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 EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report for the Dreyfus Variable
Investment Fund -- International Equity Portfolio for the 12-month period ended
December 31, 1998. Your Portfolio produced a total return of 4.49%,* which
compared unfavorably with the 20% return recorded by the main international
stock index, the Portfolio's benchmark, The Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE((reg.tm) )) Index.** This 1998 result is
disappointing in light of the Portfolio's 1997 result, which outperformed the
EAFE Index.
There are two major reasons for the difficult year the Dreyfus Variable
Investment Fund -- International Equity Portfolio has experienced. Both have to
do with the turbulent world market conditions of August and September, 1998.
First, in an effort to protect assets during the period of turmoil, your
Portfolio's foreign currency exposure was completely hedged. Hedging is meant to
offset an increase in the value of the U.S. dollar versus foreign currencies,
and is generally considered a defensive strategy. During the recent market
turmoil, the value of the dollar decreased, even as investors around the world
rushed to invest in "safe haven" assets such as U.S. government bonds. Thus, our
hedging strategy resulted in losses for your Portfolio in the August and
September portion of the year just ended.
The second reason for the Portfolio's underperformance was its substantial
position in European financial stocks. You may recall that financial stocks
around the world performed very poorly in August and September, as the
emerging-market crisis spread to Russia and a large U.S.-based investment fund
required financial support from its banks. Although most of the banks and
insurance companies held by your Portfolio are primarily involved in local
European markets, generally their stock prices declined as sharply as those of
the large international banks and more than many other nonfinancial stocks. A
few examples of Portfolio holdings that sustained such losses are the local
Finnish insurer Sampo Insurance Cl. A, Dutch insurer ING Groep and
Schweizerische Lebensversicherungs-und Rentenanstalt (Swiss Life). Prices of
these issues experienced some recovery by fiscal year end.
Beyond the difficulties described above, shares of a number of growth
companies performed quite well over the period. Two of these, Colt Telecom and
Olivetti, are entrants in the newly deregulated European telecom market and
experienced very high levels of customer and revenue growth. Other strong
performers for the year ending November 30, 1998, were the German retailer
Douglas Holding, Dutch baby food producer Koninklijke Numico and Japanese
disk-drive equipment maker Nidec.
INVESTMENT APPROACH
The Portfolio's strategy during the fiscal year included having a wide variety
of holdings in 15 to 25 markets around the world, exposure to rapidly growing
emerging markets when they were attractive for investment, and active currency
management. The crucial challenge was trying to judge the relative
attractiveness of various markets when there could be scores to choose from. We
looked to address this challenge by evaluating inputs on growth, valuation,
interest rates, liquidity, technical factors and currency in each of the world's
major markets. Our work in these areas was driven by PC-based tools developed
over time. Markets and industry sectors were overweighted, underweighted or
market weighted, relative to the EAFE Index. The Dreyfus Variable Investment
Fund -- International Equity Portfolio invested in emerging markets when, in our
opinion, significant opportunities present themselves in this asset class
In the investment process, stocks were managed in a disciplined way. We
searched for stocks expected to have higher earnings growth rates than the
market in which they trade. Attractive companies often had made a corporate
change in management, strategy or business structure that we believed could
positively alter their future growth rate. Generally, stocks purchased also
needed to have attractive valuations both relative to their own history and that
of the local market. Companies typically have been sold when growth was forecast
to fall below our own or consensus estimates, the valuation target was reached
or the weighting in that market reduced as a result of an asset allocation
decision.
STRATEGY
Looking across world markets through the filter of our six screens -- growth,
valuation, interest rates, liquidity, currency, and technical analysis -- is not
an easy task in a world undergoing so much change. Let's take a moment and
survey the big picture before honing in on specific opportunities in each
region.
We believe that economic growth should be slow in 1999. The full effect of the
difficulties that began in Asian emerging markets in the summer and fall of 1997
has begun to hit the developed economies in Europe and the U.S., even while it
has been causing deeper problems for the already troubled Japanese economy. The
Dreyfus Variable Investment Fund -- International Equity Portfolio research team
estimates that the strongest growth potential in both Gross Domestic Product
(GDP) and earnings should be in continental Europe. We believe that earnings
growth potential there compares favorably with another year of anticipated
earnings decline in Japan and most emerging markets, as well as the U.K. Global
stock valuations had been rather stretched in the summer of 1998 but became much
more attractive following the sharp market correction of August and September.
Stocks in continental Europe were trading on an average of 20 times estimated
1999 earnings at the end of the fiscal period. We think that Japanese stocks,
while not cheap on projected earnings, exhibited attractive valuations in the
areas of price/book, price/sales and price/cash-flow ratios. We believe that
many emerging markets equities also seem cheap. It is our belief from six-factor
analysis that there could be a broad decline in interest rates. Generally, the
International Equity Portfolio research team currently expects interest rates to
decline substantially in both continental Europe and the U.K. in 1999 and to
remain low in the rest of the world.
All in all, continental Europe continued to look like an attractive place for
investment. In addition to a relatively favorable outlook for growth, valuation
and interest rates, three additional positive factors are worth mentioning.
First, continental companies have continued to restructure and move toward the
investment perspective of the shareholders. Second, private pension systems and
equity-oriented savings plans began to find favor. Third, continental European
governments seem to have the financial resources to spur growth with fiscal
policy, should they decide this is necessary. Where specific stocks are
concerned, the Dreyfus Variable Investment Fund -- International Equity
Portfolio' s investment team continued to find attractive growth at a reasonable
price among many of the regional banks and insurance companies on the continent
during the fiscal year. Many of these are in the process of restructuring. Among
your Portfolio's core holdings in this area are Instituto Bancario San Paolo di
Torino of Italy, Skandia Forsakrings of Sweden, and Swiss Life. As mentioned in
the first portion of this letter, the newly deregulated telecom services
business was a profitable investment area for your Portfolio in the fiscal year
ended December 31, 1998. Core positions in the telecom area include Colt
Telecom, Olivetti, Mannesmann, and Netcom Cl.B.
Although, in our opinion, overall prospects for the U.K. are less buoyant than
those for the continent, a number of stocks with attractive growth prospects and
valuation are held in the U.K. portion of the portfolio. Perhaps most
interesting among these is British Sky Broadcasting Group, one of the pioneers
in the digital television broadcasting industry in the country. Overall,
however, your Portfolio remained underweight in the U.K. market compared to that
market' s weight in the EAFE Index.
Dreyfus Variable Investment Fund -- International Equity Portfolio remained
underweight in the Japanese market as well. Calendar 1999 looks to us to be
another year of declining GDP and earnings in Japan. Although (as noted above)
stocks appeared cheap on some measures in that market, investor enthusiasm has
been restrained by ongoing questions not only about growth but also about the
commitment of the Japanese government and companies to reform. On the government
level, deregulation of the economy and reform of the banking system remained a
stop-go process. Some deregulatory steps have been taken in industries such as
retailing, but much more needs to be done. In the bank sector, the government
moved to inject new capital into the banks but, sadly, not to reform the
practices under which loans are made and bad loans are recognized and provided
for on the balance sheet. Some private companies began to restructure and
recognize shareholders as the true owners of the company, but this is a small
minority at present.
In our semi-annual letter to shareholders we remarked that "we remain cautious
on emerging markets." We believe one can be a bit more sanguine, but not
bullish. Economic growth is not, in our view, going to return to the Asian
emerging markets in 1999. The picture in Latin America currently appears more
positive to us. The Dreyfus Variable Investment Fund -- International Equity
Portfolio research team believes that Latin American markets have been unfairly
painted with the "Asian emerging market" brush. Interest rates have risen to
very high levels to protect against capital outflows. We think that economic
growth is set to slow in the next few months as a result. But reforms are being
enacted and implemented in the region's largest nation, Brazil. As a result,
your Portfolio made new investments in both Brazil and Mexico near the end of
the fiscal year. These large liquid stocks, valued at price-to-earnings ratios
of six to nine, represent some of the cheapest stocks in the world, in our view
As manager of the Dreyfus Variable Investment Fund -- International Equity
Portfolio I look forward to communicating with you again in 1999 in the
semi-annual shareholder letter.
Sincerely,
[Ron Chapman signature]
Ron Chapman
Portfolio Manager
January 20, 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.--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.
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO DECEMBER 31,
1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO AND THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (EAFE((reg.tm))) INDEX
Dollars
$14,389
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE((reg.tm))) Index*
$13,452
Dreyfus Variable Investment Fund, International Equity Portfolio
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended From Inception (5/2/94)
December 31, 1998 to December 31, 1998
____________________ __________________________
4.49% 6.56%
- ---------------
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 Equity Portfolio on 5/2/94 (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 EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--84.6% Shares Value
- ------------------------------------------------------------------------------- ---------------- ------------------
<S> <C> <C>
Brazil--2.6% Compania de Saneamento Basico do Estado
de Sao Paolo . . . . . . . . . . . . . . . 6,500 $ 492,220
Embratel Participacoes, ADS . . . . . . . . 8,000 111,500
Tele Celular Sul Participacoes, ADS . . . . 800 13,950
Tele Centro Oeste Celular Participacoes, ADS . . 2,666 7,832
Tele Centro Sul Participacoes, ADS . . . . . 8,900 372,131
Tele Leste Celular Participacoes, ADS . . . 160 4,540
Tele Nordeste Celular Participacoes, ADS . . 400 7,400
Tele Norte Celular Participacoes, ADS . . . 160 3,610
Tele Norte Leste Participacoes, ADS . . . . 8,000 99,500
Tele Sudeste Celular Participacoes, ADS . . 1,600 33,100
Telecomunicoaes Brasileiras, ADS . . . . . . 8,000 875
Telemig Celular Participacoes, ADS . . . . . 400 8,500
Telesp Celular Participacoes, ADS . . . . . 3,200 56,000
____________
1,211,158
____________
Canada--.1% Canadian Conquest Exploration . . . . . . . 150,000 (a) 66,601
____________
France--8.3% Accor . . . . . . . . . . . . . . . . . . . 2,000 433,211
Alcatel . . . . . . . . . . . . . . . . . . 3,300 404,067
Axa . . . . . . . . . . . . . . . . . . . . 5,500 797,501
Pathe . . . . . . . . . . . . . . . . . . . 2,100 586,445
Rhone-Poulenc . . . . . . . . . . . . . . . 9,000 463,356
Suez Lyonnaise des Eaux . . . . . . . . . . 2,800 575,418
Vivendi . . . . . . . . . . . . . . . . . . 2,000 519,136
Vivendi (Warrants) . . . . . . . . . . . . . 2,500 (a) 6,489
____________
3,785,623
____________
Germany--5.5% Douglas Holding . . . . . . . . . . . . . . 5,000 303,194
Douglas Holding (New) . . . . . . . . . . . 1,800 (a) 97,262
Hoechst . . . . . . . . . . . . . . . . . . 17,000 705,271
Linde . . . . . . . . . . . . . . . . . . . 650 400,006
Mannesmann . . . . . . . . . . . . . . . . . 4,000 458,694
Muenchener Rueckverisicherungs-Gesellschaft . 1,100 532,961
____________
2,497,388
____________
Ireland--5.6% Bank of Ireland . . . . . . . . . . . . . . 72,000 1,604,912
Jurys Hotel Group . . . . . . . . . . . . . 45,000 338,830
Ryanair, ADS . . . . . . . . . . . . . . . . 15,000 (a) 566,250
____________
2,509,992
____________
Italy--10.4% Banca Nazionale del Lavoro . . . . . . . . . 150,000 (a) 448,379
Banca Popolare Di Brescia . . . . . . . . . 20,000 489,065
Instituto Bancario San Paolo di Torino . . . 58,000 1,027,716
Instituto Nazionale delle Assicurazioni . . 175,000 463,888
Olivetti . . . . . . . . . . . . . . . . . . 325,000 (a) 1,136,259
Seat Pagine Gialle . . . . . . . . . . . . . 700,000 537,860
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- -----------------
Italy (continued) Telecom Italia . . . . . . . . . . . . . . . 65,000 $ 554,589
Unione Immobiliare . . . . . . . . . . . . . 175,000 (a) 91,422
____________
4,749,178
____________
Japan--13.4% Avex . . . . . . . . . . . . . . . . . . . . 6,000 (a) 270,246
Daikin Industries . . . . . . . . . . . . . 33,000 326,415
Don Quijote . . . . . . . . . . . . . . . . 7,000 772,763
East Japan Railway . . . . . . . . . . . . . 32 178,327
Fujikura . . . . . . . . . . . . . . . . . . 40,000 214,078
Hitachi . . . . . . . . . . . . . . . . . . 32,000 197,827
Honda Motor . . . . . . . . . . . . . . . . 12,000 393,182
Hosiden . . . . . . . . . . . . . . . . . . 12,000 208,991
Kao . . . . . . . . . . . . . . . . . . . . 10,000 225,205
Mitsui Chemicals . . . . . . . . . . . . . . 70,000 242,957
NTT Mobile Communications Network . . . . . 6 246,401
Nidec . . . . . . . . . . . . . . . . . . . 3,000 366,422
Nintendo . . . . . . . . . . . . . . . . . . 2,000 193,412
Nippon Telegraph & Telephone . . . . . . . . 14 107,816
Ryohin Keikaku . . . . . . . . . . . . . . . 5,000 664,577
Sekisui House . . . . . . . . . . . . . . . 20,000 211,075
Shimamura . . . . . . . . . . . . . . . . . 8,000 364,568
Sumitomo Trust & Banking Co. . . . . . . . . 195,000 516,648
TDK . . . . . . . . . . . . . . . . . . . . 5,000 456,151
____________
6,157,061
____________
Mexico--2.4% Grupo Televisa, GDS . . . . . . . . . . . . 26,800 (a) 661,625
Telefonos de Mexico, Cl. L . . . . . . . . . 9,400 457,663
____________
1,119,288
____________
Netherlands--3.0% ING Groep . . . . . . . . . . . . . . . . . 7,900 481,990
Koninklijke Numico . . . . . . . . . . . . . 10,500 500,746
Koninklijke (Royal) Philips Electronics, ADR . . 6,000 406,125
____________
1,388,861
____________
Norway--1.7% Merkantildata . . . . . . . . . . . . . . . 80,000 786,112
____________
Portugal--1.4% Banco Commercial Portugues . . . . . . . . . 15,000 461,161
Portugal Telecom . . . . . . . . . . . . . . 4,000 183,399
____________
644,560
____________
South Africa--.9% Investec Group . . . . . . . . . . . . . . . 4,500 152,794
Liberty Life Association of Africa . . . . . 9,000 123,763
Profurn . . . . . . . . . . . . . . . . . . 350,000 145,578
____________
422,135
____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- -----------------
Spain--7.2% Adolfo Dominquez . . . . . . . . . . . . . . 8,000 (a) $ 161,473
Aldeasa . . . . . . . . . . . . . . . . . . 12,000 472,562
Banco Santander . . . . . . . . . . . . . . 33,000 656,760
Centros Commerciales Pryca . . . . . . . . . 16,000 496,840
Dogi . . . . . . . . . . . . . . . . . . . . 35,000 (a) 632,341
Telefonica . . . . . . . . . . . . . . . . . 19,000 846,110
Telefonica (Rights) . . . . . . . . . . . . 19,000 (a) 16,895
____________
3,282,981
____________
Sweden--5.6% Electrolux, Cl. B . . . . . . . . . . . . . 33,000 566,599
Fastighets AB Balder . . . . . . . . . . . . 1,400 (a) 15,508
Netcom, Cl. B . . . . . . . . . . . . . . . 13,000 (a) 528,013
Skandia Forsakrings . . . . . . . . . . . . 37,500 572,322
Svenska Handelsbanken, Cl. A . . . . . . . . 10,500 441,980
Telefonaktiebolaget LM Ericsson, Cl. B . . . 18,000 427,580
____________
2,552,002
____________
Switzerland--4.0% Nestle . . . . . . . . . . . . . . . . . . . 200 435,226
SAIA-Burgess Electronics . . . . . . . . . . 2000 (a) 494,905
Schweizerische Lebensverisicherungs-
und Retenanstalt . . . . . . . . . . . . . 600 445,415
UBS . . . . . . . . . . . . . . . . . . . . 1,550 476,055
____________
1,851,601
____________
United Kingdom--11.5% ARM Holdings . . . . . . . . . . . . . . . . 10,800 (a) 228,741
British Petroleum . . . . . . . . . . . . . 45,000 669,584
British Sky Broadcasting Group . . . . . . . 100,000 756,831
Colt Telecom . . . . . . . . . . . . . . . . 60,000 (a) 891,784
Diageo . . . . . . . . . . . . . . . . . . . 30,240 342,923
Granada . . . . . . . . . . . . . . . . . . 27,000 475,610
Scottish & Newcastle . . . . . . . . . . . . 50,000 578,607
Vodafone . . . . . . . . . . . . . . . . . . 42,000 679,606
Zeneca . . . . . . . . . . . . . . . . . . . 15,000 650,809
____________
5,274,495
____________
United States--1.0% Exxon . . . . . . . . . . . . . . . . . . . 6,300 460,688
____________
TOTAL COMMON STOCKS
(cost $33,300,731) . . . . . . . . . . . . $38,759,724
____________
Preferred Stocks--2.2%
- -------------------------------------------------------------------------------
Brazil: Companhia Energetica de Minas Gerais . . . . 20,461 $ 389,484
Telecomunicacoes de Sao Paulo . . . . . . . 4,500 613,383
____________
TOTAL PREFERRED STOCKS
(cost $1,294,020) . . . . . . . . . . . . $ 1,002,867
____________
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Short-Term Investments--12.6% Amount Value
- ------------------------------------------------------------------------------- ------------------ -----------------
U.S. Treasury Bills: 4.37%, 1/21/99 . . . . . . . . . . . . . . . $ 5,078,000 $ 5,065,584
4.35%, 3/18/99 . . . . . . . . . . . . . . . 727,000 720,566
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $5,786,004) . . . . . . . . . . . . $ 5,786,150
____________
TOTAL INVESTMENTS (cost $40,380,755) . . . . . . . . . . . . . . . . . . . . . . 99.4% $45,548,741
_______ ____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . .6% $ 262,369
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $45,811,110
_______ ____________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_____________ ____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $40,380,755 $45,548,741
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377,462
Receivable for investment securities sold . . . . . . . . . . . 172,756
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 85,795
Net unrealized appreciation on forward currency
exchange contracts--Note 4(a) . . . . . . . . . . . . . . . . 16,875
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 1,495
_____________
46,203,124
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 28,513
Payable for investment securities purchased . . . . . . . . . . 245,972
Payable for shares of Beneficial Interest redeemed . . . . . . 75,433
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 42,096
_____________
392,014
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,811,110
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $44,490,320
Accumulated undistributed investment income--net . . . . . . . 20,637
Accumulated net realized gain (loss) on investments and
foreign currency transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,887,039)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions . . . . . . . . . . . . . . . . . . . . . 5,187,192
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,811,110
_____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 3,160,346
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $14.50
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $121,652 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . $ 766,842
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,993
_____________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 929,835
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . . . . 343,496
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 66,288
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 20,527
Prospectus and shareholders' reports . . . . . . . . . . . . 15,786
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 1,531
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 936
Trustees' fees and expenses--Note 3(b) . . . . . . . . . . . 893
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 340
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 2,741
_____________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 452,538
____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477,297
____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and foreign
currency transactions . . . . . . . . . . . . . . . . . . . $ 123,244
Net realized gain (loss) on forward currency exchange contracts . . (2,338,805)
_____________
Net Realized Gain (Loss) . . . . . . . . . . . . . . . . (2,215,561)
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions . . . . . . . . . . . . . 3,117,748
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 902,187
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $1,379,484
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 477,297 $ 123,829
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . (2,215,561) 1,029,806
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 3,117,748 1,081,537
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 1,379,484 2,235,172
____________ ____________
DIVIDENDS TO SHAREHOLDERS:
From investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . (463,450) (171,499)
From net realized gain on investments . . . . . . . . . . . . . . . . . . . . -- (876,333)
In excess of net realized gain on investments . . . . . . . . . . . . . . . . -- (1,671,478)
____________ ____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (463,450) (2,719,310)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 9,806,632 16,261,848
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463,450 2,719,310
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,762,682) (3,463,970)
____________ ____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . 5,507,400 15,517,188
____________ ____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 6,423,434 15,033,050
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,387,676 24,354,626
____________ ____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,811,110 $39,387,676
____________ ____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 20,637 $ 6,790
____________ ____________
Shares Shares
____________ ____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641,163 1,073,918
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 32,302 195,593
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (322,864) (229,913)
____________ ____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 350,601 1,039,598
____________ ____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY 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 1995 1994(1)
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $14.02 $13.76 $12.82 $12.02 $12.50
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .15 .05 .10 .15 .15
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . .48 1.27 1.16 .74 (.40)
_______ _______ _______ _______ _______
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . . .63 1.32 1.26 .89 (.25)
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . (.15) (.07) (.09) (.08) (.14)
Dividends in excess of investment income--net . . -- -- -- (.01) (.09)
Dividends from net realized gain on investments . -- (.34) (.39) -- --
Dividends in excess of net realized gain on investments -- (.65) (.06) -- --
_______ _______ _______ _______ _______
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . . (.15) (1.06) (.54) (.09) (.23)
_______ _______ _______ _______ _______
Capital Contribution from an affiliate of the Adviser . -- -- .22 -- --
_______ _______ _______ _______ _______
Net asset value, end of period . . . . . . . . . $14.50 $14.02 $13.76 $12.82 $12.02
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . 4.49% 9.61% 11.61%(3) 7.39% (2.00%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . .99% 1.06% 1.28% 1.59% .23%(2)
Ratio of net investment income
to average net assets . . . . . . . . . . . . 1.04% .38% .92% 1.13% 1.11%(2)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation . -- -- -- .45% 1.70%(2)
Portfolio Turnover Rate . . . . . . . . . . . . 204.50% 165.75% 181.13% 70.22% 16.75%(2)
Net Assets, end of period (000's Omitted) . . . $45,811 $39,388 $24,355 $7,672 $1,089
- ------------
(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
(3) Had the Series not had a capital contribution by an affiliate of the Adviser
during the period, the total investment return would have been 9.89%.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY 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 Equity 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 non-diversified portfolio. The Series' investment
objective is to maximize capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the Series' investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A. Premier Mutual Fund Services, Inc. is the distributor of the
Series' shares, which are sold without a sales charge.
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 $7,764 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 DREYFUS
VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 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.
The Fund has an unused capital loss carryover of approximately $3,410,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. If not
applied, the carryover expires in fiscal 2006.
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.
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 $89,789,903 and $86,362,091,
respectively.
In addtition, the following summarizes open forward currency exchange
contracts at December 31, 1998:
<TABLE>
Foreign
Currency Unrealized
Forward Currency Exchange Contracts Amounts Proceeds Value Appreciation
_________________________________ ___________ ___________ ___________ ____________
<S> <C> <C>
Sales:
British Pounds, expiring 2/2/1999 . . . . . . . . . . 2,500,000 $4,163,125 $4,146,250 $16,875
_________
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. When executing forward currency exchange contracts, the
Series is obligated to buy or sell a foreign currency at a specified rate on a
certain date in the future. With respect to sales of forward currency exchange
contracts, the Series would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Series realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Series would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Series realizes a gain if the value of the
contract increases between those dates. The Series is also exposed to credit
risk associated with counter party nonperformance on these forward currency
exchange contracts which is typically limited to the unrealized gain on each
open contract.
(B) At December 31, 1998, accumulated net unrealized appreciation on
investments and forward currency exchange contracts was $5,184,861, consisting
of $7,773,319 gross unrealized appreciation and $2,588,458 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 EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Variable Investment Fund,
International Equity 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 confirmation of
securities owned as of December 31, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Variable Investment Fund, International Equity 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
DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO
- -----------------------------------------------------------------------------
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 $121,652
-- the total amount of income sourced from foreign countries was $382,521
--of the $.1862 per share dividends and distrbutions paid during the year
ended December 31, 1998, the portion applicable to foreign taxes paid is $.0387
per share.
[reg.tm logo]
(reg.tm)
DREYFUS VARIABLE INVESTMENT FUND,
INTERNATIONAL EQUITY 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, N.Y. 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 109AR9812
Variable
Investment Fund,
INTERNATIONAL EQUITY
PORTFOLIO
Annual Report
December 31, 1998
[reg.tm logo]
(reg.tm)
DREYFUS VARIABLE INVESTMENT FUND,
INTERNATIONAL EQUITY 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, N.Y. 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 109AR9812
Variable
Investment Fund,
INTERNATIONAL EQUITY
PORTFOLIO
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY
PORTFOLIO AND THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, FAR EAST (EAFE (R)) INDEX
EXHIBIT A:
MORGAN
STANLEY
CAPITAL
INTERNATIONAL
EUROPE, DREYFUS VARIABLE
AUSTRALASIA, INVESTMENT FUND,
PERIOD FAR EAST INTERNATIONAL EQUITY
(EAFE(R)) INDEX* PORTFOLIO
5/2/94 10,000 10,000
12/31/94 9,990 9,800
12/31/95 11,110 10,524
12/31/96 11,781 11,746
12/31/97 11,991 12,875
12/31/98 14,389 13,452
*Source: Lipper Analytical Services, Inc.
