__________ ____________
Foreign/Governmental_4.3% United Mexican States,
Floating Rate Notes, 7 7/8%, 2001..... $ 3,000,000 (a,b) $ 3,012,300
__________
Health Care_2.8% Merck & Co.,
Medium-Term Notes, Ser. B, 5.76%, 1999 2,000,000 (c) 2,008,620
__________
Hotels & Motels_2.8%. Hyatt Equities, L.L.C.,
Notes, 6.80%, 2000................... 2,000,000 (a) 2,007,002
__________
Industrial_.7% Eastman Kodak,
Deb., 9.95%, 2018.................... 400,000 504,383
__________
Insurance_0.0% SunAmerica,
Deb., 9.95%, 2012.................... 13,000 15,478
__________
Oil and Gas_2.8% Halliburton,
Notes, 63\4%, 2007................... 2,000,000 (d) 1,984,394
__________
Other_0.0% City of New York,
General Obligation Bonds, Ser. D, 10%, 2007 25,000 28,312
__________
Publishing_2.8% A. H. Belo,
Sr. Notes, 67\8%, 2002............... 2,000,000 2,004,038
__________
Residential Mortgage_6.1% GE Capital Mortgage Services,
REMIC Multi-Class Pass Through Ctfs.:
Ser. 1996-14, Cl. 2B1, 7 1/4%, 2011... 806,152 800,358
Ser. 1996-17, Cl. 2B1, 7 1/4%, 2011... 765,582 761,037
Norwest Asset Securities Corporation
Mortgage Pass-Through Ctfs.,
Ser. 1997-11, Cl. M, 7%, 2007........ 2,500,000 2,418,750
PNC Mortgage Securities,
Mortgage Pass-Through Ctfs.,
Ser. 1997-3, Cl. 1B3, 7%, 2027....... 378,679 366,491
__________
4,346,636
__________
Tobacco_2.8% Philip Morris,
Notes, 6.95%, 2001................... 2,000,000 (e) 2,020,202
__________
Utilities/Telephone_4.2% BellSouth Capital Funding,
Deb., 6.04%, 2001.................... 2,000,000 (f) 1,974,998
Wisconsin Bell,
Deb., 6.35%, 2006.................... 1,000,000 (g) 980,551
__________
2,955,549
__________
U.S. Government Agency/
Mortgage-Backed_23.4% FICO Coupon Strips,
Ser. 1, Zero Coupon, 5/11/2000....... 95,000 79,290
Federal National Mortgage Association REMIC Trust,
Gtd. REMIC Pass-Through Ctfs.,
Ser. 1997-24, Cl IA, 7%, 1/18/2026
(Interest Only Obligation)........... (h) 1,059,686
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
___________ ___________
U.S. Government Agency/
Mortgage-Backed (continued) Federal Home Loan Mortgage Association REMIC Trust,
Gtd. REMIC Pass-Through Ctfs.,
Ser. 1916, Cl. PI, 7%, 12/15/2011
(Interest Only Obligation)........... (i) $ 1,254,341
Government National Mortgage Association I:
7.33%, 10/15/2030.................... $ 2,474,345 2,460,415
8%, 9/15/2008........................ 1,028,677 1,065,967
Government National Mortgage Association II,
5 1/2%, 1/20/2027-7/20/2027........... 4,982,069 (j) 4,938,409
Government National Mortgage Association REMIC Trust,
Gtd. REMIC Pass-Through Securities:
Ser. 1997-2, Cl. K, 71\2%, 1/20/2024.... 3,300,000 3,271,521
Ser. 1997-4, Cl. G, 71\2%, 11/16/2024... 2,500,000 2,487,625
__________
16,617,254
__________
U.S. Government_2.1%.... U.S. Treasury Notes,
6 5/8%, 4/30/2002.................... 1,500,000 1,514,297
__________
TOTAL BONDS AND NOTES
(cost $72,562,297)................... $72,726,686
============
Short-Term Investments_4.8%
Agency Discount Note; Federal Home Loan Banks,
6%, 7/1/1997
(cost $3,390,000).................... $..3,390,000 $ 3,390,000
============
TOTAL INVESTMENTS (cost $75,952,297)........................................ 107.2% $76,116,686
======== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (7.2%) $ (5,143,012)
======== ============
NET ASSETS.................................................................. 100.0% $70,973,674
======== ============
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
Notes to Statement of Investments:
(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, 1997, these securities amounted to $18,177,047 or 25.6% of net
assets.
(b) Variable rate security_interest rate subject to periodic change.
(c) Reflects date security can be redeemed at holders' option; the
stated maturity date is 5/3/2037.
(d) Reflects date security can be redeemed at holders' option; the
stated maturity date is 2/1/2027.
(e) Reflects date security can be redeemed at holders' option; the
stated maturity date is 6/1/2006.
(f) Reflects date security can be redeemed at holders' option; the
stated maturity date is 11/15/2026.
(g) Reflects date security can be redeemed at holders' option; the
stated maturity date is 12/1/2026.
(h) Notional face $2,325,786.
(i)Notional face $4,807,376.
(j)Partially purchased on a forward commitment basis.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $75,952,297 $76,116,686
Cash....................................... 3,930,040
Interest receivable........................ 594,781
Prepaid expenses and other assets.......... 6,651
___________
80,648,158
___________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 40,123
Payable for investment securities purchased 9,600,960
Payable for Beneficial Interest redeemed... 12,206
Interest payable........................... 213
Accrued expenses........................... 20,982
___________
9,674,484
___________
NET ASSETS.................................................................. $70,973,674
============
REPRESENTED BY: Paid-in capital............................ $70,399,903
Accumulated undistributed investment income_net 377,231
Accumulated net realized gain (loss) on investments 32,151
Accumulated net unrealized appreciation (depreciation)
...... on investments_Note 5 164,389
___________
NET ASSETS.................................................................. $70,973,674
============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 6,163,798
NET ASSET VALUE, offering and redemption price per share.................... $11.51
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $2,343,509
EXPENSES: Investment advisory fee_Note 4(a).......... $ 213,555
Interest_Note 3............................ 13,753
Prospectus and shareholders' reports....... 11,271
Professional fees.......................... 10,385
Custodian fees_Note 4(a)................... 8,705
Registration fees.......................... 2,990
Trustees' fees and expenses_Note 4(b)...... 962
Shareholder servicing costs................ 349
Miscellaneous.............................. 3,053
____________
Total Expenses....................... 265,023
____________
INVESTMENT INCOME_NET....................................................... 2,078,486
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 5:
Net realized gain (loss) on investments.... $ (404,199)
Net unrealized appreciation (depreciation) on investments 196,789
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (207,410)
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,871,076
==============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
_________________ ___________________
OPERATIONS:
Investment income_net................................................. $ 2,078,486 $ 2,974,487
Net realized gain (loss) on investments................................. (404,199) 296,597
Net unrealized appreciation (depreciation) on investments............... 196,789 (1,282,927)
_______________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations... 1,871,076 1,988,157
_______________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net................................................... (1,701,255) (2,977,385)
Net realized gain on investments........................................ ___ ___
_______________ ________________
Total Dividends................................................... (1,701,255) (2,977,385)
_______________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 12,407,241 31,824,343
Dividends reinvested.................................................... 1,736,635 2,977,385
Cost of shares redeemed................................................. (4,276,045) (10,323,319)
_______________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 9,867,831 24,478,409
_______________ ________________
Total Increase (Decrease) in Net Assets............................. 10,037,652 23,489,181
NET ASSETS:
Beginning of Period.................................................... 60,936,022 37,446,841
_______________ ________________
End of Period........................................................... $ 70,973,674 $ 60,936,022
============== =================
Undistributed investment income_net....................................... $ 377,231 ___
_______________ ________________
Shares Shares
_______________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,086,311 2,770,727
Shares issued for dividends reinvested.................................. 152,629 260,715
Shares redeemed......................................................... (374,588) (902,643)
_______________ ________________
Net Increase (Decrease) in Shares Outstanding..................... 864,352 2,128,799
============== =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Series' financial statements.
Six Months Ended
June 30, 1997 Year Ended December 31,
______________________________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
____________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.50 $11.81 $10.53 $11.81 $10.94 $10.67
_______ ______ ______ ______ ______ ______
Investment Operations:
Investment income_net.............. .35 .66 .68 .73 .76 .92
Net realized and unrealized gain (loss)
on investments................... (.05) (.31) 1.42 (1.27) .88 .30
_______ ______ ______ ______ ______ ______
Total from Investment Operations... .30 .35 2.10 (.54) 1.64 1.22
_______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income_net (.29) (.66) (.69) (.73) (.76) (.92)
Dividends from net realized gain
on investments................... -- -- (.13) (.01) (.01) (.03)
_______ ______ ______ ______ ______ ______
Total Distributions................ (.29) (.66) (.82) (.74) (.77) (.95)
_______ ______ ______ ______ ______ ______
Net asset value, end of period..... $11.51 $11.50 $11.81 $10.53 $11.81 $10.94
======== ======== ======= ======= ====== =======
TOTAL INVESTMENT RETURN................ 5.42%(1) 3.13% 20.42% (4.59%) 15.33% 12.09%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets .77%(1) .79% .81% -- -- --
Ratio of interest expense to average net assets .04%(1) -- -- -- -- --
Ratio of net investment income
to average net assets............ 6.33%(1) 5.86% 6.13% 7.03% 6.51% 8.54%
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation.......... -- -- .04% 1.20% 3.51% 5.33%
Portfolio Turnover Rate............ 239.75%(2) 258.36% 263.53% 64.80% 110.62% 9.39%
Net Assets, end of period (000's Omitted) $70,974 $60,936 $37,447 $13,244 $4,706 $405
(1) Annualized.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1_GENERAL:
Dreyfus Variable Investment Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as an open-end management investment
company, operating as a series company currently offering thirteen series,
including the Quality Bond Portfolio (the "Series") 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 Series is a diversified portfolio. The Series' 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 Series' investment adviser. Dreyfus is
a direct subsidiary of Mellon Bank, N.A. ("Mellon"). Premier Mutual Fund
Services, Inc. is the distributor of the Series' shares, which are sold
without a sales charge.
The Fund currently functions as the funding vehicle for the Dreyfus
Series 2000 Variable Annuity Contract (the "Account") issued by Mutual
Benefit Life Insurance Company ("Mutual Benefit Life"). On July 16, 1991, the
Superior Court of New Jersey entered an Order (the "Order") appointing the
New Jersey Insurance Commissioner as Rehabilitator of Mutual Benefit Life.
The Commissioner was granted immediate exclusive possession and control of,
and title to, the business and assets of Mutual Benefit Life, including the
assets and liabilities of the Account.
The Commissioner was empowered by the Order to take such steps as he
deemed appropriate toward removing the cause and conditions that made
rehabilitation necessary. On January 15, 1993, the Commissioner filed the
First Amended Plan of Rehabilitation ("Plan") with the Court. The Plan
stipulated that the assets and liabilities of the Account would be
transferred to a separate account of MBL Life Assurance Corporation
("MBLLAC"), a wholly-owned subsidiary of Mutual Benefit Life. The Plan also
provided for the transfer of the ownership of the stock of MBLLAC to a Trust.
The Commissioner was designated as the sole Trustee of the Trust. On August
12, 1993, the Court rendered an opinion approving the Plan with certain
modifications. Two subsequent amendments to the Plan were filed and approved
by the Court. None of the modifications or amendments affected the status of
the Account. On November 10, 1993, the Court issued an Order of Confirmation
permitting the implementation of the Plan.
An order was also issued by the Court on January 28, 1994, approving the
form of the Third Amended Plan of Rehabilitation, the Election Materials and
related documents. On April 29, 1994, the Plan was implemented. Substantially
all of the assets of Mutual Benefit Life were transferred to MBLLAC which
assumed and reinsured Mutual Benefit Life's restructured insurance
liabilities. The stock of MBLLAC was assigned to the Stock Trust and the
Commissioner was designated as Trustee.
In view of the terms and conditions of both the Order and the Plan,
applications for new contracts and additional purchase payments under
existing contracts are currently not being accepted by the Account. The terms
of the Order and the Plan permit redemptions from the Account to continue as
requested.
The proceedings of the New Jersey Insurance Commissioner with respect to
Mutual Benefit Life or the Account do not apply to the separate accounts of
other life insurance companies that may use the Fund as a funding vehicle for
contracts or policies issued by them.
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 Series' 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.
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2_SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Investments in securities (excluding short-term
investments and U.S. Government obligations) 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 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. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Short-term
investments 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.
(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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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 Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 3_BANK LINE OF CREDIT:
The Series 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 Series at rates which are related to
the Federal Funds rate in effect at the time of borrowings. At June 30, 1997,
there were no outstanding borrowings under either line of credit.
The average daily amount of borrowings outstanding under both
arrangements during the period ended June 30, 1997 was approximately
$490,000, with a related weighted average annualized interest rate of 5.66%.
The maximum amount borrowed at any time during the period ended June 30, 1997
was $6,316,500.
NOTE 4_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 Series' average daily net assets and is payable monthly.
The Series 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 Series.
The Series compensates Mellon under a custody agreement to provide
custodial services for the Series. During the period ended June 30, 1997,
$8,705 was charged by Mellon pursuant to the custody agreement.
DREYFUS VARIABLE INVESTMENT FUND, QUALITY BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 5_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the period
ended June 30, 1997, amounted to $161,361,155 and $158,194,324, respectively.
At June 30, 1997, accumulated net unrealized appreciation on investments
was $164,389, consisting of $417,345 gross unrealized appreciation and
$252,956 gross unrealized depreciation.
At June 30, 1997, 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).
[Dreyfus lion "d" logo]
Registration Mark
DREYFUS VARIABLE INVESTMENT FUND,
QUALITY BOND 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
Printed in U.S.A. 120SA976
[Dreyfus logo]
Registration Mark
Variable
Investment Fund,
Quality Bond
Portfolio
Semi-Annual
Report
June 30, 1997
