Dreyfus Variable Investment Fund, Balanced Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the portfolio
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the portfolio's investments and its share price.
<PAGE>
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
13 Statement of Financial Futures
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
18 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund,
Balanced Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Balanced Portfolio, covering the six-month period from January 1, 1999
through June 30, 1999. Inside, you'll find valuable information about how the
portfolio was managed during the period, including a discussion with portfolio
managers, Ronald P. Gala and Laurie A. Carroll.
On the equity side, the past six months have been rewarding for many investors.
Strong economic growth, low inflation and high levels of consumer spending
supported continued strength in the stocks of many large companies. Beginning in
April, many previously out-of-favor market sectors rallied strongly -- including
large-cap value stocks -- while large-cap growth stocks appear to have paused in
their advance. This helped narrow the valuation gap that had developed over the
past several years between the growth and value sectors of the large-cap stock
market.
On the other hand, fixed-income securities have provided mixed results. U.S.
Treasury securities declined, giving back all of the gains they achieved after
their remarkable rally last summer and fall. Prices of other types of bonds fell
less sharply or remained relatively unchanged when investors shifted assets back
into market sectors they had previously avoided. Accordingly, many corporate
bonds, mortgage-backed securities, asset-backed securities and U.S.
dollar-denominated foreign bonds provided higher returns than U.S. Treasuries
over the first half of 1999.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Balanced
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Ronald P. Gala and Laurie A. Carroll, Portfolio Managers
How did Dreyfus Variable Investment Fund, Balanced Portfolio perform relative to
its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Balanced Portfolio produced a total return of 4.30%.(1) In comparison, the
portfolio' s Hybrid Index, which is composed of 60% Standard & Poor's 500
Composite Stock Price Index(2) ("S&P 500") and 40% Lehman Brothers Intermediate
Government/ Corporate Bond Index(2) (Intermediate Index) had total returns of
12.38% and -0.58%, respectively, for the same time period. The total return for
the Hybrid Index was 7.19%.(2)
We attribute the portfolio's performance to our more defensive equity position
during the period. While gains within this component added to the portfolio's
overall results, our de-emphasis there held back performance.
What is the portfolio's investment approach?
The portfolio is a balanced portfolio, with a "neutral" allocation of 60% stocks
and 40% bonds. However, the portfolio is permitted to invest up to 75%, and as
little as 40%, of its assets in stocks, and up to 60%, and as little as 25%, of
its assets in bonds. When allocating assets between stocks and bonds, we assess
the relative return and risks of each asset class using a model that analyzes
several factors, including interest-rate adjusted price/earnings ratios, the
valuation and volatility levels of stocks relative to bonds, and economic
factors such as interest rates.
When selecting stocks for the portfolio, we use a valuation model that
identifies and ranks stocks within an industry or sector based on its value,
growth and financial profile. Then, we attempt to manage risk by diversifying
across companies and industries and by maintaining risk characteristics -- such
as growth, size, quality and yield -- that are similar to those of the S&P 500.
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
When choosing bonds for the portfolio, we review economic, market and other
factors to measure valuations by sector, maturity and credit quality. The
portfolio' s bond component consists primarily of investment-grade domestic and
foreign bonds that are issued by corporations and governments. Its
dollar-weighted average maturity normally will not exceed 10 years.
What other factors influenced the portfolio's performance?
During the first three months of the period, the equity portion of the portfolio
benefited from its holdings in some of the best performing companies in the S&P
500, most notably America Online and Microsoft. In addition, our holdings within
the consumer cyclical sector, including Ford Motor, DaimlerChrysler and Wal-Mart
Stores provided solid returns for the portfolio. The portfolio's utility stocks
also performed well, especially those related to the telecommunications
industry, including MCI WorldCom.
However, during the second half of the period market sentiment began to shift
away from these types of large-cap growth stocks, preferring instead the more
value-oriented stocks that had previously been out of favor. As a result,
cyclical stocks -- those companies whose earnings are sensitive to changes in
economic conditions -- tended to perform the best. While we did have some
exposure to these types of stocks, our performance would have been better had we
allocated more assets there.
As for the fixed-income component of the portfolio, our best returns came from
corporate bonds and asset-backed securities, while our U.S. Treasury holdings
produced modest returns. That's because when the Federal Reserve Board trimmed
short-term interest rates by a total of three-quarters of a percentage point
last fall, it caused bond prices, which move inversely to interest rates, to
rise. Since then, in a move in late June, the Fed chose to increase short-term
interest rates by one-quarter of a point, while maintaining a neutral stance on
future rate movement.
<PAGE>
In this environment, U.S. Treasuries have not performed as well as the
portfolio' s other bonds during the period. However, we have maintained a fairly
large percentage of the portfolio's assets in these investments for liquidity
purposes.
What is the portfolio's current strategy?
While we are encouraged by the market's recent preference for more reasonably
priced value stocks, we continue to believe that the stock market is overvalued.
Early in the year, we shifted a portion of the portfolio's assets out of stocks,
choosing instead to deploy those assets into bonds, a move that positioned the
portfolio more defensively. As of June 30, 1999, approximately 47% of the
portfolio' s assets were allocated to common stock and 48% to bonds and notes,
with 5% in cash equivalents. This represents a notable shift from the
portfolio' s stance at the end of 1998, at which time approximately 65% of the
portfolio' s assets were invested in stocks, 30% invested in bonds and 5%
invested in cash equivalents. Going forward, we may make further allocation
shifts as market conditions dictate.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT
THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH
INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS.
(2) SOURCE: LIPPER 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. ()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.
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--46.5% Shares Value ($)
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<S> <C> <C>
ALCOHOL & TOBACCO--.5%
Philip Morris Cos. 8,500 341,594
CONSUMER CYCLICAL--5.0%
Delphi Automotive Systems 1,817 33,732
Delta Air Lines 2,500 144,062
Eastman Kodak 3,400 230,350
Federal-Mogul 1,000 52,000
Federated Department Stores 3,000 (a) 158,812
Ford Motor 9,200 519,225
Gap 8,400 423,150
General Motors 2,600 171,600
K mart 6,500 (a) 106,844
Safeway 6,200 (a) 306,900
Staples 5,000 (a) 154,687
TJX Cos. 10,700 356,444
Tommy Hilfiger 1,900 (a) 139,650
Wal-Mart Stores 19,800 955,350
3,752,806
CONSUMER STAPLES--2.9%
Coca-Cola 8,200 512,500
Fortune Brands 5,600 231,700
IBP 5,600 133,000
Procter & Gamble 6,100 544,425
Ralston-Purina Group 6,800 206,975
Sara Lee 9,100 206,456
Unilever, N.V. (New York Shares) 4,286 298,929
2,133,985
ENERGY--2.9%
Amerada Hess 800 47,600
Chevron 1,800 171,337
Coastal 5,400 216,000
Diamond Offshore Drilling 2,400 68,100
El Paso Energy 3,400 119,638
Exxon 10,700 825,237
Royal Dutch Petroleum (New York Shares) 6,500 391,625
Sempra Energy 4,900 110,863
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COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY (CONTINUED)
Sunoco 1,500 45,281
Transocean Offshore 3,700 97,125
UtiliCorp United 4,050 98,466
2,191,272
HEALTH CARE--5.1%
Abbott Laboratories 7,400 336,700
Amgen 8,000 (a) 487,000
Biogen 700 (a) 45,019
Biomet 3,500 139,125
Boston Scientific 4,500 (a) 197,719
Bristol-Myers Squibb 9,000 633,937
Cardinal Health 1,500 96,187
Immunex 1,700 (a) 216,644
Johnson & Johnson 6,800 666,400
Merck & Co. 1,600 118,400
Schering-Plough 10,500 556,500
Warner-Lambert 3,900 270,562
3,764,193
INTEREST SENSITIVE--9.1%
Allstate 9,600 344,400
Ambac Financial Group 3,000 171,375
American Express 1,600 208,200
Bank of America 6,500 476,531
Bank One 6,400 381,200
BankBoston 3,600 184,050
Chase Manhattan 8,200 710,325
Citigroup 13,700 650,750
Comerica 4,100 243,694
Conseco 1,500 45,656
Edwards (A.G.) 2,000 64,500
Federal National Mortgage Association 5,500 376,063
Fleet Financial Group 7,700 341,687
General Electric 6,400 723,200
Golden West Financial 1,300 127,400
Jefferson-Pilot 1,600 105,900
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
MBNA 4,900 150,063
MGIC Investment 2,200 106,975
Merrill Lynch 2,600 207,837
Morgan Stanley Dean Witter & Co. 3,200 328,000
SLM Holding 5,100 233,644
SunTrust Banks 3,100 215,256
Transamerica 800 60,000
UnionBanCal 2,500 90,312
XL Capital, Cl. A 4,000 226,000
6,773,018
PRODUCER GOODS & SERVICES--4.2%
Alcoa 2,200 136,125
Boeing 4,500 198,844
Centex 2,000 75,125
Dow Chemical 2,200 279,125
duPont (E.I.) deNemours & Co. 1,400 95,637
General Dynamics 3,500 239,750
Georgia-Pacific Group 6,000 284,250
Ingersoll-Rand 5,000 323,125
Kimberly-Clark 6,600 376,200
Rohm & Haas 3,700 158,637
Tyco International 4,900 464,275
USG 1,500 84,000
USX-U.S. Steel Group 2,800 75,600
Union Carbide 4,500 219,375
United Technologies 1,601 114,757
3,124,825
SERVICES--3.3%
America Online 4,000 (a) 442,000
Ceridian 5,400 (a) 176,513
Fox Entertainment Group, Cl. A 4,300 115,831
Gannett 4,300 306,913
IMS Health 5,400 168,750
Infinity Broadcasting, Cl. A 8,400 249,900
Time Warner 2,500 183,750
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
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SERVICES (CONTINUED)
Tribune 3,500 304,938
Vodafone AirTouch, A.D.R. 2,650 522,050
2,470,645
TECHNOLOGY--9.1%
BMC Software 6,000 (a) 324,000
Cisco Systems 9,600 (a) 619,200
Compuware 4,600 (a) 146,338
Dell Computer 12,400 (a) 458,800
EMC 5,400 (a) 297,000
General Instrument 1,600 (a) 68,000
Hewlett-Packard 4,700 472,350
Intel 17,600 1,047,200
International Business Machines 5,200 672,100
Lexmark International Group, Cl. A 4,400 (a) 290,675
Lucent Technologies 5,800 391,138
Microsoft 17,400 (a) 1,569,263
Tellabs 4,200 (a) 283,763
USWeb 4,900 (a) 108,719
6,748,546
UTILITIES--4.4%
AT&T 4,950 276,272
Ameren 3,200 122,800
Ameritech 11,000 808,500
BellSouth 11,700 548,437
Consolidated Edison 3,900 176,475
FPL Group 5,900 322,288
GTE 2,500 189,375
MCI WorldCom 9,500 (a) 819,375
3,263,522
TOTAL COMMON STOCKS
(cost $24,925,062) 34,564,406
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Principal
BONDS AND NOTES--48.4% Amount ($) Value ($)
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FINANCE--6.2%
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 600,000 602,733
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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FINANCE (CONTINUED)
Atlantic Richfield, Notes,
5.55%, 4/15/2003 500,000 487,662
Bank One, Sub. Notes,
6%, 2/17/2009 700,000 646,140
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 600,000 598,935
General Motors Acceptance, Bonds,
6.15%, 4/5/2007 430,000 412,093
Merrill Lynch, Notes,
6%, 2/17/2009 600,000 554,174
Province of Ontario, Bonds,
7.75%, 6/4/2002 500,000 519,805
US Bank, Notes,
5.70%, 12/15/2008 500,000 457,348
Wells Fargo, Sr. Notes,
6.75%, 10/1/2006 350,000 347,949
4,626,839
INDUSTRIAL--7.1%
Ameritech Capital Funding, Notes,
5.65%, 1/15/2001 500,000 497,038
Comcast Cable Communications, Notes,
6.20%, 11/15/2008 500,000 466,416
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 500,000 504,654
McDonald's, Notes,
5.90%, 5/11/2001 500,000 499,073
Mobil, Debs.,
8.375%, 2/12/2001 1,000,000 1,032,638
Monsanto, Notes,
5.375%, 12/1/2001 300,000 (b) 293,199
Norfolk Southern, Sr. Notes,
6.20%, 4/15/2009 500,000 471,022
PPG Industries, Notes,
6.25%, 2/15/2002 500,000 497,431
Safeway, Notes,
5.875%, 11/15/2001 1,000,000 986,700
5,248,171
<PAGE>
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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UTILITIES--3.9%
AT&T, Notes,
5.625%, 3/15/2004 750,000 726,936
MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 500,000 491,260
Philadelphia Electric, Notes,
6.625%, 3/1/2003 1,000,000 1,002,926
Wisconsin Electric Power, Notes,
7.25%, 8/1/2004 700,000 723,603
2,944,725
U.S. GOVERNMENT & AGENCIES--31.2%
Federal Home Loan Bank, Bonds:
5.61%, 6/22/2001 1,100,000 1,095,692
5.125%, 9/15/2003 600,000 578,526
4.875%, 1/22/2022 500,000 487,893
Federal Home Loan Mortgage Corp., Notes,
5.75%, 3/15/2009 250,000 237,812
Federal National Mortgage Association:
Medium-Term Notes,
5.10%, 9/25/2000 600,000 596,982
Notes:
5.25%, 1/15/2003 1,300,000 1,267,726
5.125%, 2/13/2004 900,000 863,229
U.S. Treasury Bonds,
10.75%, 5/15/2003 1,000,000 1,168,590
U.S. Treasury Notes:
6.125%, 9/30/2000 450,000 454,059
5.625%, 11/30/2000 1,050,000 1,053,118
5.25%, 1/31/2001 1,020,000 1,017,501
8%, 5/15/2001 600,000 626,280
6.625%, 6/30/2001 1,050,000 1,071,452
6.125%, 12/31/2001 550,000 556,127
6.625%, 4/30/2002 1,500,000 1,536,825
7.50%, 5/15/2002 730,000 764,879
6.375%, 8/15/2002 1,100,000 1,120,251
5.75%, 10/31/2002 1,700,000 1,701,870
6.25%, 2/15/2003 320,000 325,037
5.25%, 8/15/2003 500,000 490,360
5.75%, 8/15/2003 400,000 399,244
7.50%, 2/15/2005 750,000 805,912
6.50%, 8/15/2005 1,120,000 1,152,278
5.625%, 2/15/2006 500,000 491,435
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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U.S. GOVERNMENT & AGENCIES (CONTINUED)
U.S. Treasury Notes (continued):
7%, 7/15/2006 950,000 1,006,649
6.25%, 2/15/2007 320,000 326,179
6.625%, 5/15/2007 800,000 833,472
6.125%, 8/15/2007 1,170,000 1,182,940
23,212,318
TOTAL BONDS AND NOTES
(cost $36,789,772) 36,032,053
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SHORT-TERM INVESTMENTS--4.0%
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U.S. TREASURY BILLS:
4.34%, 7/22/1999 700,000 (c) 698,325
4.48%, 9/2/1999 378,000 375,030
4.60%, 9/23/1999 1,772,000 1,753,187
4.69%, 9/30/1999 171,000 168,989
TOTAL SHORT-TERM INVESTMENTS
(cost $2,995,214) 2,995,531
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TOTAL INVESTMENTS (cost $64,710,048) 98.9% 73,591,990
CASH AND RECEIVABLES (NET) 1.1% 805,033
NET ASSETS 100.0% 74,397,023
(A) NON-INCOME PRODUCING.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 1999, THIS SECURITY
AMOUNTED TO $293,199 OR APPROXIMATELY .4% OF NET ASSETS.
(C) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR
OPEN FINANCIAL FUTURES POSITIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
STATEMENT OF FINANCIAL FUTURES
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts ($) Expiration at 6/30/99 ($)
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<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG:
5 Year U.S. Treasury Notes 53 5,777,000 September '99 (39,891)
FINANCIAL FUTURES SHORT:
Standard & Poor's 500 10 3,454,250 September '99 (193,000)
TOTAL (232,891)
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 64,710,048 73,591,990
Cash 236,088
Receivable for investment securities sold 1,714,904
Dividends and interest receivable 614,922
Prepaid expenses 109
76,158,013
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 48,049
Payable for investment securities purchased 1,672,246
Payable for futures variation margin--Note 4(a) 22,750
Accrued expenses 17,945
1,760,990
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NET ASSETS ($) 74,397,023
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 62,972,014
Accumulated undistributed investment income--net 17,842
Accumulated net realized gain (loss) on investments 2,758,116
Accumulated net unrealized appreciation (depreciation)
on investments [including ($232,891) net unrealized
(depreciation) on financial futures]--Note 4(b) 8,649,051
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NET ASSETS ($) 74,397,023
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 4,565,062
NET ASSET VALUE, offering and redemption price per share ($) 16.30
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Interest 1,043,859
Cash dividends (net of $6,831 foreign taxes withheld at source) 231,078
TOTAL INCOME 1,274,937
EXPENSES:
Investment advisory fee-Note 3(a) 263,271
Custodian fees--Note 3(a) 12,938
Professional fees 12,639
Prospectus and shareholders' reports 7,483
Registration fees 3,626
Trustees' fees and expenses-Note 3(b) 559
Shareholder servicing costs 501
Loan commitment fees-Note 2 190
Miscellaneous 1,663
TOTAL EXPENSES 302,870
INVESTMENT INCOME--NET 972,067
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 4 ($):
Net realized gain (loss) on investments 3,154,449
Net realized gain (loss) on financial futures (421,064)
NET REALIZED GAIN (LOSS) 2,733,385
Net unrealized appreciation (depreciation) on investments
[including ($204,741) net unrealized (depreciation)
on financial futures] (776,856)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,956,529
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,928,596
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 972,067 1,641,276
Net realized gain (loss) on investments 2,733,385 3,392,359
Net unrealized appreciation (depreciation)
on investments (776,856) 6,714,434
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,928,596 11,748,069
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (954,225) (1,647,249)
Net realized gain on investments (461,381) (3,168,608)
TOTAL DIVIDENDS (1,415,606) (4,815,857)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 28,187,716 28,199,314
Dividends reinvested 1,415,606 4,815,857
Cost of shares redeemed (16,560,061) (21,250,964)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 13,043,261 11,764,207
TOTAL INCREASE (DECREASE) IN NET ASSETS 14,556,251 18,696,419
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NET ASSETS ($):
Beginning of Period 59,840,772 41,144,353
END OF PERIOD 74,397,023 59,840,772
Undistributed investment income-net 17,842 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,742,059 1,876,334
Shares issued for dividends reinvested 87,681 309,182
Shares redeemed (1,019,761) (1,360,556)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 809,979 824,960
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
<CAPTION>
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Six Months Ended
June 30, 1999 Year Ended December 31,
-----------------------
(Unaudited) 1998 1997(a)
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<S> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 15.94 14.04 12.50
Investment Operations:
Investment income--net .43(b) .43 .25
Net realized and unrealized
gain (loss) on investments .24 2.67 2.06
Total from Investment Operations .67 3.10 2.31
Distributions:
Dividends from investment income--net (.21) (.43) (.25)
Dividends from net realized gain on investments (.10) (.77) (.52)
Total Distributions (.31) (1.20) (.77)
Net asset value, end of period 16.30 15.94 14.04
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TOTAL RETURN (%) 4.30(c) 22.34 18.48(c)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .43(c) .87 .67(c)
Ratio of net investment income
to average net assets 1.37(c) 2.98 1.91(c)
Portfolio Turnover Rate 60.60(c) 111.75 45.78(c)
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Net Assets, end of period ($ x 1,000) 74,397 59,841 41,144
(A) FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Variable Investment Fund (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the Balanced Portfolio (the "portfolio") and is intended to be
a funding vehicle for variable annuity contracts and variable life insurance
policies to be offered by the separate accounts of life insurance companies. The
portfolio is a diversified series. The portfolio's investment objective is to
provide investment results that are greater than the total return performance of
common stocks and bonds in the aggregate, as represented by a hybrid index, 60%
of which is composed of the common stocks in the Standard & Poor's 500 Composite
Stock Price Index and 40% of which is composed of the bonds in the Lehman
Brothers Intermediate Government/Corporate Bond Index. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"). Premier Mutual Fund Services, Inc.
(the "Distributor") is the distributor of the portfolio's 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 portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent
<PAGE>
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 custody agreement, the portfolio received
net earnings credits of $556 during the period ended June 30, 1999 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
portfolio may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
" Code" ). To the extent that net realized capital gain can be offset by capital
loss carryovers, if any, it is the policy of the portfolio not to distribute
such gain.
(d) Federal income taxes: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized
The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
for temporary or emergency purposes, including the financing of redemptions. In
connection therewith, the portfolio has agreed to pay commitment fees on its pro
rata portion of the Facility. Interest is charged to the portfolio at rates
based on prevailing market rates in effect at the time of borrowings. During the
period ended June 30, 1999, the portfolio did not borrow under the Facility.
NOTE 3--Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
portfolio' s average daily net assets and is payable monthly. Dreyfus had
undertaken from January 1, 1999 through June 30, 1999 to reduce the investment
advisory fee paid by the portfolio, to the extent that the portfolio's aggregate
expenses, exclusive of taxes, brokerage, interest on borrowings, commitment fees
and extraordinary expenses, exceed an annual rate of 1.25% of the value of the
portfolio' s average daily net assets. No expense reimbursement was required for
the period ended June 30, 1999.
The portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999, the
portfolio was charged $12,938 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.
<PAGE>
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, 1999, amounted to $49,689,993 and $37,880,085, respectively.
The portfolio may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The portfolio is exposed
to market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the portfolio to "mark to
market" on a daily basis, which reflects the change in the market value of the
contracts at the close of each day' s trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the portfolio recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board of
Trade on which the contract is traded and is subject to change. Contracts open
at June 30, 1999 are set forth in the Statement of Financial Futures.
(b) At June 30, 1999, accumulated net unrealized appreciation on investments and
financial futures was $8,649,051, consisting of $10,052,302 gross unrealized
appreciation and $1,403,251 gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
For More Information
Dreyfus Variable Investment Fund,
Balanced Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 1999 Dreyfus Service Corporation 154SA996
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