Dreyfus Variable
Investment Fund,
Special Value 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
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund, Special Value Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Special Value 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, Timothy M. Ghriskey.
The past year has been both highly volatile and rewarding for many investors in
U.S. stocks. On December 31, the last trading day of 1999, most major stock
market indices hit new highs, including the Dow Jones Industrial Average, the S&
P 500 Index of large-cap stocks, the technology-heavy Nasdaq 100 and the Russell
2000 Index of small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Following the trend established over the past several
years, growth-oriented stocks handily outperformed value-oriented stocks.
Indeed, until a more broad-based rally in the fourth quarter, stellar
performance was generally limited to a handful of highly valued technology and
telecommunications companies. In our view, many fundamentally sound companies in
other market sectors may be selling at attractive valuations.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Variable Investment Fund, Special Value
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Timothy M. Ghriskey, Portfolio Manager
How did Dreyfus Variable Investment Fund, Special Value Portfolio perform
relative to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Variable Investment
Fund, Special Value Portfolio achieved a total return of 7.27%.(1) This
performance compares with the Russell 1000 Value Index, the portfolio's new
benchmark, which achieved a total return of 7.35% for the same period.(2)
We attribute the portfolio's absolute performance primarily to the high degree
of discipline with which we maintained our value-oriented investment approach
during a period that favored growth-oriented investments. Performance relative
to the Russell 1000 Value Index, our benchmark, was affected by the selection
and timing of individual investments.
What is the portfolio's investment approach?
The portfolio invests in a diversified group of value-oriented companies. We
define a value stock as one that appears underpriced in relation to the
company's intrinsic value, as measured by a wide range of financial and business
data. To put it another way, we seek to buy growing companies at bargain prices
We select investments one stock and one company at a time. Our investment
process starts with computerized, quantitative analysis of the universe of
stocks. First we attempt to identify those stocks that meet our definition of
value, and then we focus on those value stocks we believe are best positioned to
grow in the current market environment. Our team of experienced analysts
examines the fundamentals of each top-ranked candidate. Armed with these
analytical insights, the portfolio manager decides which stocks to purchase, and
whether any current holdings should be sold.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
The result of our approach during the recent 12-month period was a diversified
portfolio of carefully selected stocks that delivered mixed performance. The
portfolio enjoyed particularly strong results from several of its technology
holdings. Despite sky-high valuations in much of the technology sector, we
succeeded in identifying several stocks that met our value-oriented investment
criteria. These included microprocessor manufacturer Intel, software developer
Computer Associates International, and computer maker Apple Computer. Some of
our holdings in this sector, such as Sun Microsystems, appreciated so rapidly
that we sold them for valuation reasons during the period.
Health care proved to be another fruitful sector, despite an increasingly
restrictive regulatory environment that hurt many health care stocks. Holdings
such as Allergan and Columbia/HCA Healthcare rose sharply in response to
effective restructuring efforts. Several other holdings among HMOs also bucked
the sector' s poor overall performance by taking advantage of a strong pricing
environment and implementing effective cost controls.
The traditional value sectors of utilities and energy also provided positive
returns for the portfolio. We invested in utility companies such as Enron and
Illinova late in the period at a time when utility stock prices were severely
depressed. When utility stocks rose in December 1999, the portfolio enjoyed
gains as a result. Energy stocks benefited during much of 1999 from rising oil
prices, as well as cost cutting and consolidation in the industry. We invested
in some of the sector's best performers, including Royal Dutch Petroleum (New
York Shares) and BP Amoco.
What other factors influenced the portfolio's performance?
Our financial services holdings performed weakly because of the effects of
several influences. Insurers, such as Torchmark, were hurt by fears of
Y2K-related lawsuits and by a sharply competitive environment that limited
pricing flexibility. Banks, such as First Tennessee National, suffered as a
result of rising interest rates. And some holdings such as Bank One fell in
response to company-specific problems.
In the consumer staples sector, company-specific problems hurt several of the
portfolio' s holdings. For example, Dean Foods financed an acquisition through
the distribution of shares of stock, thereby diluting shareholder value and
forcing stock prices lower. Newell Rubbermaid suffered from merger-related
difficulties. Poor results from these and other securities drove the portfolio's
return from this sector into negative territory.
What is the portfolio's current strategy?
We believe it is important to maintain our consistent, disciplined,
value-oriented investment strategy. During 1999, the gap between the values of
growth stocks and value stocks rose to levels never seen before. The market
appeared to ignore all traditional measures of a company's intrinsic worth.
By allocating a portion of assets to a managed portfolio of value-oriented
stocks, we believe that investors can diversify their holdings and may position
themselves to benefit from sudden shifts in market sentiment, such as we
witnessed in April of 1999. Accordingly, we have adhered to our value-oriented
investment approach.
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 RUSSELL 1000 VALUE INDEX IS
AN UNMANAGED INDEX WHICH MEASURES THE PERFORMANCE OF THOSE RUSSELL 1000
COMPANIES WITH LOWER PRICE-TO-BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Variable
Investment Fund, Special Value Portfolio with the Standard and Poor's 500
Composite Stock Price Index, the Wilshire Midcap Value Index and the Russell
1000 Value Index
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Average Annual Total Returns AS OF 12/31/99
<TABLE>
Inception From
Date 1 Year 5 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO 8/31/90 7.27% 8.00% 8.37%
</TABLE>
(+) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
(+)(+) SOURCE: WILSHIRE ASSOCIATES, 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, SPECIAL VALUE PORTFOLIO ON 8/31/90 (INCEPTION DATE) TO A
$10,000 INVESTMENT MADE ON THAT DATE IN EACH OF THE RUSSELL 1000 VALUE INDEX,
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500"), AND THE
WILSHIRE MIDCAP VALUE INDEX, WHICH ARE DESCRIBED BELOW. ALL DIVIDENDS AND
CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. THE PORTFOLIO'S PERFORMANCE SHOWN IN
THE LINE GRAPH TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THIS IS THE
FIRST YEAR IN WHICH COMPARATIVE PERFORMANCE IS BEING SHOWN FOR THE RUSSELL 1000
VALUE INDEX, WHICH HAS BEEN SELECTED AS THE PRIMARY INDEX FOR COMPARING THE
FUND'S PERFORMANCE BASED ON THE FUND'S AND THE INDEX'S LARGE-CAP VALUE
ORIENTATION. THE RUSSELL 1000 VALUE INDEX IS AN UNMANAGED INDEX WHICH MEASURES
THE PERFORMANCE OF THOSE RUSSELL 1000 COMPANIES WITH LOWER PRICE-TO-BOOK RATIOS
AND LOWER FORECASTED GROWTH VALUES. THE S&P 500 IS A WIDELY ACCEPTED, UNMANAGED
INDEX OF U.S. STOCK MARKET PERFORMANCE. THE WILSHIRE MIDCAP VALUE INDEX CONSISTS
OF THE MEDIUM-CAP COMPANIES IN THE WILSHIRE 5000 INDEX THAT MEET CERTAIN
STATISTICAL CRITERIA FOR "VALUE." PERFORMANCE FOR THE S&P 500 AND THE WILSHIRE
MIDCAP VALUE INDEX WILL NOT BE PROVIDED WITH THE NEXT ANNUAL REPORT, BUT IS
PROVIDED HEREWITH PURSUANT TO APPLICABLE REGULATIONS. NONE OF THE FOREGOING
INDICES TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. FURTHER INFORMATION
RELATING TO PORTFOLIO PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF
APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS
AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
COMMON STOCKS--100.8% Shares Value ($)
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BANKING--13.4%
Bank of America 29,300 1,470,494
Bank of New York 14,800 592,000
Bank One 13,100 420,019
Chase Manhattan 18,800 1,460,525
First Tennessee National 24,800 706,800
FleetBoston Financial 31,000 1,079,187
Morgan (J.P.) & Co. 9,200 1,164,950
Wells Fargo 18,900 764,269
7,658,244
CONSUMER DURABLES--2.1%
General Motors 16,200 1,177,537
CONSUMER NON-DURABLES--3.1%
Heinz (H.J.) 21,100 840,044
PepsiCo 17,600 620,400
Philip Morris Cos. 12,800 296,800
1,757,244
CONSUMER SERVICES--4.1%
Clear Channel Communications 7,400(a) 660,450
Disney (Walt) 21,300 623,025
MediaOne Group 4,600(a) 353,337
Viacom, Cl. B 11,700(a) 707,119
2,343,931
ELECTRONIC TECHNOLOGY--10.6%
Apple Computer 5,700(a) 586,031
Boeing 15,600 648,375
Compaq Computer 11,400 308,512
EMC 8,200(a) 895,850
General Dynamics 5,800 305,950
Hewlett-Packard 2,400 273,450
Intel 7,500 617,344
International Business Machines 7,400 799,200
Micron Technology 2,300(a) 178,825
Motorola 9,900 1,457,775
6,071,312
ENERGY MINERALS--9.5%
BP Amoco, ADS 21,000 1,245,563
Conoco, Cl. B 7,200 179,100
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY MINERALS (CONTINUED)
Exxon Mobil 35,248 2,839,667
Royal Dutch Petroleum (New York Shares) 14,100 852,169
Texaco 6,000 325,875
5,442,374
FINANCE--10.5%
American Express 2,100 349,125
Citigroup 51,700 2,872,581
Fannie Mae 9,800 611,887
Freddie Mac 3,000 141,187
Morgan Stanley Dean Witter & Co. 9,700 1,384,675
XL Capital, Cl. A 11,700 606,937
5,966,392
HEALTH SERVICES--2.2%
Columbia/HCA Healthcare 42,600 1,248,713
HEALTH TECHNOLOGY--2.4%
Merck & Co. 11,500 771,219
Watson Pharmaceuticals 16,100(a) 576,581
1,347,800
INSURANCE--6.2%
Allstate 9,100 218,400
American General 15,900 1,206,413
American International Group 19,400 2,097,625
3,522,438
NON-ENERGY MINERALS--2.2%
Alcoa 12,100 1,004,300
Weyerhaeuser 3,600 258,525
1,262,825
PROCESS INDUSTRIES--4.1%
Dow Chemical 2,400 320,700
duPont (E.I.) deNemours & Co. 9,900 652,163
Eastman Chemical 6,700 319,506
International Paper 4,700 265,256
Olin 24,700 489,369
PPG Industries 5,000 312,813
2,359,807
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER MANUFACTURING--5.4%
Caterpillar 4,100 192,956
General Electric 5,500 851,125
Georgia-Pacific Group 14,100 715,575
Honeywell International 10,162 586,220
Minnesota Mining & Manufacturing 4,600 450,225
Tyco International 8,000 311,000
3,107,101
TECHNOLOGY SERVICES--4.5%
Charter Communications, Cl. A 23,900 522,813
Computer Associates International 19,400 1,356,788
Electronic Data Systems 10,500 702,844
2,582,445
UTILITIES--20.5%
AES 4,600(a) 343,850
AT&T 38,000 1,928,500
AT&T--Liberty Media Group, Cl. A 17,000(a) 964,750
BCE 8,100 730,519
Bell Atlantic 9,000 554,062
BellSouth 21,600 1,011,150
Coastal 22,300 790,256
Duke Energy 4,100 205,513
Enron 7,400 328,375
GTE 18,700 1,319,519
Illinova 9,700 337,075
MCI WorldCom 8,400(a) 445,725
SBC Communications 33,558 1,635,952
Sprint (FON Group) 7,600 511,575
U S WEST 8,300 597,600
11,704,421
TOTAL COMMON STOCKS
(cost $49,435,613) 57,552,584
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--.6% Amount ($) Value ($)
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.90%, 1/13/2000
(cost $349,428) 350,000 349,548
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TOTAL INVESTMENTS (cost $49,785,041) 101.4% 57,902,132
LIABILITIES, LESS CASH AND RECEIVABLES (1.4%) (803,125)
NET ASSETS 100.0% 57,099,007
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 49,785,041 57,902,132
Receivable for investment securities sold 589,301
Dividends receivable 80,019
Prepaid expenses 5,257
58,576,709
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 36,881
Cash overdraft due to Custodian 33,804
Payable for shares of Beneficial Interest redeemed 756,330
Payable for investment securities purchased 618,638
Accrued expenses 32,049
1,477,702
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NET ASSETS ($) 57,099,007
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 48,919,324
Accumulated undistributed investment income--net 54,174
Accumulated net realized gain (loss) on investments 8,418
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 8,117,091
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NET ASSETS ($) 57,099,007
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 3,899,534
NET ASSET VALUE, offering and redemption price per share ($) 14.64
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $11,150 foreign taxes withheld at source) 914,250
Interest 33,449
TOTAL INCOME 947,699
EXPENSES:
Investment advisory fee--Note 3(a) 455,777
Prospectus and shareholders' reports 27,420
Professional fees 24,086
Custodian fees 12,300
Trustees' fees and expenses--Note 3(b) 887
Shareholder servicing costs 618
Miscellaneous 1,516
TOTAL EXPENSES 522,604
INVESTMENT INCOME--NET 425,095
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 3,789,504
Net unrealized appreciation (depreciation) on investments (4,898)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,784,606
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,209,701
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
---------------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 425,095 405,287
Net realized gain (loss) on investments 3,789,504 3,319,993
Net unrealized appreciation
(depreciation) on investments (4,898) 4,623,217
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 4,209,701 8,348,497
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (370,921) (412,632)
Net realized gain on investments (4,725,193) --
TOTAL DIVIDENDS (5,096,114) (412,632)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 4,712,401 14,388,912
Dividends reinvested 5,096,114 412,632
Cost of shares redeemed (15,087,532) (12,454,202)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (5,279,017) 2,347,342
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,165,430) 10,283,207
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NET ASSETS ($):
Beginning of Period 63,264,437 52,981,230
END OF PERIOD 57,099,007 63,264,437
Undistributed investment income--net 54,174 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 311,362 1,044,993
Shares issued for dividends reinvested 350,784 27,861
Shares redeemed (999,465) (914,852)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (337,319) 158,002
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
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.93 12.99 10.60 11.70 12.37
Investment Operations:
Investment income--net .11(a) .10 .06 .63 .51
Net realized and unrealized
gain (loss) on investments .95 1.94 2.40 (1.05) (.54)
Total from Investment Operations 1.06 2.04 2.46 (.42) (.03)
Distributions:
Dividends from investment income--net (.10) (.10) (.01) (.56) (.64)
Dividends in excess of
investment income-net -- -- (.00)(b) (.06) --
Dividends from net realized gain
on investments (1.25) -- (.06) -- --
Paid-in capital -- -- -- (.06) --
Total Distributions (1.35) (.10) (.07) (.68) (.64)
Net asset value, end of period 14.64 14.93 12.99 10.60 11.70
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TOTAL RETURN (%) 7.27 15.69 23.14 (3.62) (.26)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .86 .83 .99 .93 .94
Ratio of dividends on securities sold short
to average net assets -- -- .02 -- --
Ratio of net investment income
to average net assets .70 .67 .38 4.12 3.56
Portfolio Turnover Rate 171.41 252.24 188.57 124.19 53.88
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Net Assets, end of period ($ x 1,000) 57,099 63,264 52,981 21,101 25,272
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
</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 Special Value 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 maximize total return, consisting of capital appreciation and
current income. 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 Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 the 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:
In accordance with an agreement with a bank, the portfolio may borrow up to $5
million under a short-term unsecured line of credit. Interest on borrowings is
charged at rates which are related to the Federal funds rate in effect from time
to time. During the period ended December 31, 1999, the portfolio did not borrow
under the line of credit.
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 $45 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 The Portfoli
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(C) During the period ended December 31, 1999, the portfolio incurred total
brokerage commissions of $226,756, of which $5,433 was paid to Dreyfus Brokerage
Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$102,224,877 and $109,032,869, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$8,117,091, consisting of $9,788,080 gross unrealized appreciation and
$1,670,989 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, Special Value Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Variable Investment Fund, Special Value
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, Special Value 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)
For Federal tax purposes, the portfolio hereby designates $.5280 per share as a
long-term capital gain distribution of the $1.0720 per share paid on December
28, 1999 and also designates $.2730 per share as a long-term capital gain
distribution paid on March 31, 1999.
The portfolio also designates 39.17% of the ordinary dividends paid during the
fiscal year ended December 31, 1999 as qualifying for the corporate dividends
received deduction.
For More Information
Dreyfus Variable
Investment Fund,
Special Value 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 118AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, SPECIAL VALUE
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX , THE WILSHIRE MIDCAP VALUE INDEX
AND THE RUSSELL 1000 VALUE INDEX
EXHIBIT A:
STANDARD DREYFUS
& POOR'S VARIABLE
500 INVESTMENT
COMPOSITE RUSSELL FUND, WILSHIRE
STOCK 1000 SPECIAL MIDCAP
PERIOD PRICE VALUE VALUE VALUE
INDEX * INDEX* PORTFOLIO INDEX**
8/31/90 10,000 10,000 10,000 10,000
12/31/90 10,366 10,292 10,185 10,222
12/31/91 13,517 12,825 11,264 15,186
12/31/92 14,546 14,596 11,385 18,622
12/31/93 16,009 17,241 14,651 21,013
12/31/94 16,218 16,898 14,423 20,438
12/31/95 22,306 23,378 14,385 28,032
12/31/96 27,424 28,437 13,865 31,948
12/31/97 36,570 38,442 17,073 43,396
12/31/98 47,028 44,450 19,753 42,232
12/31/99 56,920 47,715 21,189 38,628
*Source: Lipper Analytical Services, Inc.
**Source: Wilshire Associates, Inc.
