<PAGE>
Dreyfus
Variable
Investment Fund,
Money Market
Portfolio
Annual Report
December 31, 1997
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for the Dreyfus Variable Investment
Fund, Money Market Portfolio for the 12-month reporting period ended December
31, 1997. For the period, your Portfolio produced a yield of 5.07% and, after
taking into account the effect of compounding, the effective yield was 5.19%.*
Economic Review
In 1997, the U.S. economy put in its best growth performance of this business
cycle to date. In tandem, the labor market tightened markedly, marginally
boosting wage inflation towards year-end. Yet price inflation decelerated and
bond yields fell. Although corporate profit growth was robust for much of the
year, strains began to appear in the second half in some sectors. The Federal
Reserve Board (the "Fed") tightened credit early in the year, then subsequently
stayed on hold, torn between strong economic reports at home and worsening
financial crises overseas. While the problems overseas may slow the U.S. economy
somewhat in 1998, incoming evidence indicates little adverse impact on economic
activity to date.
Real Gross Domestic Product ("GDP") grew 3.8% in 1997, its best annual growth
since 1988. Almost all the major sectors contributed to growth. Households
enjoyed rising real incomes as wage increases outpaced price inflation. Moderate
interest rates buoyed housing demand. Tightening factory capacity boosted
capital spending, and until late in the year, steady foreign growth kept exports
robust. That all these sectors grew simultaneously in a late phase of the
business cycle was unusual. The year 1997 also saw a dramatic narrowing of the
Federal budget deficit. It is likely that the associated drop in Federal
borrowing boosted the supply of credit available to the private sector.
As mentioned, overall corporate profit growth rebounded in 1997, after
slowing in 1996. Profits from domestic sources generally did well. However,
profits from international sources began to show strains in the second half,
impacted by the rising dollar and by financial stresses overseas. More recently,
profits at some companies have been slowed by price weakness.
Economic data this winter show the economy still quite strong although some
leading statistics have begun to signal somewhat slower economic growth for
1998. First, recently slowing export orders and rising import orders imply a
widening trade deficit. Second, the number of announced layoffs has begun to
rise, indicating some future easing of labor market pressures. Once these
leading indicators actually show up in a slowing of the economy, market
expectations may shift to anticipate the possibility of a move by the Fed to
ease credit. At the start of 1998, there was uncertainty about both the severity
of Asian stresses and their impact on the U.S. economy.
Money Market Overview
The financial turmoil in Asia that started affecting security markets last
fall did not have much effect as yet on the money market before the close of
1997. However, shortly after year-end, interest rates began declining. Yet for
much of 1997, money market rates stayed within a narrow range.
Last March, when the Fed raised short-term rates by a quarter point, the
money markets responded with a brief spurt in yields. As the year went on, the
chief influences on rates continued to be the outlook for inflation in the U.S.,
which was benign, and prospects for corporate profits, which continued favorable
for most of the year. In addition, the customary year-end refinancings sent
interest rates up for a while.
Indeed, until the Asian problems began weakening equity prices, the money
markets appeared to be expecting a possible Fed move to raise interest rates.
Late in 1997 and especially in early 1998, the picture changed. Lately, the
market's expectations have focused more on a possible move by the Fed to reduce
interest rates. The reasoning is that such an action would be a preemptive
strike against an economic trend that hasn't been mentioned for years --
potential deflation.
<PAGE>
Portfolio Focus
In this interest rate environment, we maintained the average maturity of the
Portfolio at approximately the industry average, with occasional periods of
shorter or longer maturity, as warranted by market conditions. This provided the
Portfolio with liquidity while seeking competitive yields without assuming undue
market risks. We believe this strategy has been in the best interest of our
shareholders. The currently volatile investment climate requires flexibility on
our part as managers. Of course, we will make adjustments to the Portfolio as
required by the dynamics of the market.
Sincerely,
/s/ Patricia A. Larkin
Patricia A. Larkin
Senior Portfolio Manager
January 19, 1998
New York, N.Y.
* Effective yield is based upon dividends declared daily and reinvested monthly.
The Portfolio's performance does not reflect the deduction of additional
charges imposed in connection with investing in variable annuity contracts
and variable life insurance policies.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Statement of Investments December 31, 1997
Principal
Negotiable Bank Certificates of Deposit--12.4% Amount Value
- -------------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Bankers Trust Co.
6.00%, 12/10/98............................................................. $ 2,000,000 $ 2,000,180
Fuji Bank Ltd. (Yankee)
5.78%, 1/20/98.............................................................. 2,000,000 2,000,000
Industrial Bank of Japan Ltd. (Yankee)
5.87%, 1/5/98............................................................... 1,000,000 1,000,000
Sumitomo Bank Ltd. (Yankee)
5.67%-5.73%, 1/5/98-4/7/98.................................................. 3,000,000 3,000,000
------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $8,000,180)........................................................... $ 8,000,180
============
Commercial Paper--56.8%
- -------------------------------------------------------------------------------
Abbey National North America
5.65%, 2/2/98............................................................... $ 3,000,000 $ 2,985,388
Bankers Trust N.Y. Corp.
5.66%, 1/20/98.............................................................. 1,000,000 997,097
Canadian Imperial Holdings Inc.
5.72%, 2/13/98.............................................................. 2,500,000 2,483,164
Chase Manhattan Corp.
5.65%, 1/26/98.............................................................. 2,000,000 1,992,375
Finova Capital Corp.
5.82%, 2/23/98.............................................................. 3,000,000 2,974,693
General Electric Capital Corp.
5.66%, 1/12/98.............................................................. 2,500,000 2,495,760
General Electric Capital Services Inc.
5.74%, 6/30/98.............................................................. 3,000,000 2,917,500
General Motors Acceptance Corp.
5.81%, 2/6/98............................................................... 2,000,000 1,988,520
Goldman Sachs Group L.P.
5.84%, 1/16/98.............................................................. 3,000,000 2,992,750
Lehman Brothers Holdings Inc.
5.75%-6.28%, 1/23/98-1/30/98................................................ 3,000,000 2,988,090
Merrill Lynch & Co. Inc.
5.76%, 1/6/98............................................................... 2,000,000 1,998,447
Morgan (J.P.) & Co.
5.80%, 3/25/98.............................................................. 3,000,000 2,960,437
Paine Webber Group Inc.
5.76%, 3/9/98............................................................... 3,000,000 2,968,733
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Commercial Paper (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Salomon Inc.
5.84%, 2/2/98............................................................... $ 2,000,000 $ 1,989,920
Swedbank Inc.
5.66%, 1/26/98.............................................................. 2,000,000 1,992,361
------------
(cost $36,725,235).......................................................... $36,725,235
============
Corporate Notes--6.2%
- -------------------------------------------------------------------------------
Heller Financial Inc.
5.52%, 3/15/98.............................................................. $ 1,000,000 $ 1,006,786
PHH Corp.
5.93%, 6/24/98 (a).......................................................... 2,000,000 2,000,000
Salomon Inc.
5.98%, 2/27/98 (a).......................................................... 1,000,000 1,004,069
------------
TOTAL CORPORATE NOTES
(cost $4,010,855)........................................................... $ 4,010,855
============
Short-Term Bank Notes--10.8%
- -------------------------------------------------------------------------------
BankBoston N.A.
5.71%, 12/10/98 (a)......................................................... $ 3,000,000 $ 3,000,000
Comerica Bank
5.71%, 4/17/98 (a).......................................................... 2,000,000 1,999,720
PNC Bank N.A.
5.67%, 9/2/98 (a)........................................................... 2,000,000 1,999,094
------------
TOTAL SHORT-TERM BANK NOTES
(cost $6,998,814)........................................................... $ 6,998,814
============
U.S. Government Agencies--3.2%
- -------------------------------------------------------------------------------
Federal National Mortgage Association
Floating Rate Notes
5.61%, 1/21/98 (a)
(cost $1,999,943)........................................................... $ 2,000,000 $ 1,999,943
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Repurchase Agreements--11.0% Amount Value
- ------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Aubrey G. Lanston & Co., Inc.
dated 12/31/97, due 1/2/98 in the amount
of $1,133,346 (fully collateralized by $1,145,000
U.S. Treasury Notes, 5.875%, due 4/30/98, value
$1,157,594)................................................................. $ 1,133,000 $ 1,133,000
SBC Warburg Dillon Read Inc.
dated 12/31/97, due 1/2/98 in the amount
of $6,002,183 (fully collateralized by $6,204,000
U.S. Treasury Bills, due 4/2/98, value
$6,121,556)................................................................. 6,000,000 6,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $7,133,000)........................................................... $ 7,133,000
============
TOTAL INVESTMENTS
(cost $64,868,027).................................................. 100.4% $64,868,027
======= ============
LIABILITIES, LESS CASH AND RECEIVABLES................................. (.4%) $ (240,036)
======= ============
NET ASSETS............................................................. 100.0% $64,627,991
======= ============
<FN>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
Cost Value
------------ -----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments (including Repurchase Agreements
of $7,133,000)--Note 2(b)...................... $64,868,027 $64,868,027
Cash............................................. 1,208,884
Interest receivable.............................. 225,435
Prepaid expenses and other assets................ 520
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 27,440
Payable for investment securities purchased...... 1,133,000
Payable for shares of Beneficial Interest redeemed 472,798
Accrued expenses................................. 41,637
-----------
1,674,875
-----------
NET ASSETS..................................................................... $64,627,991
-----------
-----------
REPRESENTED BY: Paid-in capital.................................. $64,630,062
Accumulated net realized gain (loss) on investments (2,071)
-----------
NET ASSETS..................................................................... $64,627,991
-----------
-----------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 64,630,062
NET ASSET VALUE, offering and redemption price per share....................... $1.00
======
</TABLE>
<TABLE>
Statement of Operations Year Ended December 31, 1997
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $3,465,173
EXPENSES: Management fee--Note 3(a).................. $ 304,681
Custodian fees............................. 22,543
Professional fees.......................... 16,310
Prospectus and shareholders' reports....... 12,892
Registration fees.......................... 2,536
Trustees' fees and expenses--Note 3(b)..... 1,510
Shareholder servicing costs................ 363
Miscellaneous.............................. 10,764
-----------
Total Expenses........................... 371,599
-----------
INVESTMENT INCOME--NET................................................... 3,093,574
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 2(b)....................... (1,289)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $3,092,285
===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
_________________ _________________
<S> <C> <C>
OPERATIONS:
Investment income--net................................................. $ 3,093,574 $ 2,566,517
Net realized gain (loss) on investments................................ (1,289) (3)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 3,092,285 2,566,514
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................. (3,093,574) (2,579,096)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold.......................................... 62,971,700 114,999,607
Dividends reinvested................................................... 3,093,574 2,579,096
Cost of shares redeemed................................................ (57,622,106) (106,628,860)
------------- -------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 8,443,168 10,949,843
------------- -------------
Total Increase (Decrease) in Net Assets....................... 8,441,879 10,937,261
NET ASSETS:
Beginning of Period.................................................... 56,186,112 45,248,851
------------- -------------
End of Period.......................................................... $ 64,627,991 $ 56,186,112
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Series' financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Investment Operations:
Investment income--net............................ .050 .050 .055 .043 .032
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net............. (.050) (.050) (.055) (.043) (.032)
------ ------ ------ ------ ------
Net asset value, end of period.................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.............................. 5.19% 5.10% 5.66% 4.37% 3.29%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .61% .62% .62% -- --
Ratio of net investment income to average net assets 5.08% 4.96% 5.51% 4.62% 3.23%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation. -- -- .03% .88% 2.81%
Net Assets, end of period (000's Omitted)......... $64,628 $56,186 $45,249 $34,728 $7,651
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--General:
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 Money Market Portfolio (the "Series") and is intended to be a
funding vehicle for variable annuity contracts and variable life insurance
policies to be offered by the separate accounts of life insurance companies.
The Series is a diversified portfolio. The Series' investment objective is to
provide as high a level of current income as is consistent with the preservation
of capital and the maintenance of liquidity. The Dreyfus Corporation ("Dreyfus")
serves as the Series' investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. Premier Mutual Fund Services, Inc. is the distributor of the
Series' shares, which are sold without a sales charge.
It is the Series' policy to maintain a continuous net asset value per share
of $1.00; the Series has adopted certain investment, portfolio valuation and
dividend and distribution policies to enable it to do so. There is no assurance,
however, that the Series will be able to maintain a stable net asset value per
share of $1.00.
The Fund currently functions as the funding vehicle for the Dreyfus Series
2000 Variable Annuity Contract (the "Account") issued by Mutual Benefit Life
Insurance Company ("Mutual Benefit Life"). On July 16, 1991, the Superior Court
of New Jersey entered an Order (the "Order") appointing the New Jersey
Insurance Commissioner as Rehabilitator of Mutual Benefit Life. The
Commissioner was granted immediate exclusive possession and control of, and
title to, the business and assets of Mutual Benefit Life, including the assets
and liabilities of the Account.
The Commissioner was empowered by the order to take such steps as he deemed
appropriate toward removing the cause and conditions that made rehabilitation
necessary. On January 15, 1993, the commissioner Filed the First Amended Plan of
Rehabilitation ("Plan") with the Court. The Plan stipulated that the assets and
liabilities of the Account would be transferred to a separate account of MBL
Life Assurance Corporation ("MBLLAC"), a wholly-owned subsidiary of Mutual
Benefit Life. The Plan also provided for the transfer of the ownership of stock
of MBLLAC to a Trust. The Commissioner was designated as the sole Trustee of the
Trust. On August 12, 1993, the Court rendered an opinion approving the Plan with
certain modifications. Two subsequent amendments to the Plan were filed and
approved by the Court. None of the modifications or amendments affected the
status of the Account. On November 10, 1993, the Court issued an order of
Confirmation permitting the implementation of the Plan.
An order was also issued by the Court on January 28, 1994, approving the form
of the Third amended Plan of Rehabilitation, the Election Materials and related
documents. On April 29, 1994, the Plan was implemented. Substantially all of
the assets of Mutual Benefit Life were transferred to MBLLAC which assumed and
reinsured Mutual Benefit Life's restructured insurance liabilities. The stock
of MBLLAC was assigned to the Stock Trust and the Commissioner was designated
as Trustee.
In view of the terms and conditions of both the Order and the Plan,
applications for new contracts and additional purchase payments under existing
contracts are currently not being accepted by the Account. The terms of the
Order and the Plan permit redemptions from the Account to continue as requested.
The proceedings of the New Jersey Insurance Commissioner with respect to
Mutual Benefit Life or the Account do not apply to the separate accounts of
other life insurance companies that may use the Fund as a funding vehicle for
contracts or policies issued by them.
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.
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
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.
NOTE 2--Significant Accounting Policies:
(a) Portfolio valuation: Investments in securities are valued at amortized
cost, which has been determined by the Fund's Board of Trustees to represent the
fair value of the Series' investments.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
The Series may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the Series' Manager, subject to the seller's
agreement to repurchase and the Series' agreement to resell such securities at
a mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the Series' custodian and, pursuant to the terms
of the repurchase agreement, must have an aggregate market value greater than or
equal to the terms of the repurchase price plus accrued interest at all times.
If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Series will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Series maintains its right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(c) Dividends to shareholders: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, 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 a net realized capital gain can be offset by a capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(d) Federal income taxes: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Series has an unused capital loss carryover of approximately $2,150
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1997. If not
applied, $850 of the carryover expires in fiscal 2004, and $1,300 expires in
fiscal 2005.
NOTE 3--Investment Management Fee and Other Transactions With Affiliates:
(a) Pursuant to the provisions of an Investment Advisory Agreement with
Dreyfus, the investment advisory fee is computed at the annual rate of .50 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.
<PAGE>
Dreyfus Variable Investment Fund, Money Market Portfolio
- -------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Dreyfus Variable Investment Fund, Money Market Portfolio
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Variable Investment Fund,
Money Market Portfolio (one of the series constituting the Dreyfus Variable
Investment Fund) as of December 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and financial highlights for
each of the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus Variable Investment Fund, Money Market Portfolio at December 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[GRAPHIC OMITTED]
New York, New York
February 5, 1998
<PAGE>
Dreyfus Variable Investment Fund,
Money Market 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. 117AR9712
