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Previous: DREYFUS VARIABLE INVESTMENT FUND, N-30D, 1998-08-24 |
Next: DREYFUS VARIABLE INVESTMENT FUND, N-30D, 1998-08-24 |
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the Dreyfus
Variable Investment Fund -- Disciplined Stock Portfolio for the six-month period
ended June 30, 1998. Your Portfolio produced a total return of 17.78%,* which
compares with a total return of 17.72% for the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) for the same period.**
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 reflected 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.
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 & 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
oil field 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 overextended 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.
PORTFOLIO FOCUS
The competitive ranking of the portfolio was in the twelfth percentile of the
Lipper VIP Growth & Income Universe.** Exposure to mid-capitalization stocks and
an underweighting in several big-capitalization names that performed well
detracted from performance.
We continue to adhere to our disciplined investment process, which seeks to
identify stocks that we believe have a favorable combination of undervaluation
and earnings momentum that is exceeding expectations. Our philosophy is that, in
seeking consistent high returns we look to construct a portfolio of these stocks
in a way that also can manage unnecessary investment risks. Generally, we look
to have the Portfolio fully invested and industry- and sector-neutral compared
to the S& P 500. The Portfolio is highly diversified as it currently has
positions in 199 stocks across ten economic sectors. The 10 largest holdings
account for less than 20% of the Portfolio, so Portfolio performance is not
overly dependent on any one stock, but is determined by a large number of
securities.
Your confidence in Dreyfus management is greatly appreciated.
Sincerely,
[Bert J. Mullins signature logo]
Bert J. Mullins
Portfolio Manager
July 14, 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 is a widely accepted unmanaged index of
U.S. stock market performance.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Common Stocks--98.6% Shares Value
- -------------------------------------------------------
____________ ____________
<S> <C> <C>
Basic Industries--3.7% Cytec Industries 5,250 (a) $ 232,31
Dow Chemical 2,550 246,553
duPont (EI) deNemours 12,400 925,350
Fort James 15,675 697,537
Lennar 4,650 137,175
Mead 7,100 225,425
Owens-Illinois 2,650 (a) 118,588
PPG Industries 4,800 333,900
Rohm & Haas 2,200 228,662
Sealed Air 1,850 (a) 67,987
Solutia 7,300 209,419
Southdown 4,600 328,325
_____________
3,751,234
_____________
Capital Spending--23.6% AGCO 7,700 158,331
AlliedSignal 11,950 530,281
Allied Waste Industries 7,100 (a) 170,400
American Power Conversion 6,300 (a) 189,000
Cadence Design System 6,850 (a) 214,063
Case 6,900 332,925
Caterpillar 4,750 251,156
Cisco Systems 11,650 (a) 1,072,528
Compaq Computer 5,203 147,635
Computer Associates International 11,500 638,969
Compuware 4,600 (a) 235,175
Cooper Industries 7,500 412,031
Cordant Technologies 5,500 253,688
Dell Computer 5,900 (a) 547,594
EMC 9,250 (a) 414,516
Eaton 3,850 299,337
First Health Group 6,000 (a) 171,000
General Electric 23,850 2,170,350
Grainger (W.W.) 3,700 184,306
Gulfstream Aerospace 6,900 (a) 320,850
HBO & Co. 12,300 433,575
Ingersoll-Rand 10,500 462,656
Intel 18,000 1,334,250
International Business Machines 13,450 1,544,228
Interpublic Group Cos. 3,800 230,613
Jabil Circuit 6,000 (a) 198,375
Johnson Controls 5,750 328,828
Lexmark International Group, Cl. A 4,900 (a) 298,900
Linear Technology 4,050 244,266
Lockheed Martin 2,100 222,337
Lucent Technologies 7,900 657,181
Maxim Integrated Products 8,300 (a) 263,006
Microsoft 25,000 (a) 2,709,375
Nokia, ADS 3,800 275,738
Northrop Grumman 3,900 402,187
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ____________
Capital Spending (continued) Omnicom Group 6,200 $ 309,225
Oracle 7,100 (a) 174,394
Parametric Technology 13,200 (a) 358,050
Parker-Hannifin 6,550 249,719
Pitney Bowes 6,400 308,000
Raychem 3,300 97,556
SCI Systems 4,000 (a) 150,500
Storage Technology 7,100 (a) 307,963
Stratus Computer 4,700 (a) 118,969
Sun Microsystems 5,900 (a) 256,281
Symantec 8,550 (a) 223,369
Tellabs 6,450 (a) 461,981
Tyco International 17,900 1,127,700
U.S. Filter 5,700 (a) 159,956
United Technologies 7,350 679,875
Xerox 6,550 665,644
_____________
23,968,832
_____________
Consumer Cyclical--12.9% American Greetings, Cl. A 3,550 180,828
Borders Group 6,000 (a) 222,000
Callaway Golf 6,900 135,844
Carnival, Cl. A 7,400 293,225
Chancellor Media 4,700 (a) 233,384
Chrysler 7,000 394,625
Disney (Walt) 7,100 745,944
Federated Department Stores 10,600 (a) 570,412
Ford Motor 19,400 1,144,600
Gannett 5,050 358,866
Gap 14,800 912,050
Jones Apparel Group 7,500 (a) 274,219
King World Productions 7,100 (a) 181,050
Lear 5,800 (a) 297,613
Liz Claiborne 6,150 321,337
Magna International, Cl. A 4,150 284,794
Marriott International, Cl. A 11,400 369,075
New York Times, Cl. A 5,700 451,725
News, ADS 13,700 440,113
Penney (J.C.) 8,000 578,500
Philips Electronics 2,250 191,250
Proffitt's 4,900 (a) 197,838
Promus Hotel 4,739 (a) 182,451
Reynolds & Reynolds, Cl. A 8,700 158,231
Safeway 17,200 (a) 699,825
Sears, Roebuck 5,900 360,269
TJX Cos. 26,300 634,487
Tribune 6,700 461,044
Valassis Communications 4,000 (a) 154,250
Wal-Mart Stores 27,250 1,655,437
_____________
13,085,286
_____________
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ____________
Consumer Staples--10.5% Bestfoods 4,400 $ 255,475
Coca-Cola 29,550 2,526,525
Colgate-Palmolive 4,050 356,400
Dial 9,500 246,406
Dole Food 5,750 285,703
Gillette 14,200 804,963
Hershey Foods 4,450 307,050
Interstate Bakeries 6,300 209,081
Newell 4,100 204,231
Panamercian Beverages, Cl. A 6,300 198,056
PepsiCo 20,600 848,463
Philip Morris Cos. 23,850 939,094
Procter & Gamble 19,550 1,780,272
Ralston-Purina Group 3,900 455,569
Suiza Foods 3,100 (a) 185,031
Unilever N.V. 14,200 1,120,912
_____________
10,723,231
_____________
Energy--7.7% Ashland 4,200 216,825
British Petroleum, ADS 7,750 683,938
Chevron 10,550 876,309
Coastal 6,850 478,216
Columbia Energy Group 6,125 340,703
Cooper Cameron 4,100 (a) 209,100
Diamond Offshore Drilling 3,100 124,000
El Paso Natural Gas 4,000 153,000
Exxon 17,600 1,255,100
Halliburton 5,750 256,234
Kerr-McGee 3,300 190,988
Noble Drilling 6,550 (a) 157,609
Phillips Petroleum 7,600 366,225
Royal Dutch Petroleum, ADR 7,900 433,019
Texaco 10,550 629,703
Tosco 7,000 205,625
USX-Marathon Group 9,600 329,400
Unocal 11,400 407,550
Valero Energy 7,100 236,075
YPF Sociedad Anonima, ADS 7,600 228,475
_____________
7,778,094
_____________
Health Care--11.6% American Home Products 19,800 1,024,650
Becton, Dickinson 5,450 423,056
Biogen 4,400 (a) 215,600
Boston Scientific 7,300 (a) 522,863
Bristol-Myers Squibb 13,750 1,580,391
Centocor 5,200 (a) 188,500
Dura Pharmaceuticals 8,700 (a) 194,663
Elan, ADS 5,150 (a) 331,209
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ____________
Health Care (continued) Guidant 5,650 $ 402,916
HEALTHSOUTH 11,500 (a) 306,906
Johnson & Johnson 10,750 792,812
Lilly (Eli) 16,400 1,083,425
Merck & Co. 6,050 809,187
Pfizer 14,450 1,570,534
Schering-Plough 12,550 1,149,894
Warner-Lambert 14,050 974,719
Wellpoint Health Networks 2,650 (a) 196,100
_____________
11,767,425
_____________
Interest Sensitive--17.6% ACE 7,900 308,100
Ahmanson (H F) & Co. 5,250 372,750
Allstate 7,750 709,609
Ambac Financial Group 5,650 330,525
American General 4,100 291,869
Associates First Capital, Cl. A 6,446 495,536
Banc One 16,780 936,534
BankAmerica 20,850 1,802,222
BankBoston 6,880 382,700
Bankers Trust 4,050 470,053
Bear Stearns Cos. 4,558 259,236
CIGNA 3,350 231,150
Chase Manhattan 14,200 1,072,100
Countrywide Credit Industries 6,450 327,338
Fannie Mae 16,300 990,225
First Chicago NBD 11,950 1,059,069
First Union 4,915 286,289
Fleet Financial Group 8,150 680,525
Hartford Financial Services Group 4,900 560,438
Merrill Lynch 7,650 705,712
Morgan Stanley Dean Witter 12,300 1,123,913
Old Republic International 8,125 238,164
PMI Group 3,150 231,131
PNC Bank 17,700 952,481
Progressive 2,000 282,000
SLM Holding 5,000 245,000
SouthTrust 15,400 669,900
Summit Bancorp 9,250 439,375
SunAmerica 6,150 353,241
Torchmark 5,500 251,625
Travelers Group 13,181 799,098
_____________
17,857,908
_____________
Mining And Metals--.7% Aluminum Co. of America 6,200 408,812
Martin Marietta Materials 3,600 162,000
USX-U.S. Steel Group 4,950 163,350
_____________
734,162
_____________
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ____________
Transportation--1.3% Burlington Northern Santa Fe 2,700 $ 265,106
Canadian National Railway 8,000 227,000
Canadian Pacific 5,800 308,125
US Airways Group 6,750 (a) 534,938
_____________
1,335,169
_____________
Utilities--9.0% Ameritech 21,200 951,350
Bell Atlantic 23,284 1,062,333
BellSouth 19,900 1,335,788
CMS Energy 5,350 235,400
Cable & Wireless, ADS 5,850 215,719
Energy East 7,000 291,375
FirstEnergy 7,342 225,766
Florida Progress 10,500 431,812
GPU 10,500 397,031
Pinnacle West Capital 5,150 231,750
Qwest Communications International 11,711 (a) 408,427
SBC Communications 26,700 1,068,000
Telefonos de Mexico, Cl. L, ADS 11,000 528,687
Texas Utilities 13,950 580,669
WorldCom 25,350 (a) 1,227,891
_____________
9,191,998
_____________
TOTAL COMMON STOCKS
(cost $85,690,629) $100,193,339
_____________
Principal
Short-Term Investments--.9% Amount
- -------------------------------------------------------
_____________
U.S. Treasury Bills: 4.88%, 9/17/98 $ 309,000 $ 305,731
4.88%, 9/24/98 197,000 194,748
4.95%, 10/1/98 102,000 100,704
4.97%, 10/8/98 349,000 344,229
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $945,403) $ 945,412
_____________
TOTAL INVESTMENTS (cost $86,636,032) 99.5% $101,138,751
_______ _____________
CASH AND RECEIVABLES (NET) .5% $ 507,286
_______ _____________
NET ASSETS 100.0% $101,646,037
_______ _____________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $ 86,636,032 $101,138,751
Cash 815,891
Dividends receivable 87,547
Prepaid expenses 249
_____________
102,042,438
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 59,203
Payable for investment securities purchased 297,566
Accrued expenses 39,632
_____________
396,401
_____________
NET ASSETS $101,646,037
_____________
REPRESENTED BY: Paid-in capital $ 83,629,826
Accumulated undistributed investment income--net 350,766
Accumulated net realized gain (loss) on investments 3,162,726
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 14,502,719
_____________
NET ASSETS $101,646,037
_____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) 4,743,635
NET ASSET VALUE, offering and redemption price per share $21.43
________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $5,863 foreign taxes
<S> <C> <C>
withheld at source) $ 670,325
Interest 35,936
_____________
Total Income $ 706,261
EXPENSES: Investment advisory fee--Note 3(a) 284,840
Custodian fees--Note 3(a) 34,903
Professional fees 14,108
Registration fees 10,969
Prospectus and shareholders' reports 5,684
Trustees' fees and expenses--Note 3(b) 563
Shareholder servicing costs 281
Loan commitment fees--Note 2 125
Miscellaneous 833
_____________
Total Expenses 352,306
_____________
INVESTMENT INCOME--NET 353,955
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments $ 3,224,622
Net unrealized appreciation (depreciation) on
investments 8,012,954
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 11,237,576
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,591,531
_____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
_______________ _______________
OPERATIONS:
<S> <C> <C>
Investment income--net $ 353,955 $ 220,862
Net realized gain (loss) on investments 3,224,622 2,955,540
Net unrealized appreciation (depreciation) on investments 8,012,954 4,683,939
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations 11,591,531 7,860,341
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (18,610) (205,441)
Net realized gain on investments (428,014) (2,668,497)
_____________ _____________
Total Dividends (446,624) (2,873,938)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold 38,232,921 35,868,353
Dividends reinvested 446,623 2,860,437
Cost of shares redeemed (1,495,158) (8,120,915)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 37,184,386 30,607,875
_____________ _____________
Total Increase (Decrease) in Net Assets 48,329,293 35,594,278
NET ASSETS:
Beginning of Period 53,316,744 17,722,466
_____________ _____________
End of Period $101,646,037 $ 53,316,744
_____________ _____________
UNDISTRIBUTED INVESTMENT INCOME--NET $ 350,766 $ 15,421
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,884,345 2,064,026
Shares issued for dividends reinvested 21,431 163,038
Shares redeemed (75,846) (511,901)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding 1,829,930 1,715,163
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK 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, 1998 Year Ended December 31,
_______________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
___________ _______ _______
<S> <C> <C> <C>
Net asset value, beginning of period $18.30 $14.79 $12.50
_______ _______ _______
Investment Operations:
Investment income--net .07 .08 .07
Net realized and unrealized gain (loss) on investments 3.19 4.53 2.29
_______ _______ _______
Total from Investment Operations 3.26 4.61 2.36
_______ _______ _______
Distributions:
Dividends from investment income--net (.01) (.08) (.07)
Dividends from net realized gain on investments (.12) (1.02) --
_______ _______ _______
Total Distributions (.13) (1.10) (.07)
_______ _______ _______
Net asset value, end of period $21.43 $18.30 $14.79
______ ______ _______
TOTAL INVESTMENT RETURN 17.78%(2) 31.51% 18.86%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .46%(2) 1.02% .80%(2)
Ratio of net investment income to average net assets .46%(2) .68% .72%(2)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation -- -- .16%(2)
Portfolio Turnover Rate 22.62%(2) 79.74% 30.62%(2)
Net Assets, end of period (000's Omitted) $101,646 $53,317 $17,722
- ------------
(1) From April 30, 1996 (commencement of operations) to December 31, 1996.
(2) Not annualized.
(3) 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>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK 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 Disciplined Stock 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
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 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. is the distributor of the
Series' shares, which are sold without a sales charge.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The 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 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.
(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 $2,340 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 and 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
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
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 $34,903 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.
(C) During the period ended June 30, 1998, the Series incurred total brokerage
commissions of $64,077 of which $27,602 was paid to Dreyfus Investment Services
Corporation, a subsidiary of Mellon Bank 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, 1998, amounted
to $53,877,078 and $17,150,963, respectively.
At June 30, 1998, accumulated net unrealized appreciation on investments was
$14,502,719, consisting of $15,959,332 gross unrealized appreciation and
$1,456,613 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).
(reg.tm)
(reg.tm)
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
Printed in U.S.A. 150SA986
Variable
Investment Fund,
DISCIPLINED STOCK
PORTFOLIO
Semi-Annual
Report
June 30, 1998
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