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, DISCIPLINED STOCK PORTFOLIO
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus Variable
Investment Fund--Disciplined Stock Portfolio for the 12-month period ended
December 31, 1998. Over this period, the Portfolio achieved a total return of
26.72% ,* which was modestly behind the return of 28.60% for the Standard &
Poor's 500 Composite Stock Price 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
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 amidst 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 Standard and Poor's 500 Composite Stock Price Index was 28.60%.
Returns on mid-cap 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 negative 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.
PORTFOLIO FOCUS
Three factors contributed to the underperformance of the Portfolio compared to
the S& P 500 benchmark. First of all, a broadly diversified portfolio like the
Disciplined Stock Portfolio generally relies on a large number of stocks for its
performance. Since returns to the market this past year generally were from an
extremely small number of stocks, the S&P 500 was a very difficult index for the
Portfolio to equal or exceed. Only 14 stocks contributed 50% of the Index's
return. Since the Portfolio was not overweight in those names that did well,
effectively it had no chance of outperforming the Index.
Second, the record books show that the volatility of stock prices in 1998 was
the highest in the past 50 years. In most years, our investment process has
worked because the factors that help to identify outperforming stocks in one
month have been given a higher weight and have proven useful in identifying
potentially outperforming stocks in the next month. This past year, the factor
returns were volatile and inconsistent from month to month. As a result, our
quantitative model had a below-average year in terms of its effectiveness.
Third, we were hurt by our exposure to midcap stocks and an underweighting in
several large-cap names that performed well but were assigned a low priority on
our valuation model.
Thank you for your investment with Dreyfus. We appreciate the opportunity to
serve your investment needs.
Sincerely,
[Bert J. Mullins, signature logo]
Bert J. Mullins
Portfolio Manager
January 11, 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. 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 reinvested dividends.
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO DECEMBER 31, 199
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO AND THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX
Dollars
$19,809
Dreyfus Variable Investment Fund, Disciplined Stock Portfolio
$19,719
Standard & Poor's 500 Composite Stock Price Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended From Inception (5/1/96)
December 31, 1998 to December 31, 1998
____________________ _________________________
26.72% 29.18%
- ---------------
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, Disciplined Stock Portfolio on 5/1/96 (Inception Date) to a
$10,000 investment made in the Standard & Poor's 500 Composite Stock Price 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 Standard & Poor's 500
Composite Stock Price Index is a widely accepted, unmanaged index of overall
stock market performance, which 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, DISCIPLINED STOCK PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--99.6% Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
<S> <C> <C>
Basic Industries--3.2% AlliedSignal . . . . . . . . . . . . . . . . 20,850 $ 923,916
Bowater . . . . . . . . . . . . . . . . . . 4,600 190,612
Dow Chemical . . . . . . . . . . . . . . . . 3,050 277,359
duPont (E.I.) deNemours & Co. . . . . . . . 17,400 923,288
Fort James . . . . . . . . . . . . . . . . . 9,575 383,000
Louisiana Pacific . . . . . . . . . . . . . 10,100 184,956
Mead . . . . . . . . . . . . . . . . . . . . 9,400 275,538
Owens-Illinois . . . . . . . . . . . . . .(a) 5,850 179,156
PPG Industries . . . . . . . . . . . . . . . 6,400 372,800
Praxair . . . . . . . . . . . . . . . . . . 6,200 218,550
Solutia . . . . . . . . . . . . . . . . . . 8,900 199,137
Southdown . . . . . . . . . . . . . . . . . 7,200 426,150
_____________
4,554,462
_____________
Capital Spending--20.5% Allied Waste Industries . . . . . . . . .(a) 14,400 340,200
American Power Conversion . . . . . . . .(a) 7,900 382,656
Apple Computer . . . . . . . . . . . . . .(a) 9,500 388,906
Cisco Systems . . . . . . . . . . . . . .(a) 24,175 2,243,742
Compaq Computer . . . . . . . . . . . . . . 11,103 465,632
Cordant Technologies . . . . . . . . . . . . 7,100 266,250
Dell Computer . . . . . . . . . . . . . .(a) 16,900 1,236,869
EMC . . . . . . . . . . . . . . . . . . .(a) 10,750 913,750
Gateway 2000 . . . . . . . . . . . . . . .(a) 8,400 429,975
General Electric . . . . . . . . . . . . . . 47,150 4,812,247
Gulfstream Aerospace . . . . . . . . . . .(a) 4,600 244,950
Ingersoll-Rand . . . . . . . . . . . . . . . 10,300 483,456
Intel . . . . . . . . . . . . . . . . . . . 30,300 3,592,444
International Business Machines . . . . . . 14,450 2,669,637
Lexmark International Group, Cl. A . . . .(a) 6,200 623,100
Linear Technology . . . . . . . . . . . . . 2,950 264,209
Lucent Technologies . . . . . . . . . . . . 20,300 2,233,000
Maxim Integrated Products . . . . . . . .(a) 9,200 401,925
Nokia, Cl. A, A.D.R. . . . . . . . . . . . . 3,400 409,488
Northern Telecom . . . . . . . . . . . . . . 10,900 546,363
Pitney Bowes . . . . . . . . . . . . . . . . 11,800 779,537
Qwest Communications . . . . . . . . . . .(a) 7,911 395,550
Sun Microsystems . . . . . . . . . . . . .(a) 7,500 642,188
Tellabs . . . . . . . . . . . . . . . . .(a) 9,650 661,628
Tyco International . . . . . . . . . . . . . 23,400 1,765,238
United Technologies . . . . . . . . . . . . 10,650 1,158,187
Waste Management . . . . . . . . . . . . . . 11,000 512,875
_____________
28,864,002
_____________
Consumer Cyclical--13.0% American Greetings, Cl. A . . . . . . . . . 7,250 297,703
Best Buy . . . . . . . . . . . . . . . . .(a) 5,100 313,012
CVS . . . . . . . . . . . . . . . . . . . . 14,000 770,000
Carnival . . . . . . . . . . . . . . . . . . 9,000 432,000
Chancellor Media . . . . . . . . . . . . .(a) 6,300 301,612
Clear Channel Communications . . . . . . .(a) 7,100 386,950
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
Consumer Cyclical (continued) Federal-Mogul . . . . . . . . . . . . . . . 4,500 $ 267,750
Ford Motor . . . . . . . . . . . . . . . . . 24,900 1,461,319
Gannett . . . . . . . . . . . . . . . . . . 6,550 433,528
Gap . . . . . . . . . . . . . . . . . . . . 7,950 447,188
General Motors . . . . . . . . . . . . . . . 10,800 772,875
King World Productions . . . . . . . . . .(a) 8,700 256,106
Limited . . . . . . . . . . . . . . . . . . 24,400 710,650
Magna International, Cl. A . . . . . . . . . 5,450 337,900
McDonald's . . . . . . . . . . . . . . . . . 9,500 727,938
Meyer (Fred) . . . . . . . . . . . . . . .(a) 13,300 801,325
New York Times, Cl. A . . . . . . . . . . . 9,700 336,469
Safeway . . . . . . . . . . . . . . . . .(a) 19,200 1,170,000
Staples . . . . . . . . . . . . . . . . .(a) 15,900 694,631
TJX . . . . . . . . . . . . . . . . . . . . 36,000 1,044,000
Time Warner . . . . . . . . . . . . . . . . 26,700 1,657,069
Tribune . . . . . . . . . . . . . . . . . . 5,900 389,400
Valassis Communications . . . . . . . . .(a) 5,100 263,287
Viacom, Cl. B . . . . . . . . . . . . . .(a) 9,700 717,800
Wal-Mart Stores . . . . . . . . . . . . . . 39,950 3,253,428
_____________
18,243,940
_____________
Consumer Staples--9.9% Anheuser-Busch . . . . . . . . . . . . . . . 8,800 577,500
Avon Products . . . . . . . . . . . . . . . 10,800 477,900
Bestfoods . . . . . . . . . . . . . . . . . 5,700 303,525
Coca-Cola . . . . . . . . . . . . . . . . . 14,250 952,969
Colgate-Palmolive . . . . . . . . . . . . . 5,150 478,306
Dial . . . . . . . . . . . . . . . . . . . . 17,100 493,762
Eastman Kodak . . . . . . . . . . . . . . . 7,600 547,200
IBP . . . . . . . . . . . . . . . . . . . . 9,400 273,775
Interstate Bakeries . . . . . . . . . . . . 7,900 208,856
Newell . . . . . . . . . . . . . . . . . . . 5,000 206,250
PepsiCo . . . . . . . . . . . . . . . . . . 27,300 1,117,594
Philip Morris . . . . . . . . . . . . . . . 47,050 2,517,175
Procter & Gamble . . . . . . . . . . . . . . 23,350 2,132,147
Quaker Oats . . . . . . . . . . . . . . . . 8,200 487,900
Ralston-Ralston Purina Group . . . . . . . . 19,000 615,125
Sara Lee . . . . . . . . . . . . . . . . . . 26,300 741,331
Suiza Foods . . . . . . . . . . . . . . .(a) 5,800 295,438
Unilever, N.V. . . . . . . . . . . . . . . . 18,500 1,534,344
_____________
13,961,097
_____________
Energy--6.6% Atlantic Richfield . . . . . . . . . . . . . 12,000 783,000
British Petroleum, A.D.R. . . . . . . . . . 6,750 641,250
Chevron . . . . . . . . . . . . . . . . . . 8,150 675,941
Coastal . . . . . . . . . . . . . . . . . . 17,900 625,381
Columbia Energy Group . . . . . . . . . . . 7,725 446,119
Diamond Offshore Drilling . . . . . . . . . 3,900 92,381
Exxon . . . . . . . . . . . . . . . . . . . 32,800 2,398,500
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
Energy (continued) Halliburton . . . . . . . . . . . . . . . . 7,350 $ 217,744
Noble Drilling . . . . . . . . . . . . . .(a) 21,450 277,509
Royal Dutch Petroleum (New York Shares) . . 33,300 1,594,237
Texaco . . . . . . . . . . . . . . . . . . . 15,450 816,919
Tosco . . . . . . . . . . . . . . . . . . . 9,300 240,638
USX-Marathon Group . . . . . . . . . . . . . 16,400 494,050
_____________
9,303,669
_____________
Health Care--12.0% Abbott Laboratories . . . . . . . . . . . . 10,300 504,700
American Home Products . . . . . . . . . . . 22,900 1,289,556
Becton, Dickinson & Co. . . . . . . . . . . 10,300 439,681
Biogen . . . . . . . . . . . . . . . . . .(a) 3,900 323,700
Bristol-Myers Squibb . . . . . . . . . . . . 16,650 2,227,978
Centocor . . . . . . . . . . . . . . . . .(a) 6,800 306,850
Elan, A.D.S. . . . . . . . . . . . . . . .(a) 6,250 434,766
Guidant . . . . . . . . . . . . . . . . . . 5,650 622,913
Health Management Associates, Cl. A . . .(a) 13,800 298,425
Johnson & Johnson . . . . . . . . . . . . . 11,850 993,919
Lilly (Eli) . . . . . . . . . . . . . . . . 19,300 1,715,287
Medtronic . . . . . . . . . . . . . . . . . 10,400 772,200
Merck & Co. . . . . . . . . . . . . . . . . 8,150 1,203,653
Mylan Laboratories . . . . . . . . . . . . . 11,300 355,950
Pfizer . . . . . . . . . . . . . . . . . . . 20,050 2,515,022
Schering-Plough . . . . . . . . . . . . . . 29,100 1,607,775
Warner-Lambert . . . . . . . . . . . . . . . 16,350 1,229,316
_____________
16,841,691
_____________
Interest Sensitive--15.4% ACE . . . . . . . . . . . . . . . . . . . . 10,600 365,037
Allstate . . . . . . . . . . . . . . . . . . 20,000 772,500
Ambac Financial Group . . . . . . . . . . . 7,150 430,341
American General . . . . . . . . . . . . . . 5,300 413,400
Bank One . . . . . . . . . . . . . . . . . . 44,927 2,294,090
Chase Manhattan . . . . . . . . . . . . . . 22,600 1,538,213
CIGNA . . . . . . . . . . . . . . . . . . . 6,850 529,591
Countrywide Credit Industries . . . . . . . 8,050 404,009
Edwards (A.G.) . . . . . . . . . . . . . . . 7,800 290,550
Federal National Mortgage Association . . . 20,900 1,546,600
First Security . . . . . . . . . . . . . . . 10,000 233,750
First Union . . . . . . . . . . . . . . . . 14,314 870,470
Fleet Financial Group . . . . . . . . . . . 37,400 1,671,312
Hartford Financial Services Group . . . . . 12,300 674,963
MBNA . . . . . . . . . . . . . . . . . . . . 28,750 716,953
Morgan Stanley Dean Witter & Co. . . . . . . 19,500 1,384,500
Old Republic International . . . . . . . . . 9,725 218,813
PMI Group . . . . . . . . . . . . . . . . . 4,350 214,781
PNC Bank . . . . . . . . . . . . . . . . . . 24,600 1,331,475
Progressive . . . . . . . . . . . . . . . . 4,400 745,250
SLM Holding . . . . . . . . . . . . . . . . 13,400 643,200
SouthTrust . . . . . . . . . . . . . . . . . 20,100 742,444
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
Interest Sensitive (continued) Summit Bancorp . . . . . . . . . . . . . . . 12,450 $ 543,909
Sunamerica . . . . . . . . . . . . . . . . . 7,750 628,719
SunTrust Banks . . . . . . . . . . . . . . . 8,100 619,650
Torchmark . . . . . . . . . . . . . . . . . 8,200 289,562
Washington Mutual . . . . . . . . . . . . . 11,200 427,700
Wells Fargo . . . . . . . . . . . . . . . . 30,700 1,226,081
_____________
21,767,863
_____________
Mining & Metals--.7% Aluminum Company of America . . . . . . . . 8,700 648,694
Martin Marietta Materials . . . . . . . . . 6,200 385,563
_____________
1,034,257
_____________
Services--7.4% America Online . . . . . . . . . . . . . .(a) 6,700 1,072,000
Cadence Design Systems . . . . . . . . . .(a) 9,250 275,187
Ceridian . . . . . . . . . . . . . . . . .(a) 9,200 642,275
Compuware . . . . . . . . . . . . . . . .(a) 10,400 812,500
HBO & Co. . . . . . . . . . . . . . . . . . 15,500 444,656
Microsoft . . . . . . . . . . . . . . . .(a) 35,900 4,978,881
Omnicom Group . . . . . . . . . . . . . . . 11,500 667,000
Oracle . . . . . . . . . . . . . . . . . .(a) 26,300 1,134,188
Quintiles Transnational . . . . . . . . .(a) 7,900 421,663
_____________
10,448,350
_____________
Transportation--.9% Burlington Northern Santa Fe . . . . . . . . 14,100 475,875
Canadian National Railway . . . . . . . . . 5,000 259,375
US Airways Group . . . . . . . . . . . . .(a) 10,950 569,400
_____________
1,304,650
_____________
Utilities--10.0% Ameritech . . . . . . . . . . . . . . . . . 19,600 1,242,150
Bell Atlantic . . . . . . . . . . . . . . . 30,684 1,626,252
BellSouth . . . . . . . . . . . . . . . . . 29,000 1,446,375
CMS Energy . . . . . . . . . . . . . . . . . 6,850 331,797
Energy East . . . . . . . . . . . . . . . . 9,300 525,450
Florida Progress . . . . . . . . . . . . . . 10,300 461,569
GPU . . . . . . . . . . . . . . . . . . . . 13,900 614,206
GTE . . . . . . . . . . . . . . . . . . . . 11,700 789,019
MCI WorldCom . . . . . . . . . . . . . . .(a) 32,350 2,321,112
PECO Energy . . . . . . . . . . . . . . . . 13,400 557,775
Pinnacle West Capital . . . . . . . . . . . 6,650 281,794
SBC Communications . . . . . . . . . . . . . 31,800 1,705,275
Telefonos de Mexico, Cl. L, A.D.R. . . . . . 14,400 701,100
Texas Utilities . . . . . . . . . . . . . . 15,450 721,322
U S West . . . . . . . . . . . . . . . . . . 11,900 769,038
_____________
14,094,234
_____________
TOTAL COMMON STOCKS
(cost $111,793,549) . . . . . . . . . . . $140,418,215
=============
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Short-Term Investments--.3% Amount Value
- -------------------------------------------------------------------------------
---------------- ----------------
U.S. Treasury Bills: 4.41%, 1/21/1999 . . . . . . . . . . . . . . $ 100,000 $ 99,756
4.34%, 2/4/1999 . . . . . . . . . . . . . . 200,000 199,180
4.28%, 2/18/1999 . . . . . . . . . . . . . . 104,000 103,434
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $402,342) . . . . . . . . . . . . . $ 402,370
=============
TOTAL INVESTMENTS (cost $112,195,891). . . . . . . . . . . . . . . . . . . . . . 99.9% $140,820,585
======= =============
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . .1% $ 76,232
======= =============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $140,896,817
======= =============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $112,195,891 $140,820,585
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,013
Dividends and interest receivable . . . . . . . . . . . . . . . 135,912
Receivable for investment securities sold . . . . . . . . . . . 16,931
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 198
______________
141,026,639
______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 93,499
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 36,323
______________
129,822
______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,896,817
==============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $112,877,745
Accumulated net realized gain (loss) on investments . . . . . . (605,622)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 . . . . . . . . . . . . . . . . 28,624,694
______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,896,817
==============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized) . . . . . . 6,140,432
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $22.95
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $9,653 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . $ 1,270,542
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,894
______________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 1,336,436
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . . . . 712,844
Custodian fees--Note 3(a) . . . . . . . . . . . . . . . . . . . 62,318
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 22,116
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 18,471
Prospectus and shareholders' reports . . . . . . . . . . . . 14,701
Trustees' fees and expenses--Note 3(b) . . . . . . . . . . . 1,535
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 835
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 264
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 1,299
______________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 834,383
_____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,053
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . . . . $ (394,248)
Net unrealized appreciation (depreciation) on investments . . . 22,134,929
______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 21,740,681
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $22,242,734
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 502,053 $ 220,862
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . (394,248) 2,955,540
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 22,134,929 4,683,939
__________________ __________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 22,242,734 7,860,341
__________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (519,473) (205,441)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (586,824) (2,668,497)
__________________ __________________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,106,297) (2,873,938)
__________________ __________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 70,391,268 35,868,353
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,106,297 2,860,437
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,053,929) (8,120,915)
__________________ __________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . 66,443,636 30,607,875
__________________ __________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 87,580,073 35,594,278
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,316,744 17,722,466
__________________ __________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,896,817 $ 53,316,744
================== ==================
Undistributed investment income--net . . . . . . . . . . . . . . . . . . . . . . -- $ 15,421
__________________ __________________
Shares Shares
__________________ __________________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,435,229 2,064,026
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 50,063 163,038
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (258,565) (511,901)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 3,226,727 1,715,163
================== ==================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK 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 . . . . . . . . . . . . . . . . . . $18.30 $14.79 $12.50
_______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . .08 .08 .07
Net realized and unrealized gain (loss) on investments . . . . . . . . . 4.80 4.53 2.29
_______ _______ _______
Total from Investment Operations . . . . . . . . . . . . . . . . . . . . 4.88 4.61 2.36
_______ _______ _______
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . . . . . . (.09) (.08) (.07)
Dividends from net realized gain on investments . . . . . . . . . . . . . (.14) (1.02) --
_______ _______ _______
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . (.23) (1.10) (.07)
_______ _______ _______
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . $22.95 $18.30 $14.79
======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . 26.72% 31.51% 18.86%(2,3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . .88% 1.02% .80%(2)
Ratio of net investment income to average net assets . . . . . . . . . . .53% .68% .72%(2)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation . . . . . . . . . . . . . . . -- -- .16%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . 56.28% 79.74% 30.62%(2)
Net Assets, end of period (000's Omitted) . . . . . . . . . . . . . . . . $140,897 $53,317 $17,722
- ---------
(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, DISCIPLINED STOCK 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 Disciplined Stock 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 publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor' s 500 Composite Stock Price 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 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 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.
(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 $4,016 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 and dividends from net realized capital
gain are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code 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.
(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.
As of December 31, 1998, the Series reclassified certain components of net
assets. The reclassifications resulted in a net increase to accumulated
undistributed net investment income of $1,999, an increase in accumulated net
realized loss on investments of $9,331 and a decrease in paid-in capital of
$11,330. These reclassifications were the result of permanent book to tax
differences. Net assets were not affected by these reclassifications.
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
The Series participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "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.
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 $62,318 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.
(C) During the period ended December 31, 1998, the Series incurred total
brokerage commissions of $168,290 of which $51,195 was paid to Dreyfus
Investment Services Corporation, a subsidiary of Mellon Bank Corporation.
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1998, amounted to
$119,154,562 and $52,708,686, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $28,624,694, consisting of $30,462,524 gross unrealized appreciation and
$1,837,830 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, DISCIPLINED STOCK PORTFOLIO
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Variable Investment Fund,
Disciplined Stock 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 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, Disciplined Stock 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, DISCIPLINED STOCK PORTFOLIO
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates $.026 per share as a
long-term capital gain distribution of the $.108 per share paid on December 29,
1998 and also designates $.089 per share as a long-term capital gain
distribution of the $.120 per share paid on March 31, 1998.
The Series also designates 83.48% 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,
DISCIPLINED STOCK 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. 150AR9812
Variable
Investment Fund,
DISCIPLINED STOCK
PORTFOLIO
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK
PORTFOLIO AND THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX
EXHIBIT A:
DREYFUS VARIABLE
STANDARD & POOR'S 500 INVESTMENT FUND,
PERIOD COMPOSITE STOCK DISCIPLINED
PRICE INDEX * STOCK PORTFOLIO
5/1/96 10,000 10,000
12/31/96 11,499 11,886
12/31/97 15,334 15,632
12/31/98 19,719 19,809
* Source: Lipper Analytical Services, Inc.
