Dreyfus Variable
Investment Fund,
International
Equity Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
19 Report of Independent Auditors
20 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
International Equity Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, International Equity Portfolio, covering the 12-month period from January
1, 1999 through December 31, 1999. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with its portfolio manager, Douglas A. Loeffler, CFA of Founders
Asset Management LLC, the portfolio's sub-investment adviser.
International economies surprised many analysts with their resiliency in 1999.
Instead of remaining mired in recession after the currency- and credit-related
dislocations that adversely affected their economies in 1997 and 1998, most
developed and emerging markets enjoyed positive economic growth trends in 1999.
As a result, international stocks generally outperformed U.S. stocks in 1999, as
measured by the MSCI EAFE and the S&P 500 indices. The international stock
markets were led higher by developed markets in Japan and Asia, where economic
recoveries and financial system reforms drove stock prices higher. Europe also
produced generally attractive returns, benefiting from corporate restructuring,
the effects of economic unification and the introduction of a single currency,
the euro. Emerging markets in Asia, Latin America and Eastern Europe also
performed well in 1999.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Variable Investment Fund, International
Equity Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Douglas A. Loeffler, CFA, Portfolio Manager
How did Dreyfus Variable Investment Fund, International Equity Portfolio perform
relative to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Variable Investment
Fund, International Equity Portfolio produced a total return of 59.76%.(1) This
was significantly better than the 26.96% total return provided by the
portfolio' s benchmark, the Morgan Stanley Capital International Europe,
Australasia, Far East (MSCI EAFE((reg.tm))) Index, for the same period.(2)
We attribute the portfolio's strong performance to several factors. First, our
success in stock selection helped drive our positive returns, as did our
emphasis on stocks within the technology, telecommunications and media (cable
TV) sectors. Second, the fund's heavy exposure to the European markets, an area
that outperformed the index during much of the period, helped boost returns.
Finally, the fund was impacted by a key portfolio shift in February, 1999, which
resulted in a new management team headed by Douglas A. Loeffler, CFA, and a more
diversified portfolio with a greater focus on growth stocks.
What is the portfolio's investment approach?
The portfolio seeks capital growth by investing primarily in the stocks of
foreign companies whose fundamental strengths indicate the potential for
earnings growth. The portfolio's stock investments may include common stocks,
preferred stocks and convertible securities.
Rather than utilizing a "top-down" approach to stock selection, which relies on
forecasting market trends, the new management team has instead chosen to focus
exclusively on a "bottom-up" approach, where stocks are chosen based on their
individual merits. Stock selection is made on a company-by-company basis, with
particular emphasis given to the companies that the management team believes are
the best managed and best positioned within their respective industries
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
Developed European markets and Japan moved sharply forward during 1999 as
investors became increasingly enthusiastic about opportunities found within the
growth arena of the equity markets. This shift benefited the portfolio's new
growth investment strategy.
A late-year surge in growth-based investing moved European markets dramatically
forward. Our overweighting in European markets captured this advance, and our
strong individual stock selections there helped fuel returns, despite a
weakening euro. Specifically, the portfolio' s holdings in France and The
Netherlands were successful, as was its focus on technology, telecommunications
and media companies. France's Altran Technologies, France's STMicroelectronics,
Perlos, a Finnish plastic-parts supplier for Nokia and Ericsson phones, and
Mannesmann, a German telecommunications company, all added value. Detracting
from the portfolio's returns were Altadis (formerly named Tabacalera), a Spanish
tobacco company, and Brisa-Auto Estradas de Portugal, a Portuguese toll-road
company, both of which posted below-Index advances.
In Japan, a strong yen, coupled with a much-needed increase in communications
between corporate managements and shareholders, helped their stocks rebound,
beginning in late July. In fact, this turnaround continued throughout 1999, as
soaring investor confidence helped growth stocks drive the Japanese market.
Although the fund remained underweighted in Japan, our successes in stock
selection resulted in higher returns than that of the Index. The strength of the
yen provided additional rewards from our Japanese holdings. Of particular note
were Ryohin Keikaku, a key retailer, and NTT Mobile Communications Network, a
leader in Japan's red-hot wireless Internet-access industry. On the other hand,
our holdings in Kao, a consumer products company, provided disappointing
returns, and it has since been sold from the portfolio.
The portfolio's focus on emerging market-based companies also proved successful.
We are especially excited about the potential of select companies in the Latin
American region and have thus emphasized this area in our emerging markets
exposure.
What is the portfolio's current strategy?
As we enter the new millennium, the portfolio's management team is in the
unusual position of seeing too many, rather than too few, large- and mid-cap
investment opportunities in the international markets. In response, our strategy
has been to expand the number of stocks the portfolio holds by roughly 25% while
increasing its exposure to midcap stocks and newly listed companies. Among the
latter are Partner Communications, the first phone company to be listed in
Israel, and Thomson Multimedia S.A., a French-based consumer products company
that is poised to benefit from the upcoming shift to digital technology. We also
currently see considerable potential value in a number of portfolio holdings,
such as Ireland's ESAT Telecom, that are currently targets of hostile takeover
bids. The portfolio currently maintains its strategy of emphasizing technology,
telecommunications and media stocks, as well as overweighting Europe and
underweighting Japan.
January 14, 2000
1 TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION PORTFOLIO SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. 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.
2 SOURCE: LIPPER ANALYTICAL SERVICES, INC.--THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (MSCI EAFE((reg.tm))) INDEX IS AN
UNMANAGED INDEX COMPOSED OF A SAMPLE OF COMPANIES REPRESENTATIVE OF THE MARKET
STRUCTURE OF EUROPEAN AND PACIFIC BASIN COUNTRIES AND INCLUDES NET DIVIDENDS
REINVESTED.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Variable
Investment Fund, International Equity Portfolio and the Morgan Stanley Capital
International Europe, Australasia, Far East (EAFE((reg.tm))) Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
<TABLE>
Inception From
Date 1 Year 5 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO 5/2/94 59.76% 17.01% 14.45%
</TABLE>
(+) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The portfolio's performance does not reflect the deduction of additional charges
and expenses imposed in connection with investing in variable insurance
contracts which will reduce returns.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS VARIABLE
INVESTMENT FUND, INTERNATIONAL EQUITY PORTFOLIO ON 5/2/94 (INCEPTION DATE) TO A
$10,000 INVESTMENT MADE IN THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE,
AUSTRALASIA, FAR EAST (EAFE((reg.tm))) INDEX ON THAT DATE. ALL DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST (EAFE((reg.tm))) INDEX, WHICH IS THE
PROPERTY OF MORGAN STANLEY & CO. INCORPORATED, IS AN UNMANAGED INDEX COMPOSED OF
A SAMPLE OF COMPANIES REPRESENTATIVE OF THE MARKET STRUCTURE OF EUROPEAN AND
PACIFIC BASIN COUNTRIES AND INCLUDES NET DIVIDENDS REINVESTED. THE INDEX DOES
NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION
RELATING TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF
APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS
AND ELSEWHERE IN THIS REPORT.
<TABLE>
STATEMENT OF INVESTMENTS
December 31, 1999
COMMON STOCKS--95.1% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRIA--1.3%
Bank Austria 15,450 871,949
CANADA--1.4%
AT&T Canada, ADR 24,475 (a) 985,119
DENMARK--1.3%
Novo Nordisk, Cl. B 6,600 876,138
FINLAND--3.7%
Nokia, ADS 5,550 1,054,500
Perlos 33,850 (a) 1,193,991
UPM-Kymmene 8,450 340,636
2,589,127
FRANCE--9.3%
Accor 19,250 930,625
Alcatel 4,600 1,056,981
Altran Technologies 1,775 1,073,307
Aventis 12,225 710,884
Elf Aquitaine 8 1,561
Thomson Multimedia 17,525 (a) 944,901
Total Fina, Cl. B 7,271 970,922
Vivendi 8,275 747,640
6,436,821
GERMANY--5.2%
Deutsche Bank 10,050 849,266
Douglas Holding 13,000 560,085
Mannesmann 6,100 1,472,345
Preussag 13,125 731,474
3,613,170
HONG KONG--1.8%
China Telecom (Hong Kong) 204,000 (a) 1,275,410
IRELAND--2.4%
ESAT Telecom, ADS 18,175 (a) 1,663,013
ISRAEL--2.1%
Partner Communications, ADR 55,300 (a) 1,430,888
ITALY--4.5%
Alleanza Assicurazioni 83,900 1,029,873
Bulgari 102,000 918,170
Seat Pagine Gialle-RNC 538,875 1,184,997
3,133,040
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
JAPAN--17.1%
Citizen Electronics 5,100 923,280
FUJI MACHINE 4,900 395,107
Fujitsu 23,000 1,048,831
NEC 35,000 833,986
NTT Mobile Communications Network 40 1,538,311
Nippon Express 106,000 586,065
Nippon Telegraph & Telephone 95 1,626,871
RICOH 48,000 904,668
Ryohin Keikaku 3,900 782,748
SONY 6,600 1,956,943
Sakura Bank 88,000 509,795
TDK 5,500 759,419
11,866,024
LUXEMBOURG--1.0%
Societe Europeenne des Satellites 4,375 639,323
NETHERLANDS--11.9%
ASM Lithography, ADR 8,750 (a) 995,313
Getronics 9,900 790,196
ING Groep 12,800 773,216
KPN 7,200 703,122
Koninklijke (Royal) Philips Electronics, ADS 8,500 1,147,500
STMicroelectronics 6,825 1,050,994
TNT Post Group 25,350 726,833
United Pan-Europe Communications 7,900 (a) 1,011,126
VNU 19,150 1,007,041
8,205,341
NORWAY--.6%
Tomra Systems 24,050 408,620
PORTUGAL--1.3%
Brisa-Auto Estradas de Portugal 114,500 879,295
SINGAPORE--2.5%
DBS Group 66,335 1,087,328
NatSteel Electronics 123,000 649,895
1,737,223
SOUTH AFRICA--1.3%
DeBeers Consolidated Mines, ADR 29,950 866,678
COMMON STOCKS (CONTINUED) Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH KOREA--2.8%
Korea Telecom, ADR 15,550 1,162,363
SK Telecom, ADS 20,600 790,525
1,952,888
SPAIN--4.0%
Banco Santander Central Hispano 61,175 692,970
Centros Comerciales Continente 38,975 781,652
Telefonica Publicidad e Informacion 26,900 (a) 1,308,049
2,782,671
SWEDEN--3.7%
Ericsson (LM) Tel, Cl. B, ADS 13,100 860,506
ForeningsSparbanken 45,000 661,999
Skandia Forsakrings 35,225 1,065,414
2,587,919
SWITZERLAND--3.6%
Roche Holding Ag-Genusscheine 58 688,481
Swatch, Cl. B 975 1,123,069
Synthes-Stratec 1,500 (a) 686,790
2,498,340
TAIWAN--1.1%
Taiwan Semiconductor Manufacturing, ADS 17,431 (a) 784,395
UNITED KINGDOM--10.2%
BP Amoco, ADS 12,250 726,578
Dixons 33,250 799,525
Energis 17,800 (a) 854,883
Jazztel, ADS 10,325 (a) 672,416
Marconi 52,725 (a) 932,770
Pearson 33,000 1,067,965
Reckitt Benckiser 56,500 529,659
Vodafone AirTouch 92,575 458,589
WPP 63,000 998,057
7,040,442
UNITED STATES--1.0%
Global TeleSystems Group 20,525 (a) 710,678
TOTAL COMMON STOCKS
(cost $47,839,935) 65,834,512
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
PREFERRED STOCKS--1.8% Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
BRAZIL
Petroleo Brasileiro
(cost $627,619) 5,650 1,250,944
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
BONDS AND NOTES--.0% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM
British Aerospace
7.45%, 11/29/2003
(cost $9,318) 12,085(b) 11,776
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER
Associates Corp. of North America, 4% 1/3/2000
(cost $1,499,666) 1,500,000 1,499,666
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $49,976,538) 99.1% 68,596,898
CASH AND RECEIVABLES (NET) .9% 611,030
NET ASSETS 100.0% 69,207,928
(A) NON-INCOME PRODUCING.
(B) CONVERTED TO U.S. DOLLARS FROM BRITISH POUNDS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 49,976,538 68,596,898
Cash 1,179,263
Receivable for investment securities sold 559,471
Dividends and interest receivable 74,616
Prepaid expenses 156
70,410,404
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 40,146
Payable for investment securities purchased 1,120,205
Payable for shares of Beneficial Interest redeemed 1,310
Accrued expenses 40,815
1,202,476
- --------------------------------------------------------------------------------
NET ASSETS ($) 69,207,928
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 44,699,386
Accumulated undistributed investment income--net 20,364
Accumulated net realized gain (loss) on investments
and foreign currency transactions 5,872,482
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 18,615,696
- --------------------------------------------------------------------------------
NET ASSETS ($) 69,207,928
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial 3,098,081
Interest authorized)
NET ASSET VALUE, offering and redemption price per share ($) 22.34
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $86,105 foreign taxes withheld at source) 572,972
Interest 100,132
TOTAL INCOME 673,104
EXPENSES:
Investment advisory fee--Note 3(a) 360,746
Custodian fees 85,579
Professional fees 25,182
Prospectus and shareholders' reports 17,785
Trustees' fees and expenses--Note 3(b) 777
Loan commitment fees--Note 2 358
Shareholder servicing costs 316
Miscellaneous 1,947
TOTAL EXPENSES 492,690
INVESTMENT INCOME--NET 180,414
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency
transactions 11,909,890
Net realized gain (loss) on forward currency exchange contracts 49,125
NET REALIZED GAIN (LOSS) 11,959,015
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions 13,428,504
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 25,387,519
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 25,567,933
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
---------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 180,414 477,297
Net realized gain (loss) on investments 11,959,015 (2,215,561)
Net unrealized appreciation (depreciation)
on investments 13,428,504 3,117,748
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,567,933 1,379,484
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (180,687) (463,450)
Net realized gain on investments (2,199,494) --
TOTAL DIVIDENDS (2,380,181) (463,450)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 8,091,298 9,806,632
Dividends reinvested 2,380,181 463,450
Cost of shares redeemed (10,262,413) (4,762,682)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 209,066 5,507,400
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,396,818 6,423,434
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 45,811,110 39,387,676
END OF PERIOD 69,207,928 45,811,110
Undistributed investment income--net 20,364 20,637
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 482,292 641,163
Shares issued for dividends reinvested 109,776 32,302
Shares redeemed (654,333) (322,864)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (62,265) 350,601
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.50 14.02 13.76 12.82 12.02
Investment Operations:
Investment income--net .06(a) .15 .05 .10 .15
Net realized and unrealized
gain (loss) on investments 8.58 .48 1.27 1.16 .74
Total from Investment Operations 8.64 .63 1.32 1.26 .89
Distributions:
Dividends from investment income--net (.06) (.15) (.07) (.09) (.08)
Dividends in excess of
investment income--net -- -- -- -- (.01)
Dividends from net realized gain
on investments (.74) -- (.34) (.39) --
Dividends in excess of net realized gain
on investments -- -- (.65) (.06) --
Total Distributions (.80) (.15) (1.06) (.54) (.09)
Capital contribution from an affiliate
of the Advisor -- -- -- .22 --
Net asset value, end of period 22.34 14.50 14.02 13.76 12.82
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 59.76 4.49 9.61 11.61(b) 7.39
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.02 .99 1.06 1.28 1.59
Ratio of net investment income
to average net assets .38 1.04 .38 .92 1.13
Decrease reflected in above expense
ratios due to undertakings
by The Dreyfus Corporation - - - - .45
Portfolio Turnover Rate 261.64 204.50 165.75 181.13 70.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 69,208 45,811 39,388 24,355 7,672
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) HAD THE PORTFOLIO NOT HAD A CAPITAL CONTRIBUTION BY AN AFFILIATE OF THE
ADVISOR DURING THE PERIOD, THE TOTAL RETURN WOULD HAVE BEEN 9.89%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Variable Investment Fund (the "fund") is registered under the Investment
Company Act of 1940, as amended (the "Act" ), as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the International Equity Portfolio (the "portfolio") 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 portfolio is a non-diversified series. The portfolio's investment
objective is to maximize capital growth. The Dreyfus Corporation ("Dreyfus")
serves as the portfolio's investment adviser. Dreyfus is a direct subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial
Corporation. Premier Mutual Fund Services, Inc. is the distributor of the
portfolio's 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 portfolio' s 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 The Portfolio
NOTES TO FINANCIAL STATEMENTS (continued)
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 portfolio does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities of
short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the portfolio's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains or losses arise from changes in the value
of assets and liabilities other than investments in securities, resulting from
changes in exchange rates. Such gains and losses are included with net realized
and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the portfolio receives
net earnings credits based on available cash balances left on deposit
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio 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 portfolio not to distribute such
gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions.In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings. During the period
ended December 31, 1999, the portfolio 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
portfolio's average daily net assets and is payable monthly.
The portfolio 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 portfolio. During the
period ended December 31, 1999, the portfolio was charged $36 pursuant to the
transfer agency agreement.
(B) Each trustee who is not an "affiliated person" as defined in the Act
received from the fund an annual fee of $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board received an additional 25% of such
compensation.
Each non-affiliated trustee is a Board member of one or more funds comprising a
certain group of funds (" Fund Group") within the Dreyfus complex. Effective
January 1, 2000, for their participation as a trustee in a Fund Group, the
trustees receive an annual fee of $40,000 The Portfoli
NOTES TO FINANCIAL STATEMENTS (continued)
each, $6,000 for each meeting attended in person and $500 for each telephonic
meeting in which they participate. These fees are allocated among the funds in
the Fund Group. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4-- Securities Transactions:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended December 31, 1999, amounted to $124,012,856 and $121,924,936,
respectively.
The portfolio 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
portfolio 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 portfolio 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 portfolio realizes a gain if the value of the
contract decreases between those dates. With respect to purchases of forward
currency exchange contracts, the portfolio 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 portfolio realizes a gain if the value
of the contract increases between those dates. The portfolio is also exposed to
credit risk associated with counter party nonperformance on these forward
currency exchange contracts which is typically limited to the unrealized gain on
each open contract. At December 31, 1999, there were no open forward currency
exchange contracts.
(B) At December 31, 1999, accumulated net unrealized appreciation on investments
was $18,620,360, consisting of $19,558,283 gross unrealized appreciation and
$937,923 gross unrealized depreciation.
At December 31, 1999, 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).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Variable Investment Fund, International Equity Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Variable Investment Fund, International
Equity Portfolio (one of the series constituting the Dreyfus Variable Investment
Fund) as of December 31, 1999, 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Variable Investment Fund, International Equity Portfolio at December 31,
1999, 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 accounting
principles generally accepted in the United States.
New York, New York
February 3, 2000
The Portfolio
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the portfolio elects to provide each
shareholder with their portion of the portfolio's foreign taxes paid and the
income sourced from foreign countries. Accordingly, the portfolio hereby makes
the following designations regarding its fiscal year ended December 31, 1999:
--the total amount of taxes paid to foreign countries was $86,105.
--the total amount of income sourced from foreign countries was $610,321.
As required by Federal tax law rules, shareholders will receive notification of
their proportionate share of foreign taxes paid and foreign source income for
the 1999 calendar year with Form 1099-DIV which will be mailed by January 31,
2000.
Additionally, for Federal tax purposes, the portfolio hereby designates $.7400
per share as a long-term capital gain distribution of the $.7950 per share paid
on December 28, 1999.
For More Information
Dreyfus Variable Investment Fund,
International Equity Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE
Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
Attn: Institutional Servicing
(c) 2000 Dreyfus Service Corporation 109AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, INTERNATIONAL EQUITY
PORTFOLIO AND THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE,
AUSTRALASIA, FAR EAST (EAFE (R)) INDEX
EXHIBIT A:
MORGAN STANLEY CAPITAL DREYFUS VARIABLE
INTERNATIONAL EUROPE, INVESTMENT FUND,
AUSTRALASIA, FAR EAST INTERNATIONAL EQUITY
PERIOD (EAFE(R)) INDEX* PORTFOLIO
5/2/94 10,000 10,000
12/31/94 9,990 9,800
12/31/95 11,110 10,524
12/31/96 11,781 11,746
12/31/97 11,991 12,875
12/31/98 14,389 13,452
12/31/99 18,268 21,492
*Source: Lipper Analytical Services, Inc.
