Dreyfus Variable Investment Fund, Disciplined Stock Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
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.
Contents
THE PORTFOLIO
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
12 Statement of Assets and Liabilities
13 Statement of Operations
14 Statement of Changes in Net Assets
15 Financial Highlights
16 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Disciplined Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Disciplined Stock 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, including a discussion with the portfolio manager,
Bert J. Mullins.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader S&P 500 Index and the technology-laden
NASDAQ index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has 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.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Disciplined
Stock Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF PERFORMANCE
Bert J. Mullins, Portfolio Manager
How did Dreyfus Variable Investment Fund, Disciplined Stock Portfolio perform
relative to its benchmark?
For the six-month period ended June 30, 1999, Dreyfus Variable Investment Fund,
Disciplined Stock Portfolio produced a total return of 10.46%.(1) For the same
period, the total return of the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index"), the portfolio's benchmark, was 12.38%.(2)
We attribute this performance to the strength of a narrow group of very large
growth stocks during the first half of the reporting period. Since the S&P 500
Index is heavily weighted toward just such companies, the index rose more
rapidly than most portfolios that did not include those specific stocks.
The portfolio' s performance relative to the S&P 500 Index improved markedly
during the second half of the period, when market sentiment shifted in favor of
a broader range of companies. During May and June 1999, the portfolio
outperformed its benchmark by approximately 100 basis points (1%).
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, Disciplined Stock Portfolio invests in a
diversified mix of large- and mid-sized companies that meet our strict standards
for value and growth. We identify potential investments through a quantitative
analytic process that sifts through a universe of approximately 2,000 stocks in
search of those that are not only undervalued according to our criteria, but
that also exhibit higher than expected earnings momentum. A team of experienced
analysts examine the fundamentals of the top-ranked candidates. Armed with these
analytical insights, the portfolio manager decides which stocks to purchase, and
whether any current holdings should be sold.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
In addition to identifying attractive investment opportunities, our approach is
designed to manage the risks associated with market timing and sector and
industry exposure. Market timing refers to the practice of attempting to benefit
from gains and declines in the overall market by adjusting the percentage of a
fund's assets that are invested in the market at any one time. We do not believe
that the advantages of attempting to time the market or rotate in and out of
various industries and sectors outweigh the risks of such moves. Instead, our
goal is to neutralize these risks by being fully invested and to remain industry
and sector neutral in relation to the S&P 500 Index.
The result of our approach during the recent six-month period was a broadly
diversified portfolio of carefully selected stocks, some of which showed notable
strength. During the first half of the period, when the market's performance was
driven by advances among an extremely narrow group of stocks, the portfolio
benefited from its relatively large holdings of several of the best-performing
companies in the S& P 500 Index. These included America Online, MCI WorldCom,
Cisco Systems and Wal-Mart Stores. However, other stocks that propelled the S&P
500's growth failed to meet our investment criteria. Our performance relative to
our benchmark suffered because we did not own these stocks.
The portfolio' s performance improved in late April, when market strength
broadened to include many stocks that had previously been left behind. Returns
were enhanced by our relatively large holdings of several strong performing
stocks, such as Tyco International, Alcoa, Oracle, Tellabs and Telefonos de
Mexico Cl. L ADR.
What other factors influenced the portfolio's performance?
Of course not every company in the portfolio showed positive returns. Some
stocks lagged, even after market strength broadened in late April. The
portfolio' s performance was impaired by several holdings, including Elan ADR,
Cadence Design Systems, Lilly (Eli) & Co., U.S. Airways and Merrill Lynch.
Relative performance also suffered due to the high volatility of stock prices
during the period. Sudden swings in investor sentiment caused stock prices to
rise and fall sharply, often moving several percentage points up or down over
the course of a few days, only to move just as sharply in the opposite direction
the following week. Since our quantitative model depends on using data from one
month to identify stocks that we believe should outperform during the next
month, a high level of market volatility from month to month reduces the
effectiveness of our approach.
What is the portfolio's current strategy?
In general, the portfolio benefited from the market's mid-period shift in favor
of a broader range of stocks. While no one knows whether or for how long this
trend will persist, we continue to believe that investors can benefit from a
strictly managed, balanced portfolio of growth and value. Accordingly, we
continue to adhere to our consistent, disciplined approach in seeking to
outperform the S&P 500 Index while attempting to manage risk.
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 GAINS DISTRIBUTIONS. THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED UNMANAGED
INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--98.9% Shares Value ($)
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<S> <C> <C>
ALCOHOL & TOBACCO--1.5%
Anheuser-Busch Cos. 17,800 1,262,687
Philip Morris Cos. 40,750 1,637,641
2,900,328
CONSUMER CYCLICAL--9.4%
Best Buy 12,500 (a) 843,750
Dayton Hudson 16,500 1,072,500
Delphi Automotive Systems 26,171 485,799
Eastman Kodak 9,200 623,300
Federated Department Stores 13,700 (a) 725,244
Ford Motor 22,500 1,269,844
General Motors 14,100 930,600
Kroger 30,400 (a) 849,300
Limited 25,200 1,143,450
Lowe's Cos. 14,800 838,975
McDonald's 22,200 917,137
Safeway 18,308 (a) 906,246
Staples 27,800 (a) 860,062
TJX Cos. 34,400 1,145,950
Tandy 5,718 279,467
US Airways Group 16,550 (a) 720,959
Wal-Mart Stores 84,700 4,086,775
17,699,358
CONSUMER STAPLES--6.5%
Clorox 6,800 726,325
Coca-Cola 9,550 596,875
ConAgra 23,900 636,338
Dial 21,400 795,813
Fortune Brands 16,100 666,138
General Mills 8,800 707,300
Nabisco Holdings, Cl. A 14,200 614,150
PepsiCo 41,600 1,609,400
Procter & Gamble 28,150 2,512,387
Quaker Oats 12,200 809,775
Ralston-Purina Group 26,200 797,463
Sara Lee 31,100 705,581
Unilever, N.V. (New York Shares) 13,635 951,091
12,128,636
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY--6.3%
Atlantic Richfield 18,500 1,545,906
Coastal 21,200 848,000
Columbia Energy Group 13,825 866,655
Diamond Offshore Drilling 30,700 871,112
Enron 8,800 719,400
Mobil 18,100 1,791,900
Royal Dutch Petroleum (New York Shares) 55,900 3,367,975
Texaco 25,150 1,571,875
Tosco 10,500 272,344
11,855,167
HEALTH CARE--10.4%
Abbott Laboratories 34,800 1,583,400
American Home Products 32,200 1,851,500
Amgen 23,700 (a) 1,442,737
Becton, Dickinson & Co. 16,800 504,000
Bristol-Myers Squibb 44,000 3,099,250
Elan, A.D.S. 26,100 (a) 724,275
Immunex 4,000 (a) 509,750
Lilly (Eli) & Co. 28,300 2,026,987
Medtronic 15,900 1,238,212
Merck & Co. 19,800 1,465,200
Mylan Laboratories 14,200 376,300
Schering-Plough 34,600 1,833,800
Warner-Lambert 32,550 2,258,156
Wellpoint Health Networks 6,900 (a) 585,638
19,499,205
INTEREST SENSITIVE--18.5%
ACE 18,900 533,925
Allstate 30,800 1,104,950
Ambac Financial Group 8,150 465,569
American General 5,800 437,175
American International Group 6,226 728,802
Bank One 54,027 3,217,983
CIGNA 7,850 698,650
Chase Manhattan 27,400 2,373,525
Citigroup 52,000 2,470,000
Countrywide Credit Industries 9,450 403,988
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
Edwards (A.G.) 19,200 619,200
Federal National Mortgage Association 21,300 1,456,387
First Security 11,200 305,200
Fleet Financial Group 44,500 1,974,687
General Electric 45,250 5,113,250
GreenPoint Financial 6,100 200,156
Hartford Financial Services Group 17,700 1,032,131
Lehman Brothers Holdings 11,200 697,200
MBNA 34,150 1,045,844
Merrill Lynch 12,600 1,007,212
Morgan Stanley Dean Witter & Co. 17,700 1,814,250
Old Republic International 11,725 202,989
PMI Group 4,950 310,922
PNC Bank 13,700 789,463
Providian Financial 4,300 402,050
SLM Holding 15,800 723,838
SouthTrust 24,300 932,513
Summit Bancorp 14,950 625,097
SunTrust Banks 9,500 659,656
Torchmark 10,400 354,900
Washington Mutual 12,800 452,800
Wells Fargo 36,700 1,568,925
34,723,237
PRODUCER GOODS & SERVICES--9.0%
Alcan Aluminium 8,200 261,888
Alcoa 14,200 878,625
AlliedSignal 19,750 1,244,250
Boeing 23,400 1,033,987
Burlington Northern Santa Fe 16,900 523,900
Canadian National Railway 5,500 368,500
Caterpillar 13,100 786,000
Champion International 10,900 521,838
duPont (E.I.) deNemours & Co. 31,400 2,145,012
Fort James 11,875 449,766
Gulfstream Aerospace 12,500 (a) 844,531
Ingersoll-Rand 12,200 788,425
Louisiana-Pacific 23,200 551,000
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER GOODS & SERVICES (CONTINUED)
Martin Marietta Materials 7,100 418,900
PPG Industries 5,100 301,219
Rohm & Haas 11,800 505,925
Southdown 11,900 764,575
Tyco International 34,800 3,297,300
USX-U.S. Steel Group 10,000 270,000
United Technologies 12,500 896,094
16,851,735
SERVICES--7.8%
America Online 19,000 (a) 2,099,500
Carnival 17,100 829,350
Ceridian 21,000 (a) 686,438
Clear Channel Communications 8,500 (a) 585,969
Fox Entertainment Group, Cl. A 21,200 571,075
Infinity Broadcasting, Cl. A 20,200 600,950
MediaOne Group 6,000 (a) 446,250
Omnicom Group 11,500 920,000
Quintiles Transnational 9,100 (a) 382,200
Republic Services 29,800 737,550
Time Warner 31,300 2,300,550
Tribune 9,100 792,838
Valassis Communications 8,000 (a) 293,000
Viacom, Cl. B 28,700 (a) 1,262,800
Vodafone AirTouch, A.D.R. 7,700 1,516,900
Waste Management 10,300 553,625
14,578,995
TECHNOLOGY--20.0%
Applied Materials 11,200 (a) 827,400
BMC Software 14,200 (a) 766,800
Cisco Systems 59,950 (a) 3,866,775
Compuware 22,400 (a) 712,600
Corning 11,800 827,475
Dell Computer 33,000 (a) 1,221,000
EMC 20,400 (a) 1,122,000
Hewlett-Packard 21,300 2,140,650
Honeywell 3,800 440,325
Intel 52,300 3,111,850
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY (CONTINUED)
International Business Machines 32,500 4,200,625
Lexmark International Group, Cl. A 13,900 (a) 918,269
Lucent Technologies 54,600 3,682,087
Maxim Integrated Products 9,600 (a) 638,400
Microsoft 78,600 (a) 7,088,737
Nokia, A.D.S. 8,400 769,125
Oracle 47,600 (a) 1,767,150
Pitney Bowes 8,900 571,825
Qwest Communications International 13,322 (a) 440,459
Sun Microsystems 17,400 (a) 1,198,425
Tellabs 18,237 (a) 1,232,137
37,544,114
UTILITIES--9.5%
Ameritech 23,600 1,734,600
Bell Atlantic 36,784 2,404,754
BellSouth 40,700 1,907,812
Energy East 19,600 509,600
Florida Progress 12,600 520,538
GPU 16,700 704,531
GTE 15,500 1,174,125
MCI WorldCom 39,050 (a) 3,368,062
PECO Energy 13,300 556,938
Pinnacle West Capital 7,150 287,788
Public Service Enterprise Group 8,400 343,350
SBC Communications 38,500 2,233,000
Telefonos de Mexico, Cl. L, A.D.S. 15,800 1,276,837
Texas Utilities 18,550 765,188
17,787,123
TOTAL COMMON STOCKS
(cost $143,722,675) 185,567,898
Principal
SHORT-TERM INVESTMENTS--2.2% Amount ($) Value ($)
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U.S. TREASURY BILLS:
4.48%, 9/2/1999 655,000 649,853
4.51%, 9/16/1999 1,602,000 1,586,305
4.61%, 9/23/1999 890,000 880,551
4.70%, 9/30/1999 1,062,000 1,049,511
TOTAL SHORT-TERM INVESTMENTS
(cost $4,166,205) 4,166,220
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TOTAL INVESTMENTS (cost $147,888,880) 101.1% 189,734,118
LIABILITIES, LESS CASH AND RECEIVABLES (1.1%) (2,153,551)
NET ASSETS 100.0% 187,580,567
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 147,888,880 189,734,118
Cash 437,439
Receivable for investment securities sold 1,011,659
Dividends receivable 146,099
Prepaid expenses 2,394
191,331,709
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 117,112
Payable for investment securities purchased 3,608,206
Accrued expenses 25,824
3,751,142
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NET ASSETS ($) 187,580,567
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 142,857,486
Accumulated undistributed investment income--net 413,043
Accumulated net realized gain (loss) on investments 2,464,800
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 41,845,238
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NET ASSETS ($) 187,580,567
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SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest authorized) 7,400,297
NET ASSET VALUE, offering and redemption price per share ($) 25.35
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $25,607 foreign taxes withheld at source) 1,035,074
Interest 42,347
TOTAL INCOME 1,077,421
EXPENSES:
Investment advisory fee--Note 3(a) 595,872
Custodian fees--Note 3(a) 26,575
Professional fees 23,857
Registration fees 8,334
Prospectus and shareholders' reports 5,601
Shareholder servicing costs 1,992
Trustees' fees and expenses--Note 3(b) 989
Loan commitment fees--Note 2 327
Miscellaneous 831
TOTAL EXPENSES 664,378
INVESTMENT INCOME--NET 413,043
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 3,070,422
Net unrealized appreciation (depreciation) on investments 13,220,544
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 16,290,966
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 16,704,009
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
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OPERATIONS ($):
Investment income--net 413,043 502,053
Net realized gain (loss) on investments 3,070,422 (394,248)
Net unrealized appreciation (depreciation)
on investments 13,220,544 22,134,929
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 16,704,009 22,242,734
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net -- (519,473)
Net realized gain on investments -- (586,824)
TOTAL DIVIDENDS -- (1,106,297)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 33,662,765 70,391,268
Dividends reinvested -- 1,106,297
Cost of shares redeemed (3,683,024) (5,053,929)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 29,979,741 66,443,636
TOTAL INCREASE (DECREASE) IN NET ASSETS 46,683,750 87,580,073
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NET ASSETS ($):
Beginning of Period 140,896,817 53,316,744
END OF PERIOD 187,580,567 140,896,817
Undistributed investment income--net 413,043 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,417,823 3,435,229
Shares issued for dividends reinvested -- 50,063
Shares redeemed (157,958) (258,565)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,259,865 3,226,727
SEE NOTES TO FINANCIAL STATEMENTS.
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>
Six Months Ended
June 30, 1999 Year Ended December 31,
-----------------------------------------------
(Unaudited) 1998 1997 1996(a)
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<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 22.95 18.30 14.79 12.50
Investment Operations:
Investment income--net .06(b) .08 .08 .07
Net realized and unrealized gain (loss)
on investments 2.34 4.80 4.53 2.29
Total from Investment Operations 2.40 4.88 4.61 2.36
Distributions:
Dividends from investment income--net -- (.09) (.08) (.07)
Dividends from net realized gain on investments -- (.14) (1.02) --
Total Distributions -- (.23) (1.10) (.07)
Net asset value, end of period 25.35 22.95 18.30 14.79
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TOTAL RETURN (%) 10.46(c) 26.72 31.51 18.86(c,d)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .41(c) .88 1.02 .80(c)
Ratio of net investment income
to average net assets .26(c) .53 .68 .72(c)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- .16(c)
Portfolio Turnover Rate 27.44(c) 56.28 79.74 30.62(c)
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Net Assets, end of period ($ x 1,000) 187,581 140,897 53,317 17,722
(A) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) 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>
The 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, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the Disciplined Stock 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 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 portfolio's 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 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 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 custody agreement, the portfolio received
net earnings credits of $1,518 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 and 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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 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.
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 $26,575 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, 1999, the portfolio incurred total
brokerage commissions of $103,363 of which $16,255 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, 1999, amounted to
$72,555,239 and $43,697,928, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$41,845,238, consisting of $43,725,312 gross unrealized appreciation and
$1,880,074 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
NOTES
For More Information
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
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 150SA996
