Dreyfus Variable
Investment Fund,
Money Market 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
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2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
15 Report of Independent Auditors
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Money Market Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Money Market 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 the portfolio manager, Thomas S. Riordan.
When the reporting period began, investors were concerned that global economic
weakness might cause a slowdown in the U.S. economy. As it turned out, these
fears were unfounded. In fact, it became apparent early in the year that
international and domestic economies were growing faster than analysts expected,
giving rise to concerns that long-dormant inflationary pressures might
re-emerge. Consumers continued to spend heavily, unemployment levels reached new
lows and the stock market continued to climb. Because unsustainable economic
growth may trigger unwanted inflationary pressures, the Federal Reserve Board
raised key short-term interest rates three times between June 30 and year-end in
an attempt to forestall an acceleration of inflation. In this environment,
yields on money market securities continued to rise.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Variable Investment Fund, Money Market
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Thomas S. Riordan, Portfolio Manager
How did Dreyfus Variable Investment Fund, Money Market Portfolio perform during
the period?
For the 12-month period ended December 31, 1999, the portfolio produced a yield
of 4.68% , which, taking into account the effect of compounding, created an
effective yield of 4.79%.(1) The portfolio provided a total return of 4.78%(2 )
compared to the Lipper Variable Annuity Money Market Funds category average
return of 3.92% for the same period.(3
What factors influenced the portfolio's performance?
As 1999 began, the United States economy was marked by fears of an economic
slowdown largely as a result of the Asian financial crisis. The Federal Reserve
Board, in an attempt to cushion the economy from negative overseas events, had
sharply lowered short-term interest rates. Global markets remained unsettled as
1999 began but the general atmosphere of crisis lifted. As fears waned, the
focus of monetary policymakers shifted back to the domestic economy. As the
economy showed no signs of slowing, the Fed began to voice concern over
inflationary pressures.
The performance of the U.S. economy in the first quarter of 1999 was much
stronger than expected. But while the Gross Domestic Product (GDP) grew at a
rate of 4.3%, inflation remained benign. Despite a tight labor market, there was
no evidence of advancing wage pressure. Many economic analysts believed that
advances in technology might make it possible for the economy to grow faster
than previously thought possible without igniting inflation. Notwithstanding
fears that imbalances might eventually derail the nine-year expansion, the U.S.
economy continued to grow as the Fed held steady on rates through the first
quarter of the year.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
A surprisingly large jump in the Consumer Price Index in May pushed policymakers
closer to a rate hike. Although the Fed did not immediately raise interest
rates, it did announce a significant shift, adopting a "bias" towards tightening
- -- that is, raising short-term rates. With that shift in bias came a resulting
shift in market psychology, as participants began to anticipate higher rates
That highly anticipated move came in June, when the Fed raised short-term rates
by 0.25 percentage points. At the same time, however, it announced that it was
shifting its bias back to neutral, indicating no intention of an immediate
further rate increase. The market hoped that this pre-emptive strike to head off
the threat of inflation would signal an end to Fed tightening.
Such hopes would be short-lived as strong economic growth along with anxiety
over rising wages and benefits renewed inflationary concern. At its August
meeting, the Fed raised short-term interest rates by an additional 0.25
percentage points, signaling its added resolve by also raising the discount
rate.
The economy continued to give mixed signals to the money market throughout the
third quarter. GDP growth accelerated back to a rapid 4.8%, but key indicators
of employment costs, job creation and inflation were at lower levels than would
be expected, given such strong economic expansion. These mixed indications led
the Fed to hold off on further tightening until November, when continued fear of
inflationary pressure caused it to increase short-term interest rates by another
0.25 percentage points.
When the Fed took no action at its December meeting, many analysts considered it
to be an attempt to quiet markets that were concerned about potential Y2K
disruption. The Fed also added significant reserves to the banking system over
year-end to quell liquidity concerns, leading to temporary irregularities and
wide fluctuations in short-term interest rates. Despite the temporary drop in
rates over year-end due
to the added reserves, many believe, now that Y2K issues have been successfully
navigated, that the issue of managing sustainable growth should take center
stage again.
What is the portfolio's current strategy?
In response to a market environment marked by rising interest rates, the
portfolio took on a somewhat defensive strategy. We took two steps to position
the portfolio in the current market: we shortened the portfolio's average
maturity and built a liquidity cushion. Shorter maturities and a higher level of
cash are designed to enable the portfolio to take advantage of a possible
further rise in interest rates.
January 14, 2000
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY
OTHER GOVERNMENT AGENCY. ALTHOUGH THE PORTFOLIO SEEKS TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE PORTFOLIO. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF
ADDITIONAL CHARGES AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE
INSURANCE CONTRACTS, WHICH WILL REDUCE YIELD.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS. THE PORTFOLIO'S
PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES AND EXPENSES
IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE CONTRACTS, WHICH WILL
REDUCE RETURNS.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
December 31, 1999
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--16.1% Amount ($) Value ($)
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<S> <C> <C>
Branch Bank & Trust Co.
5.04%, 1/10/2000 2,500,000 2,499,982
First National Bank of Maryland
5.14%, 2/23/2000 4,000,000 3,999,804
Royal Bank of Canada
5.69%, 4/27/2000 5,000,000 (a) 4,999,201
Union Bank California
5.98%, 8/1/2000 5,000,000 5,000,000
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $16,498,987) 16,498,987
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COMMERCIAL PAPER--51.0%
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Associates Corp. of North America
4.00%, 1/3/2000 4,000,000 3,999,111
Associates First Capital Corp.
4.00%, 1/3/2000 2,000,000 1,999,556
Atlantis One Funding Corp.
5.92%, 2/22/2000 4,000,000 3,966,778
BCI Funding Corp.
6.05%, 5/2/2000 5,000,000 4,900,536
Commonwealth Bank of Australia
6.00%, 4/6/2000 5,000,000 4,921,600
DaimlerChrysler North America Holding Corp.
6.10%, 2/29/2000 5,000,000 4,951,161
Donaldson Lufkin & Jenrette Inc.
6.22%, 3/3/2000 4,000,000 3,957,806
General Electric Capital Corp.
5.93%, 6/16/2000 5,000,000 4,867,096
Goldman Sachs Group Inc.
6.07%, 2/29/2000 5,000,000 4,951,407
Lehman Brothers Holdings Inc.
6.20%, 3/8/2000 5,000,000 4,944,074
Santander Finance (DE) Inc.
5.94%, 3/22/2000 5,000,000 4,934,469
UBS Finance (DE) Inc.
4.25%, 1/3/2000 4,000,000 3,999,056
TOTAL COMMERCIAL PAPER
(cost $52,392,650) 52,392,650
Principal
CORPORATE NOTES--23.8% Amount ($) Value ($)
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Bear Stearns Companies
6.52%, 2/22/2000 4,000,000 (a) 4,000,310
Finova Capital Corp.
6.09%, 8/15/2000 2,520,000 (a) 2,519,185
Ford Motor Credit Corp.
5.70%, 5/5/2000 5,000,000 (a) 5,000,000
GTE Corporation
6.22%, 6/12/2000 5,000,000 (a) 4,998,566
Heller Financial Inc.
5.90%, 8/7/2000 3,000,000 (a) 3,000,000
Paine Webber Group Inc.
6.66%, 4/20/2000-9/15/2000 5,000,000 (a) 5,000,000
TOTAL CORPORATE NOTES
(cost $24,518,061) 24,518,061
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SHORT-TERM BANK NOTES--4.9%
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Old Kent Bank and Trust Co.
5.71%, 6/2/2000
(cost $4,998,790) 5,000,000 (a) 4,998,790
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TIME DEPOSITS--9.3%
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Bank One NA. (Grand Cayman)
4.50%, 1/3/2000 4,000,000 4,000,000
Chase Manhattan Bank NA (London)
4.00%, 1/3/2000 4,000,000 4,000,000
Republic National Bank of New York (London)
4.50%, 1/3/2000 1,564,000 1,564,000
TOTAL TIME DEPOSITS
(cost $9,564,000) 9,564,000
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TOTAL INVESTMENTS
(cost $107,972,488) 105.1% 107,972,488
LIABILITIES, LESS CASH AND RECEIVABLES (5.1%) (5,245,093)
NET ASSETS 100.0% 102,727,395
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 107,972,488 107,972,488
Interest receivable 619,284
Prepaid expenses and other assets 12,124
108,603,896
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 28,856
Cash overdraft due to Custodian 5,811,117
Accrued expenses and other liabilities 36,528
5,876,501
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NET ASSETS ($) 102,727,395
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 102,731,981
Accumulated net realized gain (loss) on investments (4,586)
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NET ASSETS ($) 102,727,395
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
102,731,981
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INTEREST INCOME 5,389,541
EXPENSES:
Investment advisory fee--Note 2(a) 512,034
Professional fees 34,337
Custodian fees 26,633
Prospectus and shareholders' reports 10,474
Registration fees 3,618
Trustees' fees and expenses--Note 2(b) 1,344
Shareholder servicing costs 820
Miscellaneous 642
TOTAL EXPENSES 589,902
INVESTMENT INCOME--NET 4,799,639
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NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (477)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,799,162
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
----------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 4,799,639 3,724,324
Net realized gain (loss) on investments (477) (2,038)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 4,799,162 3,722,286
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (4,799,639) (3,724,324)
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BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 89,884,808 98,705,448
Dividends reinvested 4,799,639 3,724,324
Cost of shares redeemed (80,981,281) (78,031,019)
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS 13,703,166 24,398,753
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,702,689 24,396,715
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NET ASSETS ($):
Beginning of period 89,024,706 64,627,991
END OF PERIOD 102,727,395 89,024,706
SEE NOTES TO FINANCIAL STATEMENTS.
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
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .047 .050 .050 .050 .055
Distributions:
Dividends from investment income--net (.047) (.050) (.050) (.050) (.055)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 4.78 5.12 5.19 5.10 5.66
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .58 .56 .61 .62 .62
Ratio of net investment income
to average net assets 4.69 5.01 5.08 4.96 5.51
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- -- .03
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Net Assets, end of period ($ x 1,000) 102,727 89,025 64,628 56,186 45,249
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The 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 Money Market 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 diversified series. The portfolio's investment
objective is to provide as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. 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.
It is the portfolio's policy to maintain a continuous net asset value per share
of $1.00; the portfolio has adopted certain investment, portfolio valuation and
dividend and distribution policies to enable it to do so. There is no assurance,
however, that the portfolio will be able to maintain a stable net asset value
per share of $1.00.
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 are valued at amortized cost, which has
been determined by the fund's Board of Trustees to represent the fair value of
the portfolio's investments.
(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. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
Under the terms of the custody agreement, the portfolio received net earnings
credits of $1,429 during the period ended December 31, 1999, based on available
cash balances left on deposit. Income earned under this arrangement is included
in interest income.
The portfolio may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the portfolio's Manager, subject to the seller's
agreement to repurchase and the portfolio's agreement to resell such securities
at a mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the portfolio's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value greater
than or equal to the repurchase price plus accrued interest at all times. If the
value of the underlying securities falls below the value of the repurchase price
plus accrued interest, the portfolio will require the seller to deposit
additional collateral by the next business day. If the request for additional
collateral is not met, or the seller defaults on its repurchase obligation, the
portfolio maintains its right to sell the underlying securities at market value
and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the portfolio to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, 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, it is the policy of the portfolio not to
distribute such gain.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) 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.
The portfolio has an unused capital loss carryover of approximately $4,650
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. If not
applied, $850 of the carryover expires in fiscal 2004, $1,300 expires in fiscal
2005, $1,400 expires in fiscal 2006 and $1,100 expires in 2007.
NOTE 2--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 .50 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 $113 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 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.
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Variable Investment Fund, Money Market Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Variable Investment Fund, Money Market
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. 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, Money Market 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
NOTES
For More Information
Dreyfus Variable Investment Fund,
Money Market 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 117AR9912
