YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' 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 fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus Variable
Investment Fund -- Balanced Portfolio for the 12-month period ended December 31,
1998. Over this period, your Portfolio produced a total return of 22.34%,* which
compares with a total return of 20.54% for the Hybrid Index (discussed below)
over the same period.**
Because the Portfolio is composed of fixed-income securities as well as
equities, we measure ourselves against a Hybrid Index composed 60% of the
Standard & Poor's 500 Composite Stock Price Index, measuring only common stocks,
and 40% of the Lehman Brothers Intermediate Government/Corporate Bond Index. For
the same 12-month period, the Portfolio's stock component had a total return of
30.39% compared to the Standard & Poor's 500 Composite Stock Price Index ("S&P
500" ), which had a total return of 28.60%.** The Portfolio's fixed income
holdings had a total return of 8.91% compared to 8.44% for the Lehman Brothers
Intermediate Government/Corporate Bond Index.**
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year, but world economic weakness generated powerful enough disinflationary
forces that the Fed acted instead to ease credit beginning in September. After
many years of subpar economic growth, continental Europe moved into a sustained
economic expansion. The overall European economy benefited as interest rates in
peripheral countries such as Spain and Italy fell, approaching the lower levels
established by Germany, on the eve of currency unification. Unlike the U.S.,
Europe has substantial excess capacity of productive plant and labor. In Asia,
weak economies were pervasive as a result of a financial crisis. The Latin
American economies weakened in turn as the financial stresses spread throughout
that region. On balance, there was a substantial weakening of the world economy
over the course of 1998 moderated mainly by the American consumer's role as
"spender of last resort."
A main influence on the U.S. economy during the year was the foreign financial
crisis and consequent cooling of the world economy. The positive effects hit
first. Actual inflation and expected inflation dropped, causing a decline in
long-term Treasury bond yields and mortgage rates. This caused a boom in
housing. The fall in inflation left more of the growth in consumer income with
which to buy goods and services. Thus, consumers benefited from a combination of
good growth in income after inflation, a strong labor market, and increases in
the prices of assets they owned, including bonds, stocks and real estate. In a
sense, 1998 was a year of disinflationary boom in the U.S., as above-trend
economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy, and help overinvested financial institutions rebuild their cash
reserves. Indications of a calming of financial fears were evident in the final
months of the year. In any case, there appears to have been a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition from the old manufacturing
industries to the new growth industries, such as biotechnology, software,
computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crisis relaxed.
MARKET OVERVIEW--EQUITIES
Volatility was the overriding characteristic of equity markets in the year
ended December 31. There was stock market strength during the early part of the
year. Small-cap indices started to erode in the spring and were joined by
large-cap indices by midsummer. Indices declined sharply until the end of August
followed by a rebound and then a renewed decline amid financial fears until
early October. A strong rally followed in the last three months of the year in
response to the easing of monetary policy. Over the 12-month period, the total
return on the S& P 500 was 28.60%.** Returns on midcap and small-cap stock
indices continued to be weaker, with a negative total return on small-cap
indices.
Three key trends influenced stock market behavior during the year. First, the
Federal Reserve kept the Federal Funds rate flat at 5.5% for nearly nine months
of the year, but then began a succession of easing moves. Second, weakness in
the economies of emerging countries contributed to declining commodity prices
and a drop in long-term Treasury bond yields to multidecade lows. Third,
expectations for corporate profits dropped, first in the sectors sensitive to
Asian developments such as oil, basic materials and exports and then for a
broader list of stocks.
The trigger for the sharp decline in stocks in August appeared to be the
Russian default that month. This resulted in deepening concerns about weaker
economic growth and corporate profits. There was also a global margin call on
risky assets held by hedge funds and financial institutions. This raised the
cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America sank; those for U.S. corporate profits were put on hold. Despite the
fall in Treasury bond yields, financial stocks led the summer selloff due to
concerns that financial difficulties might spread among emerging countries, who
might fail to repay loans. However, in the last three months of the year, these
fears began to ebb in response to Federal Reserve easing moves.
The erosion of expectations for corporate profit growth over the last year
contributed to an outperformance by a small group of "supercap" growth stocks
for much of the year. Investors had more confidence in the prospect for strong
persistent earnings growth for this small group of stocks than for the broad
market. Value stocks, which often have greater cyclical sensitivity to earnings
fluctuations, lagged behind these supercap growth stocks. In addition, many of
the financial stocks that fall into the value category fell sharply following
the Russian default and global margin call concerns, before rebounding strongly
after the Federal Reserve acted.
The year ended December 31, 1998 was characterized by very different
performances of the various market sectors. For example, the total return for
the year on the Russell 1000 Index with a heavy large-cap representation, was
27.02%, while the Russell 1000 Growth Index returned 38.71% and the Russell 1000
Value Index returned 15.63%. The return on the Russell Midcap Index was 10.09%
while the small-cap Russell 2000 Index return was -2.55%.***
Another pattern in 1998 was that high quality assets outperformed medium and
low quality assets. Treasury bonds outperformed junk bonds; U.S. and European
stocks outperformed emerging market stocks; blue chip stocks, especially major
growth stocks, generally rose more than the average stock. In an environment of
concern about financial risks, the high-grade assets were the market leaders.
MARKET OVERVIEW--BONDS
A combination of falling commodity prices, declining inflation and global
financial market volatility provided the backdrop for a strong bond market in
1998. The year was highlighted by an unprecedented rally from mid-August through
early October. The 10-year U.S. Treasury note, which began the year with a yield
of 5.74%, reached a low of 4.16% by October 5. In spite of an increase in yield
during the latter part of October, the yield on the 10-year U.S. Treasury Note
ended the year a full 110 basis points lower, with a yield of 4.64%.
The third quarter selloff in the stock market also affected the corporate bond
market. Uncertainty about the influence that a slowdown in the global economy
would have on the U.S. drove yield spreads on corporate securities wider.
Quality spreads among corporate securities increased most dramatically as
investors sought to buy higher quality securities with less risk of
underperformance in a volatile market.
In a surprise announcement on October 15, the Federal Reserve lowered the Fed
Funds rate from 5.25% to 5.00%. It was the second Fed move in a matter of 16
days. With this announcement, investor fears were calmed and subsequently the
bond market gave up some of its "flight to quality" gains. The Fed again moved
to lower the Fed Funds rate by another 25 basis points in November. The target
rate on Fed Funds ended the year lower by 75 basis points at 4.75%.
PORTFOLIO FOCUS
The Dreyfus Variable Investment Fund -- Balanced Portfolio was underweight in
equities in relation to its normal 60% position during the August stock market
downturn of 1998. In September and again in October, the Portfolio increased its
equity exposure in recognition of the subsequent attractive valuation levels at
that time. The Portfolio then decreased its equity exposure in December to
return to a normal 60% exposure at year- end. The strategic asset shifts made
during the year helped provide investment returns above those of the benchmark.
For the fiscal year, the equity component of the Portfolio performed slightly
above its benchmark S& P 500 Index. Strong returns in 1998 were realized by
technology and pharmaceutical holdings, as the market rewarded in particular the
growth prospects of large-cap stocks. In spite of the market' s high
price-to-earnings ratio compared to historic norms, we maintained our equity
emphasis on a broadly diversified, large-capitalization approach with exposure
to all economic sectors.
The duration of the fixed income allocation in the Portfolio was neutral to
the benchmark index, the Lehman Brothers Intermediate Government/Corporate Bond
Index, throughout the year. Earlier in the year, we supplemented the income
component of the Portfolio by increasing its holdings of high quality
asset-backed securities to 5%. During August, the Portfolio's overall position
in corporate fixed-income securities was pared back to 18% from 25%. This left
the Portfolio underweighted versus an overall corporate bond exposure of 25% for
the benchmark. By November, yield spreads on corporate bonds had widened to
levels not reached since the 1990-91 economic recession. It was during the final
two months of the year that the corporate bond allocation of the Portfolio was
increased to 40% in order to take advantage of the attractive price level.
Our efforts to reposition the Portfolio's corporate allocation during the
third and fourth quarter, as well as an overall preference for a defensive
posture and for higher quality than the benchmark index proved fruitful. For the
year, the fixed-income performance of the Portfolio was 8.91%, or 47 basis
points above the benchmark Lehman Brothers Intermediate Government/Corporate
Bond Index.
Thank you for your investment with Dreyfus. We appreciate the opportunity to
serve your investment needs.
Sincerely,
[Ronald P. Gala, signature logo] [Laurie A. Carroll, signature logo]
Ronald P. Gala Laurie A. Carroll
Portfolio Manager Portfolio Manager
January 15, 1999
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains paid.
The Portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts, which will reduce returns.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index of
U.S. stock market performance. SOURCE: LEHMAN BROTHERS -- The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely accepted unmanaged
index of government and corporate bond market performance composed of U.S.
Government, Treasury and agency securities, fixed-income securities and
nonconvertible investment-grade corporate debt, with an average maturity of 1 to
10 years.
***SOURCE: FRANK RUSSELL COMPANY -- The Russell 1000 Index measures the
performance of the 1,000 largest companies in the Russell 3000 Index, which
represents approximately 89% of the total market capitalization of the Russell
3000 Index. The Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. The Russell Midcap Index consists of the bottom 800 securities in
the Russell 1000 Index as ranked by total market capitalization and is a widely
accepted measure of medium-cap stock market performance. The Russell 2000 Index
is composed of the 2,000 smallest companies in the Russell 3000 Index. The
Russell 3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. All indices are unmanaged and include reinvestment of dividends.
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO DECEMBER 31, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, BALANCED PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX, THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX AND A HYBRID INDEX
Dollars
$15,760
Standard & Poor's 500 Composite Stock Price Index*
$14,494
Dreyfus Variable Investment Fund, Balanced Portfolio
$14,010
Hybrid Index***
$11,574
Lehman Brothers Intermediate Government/Corporate Bond Index**
* Source: Lipper Analytical Services, Inc.
** Source: Lehman Brothers
*** Source: Lipper Analytical Services, Inc., and Lehman Brothers
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended From Inception (5/1/97)
December 31, 1998 to December 31, 1998
____________________ __________________________
22.34% 24.89%
- ---------------
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, Balanced Portfolio on 5/1/97 (Inception Date) to a $10,000
investment made on that date in each of the Standard & Poor's 500 Composite
Stock Price Index, the Lehman Brothers Intermediate Government/Corporate Bond
Index and a Hybrid Index, which are described below. All dividends and capital
gain distributions are reinvested. The Hybrid Index is calculated on a
year-to-year basis.
The Portfolio' s performance shown in the line graph takes into account all
applicable fees and expenses of the Portfolio. The Standard & Poor's 500
Composite Stock Price Index is a widely accepted, unmanaged index of overall
stock market performance. The Lehman Brothers Intermediate Government/Corporate
Bond Index is a widely accepted, unmanaged index of Government and corporate
bond market performance composed of U.S. Government, Treasury and agency
securities, fixed-income securities and nonconvertible investment-grade
corporate debt, with an average maturity of 1-10 years. The Indices do not take
into account charges, fees and other expenses. The Hybrid Index is composed of
60% Standard & Poor' s 500 Composite Stock Price Index and 40% Lehman Brothers
Intermediate Government/Corporate Bond Index. Under normal circumstances, the
Portfolio' s total assets are allocated approximately 60% to common stocks and
40% to bonds; however, the Portfolio is permitted to invest up to 75%, and as
little as 40%, of its total assets in common stocks and up to 60%, and as little
as 25% , of its total assets in bonds, as deemed advisable by The Dreyfus
Corporation. 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.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--64.5% Shares Value
- -------------------------------------------------------------------------------
----------------- ----------------
<S> <C> <C>
Basic Industries--1.8% AlliedSignal . . . . . . . . . . . . . . . . . . 6,100 $ 270,306
Dow Chemical . . . . . . . . . . . . . . . . . . 2,200 200,062
Fort James . . . . . . . . . . . . . . . . . . . 6,300 252,000
PPG Industries . . . . . . . . . . . . . . . . . 4,200 244,650
USG . . . . . . . . . . . . . . . . . . . . . . 1,800 91,688
____________
1,058,706
____________
Capital Spending--17.7% America Online . . . . . . . . . . . . . . . (a) 3,800 608,000
Cisco Systems . . . . . . . . . . . . . . . (a) 5,900 547,594
Dell Computer . . . . . . . . . . . . . . . (a) 9,500 695,281
EMC . . . . . . . . . . . . . . . . . . . . (a) 5,900 501,500
Eaton . . . . . . . . . . . . . . . . . . . . . 3,000 212,062
General Dynamics . . . . . . . . . . . . . . . . 2,300 134,838
General Electric . . . . . . . . . . . . . . . . 7,000 714,437
HBO & Co . . . . . . . . . . . . . . . . . . . . 4,600 131,963
Ingersoll-Rand . . . . . . . . . . . . . . . . . 10,000 469,375
Intel . . . . . . . . . . . . . . . . . . . . . 9,500 1,126,344
International Business Machines . . . . . . . . 2,600 480,350
Lexmark International Group, Cl. A . . . . . (a) 4,300 432,150
Lucent Technologies . . . . . . . . . . . . . . 5,000 550,000
Microsoft . . . . . . . . . . . . . . . . . (a) 10,500 1,456,219
Nokia, Cl. A, A.D.R . . . . . . . . . . . . . . 1,200 144,525
Oracle . . . . . . . . . . . . . . . . . . . (a) 20,500 884,063
Sun Microsystems . . . . . . . . . . . . . . (a) 5,800 496,625
Sundstrand . . . . . . . . . . . . . . . . . . . 700 36,312
Tellabs . . . . . . . . . . . . . . . . . . (a) 5,700 390,806
Tyco International . . . . . . . . . . . . . . . 7,600 573,325
____________
10,585,769
____________
Consumer Cyclical--8.2% American Greetings, Cl. A . . . . . . . . . . . 2,100 86,231
Clear Channel Communications . . . . . . . . (a) 7,200 392,400
DaimlerChrysler . . . . . . . . . . . . . . . . 2,400 230,569
Federal-Mogul . . . . . . . . . . . . . . . . . 2,400 142,800
Federated Department Stores . . . . . . . . (a) 7,300 318,006
Ford Motor . . . . . . . . . . . . . . . . . . . 7,300 428,419
Gannett . . . . . . . . . . . . . . . . . . . . 3,300 218,419
Gap . . . . . . . . . . . . . . . . . . . . . . 6,900 388,125
K mart . . . . . . . . . . . . . . . . . . . (a) 8,000 122,500
Safeway . . . . . . . . . . . . . . . . . . (a) 7,700 469,219
Staples . . . . . . . . . . . . . . . . . . (a) 4,100 179,119
TJX . . . . . . . . . . . . . . . . . . . . . . 13,300 385,700
Time Warner . . . . . . . . . . . . . . . . . . 3,200 198,600
Tommy Hilfiger . . . . . . . . . . . . . . . (a) 2,400 144,000
Viacom, Cl. B . . . . . . . . . . . . . . . (a) 4,300 318,200
Wal-Mart Stores . . . . . . . . . . . . . . . . 10,600 863,237
____________
4,885,544
____________
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- --------------------------------------------------------------------------------
----------------- ----------------
Consumer Staples--6.0% Avon Products . . . . . . . . . . . . . . . . . 4,200 $ 185,850
Coca-Cola . . . . . . . . . . . . . . . . . . . 7,600 508,250
Eastman Kodak . . . . . . . . . . . . . . . . . 4,200 302,400
General Mills . . . . . . . . . . . . . . . . . 3,400 264,350
IBP . . . . . . . . . . . . . . . . . . . . . . 5,300 154,362
Newell . . . . . . . . . . . . . . . . . . . . . 5,500 226,875
Philip Morris . . . . . . . . . . . . . . . . . 10,500 561,750
Procter & Gamble . . . . . . . . . . . . . . . . 7,500 684,844
Ralston-Ralston Purina Group . . . . . . . . . . 8,400 271,950
Sara Lee . . . . . . . . . . . . . . . . . . . . 4,600 129,663
Unilever, N.V. (New York Shares) . . . . . . . . 4,000 331,750
____________
3,622,044
____________
Energy--4.1% Ashland . . . . . . . . . . . . . . . . . . . . 2,300 111,262
Coastal . . . . . . . . . . . . . . . . . . . . 6,600 230,588
Columbia Energy Group . . . . . . . . . . . . . 3,200 184,800
Diamond Offshore Drilling . . . . . . . . . . . 3,000 71,063
El Paso Energy . . . . . . . . . . . . . . . . . 4,200 146,212
Exxon . . . . . . . . . . . . . . . . . . . . . 12,000 877,500
Phillips Petroleum . . . . . . . . . . . . . . . 5,900 251,487
Sunoco . . . . . . . . . . . . . . . . . . . . . 4,200 151,463
Texaco . . . . . . . . . . . . . . . . . . . . . 7,100 375,412
Tosco . . . . . . . . . . . . . . . . . . . . . 2,800 72,450
____________
2,472,237
____________
Health Care--8.1% Abbott Laboratories . . . . . . . . . . . . . . 15,100 739,900
American Home Products . . . . . . . . . . . . . 3,000 168,937
Amgen . . . . . . . . . . . . . . . . . . . (a) 4,900 512,356
Biomet . . . . . . . . . . . . . . . . . . . . . 4,300 173,075
Bristol-Myers Squibb . . . . . . . . . . . . . . 4,700 628,919
Guidant . . . . . . . . . . . . . . . . . . . . 1,500 165,375
Johnson & Johnson . . . . . . . . . . . . . . . 7,400 620,675
Lilly (Eli) . . . . . . . . . . . . . . . . . . 4,100 364,388
Medtronic . . . . . . . . . . . . . . . . . . . 2,400 178,200
Schering-Plough . . . . . . . . . . . . . . . . 13,000 718,250
Warner-Lambert . . . . . . . . . . . . . . . . . 7,800 586,463
____________
4,856,538
____________
Interest Sensitive--10.5% Allstate . . . . . . . . . . . . . . . . . . . . 7,500 289,687
Ambac Financial Group . . . . . . . . . . . . . 3,800 228,713
American Express . . . . . . . . . . . . . . . . 4,600 470,350
Bank of New York . . . . . . . . . . . . . . . . 5,400 217,350
Bank One . . . . . . . . . . . . . . . . . . . . 7,938 405,334
BankAmerica . . . . . . . . . . . . . . . . . . 5,500 330,687
BankBoston . . . . . . . . . . . . . . . . . . . 4,500 175,219
Chase Manhattan . . . . . . . . . . . . . . . . 10,100 687,431
CIGNA . . . . . . . . . . . . . . . . . . . . . 2,200 170,088
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
----------------- ----------------
Interest Sensitive (continued) Comerica . . . . . . . . . . . . . . . . . . . . 5,100 $ 347,756
Edwards (A.G.) . . . . . . . . . . . . . . . . . 2,500 93,125
EXEL, Cl. A . . . . . . . . . . . . . . . . . . 4,900 367,500
Federal National Mortgage Association . . . . . 6,800 503,200
Fleet Financial Group . . . . . . . . . . . . . 9,400 420,062
Golden West Financial . . . . . . . . . . . . . 1,700 155,869
MGIC Investment . . . . . . . . . . . . . . . . 2,800 111,475
Morgan Stanley Dean Witter & Co . . . . . . . . 1,900 134,900
PNC Bank . . . . . . . . . . . . . . . . . . . . 3,400 184,025
SLM Holding . . . . . . . . . . . . . . . . . . 7,600 364,800
Sunamerica . . . . . . . . . . . . . . . . . . . 3,800 308,275
SunTrust Banks . . . . . . . . . . . . . . . . . 3,900 298,350
____________
6,264,196
____________
Mining & Metals--.4% Aluminum Company of America . . . . . . . . . . 2,100 156,581
USX-U.S. Steel Group . . . . . . . . . . . . . . 3,400 78,200
____________
234,781
____________
Transportation--.7% AMR . . . . . . . . . . . . . . . . . . . . (a) 3,100 184,063
Burlington Northern Santa Fe . . . . . . . . . . 6,500 219,375
____________
403,438
____________
Utilities--7.0% AT&T . . . . . . . . . . . . . . . . . . . . . . 9,500 714,875
AirTouch Communications . . . . . . . . . . (a) 6,500 468,812
Ameren . . . . . . . . . . . . . . . . . . . . . 4,000 170,750
Ameritech . . . . . . . . . . . . . . . . . . . 13,600 861,900
BellSouth . . . . . . . . . . . . . . . . . . . 14,400 718,200
Consolidated Edison . . . . . . . . . . . . . . 4,900 259,088
FPL Group . . . . . . . . . . . . . . . . . . . 5,400 332,775
FirstEnergy . . . . . . . . . . . . . . . . . . 4,200 136,762
MCI WorldCom . . . . . . . . . . . . . . . . (a) 4,100 294,175
Pinnacle West Capital . . . . . . . . . . . . . 2,300 97,463
Sprint (FON Group) . . . . . . . . . . . . . . . 1,800 151,425
____________
4,206,225
____________
TOTAL COMMON STOCKS
(cost $29,289,969) . . . . . . . . . . . . . . $38,589,478
============
Principal
Bonds and Notes--29.4% Amount
- ------------------------------------------------------------------------------------ ____________
Finance--7.3% American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 . . . . . . . . . . . . . . $ 600,000 $ 619,523
Chase Manhattan, Sub. Notes,
7.125%, 6/15/2009 . . . . . . . . . . . . . . 700,000 767,498
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 . . . . . . . . . . . . . . 600,000 606,513
General Motors Acceptance, Notes,
6.625%, 10/1/2002 . . . . . . . . . . . . . . 1,000,000 1,033,750
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Bonds and Notes (continued) Amount Value
- -------------------------------------------------------------------------------
----------------- ----------------
Finance (continued) Toyota Motor Credit, Notes,
5.50%, 12/15/2008 . . . . . . . . . . . . . . $ 500,000 $ 497,368
US Bank, Notes,
5.70%, 12/15/2008 . . . . . . . . . . . . . . 500,000 497,390
Wells Fargo, Sr. Notes,
6.75%, 10/1/2006 . . . . . . . . . . . . . . 350,000 372,602
____________
4,394,644
____________
Industrial--6.6% AlliedSignal, Notes,
6.20%, 2/1/2008 . . . . . . . . . . . . . . . 500,000 509,361
Ameritech Capital Funding, Notes,
5.65%, 1/15/2001 . . . . . . . . . . . . . . 500,000 506,137
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 . . . . . . . . . . . . . . . 500,000 524,164
McDonald's, Notes,
5.90%, 5/11/2001 . . . . . . . . . . . . . . 500,000 509,258
Mobil, Deb.,
8.375%, 2/12/2001 . . . . . . . . . . . . . . 1,000,000 1,064,755
Monsanto, Notes,
5.375%, 12/1/2001 . . . . . . . . . . . . (b) 300,000 299,011
Procter & Gamble, Deb.,
8.00%, 11/15/2003 . . . . . . . . . . . . . . 500,000 559,531
____________
3,972,217
____________
Utilities--.9% MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 . . . . . . . . . . . . . . 500,000 518,920
____________
U.S. Government &
Agencies--14.6% Federal Home Loan Banks;
5.61%, 6/22/2001 . . . . . . . . . . . . . . 1,100,000 1,114,934
Federal National Mortgage Association:
5.10%, 9/25/2000 . . . . . . . . . . . . . . 600,000 602,010
5.25%, 1/15/2003 . . . . . . . . . . . . . . 1,300,000 1,311,549
U.S. Treasury Bonds;
10.75%, 5/15/2003 . . . . . . . . . . . . . . 1,000,000 1,233,760
U.S. Treasury Notes:
8.50%, 2/15/2000 . . . . . . . . . . . . . . 1,350,000 1,406,133
8.875%, 5/15/2000 . . . . . . . . . . . . . . 700,000 738,997
8.00%, 5/15/2001 . . . . . . . . . . . . . . 600,000 644,970
6.375%, 8/15/2002 . . . . . . . . . . . . . . 550,000 580,816
6.25%, 2/15/2003 . . . . . . . . . . . . . . 120,000 126,876
5.75%, 8/15/2003 . . . . . . . . . . . . . . 400,000 417,892
6.50%, 8/15/2005 . . . . . . . . . . . . . . 400,000 440,020
5.625%, 5/15/2008 . . . . . . . . . . . . . . 100,000 106,778
____________
8,724,735
____________
TOTAL BONDS AND NOTES
(cost $17,456,017) . . . . . . . . . . . . . $17,610,516
============
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Short-Term Investments--22.1% Amount Value
- -------------------------------------------------------------------------------
----------------- ----------------
Agency Discount Notes--21.7% Federal Home Loan Banks,
4.30%, 1/4/1999 . . . . . . . . . . . . . . . $13,000,000 $ 12,995,342
____________
U.S. Treasury Bill--.4% 4.97%, 1/7/1999 . . . . . . . . . . . . . . (c) 200,000 199,883
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $13,195,176) . . . . . . . . . . . . . $ 13,195,225
============
TOTAL INVESTMENTS (cost $59,941,162) . . . . . . . . . . . . . . . . . . . . . . . . 116.0% $ 69,395,219
======== ============
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . (16.0%) $ (9,554,447)
======== ============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $ 59,840,772
======== ============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This Security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1998, this
security amounted to $299,011 or approximately .5% of net assets.
(c) Held by the custodian in a segregated account as collateral for open
financial futures positions.
STATEMENT OF FINANCIAL FUTURES DECEMBER 31, 1998
Market Value Unrealized
Covered (Depreciation)
Financial Futures Purchased Contracts by Contracts Expiration at 12/31/98
________________________ ________ ____________ _________ ____________
5 Year U.S. Treasury Notes . . . . . . . . . . . . . . . 38 $4,307,063 March '99 $(14,125)
Financial Futures Sold
___________________
Standard & Poor's 500. . . . . . . . . . . . . . . . . . 10 $(3,113,750) March '99 (14,025)
_________
$(28,150)
=========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_____________ ____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $59,941,162 $69,395,219
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,230
Dividends and interest receivable . . . . . . . . . . . . . . . 319,831
Receivable for investment securities sold . . . . . . . . . . . 108,088
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 77
_____________
70,039,445
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 46,080
Payable for shares of Beneficial Interest redeemed . . . . . . 10,000,951
Payable for investment securities purchased . . . . . . . . . . 107,683
Payable for futures variation margin--Note 4(a) . . . . . . . . 18,757
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 25,202
_____________
10,198,673
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,840,772
=============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $49,928,753
Accumulated net realized gain (loss) on investments . . . . . . 486,112
Accumulated net unrealized appreciation (depreciation)
on investments [including ($28,150) net unrealized
(depreciation) on financial futures]--Note 4(a). . . . . . . . . . . . . . . . . . . . . . 9,425,907
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,840,772
=============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 3,755,083
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $15.94
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,756,507
Cash dividends (net of $1,149 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . 366,901
_____________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 2,123,408
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . . . . 413,719
Auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . 22,825
Custodian fees--Note 3(a) . . . . . . . . . . . . . . . . . . . 21,024
Prospectus and shareholders' reports . . . . . . . . . . . . 17,095
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 3,270
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . 880
Trustees' fees and expenses--Note 3(b) . . . . . . . . . . . 650
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 446
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 240
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 1,983
_____________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 482,132
_____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,641,276
_____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . . . . $ 1,726,810
Net realized gain (loss) on financial futures . . . . . . . . . 1,665,549
_____________
Net Realized Gain (Loss) . . . . . . . . . . . . . . . . 3,392,359
Net unrealized appreciation (depreciation) on
investments [including ($26,287) net unrealized
(depreciation) on financial futures] . . . . . . . . . . . . 6,714,434
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 10,106,793
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $11,748,069
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997*
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,641,276 $ 625,226
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 3,392,359 1,706,671
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 6,714,434 2,711,473
______________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 11,748,069 5,043,370
______________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,647,249) (621,293)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (3,168,608) (1,442,270)
______________ _______________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,815,857) (2,063,563)
______________ _______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 28,199,314 36,492,088
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,815,857 2,063,563
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,250,964) (391,105)
______________ _______________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . 11,764,207 38,164,546
______________ _______________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 18,696,419 41,144,353
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,144,353 --
______________ _______________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,840,772 $41,144,353
============== ===============
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . -- $ 3,933
______________ _______________
Shares Shares
______________ _______________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,876,334 2,810,317
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 309,182 146,937
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,360,556) (27,131)
______________ _______________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 824,960 2,930,123
============== ===============
- ------------------
* From May 1, 1997 (commencement of operations) to December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED 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.
Year Ended December 31,
_______________________
PER SHARE DATA: 1998 1997(1)
________ ________
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . $14.04 $12.50
________ ________
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 .25
Net realized and unrealized gain (loss) on investments . . . . . . . . . . . . . . . . 2.67 2.06
________ ________
Total from Investment Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10 2.31
________ ________
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . (.43) (.25)
Dividends from net realized gain on investments . . . . . . . . . . . . . . . . . . . . (.77) (.52)
________ ________
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.20) (.77)
________ ________
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.94 $14.04
======== ========
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.34% 18.48%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . . .87% .67%(2)
Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . 2.98% 1.91%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.75% 45.78%(2)
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . . . . . . . . $59,841 $41,144
- -----------------------------
(1) From May 1, 1997 (commencement of operations) to December 31, 1997.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Variable Investment Fund (the "Fund" ) is registered under the
Investment Company Act of 1940, as amended (the "Act" ), as an open-end
management investment company, operating as a series company currently offering
thirteen series, including the Balanced Portfolio (the "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 investment results that are greater than the total
return performance of common stocks and bonds in the aggregate, as represented
by a hybrid index, 60% of which is composed of the common stocks in the Standard
& Poor' s 500 Composite Stock Price Index and 40% of which is composed of the
bonds in the Lehman Brothers Intermediate Government/Corporate Bond Index. The
Dreyfus Corporation (" Dreyfus" ) serves as the 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 Fund's shares, which are sold without a
sales charge.
As of December 31, 1998, MBC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 966,139 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The Series' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) 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 Series received net
earnings credits of $5,252 during the period ended December 31, 1998 based on
available cash balances left on deposit. Income earned under this arrangement is
included in interest income.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net are declared and paid quarterly. Dividends
from net realized capital gain are normally declared and paid annually, but the
Series 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 Series not to distribute such
gain.
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
During the period ended December 31, 1998, the Series reclassified $2,040
between accumulated undistributed investment income-net and accumulated net
realized gain (loss) on investments. Net assets were not affected by this
reclassification.
NOTE 2--BANK LINE OF CREDIT:
The Series participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Series has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Series at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
December 31, 1998, the Series did not borrow under the Facility.
NOTE 3--INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to an Investment Advisory Agreement with Dreyfus, the investment
advisory fee is computed at the annual rate of .75 of 1% of the value of the
Series' average daily net assets and is payable monthly. Dreyfus had undertaken
from January 1, 1998 through December 31, 1998 to reduce the management fee paid
by the Series, exclusive of taxes, brokerage, interest on borrowings, commitment
fees and extraordinary expenses to the extent that such expenses exceeded an
annual rate of 1.25% of the value of the Series' average daily net assets. No
expense reimbursement was required for the period ended December 31, 1998.
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.
The Series compensates Mellon under a custody agreement for providing
custodial services for the Series. During the period ended December 31, 1998,
the Series was charged $21,024 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.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
December 31, 1998, amounted to $66,625,035 and $54,095,330, respectively.
The Series may invest in financial futures contracts in order to gain exposure
to or protect against changes in the market. The Series is exposed to market
risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Series to "mark to
market" on a daily basis, which reflects the change in the market value of the
contracts at the close of each day' s trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Series recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at
December 31, 1998 are set forth in the Statement of Financial Futures.
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) At December 31, 1998, accumulated net unrealized appreciation on
investments and financial futures was $9,425,907, consisting of $9,834,486 gross
unrealized appreciation and $408,579 gross unrealized depreciation.
At December 31, 1998, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statements of investments and financial futures, of Dreyfus
Variable Investment Fund, Balanced Portfolio (one of the series constituting the
Dreyfus Variable Investment Fund) as of December 31, 1998, 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 verification by
examination of securities held by the custodian as of December 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. 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, Balanced Portfolio at December 31, 1998, 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.
New York, New York
February 4, 1999
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates $.331 per share as a
long-term capital gain distribution of the $.793 per share paid on December 29,
1998.
The Series also designates 10.48% of the ordinary dividends paid during the
fiscal year ended December 31, 1998 as qualifying for the corporate dividends
received deduction.
Dreyfus lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
DREYFUS VARIABLE INVESTMENT FUND,
BALANCED PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 154AR9812
Variable
Investment Fund,
BALANCED PORTFOLIO
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX,
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT / CORPORATE
BOND INDEX AND A HYBRID INDEX
EXHIBIT A:
DREYFUS STANDARD LEHMAN
VARIABLE & POOR'S 500 BROTHERS
INVESTMENT COMPOSITE INTERMEDIATE
FUND, STOCK GOVERNMENT /
PERIOD BALANCED PRICE CORPORATE HYBRID
PORTFOLIO INDEX* BOND INDEX** INDEX***
5/1/97 10,000 10,000 10,000 10,000
6/30/97 10,864 11,083 10,175 10,720
9/30/97 11,558 11,913 10,450 11,328
12/31/97 11,847 12,255 10,674 11,622
3/31/98 12,573 13,964 10,840 12,667
6/30/98 12,877 14,427 11,044 13,020
9/30/98 12,698 12,996 11,540 12,421
12/31/98 14,494 15,760 11,574 14,010
*Source: Lipper Analytical Services, Inc.
**Source: Lehman Brothers
***Source: Lipper Analytical Services, Inc. and Lehman Brothers
