Dreyfus
Variable
Investment Fund,
Balanced Portfolio
Semi-Annual
Report
June 30, 1998
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the Dreyfus
Variable Investment Fund -- Balanced Portfolio for the six-month period ended
June 30, 1998. Your Portfolio produced a total return of 8.69%,* which compares
with a total return of 12.02% for the Hybrid Index (discussed below) over the
same period.**
Because the Fund is composed of fixed income securities as well as equities,
we measure ourselves against a Hybrid Index composed 60% of the Standard &
Poor's 500 Composite Stock Price Index, measuring only common stocks, and 40% of
the Lehman Brothers Intermediate Government-Corporate Bond Index. For the same
six-month period, the Portfolio's stock component had a total return of 17.34%
compared to the Standard & Poor's 500 Composite Stock Price Index, which had a
total return of 17.72%.** However, during the period under review, the Portfolio
reduced its equity allocation to 42.2% for reasons discussed in the "Portfolio
Focus" section below with the remaining portion of the Portfolio in fixed income
holdings. For the same time period, the Portfolio's fixed income holdings had a
total return of 3.41% compared to 3.47% for the Lehman Brothers Intermediate
Government-Corporate Bond Index.**
Economic Review
Fears of Federal Reserve Board tightening appear to have eased due to
accumulating evidence of slower overall economic growth since the spring.
Monetary tightening has been deterred by the Asian financial crisis. The Fed's
main domestic concern is that the tight labor market has begun to fuel faster
wage growth across many industries. However, thus far rising wages have still
not meant rising prices. Instead, this cost-price mix threatens to further erode
corporate profit margins. Market interest rates have already rejected the slower
economy, and the interest rate curve has become quite flat.
The shift to slower economic growth this spring is largely due to the drag
from Asia's recession, but may well be reinforced this summer by the multiplier
impacts of the General Motors strike. Among broader economic factors, the trade
deficit has widened sharply due to both weak exports and strong growth in
imports. Also, inventories soared earlier this year, potentially creating some
drag on future production. However, slowing industrial output has largely been
met by shortening the manufacturing work week, not by cutting jobs. Hence, the
shift to slower growth has not relieved the tightness in the labor market.
Instead, the virtual absence of bad news has left consumers to enjoy the
benefits of rising real wages and lower interest rates that, in turn, have
boosted spending and home ownership.
Although growth in corporate profits has slowed in many sectors in the past
year, consensus estimates of future profit growth continue to be cut by many
analysts. Profit margins had already begun to shrink under the weight of rising
labor costs, making companies' reported profits increasingly dependent on growth
of sales. Overall profits could thus prove quite vulnerable to a period of
significantly slower economic growth.
Virtually all Treasury market interest rates have already fallen near to
the floor set by the Federal Funds rate. This implies that further substantial
interest rate drops are unlikely unless the economy weakens enough to justify
action by the Fed to ease credit.
Equity Market Overview
Measured broadly, the half-year ended June 30, 1998 was another period of
solid advance for the stock market. Yet that general statement did not apply to
all categories of stocks.
To be sure, the S&P 500 achieved a new record of 17.72% at the end of the
six-month period. The Dow Jones Industrial Average (DJIA), while it didn't
reach its all-time record, nonetheless gained 14.16% for the six months,
closing the half-year above 9000. Small and medium size stocks, however,
underperformed the large cap issues. The Standard &
<PAGE>
Poor's MidCap 400 Index gained just 8.63% for the half-year, and the Russell
2000 index of small cap issues advanced a mere 4.93%.
The first calendar quarter provided most of the strength for the six months,
particularly among the large cap companies. In the April-June quarter, the S&P
500 gained 3.32% and the DJIA 2.15%, while the Russell 2000 actually dropped
by 4.66%.
Stock categories that were strongest during the half-year included
financials, particularly banks, brokerages, insurance and diversified financial
services; technology, especially communications and computer issues; and
cyclical consumer stocks such as advertising, airlines, automotive,
broadcasting and home construction.
The weak categories for the period included precious metals, oil drilling
and oilfield suppliers, and some industrial issues.
Corporate profits dropped sharply from the strong pace of last year.
According to the statistical service First Call, profits for stocks in
the S&P 500 were expected to show a rise of just 2.3% for the second quarter,
compared to 3.8% in the first quarter. Of course there were optimists
forecasting a hefty rise in profits for later this year and early 1999, which
could potentially propel stock prices upward. Yet most investors seemed
preoccupied with the here and now, which included the strike at General
Motors plants and the continuing fallout from financial troubles in Japan and
Southeast Asia.
As expected, the Fed at its last meeting made no change in interest rates,
even though inflationary pressures are a constant worry for the Fed. The reason
for their inaction may well have been the precarious state of some economies
elsewhere in the world and the desire not to precipitate a major correction in
the U.S. stock market. Even so, the Fed thought it timely to issue a stern
warning to banks not to become over-extended with unwise loans, which happened
in the 1980s.
Despite warnings like this, and that stock prices are extremely high
historically in relation to earnings and cash flow, investors still appeared
eager to own equities. Moreover, surveys of consumer sentiment continued
to show that the average consumer was more confident about the future than had
been the case in a generation.
Bond Market Overview
The fixed-income market started 1998 with a flurry of activity as investors
sought to avoid Asian financial market turmoil by increasing demand for U.S.
fixed income securities. This "flight to quality" quickly moved the yield on the
10-year Treasury Note from a beginning-of-the-year yield level of 5.74% to a low
of 5.37% on January 12th. The market then settled into a trading range, with the
10-year bond trading between 5.50% and 5.70% through May. In June, heightened
speculation that turbulent Asian financial markets would cause a currency crisis
led to another flight-to-quality rally as the 10-year Treasury Note traded
through the trading range to end the half year at 5.44%.
The bond market continues to be supported by low inflation. Global
commodity prices have declined sharply this year, helping to push the
consumer price index down to a cyclical low of 1.7%.
Portfolio Focus -- Equities
The decision to reduce the equity exposure was reached in mid-August 1997 as
a result of our relative valuation analysis. Our current analysis continues to
suggest an underweight to equities primarily due to the high levels of price
relative to earnings.
The consumer cyclical, health care, and capital spending sectors provided the
highest returns for the period with the mining and metals group providing the
only negative return of -0.19%. The Fund's equity component continues to
emphasize a broadly diversified, large capitalization approach with exposure to
all economic sectors.
<PAGE>
Portfolio Focus -- Bonds
For the reporting period the fixed income portion of the Portfolio held a
neutral duration relative to its fixed income benchmark, the Lehman Brothers
Intermediate Government-Corporate Bond Index. The Portfolio benefited from its
corporate allocation which has a higher overall average credit quality than the
Benchmark Index. Higher quality corporate securities generally outperformed
lower quality corporate securities during the first half of 1998.
We appreciate your investment in this Dreyfus Portfolio and will continue
our efforts to bring you rewarding returns.
Sincerely,
/s/ Ronald P. Gala /s/ Laurie A. Carroll
Ronald P. Gala Laurie A. Carroll
Portfolio Manager Portfolio Manager
July 20, 1998
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 and expenses imposed in connection with investing in variable
insurance contracts, which will reduce returns.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index and the Doe Jones
Industrial Average are widely accepted unmanaged indicies of U.S. stock
market performance. SOURCE: LEHMAN BROTHERS -- The Lehman Brothers
Intermediate Government-Corporate 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.
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio --------------------------
Statement of Investments June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks--49.0% Shares Value
- -------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
Basic Industries--1.9% Dow Chemical.................................. 2,400 $ 232,050
Fort James.................................... 4,800 213,600
Millennium Chemicals.......................... 2,000 67,750
PPG Industries................................ 3,200 222,600
Rohm & Haas................................... 1,400 145,512
Southdown..................................... 1,000 71,375
USG........................................(a) 1,400 75,775
------------
1,028,662
------------
Capital Spending--11.8% AlliedSignal................................. 3,800 168,625
American Power Conversion..................(a) 1,300 39,000
Caterpillar................................... 5,400 285,525
Cisco Systems..............................(a) 6,600 607,612
Computer Associates International............. 6,600 366,713
Deere & Co.................................... 3,700 195,637
EMC........................................(a) 3,900 174,769
Eaton......................................... 2,000 155,500
General Electric.............................. 3,100 282,100
HBO & Co...................................... 5,400 190,350
Honeywell..................................... 1,200 100,275
Ingersoll-Rand................................ 6,500 286,406
Intel......................................... 5,900 437,338
International Business Machines............... 3,400 390,363
Johnson Controls.............................. 900 51,469
Lexmark International Group, Cl. A.........(a) 3,300 201,300
Microsoft..................................(a) 7,400 801,975
Oracle.....................................(a) 8,000 196,500
Parker-Hannifin............................... 4,400 167,750
Pitney Bowes.................................. 1,500 72,187
Raytheon, Cl. B............................... 2,100 124,162
Sun Microsystems...........................(a) 2,000 86,875
Tellabs....................................(a) 4,400 315,150
Tyco International............................ 6,700 422,100
United Technologies........................... 3,100 286,750
Xerox......................................... 1,600 162,600
_________
6,569,031
_________
Consumer Cyclical--6.3% American Greetings, Cl. A..................... 1,600 81,500
Carnival...................................... 3,000 118,875
Chrysler...................................... 4,000 225,500
Clear Channel Communications...............(a) 1,100 120,037
Federated Department Stores................(a) 5,600 301,350
Ford Motor.................................... 3,000 177,000
Gannett....................................... 1,200 85,275
Gap........................................... 3,500 215,688
General Motors................................ 3,900 260,569
Goodyear Tire & Rubber........................ 600 38,663
K mart.....................................(a) 3,400 65,450
</TABLE>
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio --------------------------
Statement of Investments (continued) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Consumer Cyclical (continued) New York Times, Cl. A......................... 3,400 $ 269,450
Philips Electronics, N.V...................... 2,300 195,500
Promus Hotel.................................. 1,900 73,150
Reynolds & Reynolds, Cl. A.................... 2,200 40,012
Safeway....................................(a) 5,900 240,056
Sears, Roebuck & Co........................... 2,700 164,869
TJX........................................... 10,200 246,075
Tommy Hilfiger.............................(a) 1,900 118,750
Tribune....................................... 1,200 82,575
Wal-Mart Stores............................... 6,900 419,175
_________
3,539,519
_________
Consumer Staples--4.9% Anheuser-Busch................................ 2,700 127,406
Avon Products................................. 3,200 248,000
Coca-Cola..................................... 3,400 290,700
Dial.......................................... 4,400 114,125
General Mills................................. 3,000 205,125
Interstate Bakeries........................... 1,700 56,419
Newell........................................ 4,200 209,212
PepsiCo....................................... 7,000 288,313
Philip Morris................................. 7,000 275,625
Procter & Gamble.............................. 3,200 291,400
Ralston-Ralston Purina Group.................. 2,100 245,306
Sara Lee...................................... 3,500 195,781
Unilever, N.V................................. 2,600 205,238
_________
2,752,650
_________
Energy--3.8% Ashland....................................... 1,800 92,925
Atlantic Richfield............................ 1,400 109,375
Coastal....................................... 2,500 174,531
Columbia Energy Group......................... 2,400 133,500
Diamond Offshore Drilling..................... 2,300 92,000
Exxon......................................... 7,500 534,844
Mobil......................................... 5,100 390,788
Phillips Petroleum............................ 4,500 216,844
R&B Falcon.................................... 3,200 72,400
Sun........................................... 3,200 124,200
Texaco........................................ 3,100 185,031
_________
2,126,438
_________
Health Care--5.9% Abbott Laboratories........................... 11,600 474,150
Amgen .....................................(a) 3,800 248,425
Biomet........................................ 2,400 79,350
Boston Scientific..........................(a) 1,200 85,950
Bristol-Myers Squibb.......................... 3,500 402,281
Elan, A.D.S...............................(a) 1,800 115,763
Guidant....................................... 1,700 121,231
Health Management Association..............(a) 2,800 93,625
</TABLE>
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Investments (continued) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Health Care (continued) HEALTHSOUTH................................(a) 6,900 $ 184,144
Johnson & Johnson............................. 5,700 420,375
Merck & Co.................................... 2,300 307,625
Schering-Plough............................... 4,500 412,312
Warner-Lambert................................ 2,600 180,375
Wellpoint Health Networks..................(a) 2,200 162,800
_________
3,288,406
_________
Interest Sensitive--8.7% Allstate...................................... 2,900 265,531
Ambac Financial Group......................... 2,900 169,650
BankAmerica................................... 2,100 181,519
Bear Stearns.................................. 4,300 244,562
Chase Manhattan............................... 7,800 588,900
CIGNA ........................................ 1,700 117,300
Comerica...................................... 3,900 258,375
Conseco....................................... 3,400 158,950
EXEL.......................................... 3,800 295,688
Fannie Mae.................................... 3,100 188,325
First Chicago NBD............................. 3,700 327,913
First Union................................... 5,400 314,550
Freddie Mac................................... 1,500 70,594
Golden West Financial......................... 1,400 148,838
MGIC Investment............................... 2,100 119,831
NationsBank................................... 6,100 466,650
Republic New York............................. 2,000 125,875
SLM Holding................................... 5,800 284,200
SouthTrust.................................... 1,500 65,250
SunAmerica.................................... 3,800 218,262
Travelers Group............................... 4,400 266,750
_________
4,877,513
_________
Mining & Metals--.4% Aluminum Company of America................... 1,700 112,094
USX-U.S. Steel Group.......................... 2,600 85,800
_________
197,894
_________
Transportation--.8% AMR........................................(a) 2,300 191,475
Burlington Northern Santa Fe.................. 1,700 166,919
Delta Air Lines............................... 600 77,550
_________
435,944
_________
Utilities--4.5% AT&T.......................................... 10,300 588,387
AirTouch Communications....................(a) 4,100 239,594
Ameritech..................................... 10,400 466,700
BellSouth..................................... 5,600 375,900
Consolidated Edison........................... 3,700 170,431
FPL Group..................................... 4,200 264,600
FirstEnergy................................... 3,200 98,400
</TABLE>
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Investments (continued) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Utilities (continued) Pinnacle West Capital......................... 3,500 $ 157,500
WorldCom...................................(a) 3,300 159,844
_________
2,521,356
_________
TOTAL COMMON STOCKS
(cost $22,365,615)......................... $27,337,413
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Bonds & Notes--47.1% Amount
- ------------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
Finance--5.3% American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005........................... $ 600,000 $ 614,145
Chase Manhattan, Notes,
7.125%, 6/15/2009.......................... 700,000 742,012
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003........................... 600,000 600,423
General Motors Acceptance, Notes
6.625%, 10/1/2002.......................... 1,000,000 1,020,000
------------
2,976,580
------------
Industrial--6.5% Allied-Signal, Notes,
6.20%, 2/1/2008............................ 500,000 501,287
Ameritech Capital Funding, Notes,
5.65%, 1/15/2001........................... 500,000 497,295
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002............................ 500,000 510,690
McDonald's, Notes,
5.90%, 5/11/2001........................... 500,000 502,160
Mobil, Deb.,
8.375%, 2/12/2001.......................... 1,000,000 1,059,933
Procter & Gamble, Deb.,
8.00%, 11/15/2003.......................... 500,000 549,115
------------
3,620,480
------------
Utilities--.9% SBC Communications Capital, Notes,
6.625%, 7/15/2007.......................... 500,000 517,368
------------
U.S. Government Federal Home Loan Banks;
& Agencies--34.4% 5.61%, 6/22/2001.......................... 1,100,000 1,096,906
Federal National Mortgage Association;
7.40%, 7/1/2004............................ 1,000,000 1,084,435 U.S.
Treasury Bonds;
10.75%, 5/15/2003.......................... 1,000,000 1,218,720
</TABLE>
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Investments (continued) June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Bonds & Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
U.S. Treasury Notes:
7.875%, 11/15/1999......................... $ 1,300,000 $ 1,340,144
7.75%, 1/31/2000........................... 1,300,000 1,343,472
8.50%, 2/15/2000........................... 1,000,000 1,045,680
6.875%, 3/31/2000.......................... 1,600,000 1,635,760
8.875%, 5/15/2000.......................... 1,300,000 1,377,597
6.25%, 8/31/2000........................... 975,000 989,440
8.00%, 5/15/2001........................... 600,000 639,126
6.125%, 12/31/2001......................... 1,000,000 1,018,060
6.625%, 3/31/2002.......................... 540,000 559,343
7.50%, 5/15/2002........................... 1,000,000 1,067,370
6.375%, 8/15/2002.......................... 500,000 515,340
6.25%, 2/15/2003........................... 1,200,000 1,235,196
6.50%, 8/15/2005........................... 1,200,000 1,266,204
7.00%, 7/15/2006........................... 1,240,000 1,354,452
6.25%, 2/15/2007........................... 400,000 418,948
------------
19,206,193
------------
TOTAL BONDS & NOTES
(cost $26,184,942)......................... $26,320,621
============
</TABLE>
<TABLE>
Short-Term Investments--2.9%
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Agency Discount Notes--2.4% Federal Home Loan Banks,
5.85%, 7/1/1998............................ 1,320,000 1,320,000
-----------
U.S. Treasury Bills--.5% 4.96%, 7/9/1998............................(b) 100,000 99,896
4.97%, 1/7/1999............................(b) 200,000 194,616
------------
294,512
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,614,643).......................... $ 1,614,512
============
TOTAL INVESTMENTS (cost $50,165,200)........................................... 99.0% $55,272,546
======= ============
CASH AND RECEIVABLES (NET)..................................................... 1.0% $ 561,223
======= ============
NET ASSETS..................................................................... 100.0% $55,833,769
======= ============
Notes to Statement of Investments:
- ------------------------------------------------------------------------------
(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>
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Financial Futures June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Unrealized
Market Value Appreciation/
Covered (Depreciation)
Financial Futures Purchased Contracts by Contracts Expiration at 6/30/98
- --------------------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
5 Year U.S. Treasury Notes....................... 27 $ 2,961,563 Sept. `98 $ 8,648
Financial Futures Sold
- ----------------------
Standard & Poor's 500............................ 16 $(4,572,000) Sept. `98 (193,950)
----------
$ (185,302)
----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Assets and Liabilities June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
----------- -----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $50,165,200 $55,272,546
Cash.................................................. 75,993
Dividends and interest receivable..................... 503,293
Receivable for futures variation margin--Note 4(a).... 37,797
Prepaid expenses...................................... 127
------------
55,889,756
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates......... 39,477
Accrued expenses...................................... 16,510
------------
55,987
------------
NET ASSETS..................................................................... $55,833,769
============
REPRESENTED BY: Paid-in capital....................................... $49,569,664
Accumulated undistributed investment income--net...... 12,843
Accumulated net realized gain (loss) on investments... 1,329,218
Accumulated net unrealized appreciation (depreciation)
on investments [including ($185,302) net unrealized
(depreciation) on financial futures]--Note 4(b).... 4,922,044
------------
NET ASSETS..................................................................... $55,833,769
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 3,709,100
NET ASSET VALUE, offering and redemption price per share....................... $15.05
========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio --------------------------
Statement of Operations Six Months Ended June 30, 1998 (Unaudited)
<TABLE>
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest................................... $ 788,957
Cash dividends (net of $841 foreign taxes
withheld at source)...................... 171,005
----------
Total Income.......................... $ 959,962
EXPENSES: Investment advisory fee--Note 3(a)......... 181,966
Auditing fees.............................. 13,825
Custodian fees--Note 3(a).................. 11,300
Prospectus and shareholders' reports....... 8,407
Registration fees.......................... 3,365
Shareholder servicing costs................ 247
Loan commitment fees--Note 2............... 126
Legal fees................................. 77
Trustees' fees and expenses--Note 3(b)..... 74
Miscellaneous.............................. 586
----------
Total Expenses........................ 219,973
----------
INVESTMENT INCOME--NET................................................... 739,989
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.... $1,237,672
Net realized gain (loss) on financial futures
Long transactions........................ 25,698
Short transactions....................... (198,553)
----------
Net Realized Gain (Loss).............. 1,064,817
Net unrealized appreciation (depreciation) on
investments [including ($183,439) net unrealized
(depreciation) on financial futures]..... 2,210,571
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 3,275,388
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $4,015,377
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio -------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997*
---------------- ------------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................. $ 739,989 $ 625,226
Net realized gain (loss) on investments................................ 1,064,817 1,706,671
Net unrealized appreciation (depreciation) on investments.............. 2,210,571 2,711,473
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations..... 4,015,377 5,043,370
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................. (731,079) (621,293)
Net realized gain on investments....................................... -- (1,442,270)
----------- -----------
Total Dividends..................................................... (731,079) (2,063,563)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 11,264,692 36,492,088
Dividends reinvested................................................... 731,079 2,063,563
Cost of shares redeemed................................................ (590,653) (391,105)
----------- -----------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 11,405,118 38,164,546
----------- -----------
Total Increase (Decrease) in Net Assets.......................... 14,689,416 41,144,353
NET ASSETS:
Beginning of Period.................................................... 41,144,353 --
----------- -----------
End of Period.......................................................... $55,833,769 $41,144,353
=========== ===========
Undistributed investment income--net...................................... $ 12,843 $ 3,933
----------- -----------
Shares Shares
----------- -----------
Shares sold............................................................ 770,254 2,810,317
Shares issued for dividends reinvested................................. 48,951 146,937
Shares redeemed........................................................ (40,228) (27,131)
----------- -----------
Net Increase (Decrease) in Shares Outstanding....................... 778,977 2,930,123
=========== ===========
- -----------------
* From May 1, 1997 (commencement of operations) to December 31, 1997.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Balanced 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.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
PER SHARE DATA: (Unaudited) 1997(1)
---------------- -----------
<S> <C> <C>
Net asset value, beginning of period......................................... $14.04 $12.50
------- -------
Investment Operations:
Investment income--net....................................................... .21 .25
Net realized and unrealized gain (loss) on investments....................... 1.01 2.06
------- -------
Total from Investment Operations............................................. 1.22 2.31
------- -------
Distributions:
Dividends from investment income--net........................................ (.21) (.25)
Dividends from net realized gain on investments.............................. -- (.52)
------- -------
Total Distributions.......................................................... (.21) (.77)
------- -------
Net asset value, end of period............................................... $15.05 $14.04
======= =======
TOTAL INVESTMENT RETURN......................................................... 8.69%(2) 18.48%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...................................... .45%(2) .67%(2)
Ratio of net investment income to average net assets......................... 1.51%(2) 1.91%(2)
Portfolio Turnover Rate...................................................... 48.78%(2) 45.78%(2)
Net Assets, end of period (000's Omitted).................................... $55,834 $41,144
- -------------------
(1) From May 1, 1997 (commencement of operations) to December 31, 1997.
(2) Not annualized.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Balanced 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 ("Act") as an open-end management investment
company, operating as a series company currently offering thirteen series,
including the Balanced 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 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 Series' investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Bank Corporation. Premier Mutual Fund Services, Inc. (the
"Distributor") is the distributor of the Fund's shares, which are sold without
a sales charge.
As of June 30, 1998, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 2,139,067 shares of the Series.
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.
(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) 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 custodian agreement, the Series received
net earnings credits of $2,521 during the period ended June 30, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue 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 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
<PAGE>
Dreyfus Variable Investment Fund, Balanced Portfolio
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Revenue 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 Series participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Series has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Series at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended June
30, 1998, the Series 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
Series' average daily net assets and is payable monthly. Dreyfus had undertaken
from January 1, 1998 through June 30, 1998 to reduce the management fee paid by
the Series, exclusive of taxes, brokerage, interest on borrowings, commitment
fees and extraordinary expenses to the extent that such expenses exceeded an
annual rate of 1.25% of the value of the Series' average daily net assets. No
expense reimbursement was required for the period ended June 30, 1998.
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 for providing
custodial services for the Series. During the period ended June 30, 1998 the
Series was charged $11,300 pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
June 30, 1998, amounted to $36,270,150 and $21,445,283, respectively.
The Series may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Series is exposed to
market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Series 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 Series 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, 1998 are set forth in the Statement of Financial Futures.
(b) At June 30, 1998, accumulated net unrealized appreciation on investments
and financial futures was $4,922,044, consisting of $5,335,789 gross unrealized
appreciation and $413,745 gross unrealized depreciation.
At June 30, 1998, 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).
<PAGE>
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
Printed in U.S.A. 154SA986
