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, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus Variable
Investment Fund -- Growth and Income Portfolio for the period ended December 31,
1998. The past 12 months have been a very challenging investment environment
with many crosscurrents buffeting world economies and financial markets. Over
this period, the Portfolio produced a total return of 11.81% .* Large
capitalization stocks, as measured by the Standard & Poor's 500 Composite Stock
Price Index (" S&P 500"), had a total return of 28.60%, while small-cap stocks
returned a negative -2.55%, as measured by the Russell 2000 Index.** Finally,
the Wilshire Large Company Value Index produced a total return of 11.25%.***
Although the Portfolio's results could be characterized as disappointing versus
the returns generated by the general broad market averages, as we will discuss,
they are not surprising given current market circumstances, the Portfolio's
history and evolution, and the returns generated by value style investing, as
the Wilshire index highlights.
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 away 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 relax.
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
As I discussed in my last letter, the Portfolio was restructured to be
primarily focused on investments in mid- to large-capitalization companies that
we believe have above-average earnings growth prospects and whose common stock
is selling at below-average price-earnings ratios. While our first priority was
to reduce the Portfolio' s exposure to stocks that did not meet our P/E
discipline, we maintained some of the Portfolio's bias to small and mid-cap
stocks. This bias has not served the Portfolio well in this investment climate
as liquidity and large capitalization were primary drivers of performance.
During the first half of 1998 additional changes were made to the Portfolio,
repositioning it away from small and mid-cap stocks towards larger-cap
companies. We believe that at some point, the extreme valuations that now exist
between very large capitalization, high P/E companies and the rest of the equity
market should narrow and we hope to capitalize on such a development. However,
we currently anticipate that on an ongoing basis, the Portfolio should have a
larger weighted average capitalization than it has had historically.
To sum up, we believe that the key investment drivers have been liquidity and
concerns about earnings growth. This has led to an investment environment where
performance was narrowly focused and largely driven by capitalization, with an
emphasis on growth stocks. During the year, investments in Biogen, Lexmark
International Group, Cl. A, American Stores, Carnival Corporation, and Xerox
produced the largest positive contributions to the Portfolio. On the other side
of the ledger, issue selection and a small- to mid-cap bias hurt results. An
assortment of stocks from various industries (PhyCor, Wisconsin Central
Transportation, Tosco, Beverly Enterprises, and RJR Nabisco Holdings) registered
the most negative results.
In the recent equity environment that has favored large-capitalization growth
stocks, we believe that issue selection with a large capitalization bias was a
key factor in the investment process during the year. We continued to find
stocks with above-average long-term earnings growth potential that we believe
were attractively priced relative to the broad market average. An example of a
recently purchased stock meeting our investment criteria is Dayton Hudson.
Dayton Hudson is a general merchandise retailer and the fifth largest retailer
in the country, operating 1,141 stores in 40 states under the names Hudson's,
Marshall Field' s, Dayton' s, Target, and Mervyn's. Target, which accounts for
roughly 75% of the company' s revenues and profits, is the company's growth
engine and the reason we own the stock. Recently purchased at a 20% P/E discount
to the S& P 500, based on 1999 projected earnings, the company is expected to
grow its earnings 15% to 19% over the near term and 15% longer term, above many
analysts' projected market growth.
We are grateful for the opportunity to invest your capital and will be working
diligently on your behalf.
Sincerely,
[Douglas Ramos, CFA, signature logo]
Douglas Ramos, CFA
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 2000 Index is an unmanaged index and
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. 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. All indices are unmanaged and include
reinvested dividends.
*** SOURCE: WILSHIRE ASSOCIATES, INC. The Wilshire Large Company Value Index is
constructed by using a blend of price-to-book and forecast price-to-earnings
ratios. The largest 750 stocks in the Wilshire 5000 are ranked based on a style
score that is 75% price-to-earnings ratio and 25% forecast price-to-earnings
ratio. The universe is also divided so that companies that represent half of the
total capitalization fall into growth and the remainder are placed into value.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO DECEMBER 31, 199
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO WITH THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX AND THE WILSHIRE LARGE COMPANY VALUE INDEX
Dollars
$30,148
Standard & Poor's 500 Composite Stock Price Index*
$25,093
Dreyfus Variable Investment Fund, Growth and Income Portfolio
$24,420
Wilshire Large Company Value Index**
* Source: Lipper Analytical Services, Inc.
** Source: Wilshire Associates, Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended From Inception (5/2/94)
December 31, 1998 to December 31, 1998
___________________ _________________________
<S> <C> <C>
11.81% 21.77%
- ------------------------
Past performance is not predictive of future performance.
</TABLE>
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, Growth and Income Portfolio on 5/2/94 (Inception Date) to a
$10,000 investment made on that date in the Standard & Poor's 500 Composite
Stock Price Index as well as to the Wilshire Large Company Value Index which are
described below. For comparative purposes, the value of each Index on 4/30/94 is
used as the beginning value on 5/2/94. 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. The Wilshire Large Company Value Index is constructed
by using a blend of price-to-book and forecast price-to-earnings ratios. The
largest 750 stocks in the Wilshire 5000 are ranked based on a style score that
is 75% price-to-earnings ratio and 25% forecast P/E. The universe also is
divided so that companies that represent half of the total capitalization fall
into growth and the remainder are placed into value. The Indices do 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, GROWTH AND INCOME PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Common Stocks--89.1% Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
<S> <C> <C>
Commercial Services--.1% Fortune Brands . . . . . . . . . . . . . . . 7,800 $ 246,675
_____________
Consumer Durables--5.8% Eastman Kodak . . . . . . . . . . . . . . . 23,400 1,684,800
Ford Motor . . . . . . . . . . . . . . . . . 98,800 5,798,326
General Motors . . . . . . . . . . . . . . . 89,000 6,369,063
Leggett & Platt . . . . . . . . . . . . . . 340,000 7,480,000
Newell . . . . . . . . . . . . . . . . . . . 85,900 3,543,375
_____________
24,875,564
_____________
Consumer Non-Durables--5.8% ConAgra . . . . . . . . . . . . . . . . . . 209,700 6,605,550
Kimberly-Clark . . . . . . . . . . . . . . . 159,000 8,665,500
Philip Morris Cos. . . . . . . . . . . . . . 183,200 9,801,200
_____________
25,072,250
_____________
Consumer Services--4.0% Carnival . . . . . . . . . . . . . . . . . . 221,600 10,636,800
Cendant . . . . . . . . . . . . . . . . . . 345,600 (a) 6,588,000
_____________
17,224,800
_____________
Electronic Technology--11.3% Compaq Computer . . . . . . . . . . . . . . 101,000 4,235,687
Hewlett-Packard . . . . . . . . . . . . . . 71,000 4,850,187
International Business Machines . . . . . . 45,000 8,313,750
Lexmark International Group, Cl. A . . . . . 91,900 (a) 9,235,950
Lockheed Martin . . . . . . . . . . . . . . 32,500 2,754,375
Perkin-Elmer . . . . . . . . . . . . . . . . 92,100 8,985,506
Seagate Technology . . . . . . . . . . . . . 18,300 (a) 553,575
Sun Microsystems . . . . . . . . . . . . . . 56,000 (a) 4,795,000
United Technologies . . . . . . . . . . . . 47,100 5,122,125
_____________
48,846,155
_____________
Energy Minerals--5.4% British Petroleum, A.D.S. . . . . . . . . . 65,000 6,175,000
Mobil . . . . . . . . . . . . . . . . . . . 55,000 4,791,875
Royal Dutch Petroleum A.D.R. . . . . . . . . 98,000 4,691,750
Texaco . . . . . . . . . . . . . . . . . . . 111,000 5,869,125
USX-Marathon Group . . . . . . . . . . . . . 59,000 1,777,375
_____________
23,305,125
_____________
Finance--22.0% ACE . . . . . . . . . . . . . . . . . . . . 27,700 953,919
BankAmerica . . . . . . . . . . . . . . . . 54,000 3,246,750
BankBoston . . . . . . . . . . . . . . . . . 130,000 5,061,875
CIGNA . . . . . . . . . . . . . . . . . . . 38,700 2,991,994
Chase Manhattan . . . . . . . . . . . . . . 60,000 4,083,750
Citigroup . . . . . . . . . . . . . . . . . 159,000 7,870,500
EXEL, Cl. A . . . . . . . . . . . . . . . . 48,900 3,667,500
Everest Reinsurance Holdings . . . . . . . . 109,000 4,244,187
Federal Home Loan Mortgage . . . . . . . . . 153,000 9,858,938
Federal National Mortgage Association . . . 130,000 9,620,000
First Union . . . . . . . . . . . . . . . . 117,500 7,145,469
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
Finance (continued) Fleet Financial Group . . . . . . . . . . . 210,000 $ 9,384,375
Household International . . . . . . . . . . 101,900 4,037,787
Standard & Poor's Depository Receipts . . . 44,000 5,412,000
SunAmerica . . . . . . . . . . . . . . . . . 88,300 7,163,337
Torchmark . . . . . . . . . . . . . . . . . 48,000 1,695,000
Wells Fargo . . . . . . . . . . . . . . . . 211,000 8,426,812
_____________
94,864,193
_____________
Health Services--3.7% Beverly Enterprises . . . . . . . . . . . . 150,600 (a) 1,016,550
Columbia/HCA Healthcare . . . . . . . . . . 170,300 4,214,925
Tenet Healthcare . . . . . . . . . . . . . . 220,500 (a) 5,788,125
Wellpoint Health Networks . . . . . . . . . 58,400 (a) 5,080,800
_____________
16,100,400
_____________
Health Technology--2.8% Pharmacia & Upjohn . . . . . . . . . . . . . 160,100 9,065,663
Zeneca . . . . . . . . . . . . . . . . . . . 66,000 2,863,558
_____________
11,929,221
_____________
Industrial Services--1.9% Waste Management . . . . . . . . . . . . . . 169,950 7,923,919
_____________
Process Industries--.6% dupont (E.I.) de Nemours . . . . . . . . . . 23,000 1,220,438
Mead . . . . . . . . . . . . . . . . . . . . 40,000 1,172,500
_____________
2,392,938
_____________
Producer Manufacturing--4.9% AlliedSignal . . . . . . . . . . . . . . . . 102,000 4,519,875
Masco . . . . . . . . . . . . . . . . . . . 270,400 7,774,000
Xerox . . . . . . . . . . . . . . . . . . . 76,000 8,968,000
_____________
21,261,875
_____________
Retail Trade--8.3% American Stores . . . . . . . . . . . . . . 301,000 11,118,188
Dayton Hudson . . . . . . . . . . . . . . . 182,000 9,873,500
Federated Department Stores . . . . . . . . 41,000 (a) 1,786,062
May Department Stores . . . . . . . . . . . 122,000 7,365,750
TJX Cos. . . . . . . . . . . . . . . . . . . 195,800 5,678,200
_____________
35,821,700
_____________
Transportation--1.2% CNF Transportation . . . . . . . . . . . . . 56,800 2,133,550
Union Pacific . . . . . . . . . . . . . . . 41,200 1,856,575
Wisconsin Central Transportation . . . . . . 72,000 (a) 1,237,500
_____________
5,227,625
_____________
Utilities--11.3% AT&T . . . . . . . . . . . . . . . . . . . . 74,000 5,568,500
Bell Atlantic . . . . . . . . . . . . . . . 146,000 7,738,000
Coastal . . . . . . . . . . . . . . . . . . 254,000 8,874,125
. Duke Energy . . . . . . . . . . . . . . . . 32,000 2,050,000
GTE . . . . . . . . . . . . . . . . . . . . 117,000 7,890,188
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- -------------------------------------------------------------------------------
---------------- ----------------
Utilities (continued) SBC Communications . . . . . . . . . . . . . 160,000 $ 8,580,000
Texas Utilities . . . . . . . . . . . . . . 169,400 7,908,862
_____________
48,609,675
_____________
TOTAL COMMON STOCKS
(cost $319,838,693) . . . . . . . . . . . $383,702,115
=============
Principal
Short-Term Investments--11.4% Amount
- -------------------------------------------------------------------------------
---------------- ----------------
U.S. Treasury Bills: 3.71%, 1/7/1999 . . . . . . . . . . . . . . $ 3,252,000 $ 3,250,107
3.96%, 1/14/1999 . . . . . . . . . . . . . . 4,416,000 4,410,273
4.23%, 1/21/1999 . . . . . . . . . . . . . . 17,519,000 17,476,166
4.35%, 2/4/1999 . . . . . . . . . . . . . . 7,026,000 (b) 6,997,200
4.41%, 3/18/1999 . . . . . . . . . . . . . . 1,764,000 1,748,389
4.44%, 3/25/1999 . . . . . . . . . . . . . . 229,000 226,708
4.46%, 4/1/1999 . . . . . . . . . . . . . . 15,391,000 15,223,238
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $49,328,011) . . . . . . . . . . . . $ 49,332,081
=============
TOTAL INVESTMENTS (cost $369,166,704). . . . . . . . . . . . . . . . . . . . . . 100.5% $433,034,196
======= =============
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . (.5%) $ (2,332,345)
======= =============
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $430,701,851
======= =============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as collateral for
open financial futures positions.
STATEMENT OF FINANCIAL FUTURES DECEMBER 31, 1998
Market Value Unrealized
Covered Appreciation
Financial Futures Purchased Contracts by Contracts Expiration at 12/31/98
________________________ ________ ____________ _________ ____________
Standard & Poor's 500. . . . . . . . . . . . . . . . . . 100 $31,137,500 March '99 $1,310,500
==========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
______________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $369,166,704 $433,034,196
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,478,274
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 588,226
Receivable for investment securities sold . . . . . . . . . . . 355,001
Receivable for shares of Beneficial Interest subscribed . . . . 86,167
Receivable for futures variation margin . . . . . . . . . . . . 85,000
Net unrealized appreciation on forward currency
exchange contracts--Note 4(a) . . . . . . . . . . . . . . . . 27,876
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 1,048
______________
435,655,788
______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 273,305
Payable for shares of Beneficial Interest redeemed . . . . . . 3,752,565
Payable for investment securities purchased . . . . . . . . . . 897,993
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 30,074
______________
4,953,937
______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,701,851
==============
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $378,873,141
Accumulated undistributed investment income--net . . . . . . . 333,768
Accumulated net realized gain (loss) on investments . . . . . . (13,710,926)
Accumulated net unrealized appreciation (depreciation)
on investments and forward currency exchange contracts
[including $1,310,500 net unrealized
appreciation on financial futures]--Note 4(b). . . . . . . . . . . . . . . . . . . . . . . 65,205,868
______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,701,851
==============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 19,034,219
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $22.63
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $28,211 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . $ 6,312,195
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 863,588
______________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 7,175,783
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . . . . 3,030,241
Prospectus and shareholders' reports . . . . . . . . . . . . 42,602
Custodian fees--Note 3(a) . . . . . . . . . . . . . . . . . . . 39,050
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 22,203
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 8,011
Trustees' fees and expenses--Note 3(b) . . . . . . . . . . . 6,523
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 2,464
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 2,201
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 5,562
______________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 3,158,857
_____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,016,926
_____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments:
Long transactions (including foreign currency transactions) . $(15,286,132)
Short sale transactions . . . . . . . . . . . . . . . . . . (3,502)
Net realized gain (loss) on forward currency exchange contracts . . 558,598
Net realized gain (loss) on financial futures . . . . . . . . . 2,528,083
______________
Net Realized Gain (Loss) . . . . . . . . . . . . . . . . (12,202,953)
Net unrealized appreciation (depreciation) on investments
and forward currency exchange contracts [including
$1,310,500 net unrealized appreciation on financial futures] . . 51,292,044
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 39,089,091
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $43,106,017
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,016,926 $ 4,119,396
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . (12,202,953) 28,865,086
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 51,292,044 11,506,268
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 43,106,017 44,490,750
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,885,893) (4,098,117)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (7,167,070) (24,999,802)
________________ ________________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,052,963) (29,097,919)
________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 98,659,399 130,840,229
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,052,963 29,097,917
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,895,666) (31,433,846)
________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . 28,816,696 128,504,300
________________ ________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 60,869,750 143,897,131
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369,832,101 225,934,970
________________ ________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,701,851 $369,832,101
================ ================
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 333,768 $ 202,735
________________ ________________
Shares Shares
________________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,575,277 6,307,701
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 497,056 1,442,683
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,835,536) (1,509,225)
________________ ________________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 1,236,797 6,241,159
================ ================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME 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 . . . . . $20.78 $19.55 $18.33 $11.98 $12.50
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . .21 .28 .36 .28 .28
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . 2.23 2.79 3.43 7.07 (.43)
______ ______ ______ ______ ______
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . 2.44 3.07 3.79 7.35 (.15)
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . (.20) (.28) (.35) (.27) (.28)
Dividends from net realized gain on investments . (.39) (1.56) (2.22) (.73) (.09)
______ ______ ______ ______ ______
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . (.59) (1.84) (2.57) (1.00) (.37)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . $22.63 $20.78 $19.55 $18.33 $11.98
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . 11.81% 16.21% 20.75% 61.89% (1.22%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . .. .78% .80% .83% .92% .22%(2)
Ratio of net investment income
to average net assets . . . . . . . . . . . 1.00% 1.37% 1.96% 2.21% 2.25%(2)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation -- -- -- .03% 1.28%(2)
Portfolio Turnover Rate . . . . . . . . . . . 126.18% 180.73% 237.44% 255.42% 237.09%(2)
Net Assets, end of period (000's Omitted) . . $430,702 $369,832 $225,935 $71,161 $1,040
- -----------------------------
(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME 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 Growth and Income 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 provide long-term capital growth, current income and growth of
income, consistent with reasonable investment risk. The Dreyfus Corporation
(" Dreyfus" ) serves as the Series' investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"). 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 the 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 amount 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 and 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 $669 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.
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. The Series declares and pays dividends from investment income-net on a
quarterly basis. 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, 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 Series has an unused capital loss carryover of approximately $11,768,000
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. During the period
ended December 31, 1998, the Series was charged $209 pursuant to the transfer
agency agreement.
The Series compensates Mellon under a custody agreement to provide custodial
services for the Series. During the period ended December 31, 1998, the Series
was charged $39,050 pursuant to the custody agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The following summarizes the aggregate amount of purchases and sales of
investment securities and securities sold short, excluding short-term
securities, financial futures, and forward currency exchange contracts, during
the period ended December 31, 1998:
<TABLE>
Purchases Sales
______________ ______________
<S> <C> <C>
Long transactions . . . . . . . . . . . . . . . . . . . . . . . $488,424,529 $493,907,483
Short sale transactions . . . . . . . . . . . . . . . . . . . . 283,668 280,166
______________ ______________
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $488,708,197 $494,187,649
============== ==============
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series is engaged in short-selling which obligates the Series to replace
the security borrowed by purchasing the security at current market value. The
Series would incur a loss if the price of the security increases between the
date of the short sale and the date on which the Series replaces the borrowed
security. The Series would realize a gain if the price of the security declines
between those dates. Until the Series replaces the borrowed security, the Series
will maintain daily, a segregated account with a broker and custodian, of
permissible liquid assets sufficient to cover its short position. At December
31, 1998, there were no securities sold short outstanding.
In addition, 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 3/24/99 . . . . . . . . . . 1,313,119 $2,200,000 $2,172,124 $27,876
=========
</TABLE>
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.
The Series may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Series is exposed to
market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the Series to "mark to
market" on a daily basis, which reflects the change in market value of the
contracts at the close of each day's trading. Accordingly, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Series recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at
December 31, 1998 are set forth in the Statement of Financial Futures.
(B) At December 31, 1998, accumulated net unrealized appreciation on
investments, financial futures and forward currency exchange contracts was
$65,205,868, consisting of $73,316,876 gross unrealized appreciation and
$8,111,008 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, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statements of investments and financial futures, of Dreyfus
Variable Investment Fund, Growth and Income Portfolio (one of the series
constituting the Dreyfus Variable Investment Fund) as of December 31, 1998, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Variable Investment Fund, Growth and Income 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, GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates $.067 per share as a
long-term capital gain distribution of the $.446 per share paid on March 31,
1998.
The Series also designates 46.73% of the ordinary dividends paid during the
fiscal year ended December 31, 1998 as qualifying for the corporate dividends
received deduction.
[This page intentionally left blank.]
Dreyfus lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
DREYFUS VARIABLE INVESTMENT FUND,
GROWTH AND INCOME 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. 108AR9812
Variable
Investment Fund,
GROWTH AND INCOME
PORTFOLIO
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, GROWTH AND INCOME
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX AND THE WILSHIRE LARGE COMPANY VALUE INDEX
EXHIBIT A:
DREYFUS
STANDARD VARIABLE WILSHIRE
& POOR'S 500 INVESTMENT LARGE
COMPOSITE FUND, GROWTH COMPANY
STOCK AND INCOME VALUE
PERIOD PRICE INDEX* PORTFOLIO INDEX**
5/2/94 10,000 10,000 10,000
12/31/94 10,397 9,878 9,780
12/31/95 14,299 15,992 14,031
12/31/96 17,580 19,311 16,709
12/31/97 23,443 22,442 21,952
12/31/98 30,148 25,093 24,420
*Source: Lipper Analytical Services, Inc.
**Source: Wilshire Associates, Inc.
