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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 lion "d" logo] (reg.tm)
[dreyfus logo] (reg.tm)
Dreyfus Variable Investment Fund,
INTERNATIONAL VALUE PORTFOLIO
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 152SA986
Variable
Investment Fund,
INTERNATIONAL VALUE
PORTFOLIO
Semi-Annual
Report
June 30, 1998
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the Dreyfus
Variable Investment Fund, International Value Portfolio for the six-month period
ended June 30, 1998. Over this period, your Portfolio produced a total return of
12.91% ,* compared to a total return of 15.93% for the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(reg.tm)) Index for the same
time period.** The return of the Fund lagged the Index as value stocks in Europe
lagged growth stocks.
Japan continued to depress returns from abroad with its stock market now in
the ninth year of a bear market. On June 30 the Nikkei Index closed nearly 60%
below its December 29, 1989 level. In contrast, during this same eight and a
half-year period the U.S. market, as measured by the Standard & Poor's 500
Composite Stock Price Index, had more than tripled.
During the first half of 1998 the Japanese component of EAFE declined by 3%.
Other Asian markets fared even worse with Hong Kong down 28%, Singapore off 32%
and Malaysia down 31%. Generally, your Fund was underweighted, compared to the
EAFE, in the region and weathered the storm relatively well. The Japanese market
actually reached its low on January 12 and on June 30 was 8% higher. We believe
that after the July elections the government will take more decisive measures to
get the economy moving forward.
Our strategy for the first half of the year was to be well diversified as to
countries and sectors and to focus on value stocks. The Portfolio was primarily
invested in the major industrialized countries and exposure to emerging markets
was under 2% as of June 30, 1998.
ECONOMIC AND MARKET ENVIRONMENT
Economic growth worldwide, with the exception of Asia, continued at a moderate
pace during the reporting period. Generally, inflation in the industrialized
countries remained under control, interest rates were stable and the environment
was favorable for stock prices. The most significant negative development in the
past six months was the sharp economic reversal in Asia. The "Asian Tigers,"
portrayed for years as the model of economic development, fell victim to
overexpansion. Currencies depreciated and stock markets suffered sharp
reversals. As mentioned earlier, your Portfolio had a very limited exposure in
the area and was not seriously impacted.
In contrast to Asia, European markets were strong across the board. France,
Germany, Italy and the UK (now the largest stock market outside the U.S.) all
recorded returns in the double digits for the first six months of 1998. With the
market rally in the UK and continuing weakness in Japan, the market
capitalization for the UK now exceeds that of Japan, even though its Gross
Domestic Product (GDP) is less than one third of Japan. During the first six
months of the year the European economies as a whole continued to improve, with
GDP growth reaching the 2.7% to 3.0% range. In anticipation of the European
Monetary Union (EMU) , interest rate differentials continued to narrow and
inflation continued to trend down.
The fiscal tightening needed to reach the Maastricht guidelines for EMU
appears to have run its course. Monetary policy seems more accommodating to
encourage growth. European economies at this point are lagging the U.S. in terms
of the economic cycle. The exception is the UK which is much closer to the U.S.
cycle.
In terms of the stock markets, we generally believe the environment in Europe
currently is favorable for investment. Although valuations are not cheap
relative to the historical norm, they compare favorably with the U.S. In terms
of book value and price to cash flow, Europe is at a significant discount to the
U.S. In terms of price-to-earnings ratios, however, the case is less compelling,
but if the numbers are adjusted to reflect the more conservative accounting
practices of German and Swiss companies, price-to-earnings ratios are also
lower. Furthermore, we currently believe that there is a great deal of potential
for improved profitability in Europe at the corporate level. Restructuring and
share buybacks are just now beginning in Europe whereas in the U.S. the process
has been under way for several years.
THE ASIAN PICTURE
The biggest challenge today is to minimize the impact of turmoil in Asia on
the rest of the world. The Asian Tigers, accustomed to generating economic
growth of 7% to 8%, could experience significantly lower or even negative growth
rates for a while. Although currencies are beginning to stabilize, major Asian
firms are still struggling under the burden of heavy dollar-based debt. Until
now these problems have not impacted developed countries to any significant
extent. One reason for the severity of the situation in the emerging markets of
Asia is that the major industrial power in the region, Japan, is still
struggling to solve its own economic problems.
Early last year, Japan appeared on its way to economic recovery when the
consumption tax was raised from 3% to 5%. However, the increase in the tax had a
much more adverse impact on the consumer than anticipated. Retail sales and
housing were impacted negatively and the economy stagnated. Politicians now seem
to realize that adaquate measures have not yet been implemented. We believe that
over the next few months, new programs will be put in place by japan in an
effort to shore up its economy.
In terms of valuations, Japan now appears cheap relative to the rest of the
world. The price-to-book value of the Japanese market is 1.8 compared with the
U.S. value of 4.7. The price-to-cash-flow ratio is 11 compared with 16 in the
U.S. In terms of price-to-earnings ratios, Japan is still expensive because
profits are depressed at the bottom of the economic cycle.
PORTFOLIO FOCUS
Our strategy is to seek undervalued securities with sound fundamentals and
improving earnings momentum. We intend to remain well diversified within the
value universe, both in terms of country exposure and economic sectors. As of
June 30, 1998, the Fund was invested in 22 countries including a small exposure
(less than 2%) to emerging markets, and in 30 different economic sectors.
Holdings in emerging markets have been kept low due to the turmoil and
volatility in Asia. The severe decline in those markets has brought valuations
down, and as we begin to see evidence of stabilization we will search for
opportunities. The economic decline could bring greater opportunity in the value
sector, and while exposure to emerging markets may rise somewhat, over 90% of
the Portfolio currently is expected to continue to be invested in the major
industrialized economies.
Although stock market returns abroad have lagged those of the U.S. in recent
years, we are optimistic about the long-term outlook abroad and will continue to
search for opportunities within the value sector.
We appreciate your investment in the Fund and will continue to exert our best
efforts to bring long-term investors like you rewarding returns from
international value stocks.
Sincerely,
[Sandor Cseh signature logo]
Sandor Cseh
Portfolio Manager
July 17, 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
dividends and, where applicable, capital gain distributions. The Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE(reg.tm)) Index is an
unmanaged index composed of a sample of companies representative of the market
structure of European and Pacific Basin countries. The Index is the property of
Morgan Stanley & Co., Incorporated. 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, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Common Stocks--92.6% Shares Value
- -------------------------------------------------------
____________ ___________
<S> <C> <C>
Argentina--.6% YPF Sociedad Anonima, ADS 4,700 $ 141,294
____________
Australia--1.9% Australia and New Zealand Banking 30,221 208,427
Boral 62,222 116,721
Pacific Dunlop 75,988 122,785
____________
447,933
____________
Austria--.4% Bank Austria 1,320 (a) 94,615
____________
Denmark--.8% Jyske Bank 1,600 188,418
____________
Finland --.8% Kesko 13,000 203,398
____________
France--11.2% Alstom, ADR 6,510 211,982
Bongrain 325 162,798
C.S.F. (Thompson) 4,624 175,472
Danone 900 247,537
Dexia France 1,500 201,455
Elf Aquitaine, ADS 5,400 383,400
Guyenne et Gascog 500 203,353
L'Air Liquid 1,125 185,616
Michelin 4,016 231,250
Pechiney 3,700 148,650
Societe Generale 1,878 389,488
Usinor 11,000 169,513
____________
2,710,514
____________
Germany--12.6% Bayer 8,000 413,137
Deutsche Bank 4,300 362,811
Deutsche Lufthansa 9,500 238,734
GEA 550 214,392
Hoechst 4,000 200,708
KM Europa Metal 800 100,852
Merck KGaA 3,000 134,192
Siemens 5,400 328,879
Tarkett Sommer 3,500 116,112
VEBA 5,600 375,738
Viag 550 377,695
Volkswagen 190 183,109
____________
3,046,359
____________
Greece--.5% Hellenic Telecommunication Organization, GDR 9,000 (a,b) 115,650
____________
Hong Kong--2.4% HSBC 4,513 110,393
Henderson Investment 290,000 150,671
HongKong Electric 85,000 263,328
Swire Pacific 105,000 63,024
____________
587,416
____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ___________
Italy--3.1% ENI, ADS 5,200 $ 338,000
Istituto Mobiliare Italiano, ADS 2,500 119,219
Telecom Italia 60,000 291,417
____________
748,636
____________
Japan--20.2% Canon 12,000 271,894
Credit Saison 12,400 245,280
Dai-Tokyo Fire & Marine Insurance 45,000 156,339
Fuji Machine Manufacturing 6,000 158,820
Hitachi 25,000 162,741
Honda Motor 6,000 213,199
Ito-Yokado 5,000 234,850
Kao 18,000 277,072
Mabuchi Motor 5,000 316,490
Marubeni 61,000 121,539
Matsumotokiyoshi 5,000 175,508
Minebea 29,000 288,070
Mitsubishi Heavy Industries 37,000 139,457
Murata Manufacturing 7,000 226,578
NAMCO 6,000 139,831
Nichiei 3,050 207,099
Nishimatsu Construction 20,000 97,824
Rinnai 12,000 181,262
Rohm 2,000 204,999
Sankyo 6,500 105,197
Sekisui Chemical 30,000 153,210
Sony 4,000 343,823
Toshiba 34,000 138,666
Toyota Motor 5,000 129,113
Yamanouchi Pharmaceutical 9,000 187,089
____________
4,875,950
____________
Netherlands--7.5% ABN-Amro 13,182 307,746
Akzo Nobel, ADR 2,600 288,275
Hollandsche Beton Groep 8,313 172,873
Hunter Douglas 5,547 300,625
Koninklijke KNP 9,000 231,743
Philips Electronics, ADR 2,200 187,000
Royal PTT Nederland, ADS 3,469 220,715
Stork 3,500 111,236
____________
1,820,213
____________
New Zealand--.2% Air New Zealand 18,909 20,267
Fletcher Challenge Paper 21,673 24,016
____________
44,283
____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
____________ ___________
Norway--.6% Fred. Olsen Energy 7,000 $ 93,108
Orkla AS-B 2,800 59,882
____________
152,990
____________
Peru--.5% Telefonica del Peru, ADS 6,000 122,625
____________
Portugal--.6% Banco Pinto & Sotto Mayor 5,600 138,677
____________
Singapore--1.1% Development Bank of Singapore 46,200 256,210
____________
South Korea--.1% Kookmin Bank, ADS 176 (a,b) 682
____________
Spain--5.4% Corporacion Bancaria de Espana, ADS 7,300 329,412
Endesa 14,000 306,033
Gas Y Electridad 3,300 250,704
Repsol, ADR 7,700 423,500
____________
1,309,649
____________
Sweden--2.0% Autoliv 11,300 360,232
Scania AB 'A', ADS 5,500 133,392
____________
493,624
____________
Switzerland--3.7% Barry Callebaut 552 118,792
Forbo Holding 500 254,031
Sulzer 250 196,940
UBS 900 334,057
____________
903,820
____________
United Kingdom--14.7% BTR 71,500 202,721
British Airways 6,234 67,425
British Airways, ADR 1,250 134,453
Bunzl 62,183 290,385
Laird Group 29,700 138,694
LucasVarity 85,650 339,976
Medeva 42,000 120,482
PowerGen 24,986 345,041
Rio Tinto 18,002 202,660
Royal & Sun Alliance Insurance 30,266 312,709
Safeway 45,780 299,681
Stakis 92,000 187,194
Standard Charter 22,000 249,870
Storehouse 72,000 300,204
Tomkins 64,072 347,560
____________
3,539,055
____________
United States--1.7% Pharmacia & Upjohn 9,000 415,125
____________
TOTAL COMMON STOCKS
(cost $20,809,500) $22,357,136
============
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Preferred Stocks--2.1% Shares Value
- -------------------------------------------------------
____________ ___________
Austria--.8% Bank Austria 2,520 (a) $ 204,199
____________
Germany--1.3% Hugo Boss 70 154,816
Rheinmetal 5,500 156,613
____________
311,429
____________
TOTAL PREFERRED STOCKS
(cost $269,338) $ 515,628
============
Principal
Short-Term Investments--1.0% Amount
- ------------------------------------------------------------------------------------------
____________
U.S. Treasury Bills; 4.99%, 9/24/98
(cost $236,246) $ 239,000 $ 236,268
============
TOTAL INVESTMENTS (cost $21,315,084) 95.7% $23,109,032
======= ============
CASH AND RECEIVABLES (NET) 4.3% $ 1,030,369
======= ============
NET ASSETS 100.0% $24,139,401
======= ============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b)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, 1998,
these securities amounted to $116,332 or approximately .5% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
____________ ___________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $21,315,084 $23,109,032
Cash 248,821
Cash denominated in foreign currencies 619,539 624,118
Receivable for investment securities sold 178,868
Dividends receivable 118,093
Prepaid expenses 152
____________
24,279,084
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 20,146
Payable for investment securities purchased 94,486
Payable for shares of Beneficial Interest redeemed 3,372
Net unrealized depreciation on forward
currency exchange contracts--Note 4(a) 89
Accrued expenses 21,590
____________
139,683
____________
NET ASSETS $24,139,401
============
REPRESENTED BY: Paid-in capital $21,149,866
Accumulated undistributed investment income--net 185,701
Accumulated net realized gain (loss) on investments 1,008,219
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 1,795,615
____________
NET ASSETS $24,139,401
============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) 1,592,120
NET ASSET VALUE, offering and redemption price per share $15.16
========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $35,561 foreign taxes
<S> <C> <C>
withheld at source) $ 290,654
Interest 44,830
___________
Total Income $ 335,484
EXPENSES: Investment advisory fee--Note 3(a) 113,923
Custodian fees 15,782
Auditing fees 11,977
Prospectus and shareholders' reports 7,007
Registration fees 750
Trustees' fees and expenses--Note 3(b) 213
Shareholder servicing costs 166
Legal fees 162
Loan commitment fees--Note 2 42
Miscellaneous 624
___________
Total Expenses 150,646
___________
INVESTMENT INCOME--NET 184,838
___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and
foreign currency transactions $1,200,433
Net realized gain (loss) on forward currency
exchange contracts (44,473)
___________
Net Realized Gain (Loss) 1,155,960
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 1,281,596
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 2,437,556
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,622,394
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE 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 $ 184,838 $ 100,487
Net realized gain (loss) on investments 1,155,960 372,825
Net unrealized appreciation (depreciation) on investments 1,281,596 320,950
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations 2,622,394 794,262
____________ ____________
DIVIDENDS TO SHAREHOLDERS:
From investment income--net -- (99,919)
From net realized gain on investments (41,365) (390,614)
In excess of net realized gain on investments -- (106,376)
____________ ____________
Total Dividends (41,365) (596,909)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold 8,835,813 10,934,432
Dividends reinvested 41,365 596,909
Cost of shares redeemed (6,335,253) (739,686)
____________ ____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 2,541,925 10,791,655
____________ ____________
Total Increase (Decrease) in Net Assets 5,122,954 10,989,008
NET ASSETS:
Beginning of Period 19,016,447 8,027,439
____________ ____________
End of Period $24,139,401 $19,016,447
============ ============
UNDISTRIBUTED INVESTMENT INCOME--NET $ 185,701 $ 863
____________ ____________
Shares Shares
____________ ____________
CAPITAL SHARE TRANSACTIONS:
Shares sold 599,643 794,420
Shares issued for dividends reinvested 2,730 44,979
Shares redeemed (424,414) (52,186)
____________ ____________
Net Increase (Decrease) in Shares Outstanding 177,959 787,213
============ ============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE 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, 1998
_______________________
PER SHARE DATA: (Unaudited) 1997 1996(1)
__________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period $13.45 $12.80 $12.50
______ ______ ______
Investment Operations:
Investment income--net .12 .07 .08
Net realized and unrealized gain (loss) on investments 1.62 1.03 .34
______ ______ ______
Total from Investment Operations 1.74 1.10 .42
______ ______ ______
Distributions:
Dividends from investment income--net -- (.07) (.08)
Dividends from net realized gain on investments (.03) (.30) (.04)
Dividends in excess of net realized gain on investments -- (.08) --
______ ______ ______
Total Distributions (.03) (.45) (.12)
______ ______ ______
Net asset value, end of period $15.16 $13.45 $12.80
====== ====== ======
TOTAL INVESTMENT RETURN 12.91%(2) 8.71% 3.41%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .66%(2) 1.42% 1.01%(2)
Ratio of net investment income
to average net assets .80%(2) .74% .76%(2)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation -- -- .34%(2)
Portfolio Turnover Rate 22.21%(2) 25.67% 24.48%(2)
Net Assets, end of period (000's Omitted) $24,139 $19,016 $8,027
- ------------------------
(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, INTERNATIONAL VALUE 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 International Value 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 long-term
capital growth. 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.
As of June 30, 1998, APT Holdings Corporation, an indirect subsidiary of
Mellon Bank Corporation, held 352,377 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) FOREIGN CURRENCY TRANSACTIONS: The Series does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Series' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the value of
assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custodian agreement, the Series received
net earnings credits of $179 during DREYFUS VARIABLE INVESTMENT FUND,
INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the period ended June 30, 1998 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the 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.
(E) 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 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 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.
(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 forward currency exchange contracts, during
the period ended June 30, 1998 amounted to $7,732,062 and $4,605,412,
respectively.
In addition, the following summarizes open forward currency exchange contracts
at June 30, 1998:
<TABLE>
Foreign
Currency Unrealized
Forward Currency Exchange Contracts Amounts Cost Value (Depreciation)
_________________________________ ____________ ____________ ____________ ____________
Purchases:
_________
<S> <C> <C> <C> <C>
British Pounds, expiring 7/6/98 ................. 7,553 $12,613 $12,596 ($17)
New Zealand Dollars, expiring 7/6/98 ....... 23,253 12,112 12,040 (72)
____
($89)
=====
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Series enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to settle foreign currency transactions. When executing
forward currency exchange contracts, the Series is obligated to buy or sell a
foreign currency at a specified rate on a certain date in the future. With
respect to sales of forward currency exchange contracts, the Series would incur
a loss if the value of the contract increases between the date the forward
contract is opened and the date the forward contract is closed. The Series
realizes a gain if the value of the contract decreases between those dates. With
respect to purchases of forward currency exchange contracts, the Series would
incur a loss if the value of the contract decreases between the date the forward
contract is opened and the date the forward contract is closed. The Series
realizes a gain if the value of the contract increases between those dates. The
Series is also exposed to credit risk associated with counter party
nonperformance on these forward currency exchange contracts which is typically
limited to the unrealized gain on each open contract.
(B) At June 30, 1998, accumulated net unrealized appreciation on investments
and forward currency exchange contracts was $1,793,859, consisting of $3,509,243
gross unrealized appreciation and $1,715,384 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).
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