<PAGE>
Dreyfus
Variable
Investment Fund,
International Value
Portfolio
Annual Report
December 31, 1997
<PAGE>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus
Variable Investment Fund, International Value Portfolio for the 12-month
reporting period ended December 31, 1997. Over this period, your Portfolio
outperformed its benchmark, the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE(R)) Index by a wide margin. The Portfolio produced a
total return of 8.71% for the year,* while the EAFE Index rose only 1.8%.**
Returns abroad lagged those of the U.S. primarily due to the strength of the
dollar and declining stock markets in Asia. The Japanese market, the largest
market outside the U.S., declined 23.7% for the year and other Asian markets
were even weaker with Singapore down 30% and Malaysia off 68%. Except for Japan,
your Portfolio had very little exposure to Asia and was relatively well
protected from the effects of the turmoil there.
In Japan, the Portfolio was slightly underweighted 22.9% vs. 25.2% for EAFE.
A major factor enhancing returns in 1997 was the strong performance of value
stocks in Japan. Despite the weak market, many of our holdings generated
double-digit returns with the best performing stock in the Japanese portfolio up
75%. The major exception to the success of our value-oriented strategy was the
United Kingdom. In the U.K. for the second consecutive year, value stocks lagged
the market as investors there continued to bid up growth stocks.
Our strategy in 1997 was to be well diversified by country and industry
sectors with a strong emphasis on value. The Portfolio was primarily invested
in the major industrialized countries and exposure to emerging markets was only
2.2% at year-end.
ECONOMIC AND MARKET ENVIRONMENT
Performance of European stock markets in 1997 was very similar to the prior
year. Most European markets registered strong gains, and several generated
returns exceeding those of the U.S. The German and Dutch markets each were up
over 45%, Italy and Switzerland were up 57%, and France was up 29.5%. Every
European market generated positive returns. Even the laggard, Austria, was up
over 18%. However, as mentioned earlier, the strong U.S. dollar depressed those
returns. In the case of Germany, the 45% return translated into only 24.6% in
U.S. dollars, and the impact was similar elsewhere. The economic cycle in
continental Europe is lagging the U.S. The Gross Domestic Product ("GDP") growth
rate is still increasing from the 2.5% range to the 2.7%-3% area. The move
toward closer integration and unified currency (targeted for January 1, 1999)
should result in increased efficiency and accelerate the pace of restructuring.
Labor costs are still too high in many countries, but labor laws are being eased
in order to increase efficiency and lower costs. The U.K. is much further ahead
of the Continent both in terms of the economic cycle and also in terms of
restructuring.
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%-8%, are likely to grow at only 1%-1.5% for a while. Currencies
remain under pressure, and major firms are struggling under the burden of heavy
dollar-based debt. Until now, these problems have not impacted developed
countries to any significant extent, and we are optimistic that future impact
will be minimal. 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.
The Japanese market in 1997 declined 14.5% in local currency, and with the
10.7% yen depreciation the decline in dollar terms was almost 24%. The year-end
close of 15,258 on the Nikkei was the lowest since year-end 1985. However,
despite the falling market, there were also some opportunities in Japan.
Export-oriented companies with strong worldwide market positions registered
earnings growth and share price appreciation. The banks and real estate-related
issues declined much more than the overall market. Your Portfolio did not invest
in banks or real estate-related firms, because of poor fundamentals and the
absence of value stocks. During the year several banks became insolvent and the
fourth largest
<PAGE>
brokerage house failed. We believe that these developments will force the
government to finally face up to the problems in the banking system and enable
the domestic economy to get moving ahead.
Hong Kong, the second largest market in Asia, registered a 26% decline
for the year. The Hong Kong dollar held its peg to the U.S. dollar and, unlike
other Asian currencies, it did not depreciate. However, the market
remained volatile largely due to pessimism regarding China's ability and
willingness to support the currency indefinitely. Your Portfolio only
had a 2.1% weighting in Hong Kong, in issues chosen to be defensive.
PORTFOLIO FOCUS
Our strategy is to continue 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. The Portfolio is now invested in 23 countries including a
small exposure (2.2%) to emerging markets.
Emerging market exposure has been kept low due to the turmoil and the
volatility in Asian markets. The severe decline in those markets has brought
valuations down, and as we begin to see evidence of stabilization we will search
for opportunities. However, the objective of the Portfolio is to invest
primarily in the major established stock markets. While exposure to emerging
markets may rise somewhat because the severe decline will provide more
opportunities in the value sector, over 90% of the Portfolio will continue to be
invested in the major industrialized economies.
Although stock market returns abroad lagged those of the U.S. in recent
years, we remain optimistic about the future. Valuations abroad now compare
favorably with the U.S., even though most countries are behind the U.S. in terms
of their economic cycle. Restructuring, share buybacks and downsizing measures
designed to benefit shareholder value are just now beginning abroad while most
of these steps have already been taken in the U.S.
The largest market abroad, Japan, is still more than 50% below its peak of
eight years ago, while the U.S. market has tripled during the same period. 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 Portfolio and will continue exerting our
best efforts to bring you rewarding returns from international value stocks.
Sincerely,
/s/ Sandor Cseh
Sandor Cseh
Portfolio Manager
January 20, 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 imposed in connection with investing in variable insurance
contracts, which will reduce returns.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index is an unmanaged
index composed of samples of companies representative of the market
structure of European and Pacific Basin countries. The return indicated
includes net dividends reinvested. Index is the property of Morgan Stanley
& Co., Incorporated.
<PAGE>
Dreyfus Variable Investment Fund, International Value Portfolio
December 31, 1997
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO AND THE MORGAN STANLEY
CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (EAFE(R)) INDEX
Dollars
$11,241
Dreyfus Variable
Investment Fund, International Value
Portfolio
$10,194
Morgan Stanley
Capital International Europe, Australasia,
Far East (EAFE(R))
Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- --------------------------------------------------------------------------------
One Year Ended From Inception (5/1/96)
December 31, 1997 to December 31, 1997
----------------- -----------------------
8.71% 7.26%
- -------------
Past performance is not predictive of future performance.
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.
The above graph compares a $10,000 investment made in Dreyfus Variable
Investment Fund, International Value Portfolio on 5/1/96 (Inception Date) to a
$10,000 investment made in the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE(R)) Index on that date. All dividends and capital
gain distributions are reinvested.
The Portfolio's performance shown in the line graph takes into account all
applicable fees and expenses of the Portfolio. The Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE(R)) Index, which is the
property of Morgan Stanley & Co. Incorporated, is an unmanaged index composed
of a sample of companies representative of the market structure of European and
Pacific Basin countries and includes net dividends reinvested. The Index does
not take into account charges, fees and other expenses. Further information
relating to Portfolio performance, including expense reimbursements, if
applicable, is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1997
Common Stocks--89.7% Shares Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Argentina--.8% YPF Sociedad Anonima, ADS..................... 4,700 $ 160,681
-----------
Australia--1.8% Australia and New Zealand Banking............. 29,450 194,643
Boral......................................... 61,048 154,389
-----------
349,032
-----------
Austria--.2% Bank Austria.................................. 1,320(a) 35,529
Creditanstalt-Bankverein...................... 2 346
-----------
35,875
-----------
Brazil--.2% Telecomunicacoes Brasileiras-Telebras, ADR.... 300 34,931
-----------
Denmark--.7% Tele Danmark, ADS............................. 4,500 138,656
-----------
France--11.8% Alcatel Alsthom, ADS.......................... 9,750 246,797
Axa-UAP....................................... 2,200 170,232
Bongrain...................................... 125 52,754
C.S.F. (Thompson)............................. 4,624 145,746
Danone........................................ 1,400 250,062
Dexia France.................................. 1,600 185,295
Elf Aquitaine, ADS............................ 5,500 322,438
Michelin...................................... 3,016 151,840
Pechiney A.................................... 2,500 98,696
Rhone-Poulenc, ADR............................ 3,644 161,702
Societe Generale.............................. 1,628 221,809
Societe Television Francaise 1................ 1,100 112,403
Usinor........................................ 8,000 115,511
-----------
2,235,285
-----------
Germany--10.1% Bayer......................................... 5,500 205,447
Berliner Kraft-und Licht Aktiengesellschaft... 3,000 90,717
Deutsche Bank................................. 3,300 232,963
Deutsche Lufthansa............................ 7,000 134,241
GEA........................................... 550 207,893
Hoechst....................................... 2,000 70,039
Siemens....................................... 4,400 260,478
Tarkett....................................... 5,000 115,342
VEBA.......................................... 3,800 258,755
Viag.......................................... 385 207,374
Volkswagen.................................... 250 140,634
-----------
1,923,883
-----------
Greece--.5% Hellenic Telecommunication Organization, GDR.. 9,000(a,b) 94,500
-----------
Hong Kong--2.1% Guoco......................................... 27,000 66,028
HSBC.......................................... 4,439 109,414
HongKong Electric............................. 38,000 144,419
Swire Pacific................................. 70,000 70,912
-----------
390,773
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Italy--4.9% ENI, ADS...................................... 2,800 $ 159,775
Fiat.......................................... 22,000 63,811
Istituto Mobiliare Italiano, ADS.............. 4,800 171,600
Mondadori (Arnoldo) Editore................... 10,000 78,570
Montedison.................................... 150,000 134,483
Telecom Italia................................ 75,000 329,551
-----------
937,790
-----------
Japan--22.9% Canon......................................... 12,000 279,390
Credit Saison................................. 9,400 231,814
Dai-Tokyo Fire & Marine Insurance............. 27,000 92,640
Fuji Machine Manufacturing.................... 6,000 144,750
Hitachi....................................... 17,000 121,084
Honda Motor................................... 5,000 183,427
Ito-Yokado.................................... 5,000 254,653
Kao........................................... 19,000 273,570
Mabuchi Motor................................. 4,000 203,109
Matsumotokiyoshi.............................. 3,000 114,881
Mikuni Coca Cola Bottling..................... 10,000 124,837
Minebea....................................... 25,000 268,055
Mitsubishi Heavy Industries................... 25,000 104,159
Murata Manufacturing.......................... 7,000 175,844
NAMCO ........................................ 3,000 87,080
Nichiei....................................... 2,500 266,141
Nishimatsu Construction....................... 20,000 62,802
Rinnai........................................ 7,800 117,684
Rohm.......................................... 2,000 203,722
Sankyo........................................ 4,500 65,827
Sekisui Chemical.............................. 20,000 101,555
Sony.......................................... 3,000 266,524
Toshiba....................................... 27,000 112,285
Toyota Motor.................................. 5,000 143,218
Yamanouchi Pharmaceutical..................... 9,000 193,000
Yamato Transport.............................. 12,000 160,833
-----------
4,352,884
-----------
Netherlands--5.6% ABN-Amro...................................... 8,014 156,114
Akzo Nobel, ADR............................... 2,100 182,438
Hollandsche Beton Groep....................... 6,110 113,600
Hunter Douglas................................ 3,766 131,867
Koninklijke KNP............................... 8,000 184,248
Philips Electronics, ADR...................... 2,200 133,100
Royal PTT Nederland, ADS...................... 4,112 170,648
-----------
1,072,015
-----------
New Zealand--.2% Air New Zealand............................... 18,909 37,883
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Norway--.6% Orkla AS-B.................................... 1,400 $ 108,803
-----------
Peru--.5% Telefonica del Peru, ADS...................... 4,000 93,250
-----------
Portugal--.7% Banco Totta & Acores.......................... 7,000 137,452
-----------
Singapore--1.3% Development Bank of Singapore................. 17,000 145,239
Singapore Airlines............................ 16,000 104,420
-----------
249,659
-----------
South Korea--.1% Kookmin Bank, ADS............................. 4,253(a,b) 20,180
-----------
Spain--4.3% Corporacion Bancaria de Espana, ADS........... 8,400 256,725
Endesa........................................ 6,400 113,633
Gas Y Electridad.............................. 2,800 202,166
Repsol, ADR................................... 5,700 242,606
-----------
815,130
-----------
Sweden--.9% Marieberg Tidnings............................ 5,000 117,130
Scania AB 'A', ADS............................ 2,500 56,250
-----------
173,380
-----------
Switzerland--3.7% Forbo Holding................................. 300 122,570
Nestle........................................ 150 224,713
Sulzer........................................ 150 95,059
UBS........................................... 180 260,170
-----------
702,512
-----------
United Kingdom--14.7% BTR........................................... 80,000 241,776
Bunzl......................................... 48,183 187,168
Cable & Wireless, ADS......................... 3,800 103,313
Laird Group................................... 22,700 165,917
LucasVarity................................... 68,000 240,134
Medeva........................................ 37,000 98,451
National Westminster Bank..................... 16,938 281,545
PowerGen...................................... 21,318 277,317
Rio Tinto..................................... 18,002 221,467
Royal & Sun Alliance Insurance................ 32,266 324,871
Safeway....................................... 42,780 241,013
Stakis........................................ 65,000 101,424
Tomkins....................................... 63,477 303,399
-----------
2,787,795
-----------
United States--1.1% Pharmacia & Upjohn............................ 5,900 216,088
-----------
TOTAL COMMON STOCKS
(cost $16,564,220).......................... $17,068,437
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Preferred Stocks--1.1% Shares Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Austria--.6% Bank Austria.................................. 2,520(a) $ 113,711
-----------
Germany--.5% Hugo Boss..................................... 70 90,466
-----------
TOTAL PREFERRED STOCKS
(cost $172,204)............................. $ 204,177
===========
Principal
Short-Term Investments--7.2% Amount
- ------------------------------------------------------------------------------- -----------
U.S. Treasury Bills: 4.86%, 1/2/98................................. $ 99,000 $ 98,997
4.96%, 1/8/98................................. 100,000 99,931
5.13%, 1/22/98................................ 826,000 823,571
5.18%, 2/5/98................................. 136,000 135,335
5.22%, 3/5/98................................. 215,000 213,063
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,370,769)........................... $ 1,370,897
===========
TOTAL INVESTMENTS (cost $18,107,193)........................................... 98.0% $18,643,511
====== ===========
CASH AND RECEIVABLES (NET)..................................................... 2.0% $ 372,936
====== ===========
NET ASSETS..................................................................... 100.0% $19,016,447
====== ===========
<FN>
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 December 31,
1997, these securities amounted to $114,680 or approximately .6% of net
assets.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $18,107,193 $18,643,511
Cash............................................. 34,543
Cash denominated in foreign currencies........... 568,876 545,781
Dividends receivable............................. 33,550
Prepaid expenses................................. 58
-----------
19,257,443
-----------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 15,712
Payable for investment securities purchased...... 199,909
Net unrealized depreciation on forward
currency exchange contracts--Note 5(a)......... 366
Payable for shares of Beneficial Interest redeemed 145
Accrued expenses ................................ 24,864
-----------
240,996
-----------
NET ASSETS..................................................................... $19,016,447
===========
REPRESENTED BY: Paid-in capital.................................. $18,607,941
Accumulated undistributed investment income--net. 863
Accumulated distributions in excess of
net realized gain (loss) on investments........ (106,376)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 514,019
-----------
NET ASSETS..................................................................... $19,016,447
===========
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 1,414,161
NET ASSET VALUE, offering and redemption price per share....................... $13.45
======
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Statement of Operations Year Ended December 31, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Cash dividends (net of $35,230 foreign taxes
withheld at source) ..................... $ 239,154
Interest................................... 54,910
---------
Total Income.......................... $ 294,064
EXPENSES: Investment advisory fee--Note 4(a)......... 136,687
Custodian fees............................. 24,964
Auditing fees.............................. 19,274
Prospectus and shareholders' reports....... 7,360
Registration fees.......................... 3,183
Legal fees................................. 651
Trustees' fees and expenses--Note 4(b)..... 391
Shareholder servicing costs................ 228
Loan commitment fees--Note 3............... 170
Miscellaneous.............................. 669
---------
Total Expenses........................ 193,577
---------
INVESTMENT INCOME--NET................................................... 100,487
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 5:
Net realized gain (loss) on investments and
foreign currency transactions............ $ 403,152
Net realized gain (loss) on forward currency
exchange contracts....................... (30,327)
---------
Net Realized Gain (Loss).............. 372,825
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions 320,950
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 693,775
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 794,262
=========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, International Value 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.............................................. $ 100,487 $ 48,531
Net realized gain (loss) on investments............................. 372,825 44,655
Net unrealized appreciation (depreciation) on investments........... 320,950 193,069
----------- ----------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 794,262 286,255
----------- ----------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net......................................... (99,919) (48,236)
From net realized gain on investments............................... (390,614) (26,866)
In excess of net realized gain on investments....................... (106,376) --
----------- ----------
Total Dividends.................................................. (596,909) (75,102)
----------- ----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold....................................... 10,934,432 8,053,676
Dividends reinvested................................................ 596,909 75,102
Cost of shares redeemed............................................. (739,686) (312,492)
----------- ----------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 10,791,655 7,816,286
----------- ----------
Total Increase (Decrease) in Net Assets....................... 10,989,008 8,027,439
NET ASSETS:
Beginning of Period................................................. 8,027,439 --
----------- ----------
End of Period....................................................... $19,016,447 $8,027,439
=========== ==========
Undistributed investment income--net................................... $ 863 $ 295
----------- ----------
Shares Shares
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 794,420 645,895
Shares issued for dividends reinvested.............................. 44,979 5,994
Shares redeemed..................................................... (52,186) (24,941)
----------- ----------
Net Increase (Decrease) in Shares Outstanding.................... 787,213 626,948
=========== ==========
<FN>
- ------------
* From April 30, 1996 (commencement of operations) to December 31, 1996.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
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.
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------------
PER SHARE DATA: 1997 1996(1)
------- -------
<S> <C> <C>
Net asset value, beginning of period................................................. $12.80 $12.50
------ ------
Investment Operations:
Investment income--net............................................................... .07 .08
Net realized and unrealized gain (loss) on investments............................... 1.03 .34
------ ------
Total from Investment Operations..................................................... 1.10 .42
------ ------
Distributions:
Dividends from investment income--net................................................ (.07) (.08)
Dividends from net realized gain on investments...................................... (.30) (.04)
Dividends in excess of net realized gain on investments.............................. (.08) --
------ ------
Total Distributions.................................................................. (.45) (.12)
------ ------
Net asset value, end of period....................................................... $13.45 $12.80
====== ======
TOTAL INVESTMENT RETURN................................................................. 8.71% 3.41%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............................................. 1.42% 1.01%(2)
Ratio of net investment income to average net assets................................. .74% .76%(2)
Decrease reflected in above expense ratios due to undetakings by The Dreyfus Corporation -- .34%(2)
Porfolio Turnover Rate............................................................... 25.67% 24.48%(2)
Average commission rate paid (4)..................................................... $.0297 $.0351
Net Assets, end of period (000's Omitted)............................................ $19,016 $8,027
<FN>
- --------------
(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.
(4) The Series is required to disclose its average commission rate paid per
share for purchases and sales of investment securities.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Variable Investment Fund, International Value 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 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 December 31, 1997, APT Holdings Corporation, an indirect subsidiary of
Mellon Bank Corporation, held 417,885 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.
NOTE 2--Significant Accounting Policies:
(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. 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.
<PAGE>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(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 3--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
December 31, 1997, the Series did not borrow under the Facility.
NOTE 4--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 5--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 December 31, 1997 amounted to $12,459,467 and $3,199,684,
respectively.
In addition, the following summarizes open forward currency exchange
contracts at December 31, 1997:
<TABLE>
<CAPTION>
Foreign
Currency Unrealized
Forward Currency Exchange Contracts Amounts Cost Value (Depreciation)
- ----------------------------------- -------- -------- -------- --------------
Purchases:
- ----------
<S> <C> <C> <C> <C>
British Pounds, expiring 1/7/98............... 15,358 $25,417 $25,225 $(192)
Japanese Yen, expiring 1/5/98................. 895,094 6,885 6,855 (30)
Japanese Yen, expiring 1/6/98................. 3,160,917 24,352 24,208 (144)
-----
$(366)
=====
</TABLE>
<PAGE>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 December 31, 1997, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $535,952, consisting of
$1,987,559 gross unrealized appreciation and $1,451,607 gross unrealized
depreciation.
At December 31, 1997, 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).
<PAGE>
Dreyfus Variable Investment Fund, International Value Portfolio
- --------------------------------------------------------------------------------
Report of Ernst & Young, LLP, Independent Auditors
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Variable Investment Fund,
International Value Portfolio (one of the Series constituting 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, International Value 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.
Ernst & Young LLP
New York, New York
February 5, 1998
Important Tax Information (Unaudited)
In accordance with Federal tax law, the Series elects to provide each
shareholder with their portion of the Series' foreign taxes paid and the income
sourced from foreign countries. Accordingly, the Series hereby makes the
following designations regarding its fiscal year ended December 31, 1997:
--the total amount of taxes paid to foreign countries was $35,230.
--the total amount of income sourced from foreign countries was $237,401.
--of the $.4831 per share dividends and distributions paid during the year
ended December 31, 1997, the portion applicable to foreign taxes paid is
$.0261 per share.
For Federal tax purposes the Series hereby designates $.067 per share as
long-term capital gain distribution (of which 58.21% is subject to the 20%
maximum Federal tax rate) of the $.421 per share paid on December 23, 1997.
Additionally, the Series designates .50% of the ordinary dividends paid during
the fiscal year ended December 31, 1997 as qualifying for the corporate
dividends received deduction.
<PAGE>
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. 152AR9712
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL
VALUE PORTFOLIO AND THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (EAFE (R) )
INDEX
EXHIBIT A:
MORGAN
STANLEY DREYFUS
CAPITAL VARIABLE
INTERNATIONAL INVESTMENT
EUROPE, FUND,
AUSTRALASIA, INTERNATIONAL
PERIOD FAR EAST VALUE
(EAFE (R) ) INDEX* PORTFOLIO
5/1/96 10,000 10,000
6/30/96 9,871 10,000
9/30/96 9,858 9,952
12/31/96 10,016 10,341
3/31/97 9,858 10,450
6/30/97 11,137 11,657
9/30/97 11,059 12,030
12/31/97 10,194 11,241
* Source: Lipper Analytical Services, Inc.
