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, 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 months ended
December 31, 1998. During that period, the portfolio returned 8.74%* while the
Morgan Stanley Capital International Europe Australasia Far East (EAFE(reg.tm))
Index generated a return of 20.00%.** The Fund's return lagged the Index as
value stocks generally trailed the markets.
Japan continued to lag the rest of the world, finishing the year more than 50%
below its 1989 peak; other Asian markets were mixed but most finished well above
their lows, and South Korea, the best Asian market in 1998, nearly doubled in
dollar terms. European markets were strong across the board, posting returns
averaging close to 20% in dollar terms. Currency fluctuations enhanced returns
in 1998 as most foreign currencies appreciated against the U.S. dollar; the
Japanese yen was particularly strong with a gain of 14%.
Our strategy in 1998 was to be well-diversified across countries and sectors
and to focus on value stocks. The portfolio was primarily invested in major
industrialized countries and exposure to emerging markets was less than 2%.
ECONOMIC AND MARKET ENVIRONMENT
Economic growth worldwide, with the exception of Asia and parts of Latin
America, continued at a healthy pace through the year. Despite solid economic
growth, inflation remained under control and interest rates experienced a
downward trend in the major industrialized countries. The environment in 1998
was very favorable for stock prices. A major problem last year was the sharp
economic reversal in Asia where the tigers (nations such as Thailand, Malaysia
and Indonesia) fell victim to overexpansion. However, your Portfolio exposure to
the region was limited and damage was minimal.
In contrast to Asia, European markets were strong across the board. The best
returns in Europe were in France and Italy, both up in excess of 40%. Norway,
whose economy is based more on natural resources, had negative returns. The
U.K., having surpassed Japan as the second largest stock market in the world
(the U.S. is number one) also had a good year, generating a total return of
nearly 18%.
European economies as a whole continued to improve, with Gross Domestic
Product (GDP) growth in the 3% range. In anticipation of monetary union,
interest rate differentials narrowed and inflation continued to decrease.
With the new currency comes one central bank, the European Central Bank or
ECB.The ECB will be required to set monetary policy for a large but loosely
congregated group of countries. It will also have to deal with the politics of
eleven sovereign fiscal authorities. Despite the excitement surrounding the
arrival of the Euro, there are still differences in financial institutions,
industrial structure, labor market flexibility and tax accounting. However, we
believe that, on balance, monetary union should be beneficial. Increased product
price transparency across the eleven participating countries and the removal of
currency risk may encourage companies, which previously preferred to match sales
and production in the major markets, to rationalize production on the basis of
the relative cost advantage of different locations; European corporations'
traditional dependence on commercial bank finance should give way to cheaper and
more easily accessible and flexible capital market financing. We believe that
the introduction of the Euro could increase openness in pricing and disclosure,
raise earnings and improve corporate performance.
In terms of the equity markets, we believe that the environment is still
favorable in Europe. Although valuations are not cheap relative to their
historical norm, they still compare favorably with the U.S. In terms of book
value and price-to-cash flow, Europe is still at a discount to the U.S. and the
higher price-to-earnings ratio can largely be explained by the more conservative
accounting practices. Furthermore, we believe that there is a great deal of
potential for improved profitability at the corporate level. Share buybacks and
corporate restructuring are just now beginning in Europe, whereas in the U.S.,
the process has been under way for several years.
At the other extreme, the problems in Asia are still with us. However, there
are signs of improvement on the horizon. Thailand and Korea appear to us to be
in the very early recovery stage. Japan is still in a long recession but the
government is finally taking steps to address some of its problems. In 1998 we
saw several major corporate bankruptcies and two large banks (Long Term Credit
Bank of Japan and Nippon Credit Bank LTD) were taken over by the government. It
appears that these developments forced the government to finally recognize the
size and scope of the banking crisis. The Japanese government set aside 60
trillion yen (approximately 500 billion U.S. dollars) to inject into the banking
system and enable the banks to perform needed functions.
Very recently we finally started to see some positive signs in Japan. Sales of
personal computers are strong, increasing 8% between July and September. Sales
at electronics stores began to rise on the strength of rising demand for
televisions, video cassette recorders, washing machines and refrigerators.
Public works startups rose 37% in September and 13% in October. Honda motor is
barely able to meet demand for minicars despite increased capacity. Unlike other
major stock markets worldwide, Japan is still languishing near a 14-year low.
PORTFOLIO FOCUS
Our strategy has been to seek undervalued securities with sound fundamentals
and improving earnings momentum. In 1998 this strategy did not enhance
performance as large capitalization growth stocks led most major stock markets.
As a result, the price-to-earnings differential between growth stocks and value
stocks has widened considerably. We believe that, in the long term, this could
provide opportunities in value stocks. As of year-end, the portfolio was
well-diversified with holdings in 20 foreign countries. Investments were
primarily in major industrialized countries and exposure to emerging markets was
under 2%.
Holdings in emerging markets were kept low due to volatility and turmoil in
most of those markets. As valuations continue to shrink, we will search for
opportunities when we determine that conditions have begun to stabilize.
However, looking ahead to 1999, we currently expect to continue our emphasis on
major developed markets.
We appreciate the opportunity to serve your investment needs.
Sincerely,
[Sandor Cseh signature]
Sandor Cseh
Portfolio Manager
January 11, 1999
New York, N.Y.
*Total returns include 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
dividends and, where applicable, capital gains distributions. The Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE(reg.tm)) Index 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 is the property of Morgan Stanley & Co., Incorporated.
The Standard & Poor' s 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO DECEMBER 31,
1998
- -----------------------------------------------------------------------------
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((reg.tm))) INDEX
Dollars
$12,232
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE((reg.tm))) Index*
$12,224
Dreyfus Variable Investment Fund, International Value Portfolio
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended From Inception (5/1/96)
December 31, 1998 to December 31, 1998
____________________ __________________________
8.74% 7.81%
- ---------------
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((reg.tm) )) 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((reg.tm))) 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.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--95.9% Shares Value
- ------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Argentina--.6% YPF Sociedad Anonima, ADS . . . . . . . . . 4,700 $ 131,305
_____________
Australia--2% Australia and New Zealand Banking . . . . . 31,704 207,392
Boral . . . . . . . . . . . . . . . . . . . 46,220 65,679
Pacific Dunlop . . . . . . . . . . . . . . . 85,988 139,043
_____________
412,114
_____________
Denmark--.7% Jyske Bank . . . . . . . . . . . . . . . . . 1,600 154,529
_____________
Finland--.9% Kesko Oyj . . . . . . . . . . . . . . . . . 13,000 193,842
_____________
France--10.3% ALSTHOM, ADS . . . . . . . . . . . . . . . . 5,410 125,783
Air Liquide . . . . . . . . . . . . . . . . 1,425 261,470
Bongrain . . . . . . . . . . . . . . . . . . 355 158,874
Compagnie Generale des Etablissements
Michelin, Cl. B . . . . . . . . . . . . . 4,051 162,078
Dexia France . . . . . . . . . . . . . . . . 1,300 200,369
Elf Aquitaine, ADS . . . . . . . . . . . . . 5,000 283,125
Guyenne et Gascogne . . . . . . . . . . . . 500 224,303
Pechiney, Cl. A . . . . . . . . . . . . . . 3,700 120,878
Societe Generale, Cl. A . . . . . . . . . . 1,628 263,746
Thompson CSF . . . . . . . . . . . . . . . . 5,024 215,846
Usinor . . . . . . . . . . . . . . . . . . . 11,000 122,185
_____________
2,138,657
_____________
Germany--11.6% Bayer . . . . . . . . . . . . . . . . . . . 7,000 292,297
Deutsche Bank . . . . . . . . . . . . . . . 3,600 211,924
Deutsche Lufthansa . . . . . . . . . . . . . 8,500 187,800
GEA . . . . . . . . . . . . . . . . . . . . 6,500 196,296
Hoechst . . . . . . . . . . . . . . . . . . 5,400 224,027
KM Europa Metal . . . . . . . . . . . . . . 1,600 92,219
Merck KGaA . . . . . . . . . . . . . . . . . 6,000 270,173
Siemens . . . . . . . . . . . . . . . . . . 4,800 309,798
Tarkett Sommer . . . . . . . . . . . . . . . 3,500 42,657
VEBA . . . . . . . . . . . . . . . . . . . . 6,600 395,065
Volkswagen . . . . . . . . . . . . . . . . . 2,100 167,687
_____________
2,389,943
_____________
Greece--.7% Hellenic Telecommunication Organization, GDR 11,000(a) 145,750
_____________
Hong Kong--1.4% Henderson Investment . . . . . . . . . . . . 200,000 117,463
HongKong Electric . . . . . . . . . . . . . 60,000 182,004
_____________
299,467
_____________
Italy--3.9% ENI, ADS . . . . . . . . . . . . . . . . . . 4,700 318,425
San Paulo-IMI, ADR . . . . . . . . . . . . . 3,918 140,069
Telecom Italia . . . . . . . . . . . . . . . 57,000 358,224
_____________
816,718
_____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------- ---------------
Japan--25.8% Canon . . . . . . . . . . . . . . . . . . . 13,000 $ 277,268
Credit Saison . . . . . . . . . . . . . . . 12,400 304,990
Dai-Tokyo Fire & Marine Insurance . . . . . 45,000 158,968
Fuji Machine Manufacturing . . . . . . . . . 6,000 189,172
Honda Motor . . . . . . . . . . . . . . . . 6,000 196,591
Ito-Yokado . . . . . . . . . . . . . . . . . 4,000 279,078
Kao . . . . . . . . . . . . . . . . . . . . 18,000 405,370
Mabuchi Motor . . . . . . . . . . . . . . . 4,400 336,130
Marubeni . . . . . . . . . . . . . . . . . . 71,000 121,646
Matsumotokiyoshi . . . . . . . . . . . . . . 5,000 192,970
Minebea . . . . . . . . . . . . . . . . . . 29,000 331,414
Mitsubishi Heavy Industries . . . . . . . . 37,000 143,778
Murata Manufacturing . . . . . . . . . . . . 7,000 289,941
NAMCO . . . . . . . . . . . . . . . . . . . 6,000 120,286
Nichiei . . . . . . . . . . . . . . . . . . 3,050 242,427
Nishimatsu Construction . . . . . . . . . . 20,000 116,577
Rinnai . . . . . . . . . . . . . . . . . . . 12,000 209,414
Rohm . . . . . . . . . . . . . . . . . . . . 2,000 181,754
Sankyo . . . . . . . . . . . . . . . . . . . 6,500 108,496
Sekisui Chemical . . . . . . . . . . . . . . 30,000 201,360
Sony . . . . . . . . . . . . . . . . . . . . 4,000 290,736
Toshiba . . . . . . . . . . . . . . . . . . 34,000 202,084
Toyota Motor . . . . . . . . . . . . . . . . 5,000 135,565
Yamanouchi Pharmaceutical . . . . . . . . . 9,000 289,323
_____________
5,325,338
_____________
Netherlands--7.9% ABN-AMRO . . . . . . . . . . . . . . . . . . 13,364 281,280
Akzo Nobel, ADS . . . . . . . . . . . . . . 5,200 232,050
Buhrmann . . . . . . . . . . . . . . . . . . 8,900 159,344
Hollandsche Beton Groep . . . . . . . . . . 11,179 138,196
Hunter Douglas . . . . . . . . . . . . . . . 5,547 183,846
KPN, ADR . . . . . . . . . . . . . . . . . . 4,611 231,703
Koninklijke (Royal) Philips Electronics, ADR . . 2,700 182,756
Stork . . . . . . . . . . . . . . . . . . . 5,500 125,726
TNT Post, ADR . . . . . . . . . . . . . . . 3,090 100,425
_____________
1,635,326
_____________
New Zealand--.3% Fletcher Challenge Paper . . . . . . . . . . 99,596 66,557
_____________
Norway--.4% Fred Olsen Energy . . . . . . . . . . . . . 7,000(a) 43,105
Orkla, Cl. B . . . . . . . . . . . . . . . . 2,800 36,502
_____________
79,607
_____________
Peru--.3% Telefonica del Peru, ADS . . . . . . . . . . 5,000 63,438
_____________
Portugal--.6% Banco Pinto & Sotto Mayor . . . . . . . . . 6,160 116,791
_____________
Singapore--.9% Development Bank of Singapore . . . . . . . 20,200 182,302
_____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ------------- ---------------
Spain--6.4% Banca Popular Espanol . . . . . . . . . . . 3,200 $ 241,645
Corporation Bancaria de Espana, ADS . . . . 3,400 175,100
Endesa . . . . . . . . . . . . . . . . . . . 8,300 220,247
Gas y Electridad . . . . . . . . . . . . . . 3,300 330,709
Repsol, ADS . . . . . . . . . . . . . . . . 6,400 349,600
_____________
1,317,301
_____________
Sweden--1.6% Autoliv . . . . . . . . . . . . . . . . . . 7,200 257,877
Scania, Cl. A . . . . . . . . . . . . . . . 3,500 64,186
_____________
322,063
_____________
Switzerland--4.9% Barry Callebaut . . . . . . . . . . . . . . 502 113,991
Forbo . . . . . . . . . . . . . . . . . . . 500 218,341
Sulzer . . . . . . . . . . . . . . . . . . . 330 200,786
Swisscom . . . . . . . . . . . . . . . . . . 470(a) 196,689
UBS . . . . . . . . . . . . . . . . . . . . 900 276,419
_____________
1,006,226
_____________
United Kingdom--14.2% BOC Group . . . . . . . . . . . . . . . . . 12,667 180,500
British Airway . . . . . . . . . . . . . . . 6,234 41,884
British Airway, ADS . . . . . . . . . . . . 1,150 77,984
Bunzl . . . . . . . . . . . . . . . . . . . 62,183 242,269
Laird Group . . . . . . . . . . . . . . . . 29,700 80,261
LucasVarity . . . . . . . . . . . . . . . . 48,819 162,279
Medeva . . . . . . . . . . . . . . . . . . . 42,000 74,506
Morgan Crucible . . . . . . . . . . . . . . 23,790 108,858
PowerGen . . . . . . . . . . . . . . . . . . 24,986 327,251
Rio Tinto . . . . . . . . . . . . . . . . . 18,002 208,620
Royal & Sun Alliance Insurance Group . . . . 31,405 255,516
Safeway . . . . . . . . . . . . . . . . . . 58,950 295,154
Stakis . . . . . . . . . . . . . . . . . . . 92,000 152,527
Standard Chartered . . . . . . . . . . . . . 22,000 254,040
Storehouse . . . . . . . . . . . . . . . . . 73,576 165,895
Tomkins . . . . . . . . . . . . . . . . . . 66,440 312,278
_____________
2,939,822
_____________
United States--.5% Pharmacia & Upjohn . . . . . . . . . . . . . 1,800 101,925
_____________
TOTAL COMMON STOCKS
(cost $19,457,455) . . . . . . . . . . . $ 19,839,021
_____________
Preferred Stocks--.5%
- -------------------------------------------------
Germany; Rheinmetall
(cost $97,134) . . . . . . . . . . . . . 5,500 $ 103,356
_____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Short-Term Investments--6.9% Amount Value
- ------------------------------------------------------------------------------- ------------- ----------------
U.S. Treasury Bills: 4.37%, 1/21/99 . . . . . . . . . . . . . . . $ 408,000 $ 407,002
4.38%, 3/18/99 . . . . . . . . . . . . . . . 596,000 590,725
4.46%, 4/1/99 . . . . . . . . . . . . . . . 435,000 430,259
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $1,427,642) . . . . . . . . . . . . $ 1,427,986
____________
TOTAL INVESTMENTS (cost $20,982,231) . . . . . . . . . . . . . . . . . . . . . . 103.3% $21,370,363
_______ ____________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . (3.3%) $ (690,373)
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $20,679,990
_______ ____________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $20,982,231 $21,370,363
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,850
Cash denominated in foreign currencies . . . . . . . . . . . . 386,230 389,146
Receivable for investment securities sold . . . . . . . . . . . 80,121
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 49,580
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 89
____________
22,025,149
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 17,781
Payable for shares of Beneficial Interest redeemed . . . . . . 1,300,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 27,378
____________
1,345,159
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,679,990
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $20,155,800
Accumulated undistributed investment income--net . . . . . . . 37,223
Accumulated net realized gain (loss) on investments . . . . . . 93,432
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions . . . . . . . . . . . . . . . . . . . . . 393,535
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,679,990
____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 1,538,085
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $13.45
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $51,588 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . $ 436,064
Interest . . . . . . . . . . . . . . . . . . . . . . . . 66,663
___________
Total Income . . . . . . . . . . . . . . . . . . . $ 502,727
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . 225,035
Custodian fees . . . . . . . . . . . . . . . . . . . . . 28,138
Auditing fees . . . . . . . . . . . . . . . . . . . . . . 20,784
Prospectus and shareholders' reports . . . . . . . . . 13,888
Trustees' fees and expenses--Note 3(b) . . . . . . . . 455
Registration fees . . . . . . . . . . . . . . . . . . . . 430
Shareholder servicing costs . . . . . . . . . . . . . . . 330
Legal fees . . . . . . . . . . . . . . . . . . . . . . . 310
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 97
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 966
___________
Total Expenses . . . . . . . . . . . . . . . . . . 290,433
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,294
___________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and
foreign currency transactions . . . . . . . . . . . . $1,774,974
Net realized gain (loss) on forward currency
exchange contracts . . . . . . . . . . . . . . . . . . (60,354)
___________
Net Realized Gain (Loss) . . . . . . . . . . . . . 1,714,620
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions . . . . . . . . . . (120,484)
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 1,594,136
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $1,806,430
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 212,294 $ 100,487
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 1,714,620 372,825
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . (120,484) 320,950
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 1,806,430 794,262
_____________ _____________
DIVIDENDS TO SHAREHOLDERS:
From investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . (175,934) (99,919)
From net realized gain on investments . . . . . . . . . . . . . . . . . . . . (1,514,812) (390,614)
In excess of net realized gain on investments . . . . . . . . . . . . . . . . -- (106,376)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,690,746) (596,909)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 13,646,748 10,934,432
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,690,746 596,909
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (13,789,635) (739,686)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . 1,547,859 10,791,655
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 1,663,543 10,989,008
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,016,447 8,027,439
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,679,990 $ 19,016,447
_____________ _____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 37,223 $ 863
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 954,460 794,420
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 128,159 44,979
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (958,695) (52,186)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 123,924 787,213
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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.
Year Ended December 31,
___________________________________
PER SHARE DATA: 1998 1997 1996(1)
_______ _______ _______
<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . $13.45 $12.80 $12.50
_______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . .14 .07 .08
Net realized and unrealized gain (loss) on investments . . . . . . . . . 1.01 1.03 .34
_______ _______ _______
Total from Investment Operations . . . . . . . . . . . . . . . . . . . . 1.15 1.10 .42
_______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . . . . . . (.12) (.07) (.08)
Dividends from net realized gain on investments . . . . . . . . . . . . . (1.03) (.30) (.04)
Dividends in excess of net realized gain on investments . . . . . . . . . -- (.08) --
_______ _______ _______
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.15) (.45) (.12)
_______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . $13.45 $13.45 $12.80
_______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.74% 8.71% 3.41%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . 1.29% 1.42% 1.01%(2)
Ratio of net investment income to average net assets . . . . . . . . . . .94% .74% .76%(2)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation . . . . . . . . . . . . . . . -- -- .34%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . 42.14% 25.67% 24.48%(2)
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . $20,680 $19,016 $8,027
- ---------
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE 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 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, 1998, APT Holdings Corporation, an indirect subsidiary of
Mellon Bank Corporation, held 102,845 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) 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. Under the terms of the custody agreement, the Series received net
earnings credits of $254 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.
(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
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL VALUE PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--BANK LINE OF CREDIT:
The 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 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 4--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, 1998 amounted to $9,919,595 and $8,633,186,
respectively.
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. At December 31, 1998,
there were no forward currency exchange contracts outstanding.
(B) At December 31, 1998, accumulated net unrealized appreciation on
investments was $388,132, consisting of $2,479,383 gross unrealized appreciation
and $2,091,251 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, 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, 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 confirmation of
securities owned as of December 31, 1998 by correspondence with the custodian.
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,
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)
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, 1998:
-- the total amount of taxes paid to foreign countries was $51,588.
-- the total amount of income sourced from foreign countries was $485,566.
-- of the $1.186 per share dividends and distributions paid during the year
ended December 31, 1998, the portion applicable to foreign taxes paid is $.035
per share.
Additionally, for Federal tax purposes the Series hereby designates $.682 per
share as a long-term capital gain distribution of the $1.125 per share paid on
December 21, 1998 and also designates $.020 per share as a long-term capital
gains distribution of the $.026 per share paid on March 31, 1998. The Series
also designates .93% of the ordinary dividends paid during the fiscal year ended
December 31, 1998 as qualifying for the corporate dividends received deduction.
[reg.tm logo]
(reg.tm)
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. 152AR9812
Variable
Investment Fund,
INTERNATIONAL VALUE
PORTFOLIO
Annual Report
December 31, 1998
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 CAPITAL DREYFUS VARIABLE
INTERNATIONAL EUROPE, INVESTMENT FUND,
PERIOD AUSTRALASIA, FAR EAST INTERNATIONAL
(EAFE (R) ) INDEX* VALUE PORTFOLIO
5/1/96 10,000 10,000
12/31/96 10,016 10,341
12/31/97 10,194 11,241
12/31/98 12,232 12,224
* Source: Lipper Analytical Services, Inc.
