Dreyfus Variable
Investment Fund,
Balanced 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
8 Statement of Investments
15 Statement of Financial Futures
16 Statement of Assets and Liabilities
17 Statement of Operations
18 Statement of Changes in Net Assets
19 Financial Highlights
20 Notes to Financial Statements
25 Report of Independent Auditors
26 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Balanced Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Balanced 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 managers, Ronald P. Gala and Laurie A. Carroll.
On the equity side, the past year has been both highly volatile and generally
rewarding for investors as most major stock market indices -- 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 -- hit new highs. Following the trend established over the past several
years, however, 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.
On the bond side, 1999 was challenging for most investors. Concerns that
long-dormant inflationary pressures might re-emerge prompted the Federal Reserve
Board to raise key short-term interest rates three times during the summer and
fall of 1999. U.S. Treasury and agency securities declined sharply in this
environment, while prices of corporate bonds and mortgage-backed securities fell
less severely.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Variable Investment Fund, Balanced Portfolio
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Ronald P. Gala and Laurie A. Carroll, Portfolio Managers
How did Dreyfus Variable Investment Fund, Balanced Portfolio perform relative to
its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Variable Investment
Fund, Balanced Portfolio produced a total return of 8.13%.(1) In comparison, the
portfolio's Hybrid Index, which is composed of 60% Standard & Poor's
500((reg.tm)) Composite Stock Price Index ("S&P 500") and 40% Lehman Brothers
Intermediate Government/ Corporate Bond Index ("Intermediate Index") produced a
12.77% total return for the same period.(2)
We attribute the portfolio's relative underperformance to our defensive asset
allocation strategy. Early in 1999, we shifted a portion of the portfolio's
assets out of stocks, primarily because we believed the stock market was
overvalued. Instead, we deployed those assets into bonds, a move that
constrained the portfolio's returns.
What is the portfolio's investment approach?
The portfolio is a balanced portfolio, with a "neutral" allocation of 60% stocks
and 40% bonds. However, the portfolio is permitted to invest up to 75%, and as
little as 40%, of its total assets in stocks, and up to 60%, and as little as
25%, of its total assets in bonds.
When allocating assets between stocks and bonds, we assess the relative return
and risks of each asset class using a model that analyzes several factors,
including interest-rate adjusted price/earnings ratios, the valuation and
volatility levels of stocks relative to bonds, and economic factors such as
interest rates.
What other factors influenced the portfolio's performance?
The fixed-income portion of the portfolio was adversely affected by economic
conditions, including rising interest rates, while the equity portion was
positively influenced by a rising stock market in 1999.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
Soon after the reporting period began, it became apparent that overseas
economies were beginning to recover from 1998's global financial crisis and that
the growth of the U.S. economy was stronger than most analysts had expected. In
this environment, fixed-income investors began to move away from U.S. Treasury
securities, to which they had previously fled during the worst of 1998's global
financial crisis, and into higher yielding, riskier assets. This caused the
prices of U.S. Treasury securities to fall from relatively high levels, while
prices of corporate bonds, mortgage-backed securities and asset-backed
securities rallied from low valuations compared to historical norms. In the
stock market, equity investors continued to favor the large-cap growth stocks
that had led the market' s advance over the past several years. In addition,
equity investors began to speculate in technology companies that they expected
to benefit from the growth of the Internet.
In the second and third quarters of 1999, rapid economic growth raised concerns
among U.S. fixed-income investors that inflationary pressures might re-emerge.
In response, the Federal Reserve Board increased short-term interest rates three
times during the summer and fall of 1999 in an attempt to forestall a
reacceleration of inflation.
These changes in monetary policy caused the prices of most bonds to fall. In the
stock market, while a handful of technology, telecommunications and deep
cyclical stocks prospered, most other industry groups languished. The portfolio
maintained significant exposure to technology stocks during this time, but most
speculative Internet companies did not meet the portfolio's risk/reward criteria
and, as a result, we did not own them. Instead, we favored large,
well-established technology companies that provide products and services for the
Internet's infrastructure.
The fourth quarter saw further deterioration of the bond market amid
expectations of further interest-rate hikes while the stock market broadened to
benefit a number of different industry groups. In fact, on the last trading day
of the year, several major indices hit new record highs. These developments
helped boost returns from the portfolio's equity holdings, but further eroded
the performance of our fixed-income investments.
What is the portfolio's current strategy?
We have continued to maintain a relatively defensive strategy because we
currently believe that the U.S. stock market remains overvalued relative to
bonds. That said, however, we have continued to emphasize carefully selected
technology stocks, including Microsoft, America Online, Cisco Systems and, more
recently, Yahoo! and Nokia. In addition, even though interest rates are rising,
we remain confident in the fundamentals of financial stocks, such as Citigroup
and Morgan Stanley Dean Witter & Co. On the other hand, we have reduced our
holdings of Philip Morris Cos. and Tyco International after disappointing
performance in 1999.
Within the portfolio's fixed-income portion, we have continued to emphasize the
investments in asset-backed securities, corporate bonds and government agency
holdings, but have limited our exposure to U.S. Treasury holdings in
anticipation of higher interest rates.
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, YIELD 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. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500((reg.tm)) COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED,
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE. THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED
INDEX OF GOVERNMENT AND CORPORATE BOND MARKET PERFORMANCE COMPOSED OF U.S.
GOVERNMENT, TREASURY AND AGENCY SECURITIES, FIXED-INCOME SECURITIES AND
NONCONVERTIBLE INVESTMENT-GRADE CORPORATE DEBT, WITH AN AVERAGE MATURITY OF 1-10
YEARS.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Variable
Investment Fund, Balanced Portfolio with the Standard & Poor's 500 Composite
Stock Price Index, the Lehman Brothers Intemediate Government/Corporate Bond
Index and a Hybrid Index
(+) 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, BALANCED PORTFOLIO ON 5/1/97 (INCEPTION DATE) TO A $10,000
INVESTMENT MADE ON THAT DATE IN EACH OF THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX, THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX AND A HYBRID INDEX, WHICH ARE DESCRIBED BELOW. ALL DIVIDENDS AND CAPITAL
GAIN DISTRIBUTIONS ARE REINVESTED. THE HYBRID INDEX IS CALCULATED ON A
YEAR-TO-YEAR BASIS.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE. THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF GOVERNMENT AND CORPORATE BOND
MARKET PERFORMANCE COMPOSED OF U.S. GOVERNMENT, TREASURY AND AGENCY SECURITIES,
FIXED-INCOME SECURITIES AND NONCONVERTIBLE INVESTMENT-GRADE CORPORATE DEBT, WITH
AN AVERAGE MATURITY OF 1-10 YEARS. THE INDICES DO NOT TAKE INTO ACCOUNT CHARGES,
FEES AND OTHER EXPENSES. THE HYBRID INDEX IS COMPOSED OF 60% STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX AND 40% LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX. UNDER NORMAL CIRCUMSTANCES, THE PORTFOLIO'S
TOTAL ASSETS ARE ALLOCATED APPROXIMATELY 60% TO COMMON STOCKS AND 40% TO BONDS;
HOWEVER, THE PORTFOLIO IS PERMITTED TO INVEST UP TO 75%, AND AS LITTLE AS 40%,
OF ITS TOTAL ASSETS IN COMMON STOCKS AND UP TO 60%, AND AS LITTLE AS 25%, OF ITS
TOTAL ASSETS IN BONDS, AS DEEMED ADVISABLE BY THE DREYFUS CORPORATION. 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.
Average Annual Total Returns AS OF 12/31/99
<TABLE>
Inception From
Date 1 Year Inception
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<S> <C> <C> <C>
PORTFOLIO 5/1/97 8.13% 18.33%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Portfolio
STATEMENT OF INVESTMENTS
<TABLE>
December 31, 1999
COMMON STOCKS--46.7% Shares Value ($)
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<S> <C> <C>
ALCOHOL & TOBACCO--.2%
Philip Morris Cos. 5,200 120,575
CONSUMER CYCLICAL--4.5%
Bed Bath & Beyond 3,600 (a) 125,100
Delphi Automotive Systems 2,117 33,343
Delta Air Lines 2,900 144,456
Federated Department Stores 3,500 (a) 176,969
Ford Motor 10,600 566,437
Gap 3,200 147,200
General Motors 3,000 218,063
Home Depot 6,900 473,081
K mart 7,500 (a) 75,469
Limited 3,000 129,937
Office Depot 9,800 (a) 107,188
Safeway 7,200 (a) 256,050
Sears, Roebuck & Co. 7,000 213,063
TJX Cos. 12,400 253,425
Tommy Hilfiger 4,400 (a) 102,575
Wal-Mart Stores 15,300 1,057,613
4,079,969
CONSUMER STAPLES--2.4%
Fortune Brands 5,600 185,150
IBP 5,600 100,800
Procter & Gamble 7,000 766,937
Quaker Oats 3,700 242,813
Ralston-Purina Group 7,900 220,213
Sara Lee 17,600 388,300
Unilever, N.V. (New York Shares) 4,985 271,371
2,175,584
ENERGY--2.8%
Amerada Hess 3,300 187,275
Atlantic Richfield 4,600 397,900
Chevron 2,100 181,913
Diamond Offshore Drilling 3,200 97,800
Exxon Mobil 7,100 571,994
Global Marine 6,700 (a) 111,387
KeySpan 3,500 81,156
Royal Dutch Petroleum (New York Shares) 10,900 658,790
COMMON STOCKS (CONTINUED) Shares Value ($)
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ENERGY (CONTINUED)
Texaco 4,600 249,837
2,538,052
HEALTH CARE--4.4%
Amgen 3,200 (a) 192,200
Bausch & Lomb 1,600 109,500
Biogen 2,700 (a) 228,150
Biomet 3,500 140,000
Bristol-Myers Squibb 10,400 667,550
Cardinal Health 3,400 162,775
Johnson & Johnson 4,800 447,000
Merck & Co. 11,100 744,394
Pfizer 6,000 194,625
Schering-Plough 12,100 510,469
United Healthcare 1,900 100,937
Warner-Lambert 3,900 319,556
Wellpoint Health Networks 2,400 (a) 158,250
3,975,406
INTEREST SENSITIVE--8.2%
Allstate 13,500 324,000
Ambac Financial Group 3,000 156,562
Bank of America 7,500 376,406
Bank One 3,400 109,013
CIGNA 2,600 209,463
Chase Manhattan 7,200 559,350
Citigroup 15,400 855,662
Comerica 4,100 191,419
Conseco 6,600 117,975
Edwards (A.G.) 2,300 73,744
Fannie Mae 6,400 399,600
FleetBoston Financial 6,600 229,762
General Electric 7,400 1,145,150
Household International 4,000 149,000
MBNA 10,900 297,025
MGIC Investment 2,500 150,469
Marsh & McLennan Cos. 4,400 421,025
Merrill Lynch 3,000 250,500
Morgan Stanley Dean Witter & Co. 2,800 399,700
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
SLM Holding 3,800 160,550
St. Paul Cos. 6,200 208,862
SunTrust Banks 3,600 247,725
UnionBanCal 2,900 114,369
XL Capital, Cl. A 4,600 238,625
7,385,956
PRODUCER GOODS--3.7%
American Power Conversion 6,200 (a) 163,525
Boeing 5,200 216,125
Deere & Co. 4,400 190,850
Dow Chemical 2,500 334,062
duPont (E.I.) deNemours & Co. 4,600 303,025
General Dynamics 4,000 211,000
Georgia-Pacific Group 6,400 324,800
Ingersoll-Rand 2,700 148,669
International Paper 3,800 214,462
Kerr-McGee 2,000 124,000
Kimberly-Clark 2,000 130,500
PPG Industries 2,000 125,125
Rohm & Haas 3,700 150,544
Tyco International 7,200 279,900
USG 1,700 80,113
Union Carbide 1,800 120,150
United Technologies 3,600 234,000
3,350,850
SERVICES--3.8%
ALLTEL 2,900 239,794
America Online 10,800 (a) 814,725
Comcast, Cl. A (Non-voting) 6,800 341,700
Fox Entertainment Group, Cl. A 8,700 (a) 216,956
Gannett 5,000 407,812
IMS Health 5,400 146,813
Infinity Broadcasting, Cl. A 9,700 (a) 351,019
Tribune 8,000 440,500
Yahoo! 1,100 (a) 475,956
3,435,275
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY--12.5%
ADC Telecommunications 2,500 (a) 181,406
Applied Materials 2,700 (a) 342,056
BMC Software 1,500 (a) 119,906
Cisco Systems 11,100 (a) 1,189,087
Computer Associates International 4,800 335,700
Compuware 5,300 (a) 197,425
Dell Computer 15,800 (a) 805,800
EMC 3,600 (a) 393,300
Eaton 2,100 152,513
Gateway 3,600 (a) 259,425
General Instrument 3,500 (a) 297,500
Intel 12,700 1,045,369
International Business Machines 4,000 432,000
Lexmark International Group, Cl. A 4,600 (a) 416,300
Lucent Technologies 9,800 733,162
Micron Technology 3,200 (a) 248,800
Microsoft 20,100 (a) 2,346,675
Motorola 3,700 544,825
Nokia, A.D.S. 1,200 228,000
RealNetworks 1,800 (a) 216,562
Tellabs 8,100 (a) 519,919
Texas Instruments 2,800 271,250
11,276,980
UTILITIES--4.2%
AT&T 11,800 598,850
Ameren 3,700 121,175
BellSouth 13,100 613,244
Consolidated Edison 4,500 155,250
FPL Group 6,400 274,000
GTE 6,100 430,431
MCI WorldCom 16,500 (a) 875,531
SBC Communications 10,100 492,375
Sempra Energy 5,700 99,038
UtiliCorp United 4,050 78,722
3,738,616
TOTAL COMMON STOCKS
(cost $31,607,582) 42,077,263
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES--49.2% Amount ($) Value ($)
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FINANCE--5.4%
American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 600,000 593,943
Atlantic Richfield, Notes,
5.55%, 4/15/2003 500,000 481,668
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 600,000 593,835
General Motors Acceptance Corp., Bonds,
6.15%, 4/5/2007 430,000 399,372
Lehman Brothers Holdings, Notes,
7.50%, 9/1/2006 1,000,000 985,849
Merrill Lynch, Notes,
6%, 2/17/2009 600,000 538,721
Province of Ontario, Bonds,
7.75%, 6/4/2002 500,000 510,725
US Bank, Notes,
5.70%, 12/15/2008 500,000 439,843
Wells Fargo, Sr. Notes,
6.75%, 10/1/2006 350,000 339,473
4,883,429
INDUSTRIAL--10.2%
Albertson's, Sr. Notes,
6.95%, 8/1/2009 700,000 673,555
Coca-Cola Enterprises, Notes,
7.125%, 9/30/2009 1,500,000 1,469,870
Comcast Cable Communications, Notes,
6.20%, 11/15/2008 500,000 453,980
duPont (E.I.) deNemours & Co., Notes,
6.50%, 9/1/2002 500,000 496,827
McDonald's, Notes,
5.90%, 5/11/2001 500,000 495,025
Monsanto, Notes,
5.375%, 12/1/2001 300,000 (b) 291,626
News America Holdings, Sr. Notes,
8.625%, 2/1/2003 900,000 930,775
Norfolk Southern, Sr. Notes,
6.20%, 4/15/2009 1,500,000 1,351,401
PPG Industries, Notes,
6.25%, 2/15/2002 500,000 493,176
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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INDUSTRIAL (CONTINUED)
Safeway, Notes,
5.875%, 11/15/2001 1,000,000 978,586
Time Warner, Notes,
7.75%, 6/15/2005 1,500,000 1,521,660
9,156,481
UTILITIES--4.3%
AT&T, Notes,
5.625%, 3/15/2004 750,000 711,707
MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 1,000,000 961,848
PECO Energy, Notes,
6.625%, 3/1/2003 1,000,000 979,459
Viacom, Sr. Notes,
7.50%, 1/15/2002 550,000 553,494
Wisconsin Electric Power, Notes,
7.25%, 8/1/2004 700,000 703,377
3,909,885
U.S. GOVERNMENT & AGENCIES--29.3%
Federal Home Loan Bank, Bonds:
5.61%, 6/22/2001 1,100,000 1,086,363
5.875%, 9/17/2001 2,500,000 2,473,412
4.875%, 1/22/2002 500,000 483,977
5.25%, 4/25/2002 1,500,000 1,459,098
5.125%, 9/15/2003 600,000 568,104
Federal Home Loan Mortgage Corp., Notes:
5.75%, 7/15/2003 3,100,000 3,002,939
5%, 1/15/2004 600,000 561,584
5.125%, 10/15/2008 750,000 657,900
5.75%, 3/15/2009 750,000 685,312
Federal National Mortgage Association, Notes:
5.25%, 1/15/2003 1,300,000 1,249,941
4.75%, 11/14/2003 1,500,000 1,397,964
5.125%, 2/13/2004 2,200,000 2,066,084
5.625%, 5/14/2004 1,500,000 1,432,037
U.S. Treasury Bonds,
11.125%, 8/15/2003 1,100,000 1,262,624
U.S. Treasury Notes:
5.25%, 1/31/2001 1,020,000 1,011,248
8%, 5/15/2001 600,000 613,938
6.625%, 6/30/2001 1,350,000 1,358,033
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
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U.S. GOVERNMENT & AGENCIES (CONTINUED)
U.S. Treasury Notes (continued):
7.50%, 5/15/2002 1,430,000 1,468,267
5.75%, 10/31/2002 500,000 493,310
7.50%, 2/15/2005 835,000 871,130
7%, 7/15/2006 500,000 512,315
6.50%, 10/15/2006 1,690,000 1,686,113
26,401,693
TOTAL BONDS AND NOTES
(cost $45,420,370) 44,351,488
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SHORT-TERM INVESTMENTS--3.2%
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REPURCHASE AGREEMENT--2.8%
Greenwich Capital Markets, Tri-Party
Repurchase Agreement, 2.8%, dated
12/31/1999, due 1/3/2000, in the amount
of $2,550,595 (fully collateralized by
$2,580,000 U.S. Treasury Inflation Protected
Securities, 3.875%, 1/15/2009, value $2,605,642) 2,550,000 2,550,000
U.S. TREASURY BILLS--.4%
5.08%, 3/2/2000 354,000 (c) 351,058
TOTAL SHORT-TERM INVESTMENTS
(cost $2,900,953) 2,901,058
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TOTAL INVESTMENTS (cost $79,928,905) 99.1% 89,329,809
CASH AND RECEIVABLES (NET) .9% 800,138
NET ASSETS 100.0% 90,129,947
(A) NON-INCOME PRODUCING.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT DECEMBER 31, 1999, THIS
SECURITY AMOUNTED TO $291,626 OR APPROXIMATELY .3% OF NET ASSETS.
(C) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR
OPEN FINANCIAL FUTURES POSITIONS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF FINANCIAL FUTURES
December 31, 1999
<TABLE>
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts ($) Expiration at 12/31/99 ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG
5 Year U.S. Treasury Notes 83 8,135,297 March 2000 (69,031)
FINANCIAL FUTURES SHORT
Standard & Poor's 500 8 2,968,400 March 2000 (73,113)
(142,144)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--
See Statement of Investments--Note 1(b) 79,928,905 89,329,809
Cash 99,615
Dividends and interest receivable 822,036
Prepaid expenses 2,454
90,253,914
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 63,387
Payable for futures variation margin--Note 4(a) 28,342
Loan commitment fees payable 75
Accrued expenses 32,163
123,967
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NET ASSETS ($) 90,129,947
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 80,219,878
Accumulated undistributed investment income--net 13,289
Accumulated net realized gain (loss) on investments 638,020
Accumulated net unrealized appreciation (depreciation)
on investments [including ($142,144) net unrealized
(depreciation) on financial futures]--Note 4(b) 9,258,760
- --------------------------------------------------------------------------------
NET ASSETS ($) 90,129,947
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
5,625,437
NET ASSET VALUE, offering and redemption price per share ($) 16.02
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Interest 2,449,235
Cash dividends (net of $8,003 foreign taxes withheld at source) 455,163
TOTAL INCOME 2,904,398
EXPENSES:
Investment advisory fee--Note 3(a) 574,439
Professional fees 23,538
Custodian fees--Note 3(a) 22,573
Prospectus and shareholders' reports 20,505
Registration fees 7,997
Trustees' fees and expenses--Note 3(b) 1,111
Loan commitment fees--Note 2 726
Shareholder servicing costs 630
Miscellaneous 4,517
TOTAL EXPENSES 656,036
INVESTMENT INCOME--NET 2,248,362
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 4,885,031
Net realized gain (loss) on financial futures (897,850)
NET REALIZED GAIN (LOSS) 3,987,181
Net unrealized appreciation (depreciation) on investments
[including ($113,994) net unrealized (depreciation)
on financial futures] (167,147)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,820,034
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 6,068,396
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,248,362 1,641,276
Net realized gain (loss) on investments 3,987,181 3,392,359
Net unrealized appreciation (depreciation)
on investments (167,147) 6,714,434
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 6,068,396 11,748,069
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (2,235,073) (1,647,249)
Net realized gain on investments (3,835,273) (3,168,608)
TOTAL DIVIDENDS (6,070,346) (4,815,857)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 43,286,441 28,199,314
Dividends reinvested 6,070,346 4,815,857
Cost of shares redeemed (19,065,662) (21,250,964)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 30,291,125 11,764,207
TOTAL INCREASE (DECREASE) IN NET ASSETS 30,289,175 18,696,419
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 59,840,772 41,144,353
END OF PERIOD 90,129,947 59,840,772
Undistributed investment income--net 13,289 --
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 2,665,579 1,876,334
Shares issued for dividends reinvested 378,221 309,182
Shares redeemed (1,173,446) (1,360,556)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,870,354 824,960
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Year Ended December 31,
---------------------------------------
1999 1998 1997a
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 15.94 14.04 12.50
Investment Operations:
Investment income--net .47(b) .43 .25
Net realized and unrealized gain (loss) on investments .80 2.67 2.06
Total from Investment Operations 1.27 3.10 2.31
Distributions:
Dividends from investment income--net (.46) (.43) (.25)
Dividends from net realized gain on investments (.73) (.77) (.52)
Total Distributions (1.19) (1.20) (.77)
Net asset value, end of period 16.02 15.94 14.04
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 8.13 22.34 18.48(c
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .86 .87 .67(c)
Ratio of net investment income to average net assets 2.94 2.98 1.91(c)
Portfolio Turnover Rate 98.61 111.75 45.78(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 90,130 59,841 41,144
(A) FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
</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 Balanced 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 investment results that are greater than the total return performance of
common stocks and bonds in the aggregate, as represented by a hybrid index, 60%
of which is composed of the common stocks in the Standard & Poor's 500 Composite
Stock Price Index and 40% of which is composed of the bonds in the Lehman
Brothers Intermediate Government/Corporate Bond Index. The Dreyfus Corporation
(" Dreyfus" ) serves as the portfolio's investment adviser. Dreyfus is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation. Premier Mutual Fund Services, Inc. (the
" Distributor" ) 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. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(b) 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 received
net earnings credits of $1,869 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 terms of 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: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net are declared and paid quarterly. Dividends
from net realized capital gain are normally declared and paid annually, but the
portfolio may make distributions on
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(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.
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. Dreyfus had
undertaken from January 1, 1999 through December 31, 1999, to reduce the
investment advisory fee paid by the portfolio, to the extent that the
portfolio' s aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings, commitment fees and extraordinary expenses, exceeded an annual rate
of 1.25% of the value of the portfolio's average daily net assets. No expense
reimbursement was required for the period ended December 31, 1999.
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
$33 pursuant to the transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended December 31, 1999,
the portfolio was charged $22,573 pursuant to the custody 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.
NOTE 4--Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period ended
December 31, 1999, amounted to $94,271,105 and $68,913,108, respectively.
The portfolio may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The portfolio is exposed
to market risk as a result of changes in the value of the underlying financial
instruments. Investments in financial futures require the portfolio to "mark to
market" on a daily basis, which reflects the change in the market value of the
contracts at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the portfolio recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents,
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
up to approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded and
is subject to change. Contracts open at December 31, 1999 are set forth in the
Statement of Financial Futures.
(b) At December 31, 1999, accumulated net unrealized appreciation on investments
and financial futures was $9,258,760, consisting of $11,930,097 gross unrealized
appreciation and $2,671,337 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, Balanced
Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statements of investments and financial futures, of Dreyfus Variable
Investment Fund, Balanced 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. Our procedures included verification by examination
of securities held by the custodian as of December 31, 1999 and confirmation of
securities not held by the custodian by correspondence with others. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Variable Investment Fund, Balanced 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 $.1120 per share as a
long-term capital gain distribution of the $.7550 per share paid on December 30,
1999 and also designates $.0530 per share as a long-term capital gain
distribution of the $.1910 per share paid on March 31, 1999.
The portfolio also designates 8.25% of the ordinary dividends paid during the
fiscal year ended December 31, 1999 as qualifying for the corporate dividends
received deduction.
NOTES
For More Information
Dreyfus Variable
Investment Fund,
Balanced Portfolio
200 Park Avenue
New York, NY 10166
Investment Adviser
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
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
154AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX,
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT / CORPORATE
BOND INDEX AND A HYBRID INDEX
EXHIBIT A:
STANDARD
DREYFUS & POOR'S LEHMAN
VARIABLE 500 BROTHERS
INVESTMENT COMPOSITE INTERMEDIATE
FUND, STOCK GOVERNMENT /
PERIOD BALANCED PRICE CORPORATE HYBRID
PORTFOLIO INDEX* BOND INDEX* INDEX*
5/1/97 10,000 10,000 10,000 10,000
12/31/97 11,847 12,255 10,674 11,623
12/31/98 14,494 15,760 11,575 14,009
12/31/99 15,673 19,075 11,619 15,799
*Source: Lipper Analytical Services, Inc.