Dreyfus Variable
Investment Fund,
Zero Coupon 2000 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 Portfolio Performance
7 Statement of Investments
8 Statement of Financial Futures
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
17 Report of Independent Auditors
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Zero Coupon 2000 Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Zero Coupon 2000 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 Gerald Thunelius, portolio manager and a member of the Dreyfus
Taxable Fixed Income Team that manages the portfolio.
The past year was challenging for most fixed-income investors. Faster than
expected economic growth in the U.S. and overseas fueled concerns that
long-dormant inflationary pressures might re-emerge, potentially reducing the
future value of bonds' interest and principal payments. These concerns prompted
the Federal Reserve Board to raise key short-term interest rates three times
during the summer and fall of 1999 in an attempt to prevent a reacceleration of
inflation.
While U.S. Treasury and agency securities declined sharply in this environment
during 1999, prices of higher yielding securities -- such as corporate bonds and
mortgage-backed securities -- fell less severely. In an environment of robust
economic growth, investors appeared more comfortable owning bonds that are
influenced primarily by credit risk, and they seemed to avoid securities that
are most affected by interest-rate risk.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Variable Investment Fund, Zero Coupon 2000
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Gerald Thunelius, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus Variable Investment Fund, Zero Coupon 2000 Portfolio perform
during the period?
For the 12-month period ended December 31, 1999, the Dreyfus Variable Investment
Fund, Zero Coupon 2000 Portfolio produced a total return, including share price
changes and dividend income generated, of 2.69%.(1) In comparison, the Merrill
Lynch U.S. Treasury Coupon 1-Year Strips Index produced a 4.34% total return and
the Merrill Lynch U.S. Treasury Coupon 2-Year Strips Index produced a 2.32%
total return for the same period.(2) Income dividends paid from net investment
income during the period amounted to $0.656 per share, representing a
distribution rate per share of 5.39%.(3)
We attribute the portfolio's modest performance to a declining bond market in a
rising interest-rate environment. We attribute our positive performance to our
duration management strategy, which kept the portfolio's average duration -- a
measure of sensitivity to changing interest rates -- considerably shorter than
the average for our peer group.
What is the portfolio's investment strategy?
The portfolio seeks as high an investment return as is consistent with the
preservation of capital. To pursue this goal, the portfolio invests primarily in
debt obligations issued by the U.S. government and its agencies and
instrumentalities that have been stripped of their unmatured interest coupons,
and interest coupons that have been stripped from these debt obligations
The term "stripped securities" refers to a debt obligation that does not entitle
the holder to any periodic payments of interest prior to maturity. Stripped
securities are bonds that are issued and traded at a discount from their face
amount. The discount varies depending on the time of maturity, prevailing
interest rates and the perceived credit qual The Portfoli
DISCUSSION OF PERFORMANCE (CONTINUED)
ity of the issuer. Investors who hold stripped securities until maturity know
the total amount of their return at the time of investment.
At least 65% of the portfolio' s assets will be invested in zero coupon
securities that mature on or about December 31, 2000. On that date, the
portfolio will be liquidated. Prior to December 31, 2000, shareholders will be
informed of the liquidation of the portfolio and will be given the opportunity
to exchange their investment for another portfolio of the Dreyfus Variable
Investment Funds. If the portfolio has not received instructions from its
shareholders before the liquidation date, their investment will automatically be
invested in the Dreyfus Variable Investment Fund, Money Market Portfolio.
What other factors influenced the portfolio's performance?
Like virtually all fixed-income investments, the bonds in the portfolio were
adversely affected by rising interest rates throughout the year.
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 expected. In
this environment, investors began to move away from U.S. Treasury securities, to
which they had previously fled during the worst of the global financial crisis.
They moved instead into higher yielding, riskier assets. This caused the prices
of U.S. Treasury securities to fall from relatively high levels, while the
prices of corporate bonds rallied from depressed prices.
During the second, third and fourth quarters of 1999, economic strength in
domestic and overseas markets 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.
However, corporate bonds generally fell less severely than prices of U.S.
government securities during the second half of the year. That's primarily
because corporate bonds tend to be more sensitive to th
credit quality of their issuers, which generally improves in a strong economy,
and less sensitive to interest-rate trends.
What is the portfolio's current strategy?
The portfolio' s final year is underway and we have begun to prepare for its
eventual liquidation on December 31, 2000. The first step in that process has
been to reduce our holdings of longer term corporate and U.S. government agency
securities that mature after the anticipated liquidation date. We have been
redeploying those assets to shorter term U.S. Treasury securities, which have
the liquidity characteristics required for timely conversion to cash when the
time comes.
As we move closer to liquidation on December 31, 2000, we can expect the
portfolio' s average duration to become incrementally shorter. If interest rates
continue to rise, this position should help cushion the portfolio from adverse
market movements. If interest rates reverse course and fall, however, the
portfolio' s short average duration is unlikely to help it capture all the
benefits of positive market developments.
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 SO 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: BLOOMBERG L.P. -- THE MERRILL LYNCH U.S. TREASURY COUPON 1-YEAR AND
2-YEAR STRIPS INDEXES ARE UNMANAGED ZERO-COUPON INDEXES WITH CONSTANT MATURITY
AND DURATION. THE INDEXES DO NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES.
(3) DISTRIBUTION RATE PER SHARE IS BASED UPON DIVIDENDS PER SHARE PAID FROM NET
INVESTMENT INCOME DURING THE 12-MONTH PERIOD, DIVIDED BY THE NET ASSET VALUE PER
SHARE AT THE END OF THE PERIOD.
The Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Variable
Investment Fund, Zero Coupon 2000 Portfolio and the Merrill Lynch U.S. Treasury
Coupon 1-Year Strips Index
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Average Annual Total Returns AS OF 12/31/99
<TABLE>
Inception From
Date 1 Year 5 Years Inception
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<S> <C> <C> <C> <C>
PORTFOLIO 8/31/90 2.69% 7.36% 8.83%
</TABLE>
(+) SOURCE: BLOOMBERG L.P.
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, ZERO COUPON 2000 PORTFOLIO ON 8/31/90 (INCEPTION DATE) TO A
$10,000 INVESTMENT MADE IN THE MERRILL LYNCH U.S. TREASURY COUPON 1-YEAR STRIPS
INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
UNLIKE THE MERRILL LYNCH U.S. TREASURY COUPON 1-YEAR STRIPS INDEX, THE
PORTFOLIO'S PAST PERFORMANCE GENERALLY REFLECTS THE HIGHER PERFORMANCE OF
SECURITIES WITH MATURITIES GREATER THAN ONE YEAR.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE MERRILL LYNCH U.S. TREASURY
COUPON 1-YEAR STRIPS INDEX IS AN UNMANAGED ZERO COUPON INDEX WITH CONSTANT
MATURITY AND DURATION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND
OTHER EXPENSES. FURTHER INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
Principal
BONDS AND NOTES--99.2% Amount ($) Value ($)
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<S> <C> <C>
FOREIGN--2.6%
Deutsche Bank AG,
Medium-Term Notes, Zero Coupon, 2000 1,000,000 995,710
MUNICIPAL BONDS--3.7%
New Jersey Economic Development Authority,
State Pension Funding Bonds, Ser. 1997B,
Zero Coupon, 2001 1,500,000 1,391,250
U.S. GOVERNMENTS--42.9%
U.S. Treasury Notes
Principal Strips, Zero Coupon, 11/15/2000 17,000,000 16,147,960
U.S. GOVERNMENT AGENCIES--50.0%
Chattanooga Valley,
Secured First Mortgage, Zero Coupon, 1/1/2000 176,000 176,000
FACO Coupon Strips,
Ser. 97-1, Zero Coupon, 7/21/2000 4,743,000 4,584,655
FICO Coupon Strips,
Ser. 1, Zero Coupon, 11/11/2000 1,132,000 1,072,115
Federal Home Loan Mortgage:
Coupon Strips, Zero Coupon, 5/15/2000 5,000,000 4,887,250
Principal Strips, Zero Coupon, 5/15/2000 1,000,000 979,106
Tennessee Valley Authority,
Coupon Strips, Zero Coupon, 11/1/2000 3,000,000 2,851,188
Principal Strips, Zero Coupon, 11/1/2000 4,500,000 4,271,108
18,821,422
TOTAL BONDS AND NOTES
(cost $37,420,066) 37,356,342
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SHORT-TERM INVESTMENTS--.7%
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U.S. TREASURY BILLS;
4.82%, 1/13/2000
(cost $269,536) 270,000 (a) 269,652
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TOTAL INVESTMENTS (cost $37,689,602) 99.9% 37,625,994
CASH AND RECEIVABLES (NET) .1% 36,751
NET ASSETS 100.0% 37,662,745
(A) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR OPEN FINANCIAL FUTURES POSITIONS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF FINANCIAL FUTURES
December 31, 1999
<TABLE>
Market Value Unrealized
Covered (Depreciation)
Contracts By Contracts ($) Expiration at 12/31/99 ($)
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<S> <C> <C> <C> <C>
FINANCIAL FUTURES SHORT
U.S. Treasury 5 Year Notes 54 5,292,844 March 2000 (66,383)
U.S. Treasury Bonds 1 90,937 March 2000 (250)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of Investments 37,689,602 37,625,994
Cash 101,813
Prepaid expenses 1,246
37,729,053
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 18,214
Payable for futures variation margin--Note 4(a) 17,305
Accrued expenses 30,789
66,308
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NET ASSETS ($) 37,662,745
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 38,047,273
Accumulated undistributed investment income--net 5,198
Accumulated net realized gain (loss) on investments and financial
futures (259,485)
Accumulated net unrealized appreciation (depreciation)
on investments [including ($66,633) net unrealized
depreciation on financial futures]--Note 4(b) (130,241)
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NET ASSETS ($) 37,662,745
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
3,095,348
NET ASSET VALUE, offering and redemption price per share ($) 12.17
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INTEREST INCOME 2,282,690
EXPENSES:
Investment advisory fee--Note 3(a) 172,383
Auditing fees 24,636
Prospectus and shareholders' reports 17,694
Custodian fees--Note 3(a) 10,043
Legal fees 1,662
Shareholder servicing costs 1,611
Trustees' fees and expenses--Note 3(b) 615
Loan commitment fees--Note 2 314
Registration fees 61
Miscellaneous 14,418
TOTAL EXPENSES 243,437
INVESTMENT INCOME--NET 2,039,253
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (71,361)
Net realized gain (loss) on financial futures 6,860
NET REALIZED GAIN (LOSS) (64,501)
Net unrealized appreciation (depreciation) on investments
[including ($66,633) net unrealized (depreciation) on financial
futures] (965,706)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,030,207)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,009,046
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
-----------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 2,039,253 1,954,940
Net realized gain (loss) on investments (64,501) 88,493
Net unrealized appreciation (depreciation)
on investments (965,706) 467,097
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,009,046 2,510,530
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (2,034,055) (1,955,398)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 9,409,530 9,622,198
Dividends reinvested 2,034,055 1,955,398
Cost of shares redeemed (11,283,823) (8,710,873)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 159,762 2,866,723
TOTAL INCREASE (DECREASE) IN NET ASSETS (865,247) 3,421,855
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NET ASSETS ($):
Beginning of Period 38,527,992 35,106,137
END OF PERIOD 37,662,745 38,527,992
Undistributed investment income--net 5,198 --
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 762,726 770,401
Shares issued for dividends reinvested 165,546 157,239
Shares redeemed (915,601) (698,443)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 12,671 229,197
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.50 12.30 12.29 12.70 11.39
Investment Operations:
Investment income--net .66 .67 .69 .68 .69
Net realized and unrealized
gain (loss) on investments (.33) .20 .14 (.36) 1.31
Total from Investment Operations .33 .87 .83 .32 2.00
Distributions:
Dividends from investment income--net (.66) (.67) (.69) (.68) (.69)
Dividends from net realized gain
on investments -- -- (.13) (.05) --
Total Distributions (.66) (.67) (.82) (.73) (.69)
Net asset value, end of period 12.17 12.50 12.30 12.29 12.70
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TOTAL RETURN (%) 2.69 7.27 7.01 2.59 17.95
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .64 .59 .61 .66 .68
Ratio of net investment income
to average net assets 5.32 5.41 5.65 5.54 5.73
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation -- -- -- -- .03
Portfolio Turnover Rate 57.23 84.71 200.54 98.28 49.43
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Net Assets, end of period ($ x 1,000) 37,663 38,528 35,106 31,796 22,291
</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 Zero Coupon 2000 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 an investment return as is consistent with the
preservation of capital. 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. 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 (excluding short-term
investments other than U.S. Treasury Bills and financial futures) are valued
each business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily available
and are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by the
Service based upon its evaluation of the market for such securities). Other
investments (which constitute a majority of the portfolio's securities) are
carried at fair value as determined by the Service, based on meth The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ods which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. Securities for which there are no such valuations are
valued at fair value as determined in good faith under the Board of Trustees.
Short-term investments, excluding U.S. Treasury Bills, are carried at amortized
cost, which approximates value. 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 on each business
day.
(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,
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 $4,162 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.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend date.
Dividends from investment income-net are declared and paid monthly. Dividends
from net realized capital gain are normally declared and paid annually, but the
portfolio may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
" Code" ). To the extent that net realized capital gain can be offset by capital
loss carryovers, 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.
The portfolio has an unused capital loss carryover of approximately $221,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to
December 31, 1999. This amount is calculated based on Federal income tax
regulations which may differ from financial reporting in accordance with
generally accepted accounting principles. If not applied, $146,000 of the
carryover expires in fiscal 2005 and $75,000 expires in fiscal 2007.
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 .45 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 $114 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended December 31, 1999, the
portfolio was charged $10,043 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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $21,456,713 and $23,079,088, 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
contract at the close of each day's trading. Accordingly, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the portfolio recognizes a realized gain or loss.
These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board of
Trade on which the contract is traded and is subject to change. Contracts open
December 31, 1999 are set forth in the Statement of Financial Futures.
(B) At December 31, 1999, accumulated net unrealized depreciation on investments
and financial futures, was $130,241, consisting of $17,112 gross unrealized
appreciation and $147,353 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, Zero Coupon Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statements of investments and financial futures, of Dreyfus Variable
Investment Fund, Zero Coupon 2000 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
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, Zero Coupon 2000 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
For More Information
Dreyfus Variable
Investment Fund,
Zero Coupon 2000
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 119AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, ZERO COUPON
2000 PORTFOLIO AND THE MERRILL LYNCH U.S. TREASURY
COUPON 1-YEAR STRIPS INDEX
EXHIBIT A:
MERRILL LYNCH DREYFUS VARIABLE
U.S. TREASURY INVESTMENT FUND,
PERIOD COUPON 1-YEAR ZERO COUPON 2000
STRIPS INDEX * PORTFOLIO
8/31/90 10,000 10,000
12/31/90 10,342 10,677
12/31/91 11,368 12,822
12/31/92 11,996 13,959
12/31/93 12,500 16,079
12/31/94 12,828 15,450
12/31/95 13,943 18,223
12/31/96 14,724 18,695
12/31/97 15,620 20,006
12/31/98 16,594 21,459
12/31/99 17,315 22,036
*Source: Bloomberg L.P.
