Dreyfus Variable
Investment Fund,
Disciplined Stock
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
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
21 Report of Independent Auditors
22 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Disciplined Stock Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Disciplined Stock Portfolio, covering the 12-month period from January 1,
1999, through December 31, 1999. Inside, you'll find valuable information about
how the fund was managed during the reporting period, including a discussion
with the fund's portfolio manager, Bert J. Mullins.
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, Disciplined Stock
Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF PERFORMANCE
Bert J. Mullins, Portfolio Manager
How did Dreyfus Variable Investment Fund, Disciplined Stock Portfolio perform
relative to its benchmark?
For the 12-month period ended December 31, 1999, the portfolio's total return
was 18.45% .(1) For the same period, the total return of the Standard & Poor's
500((reg.tm) ) Composite Stock Price Index ("S&P 500 Index"), the portfolio's
benchmark, was 21.03%.(2)
We attribute the portfolio' s strong absolute performance to market strength
among large-cap stocks throughout 1999. However, much of the market's advance
during the period was driven by exceptionally strong performance among a
relative handful of growth-oriented stocks in the technology industry. Because
the portfolio is broadly diversified to reduce risks and did not overweight the
handful of technology stocks that provided stellar performance, the portfolio
did not exceed the benchmark's returns.
What is the portfolio's investment approach?
Dreyfus Variable Investment Fund, Disciplined Stock Portfolio invests in a
diversified group of large companies that meet strict standards for value and
growth. We identify potential investments through a quantitative analytical
process that sifts through approximately 2,000 stocks in search of those that
are not only undervalued according to our criteria, but that we believe also
exhibit high earnings potential. A team of experienced analysts examines the
fundamentals of the top-ranked candidates.
In addition to identifying attractive investment opportunities, our approach is
designed to manage the risks associated with market timing and sector and
industry exposure. Market timing refers to the practice of attempting to benefit
from gains and declines in the overall market by adjusting the percentage of a
portfolio' s assets invested in the market at any one time. We do not believe
that the advantages of attempting to time the market or rotate in and out of
various indus
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
try sectors outweigh the risks of such moves. Instead, we seek to manage these
risks typically by being close to fully invested and by remaining industry- and
sector-neutral in relation to the S&P 500 Index, as we deem appropriate.
The result is a broadly diversified portfolio of carefully selected stocks. At
the end of the recent 12-month period, the portfolio held positions in more than
150 stocks across 10 economic sectors. Our 10 largest holdings accounted for
only 27% of the portfolio, so that performance was not overly dependent on any
one stock but was determined by a large number of securities.
What other factors influenced the portfolio's performance?
The portfolio was affected by the market's emphasis on price momentum rather
than company fundamentals during most of 1999. Early in the year, uncertainties
regarding the sustainability of U.S. economic growth led to sudden swings in
investor sentiment. By midyear, rising interest rates had become the focus of
investor uncertainty. As a result, stock prices rose and fell sharply, often
moving just as sharply in the opposite direction the following week.
Because our quantitative model depends on using data from one month to identify
stocks that we believe can perform well during the next, a high level of market
volatility from month to month typically reduces the effectiveness of our
approach. However, many of the portfolio's holdings showed notable strength
during 1999. The portfolio benefited from its holdings of several of the
best-performing companies in the S&P 500, including Nokia, Oracle, Telefonos de
Mexico, EMC and Sun Microsystems.
On the other hand, performance was hurt by stocks we did not own. Several of the
Index' s top performers failed to meet our investment criteria. Investors chased
the prices of certain technology stocks to unprecedented levels with little
regard to valuation or earnings momentum.
What is the portfolio's current strategy?
We have continued to adhere to our highly disciplined investment process, which
seeks to identify stocks that have favorable value and growth characteristics.
We also have continued to follow our diversification strategy, which is intended
to manage risk by investing the portfolio' s assets among industry groups
typically in proportions that match the composition of the portfolio' s
benchmark, the S&P 500 Index. While broad diversification hindered performance
relative to the S&P 500 Index in a remarkably narrow stock market, we continue
to believe in our diversified, long-term 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, 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 THAT 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 Portfolio
PORTFOLIO PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Variable
Investment Fund, Disciplined Stock Portfolio and the Standard & Poor's 500
Composite Stock Price Index
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<TABLE>
Average Annual Total Returns AS OF 12/31/99
Inception From
Date 1 Year Inception
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<S> <C> <C> <C>
PORTFOLIO 5/1/96 18.45% 26.16%
</TABLE>
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS VARIABLE
INVESTMENT FUND, DISCIPLINED STOCK PORTFOLIO ON 5/1/96 (INCEPTION DATE) TO A
$10,000 INVESTMENT MADE IN THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
<TABLE>
December 31, 1999
COMMON STOCKS--98.9% Shares Value ($)
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<S> <C> <C>
ALCOHOL & TOBACCO--1.1%
Anheuser-Busch Cos. 18,800 1,332,450
Philip Morris Cos. 43,150 1,000,541
2,332,991
CONSUMER CYCLICAL--9.1%
Best Buy 16,500 (a) 828,094
Dayton Hudson 17,400 1,277,812
Delphi Automotive Systems 27,671 435,818
Federated Department Stores 17,800 (a) 900,013
Ford Motor 11,900 635,906
General Motors 23,200 1,686,350
Limited 26,600 1,152,112
Lowe's Cos. 18,800 1,123,300
McDonald's 30,500 1,229,531
Safeway 27,000 (a) 960,187
Staples 29,500 (a) 612,125
TJX Cos. 36,400 743,925
Tandy 23,700 1,165,744
US Airways Group 14,850 (a) 476,128
Wal-Mart Stores 89,700 6,200,513
19,427,558
CONSUMER STAPLES--5.1%
Coca-Cola 29,250 1,703,813
Dial 22,600 549,463
Fortune Brands 17,000 562,063
General Mills 26,400 943,800
Nabisco Holdings, Cl. A 23,900 755,837
PepsiCo 44,000 1,551,000
Procter & Gamble 29,850 3,270,441
Quaker Oats 12,900 846,563
Ralston-Purina Group 27,700 772,137
10,955,117
ELECTRONIC EQUIPMENT--6.3%
Corning 10,000 1,289,375
General Instrument 11,000 (a) 935,000
Lucent Technologies 57,800 4,324,163
Motorola 11,000 1,619,750
Nokia, ADS 8,900 1,691,000
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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ELECTRONIC EQUIPMENT (CONTINUED)
Qwest Communications International 14,122 (a) 607,246
SCI Systems 12,730 (a) 1,046,247
Solectron 10,500 (a) 998,813
Tellabs 14,700 (a) 943,556
13,455,150
ENERGY--6.1%
Atlantic Richfield 13,000 1,124,500
Coastal 22,400 793,800
Columbia Energy Group 14,625 925,031
Diamond Offshore Drilling 32,500 993,281
Enron 27,900 1,238,062
Exxon Mobil 49,800 4,012,012
Occidental Petroleum 21,800 471,425
Royal Dutch Petroleum (New York Shares) 37,500 2,266,406
Tidewater 16,800 604,800
Tosco 20,300 551,906
12,981,223
HEALTH CARE--9.0%
American Home Products 33,900 1,336,931
Amgen 39,000 (a) 2,342,438
Bausch & Lomb 9,800 670,687
Bristol-Myers Squibb 41,200 2,644,525
Cardinal Health 11,100 531,413
Elan, A.D.S. 33,000 (a) 973,500
Lilly (Eli) & Co. 26,700 1,775,550
MedImmune 5,000 (a) 829,375
Medtronic 33,700 1,227,944
Merck & Co. 21,000 1,408,313
Pharmacia & Upjohn 23,500 1,057,500
Schering-Plough 46,400 1,957,500
United Healthcare 14,400 765,000
Warner-Lambert 20,550 1,683,816
19,204,492
INTEREST SENSITIVE--17.3%
ACE 20,000 333,750
Allstate 38,000 912,000
Ambac Financial Group 8,650 451,422
COMMON STOCKS (CONTINUED) Shares Value ($)
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INTEREST SENSITIVE (CONTINUED)
American General 6,100 462,837
American International Group 8,182 884,679
Bank One 17,027 545,928
Chase Manhattan 37,000 2,874,437
CIGNA 8,350 672,697
Citigroup 76,300 4,239,419
Edwards (A.G.) 11,800 378,337
Fannie Mae 22,600 1,411,087
FleetBoston Financial 62,900 2,189,706
General Electric 62,050 9,602,238
Hartford Financial Services Group 18,800 890,650
Lehman Brothers Holdings 11,800 999,312
MBNA 47,950 1,306,638
Merrill Lynch 13,300 1,110,550
Morgan Stanley Dean Witter & Co. 11,800 1,684,450
Old Republic International 12,325 167,928
PNC Bank 14,500 645,250
SLM Holding 16,800 709,800
SouthTrust 25,700 971,781
Summit Bancorp 10,150 310,844
SunTrust Banks 10,100 695,006
Torchmark 11,000 319,688
Washington Mutual 13,500 351,000
Wells Fargo 49,600 2,005,700
37,127,134
PRODUCER GOODS--8.2%
Alcan Aluminium 8,700 358,331
Alcoa 15,000 1,245,000
Burlington Northern Santa Fe 17,900 434,075
Canadian National Railway 11,700 307,856
Champion International 11,500 712,281
Deere & Co. 12,600 546,525
duPont (E.I.) deNemours & Co. 10,400 685,100
General Dynamics 14,700 775,425
Honeywell International 20,950 1,208,553
Ingersoll-Rand 12,900 710,306
International Paper 13,200 744,975
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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PRODUCER GOODS (CONTINUED)
Kerr-McGee 11,800 731,600
Martin Marietta Materials 7,500 307,500
Minnesota Mining & Manufacturing 12,900 1,262,587
Northrop Grumman 6,000 324,375
PPG Industries 17,000 1,063,563
Rohm & Haas 12,500 508,594
Southdown 12,600 650,475
Tyco International 79,900 3,106,113
USX-U.S. Steel Group 10,500 346,500
Union Carbide 9,600 640,800
United Technologies 13,200 858,000
17,528,534
SERVICES--8.7%
AMFM 5,500 (a) 430,375
AT&T - Liberty Media Group, Cl. A 18,000 (a) 1,021,500
America Online 51,800 (a) 3,907,663
Carnival 18,100 865,406
Clear Channel Communications 9,000 (a) 803,250
Fox Entertainment Group, Cl. A 22,400 (a) 558,600
Infinity Broadcasting, Cl. A 21,300 (a) 770,794
MediaOne Group 6,400 (a) 491,600
Omnicom Group 12,200 1,220,000
Time Warner 33,100 2,397,681
Valassis Communications 8,400 (a) 354,900
Viacom, Cl. B 30,900 (a) 1,867,519
Vodafone AirTouch, ADR 41,200 2,039,400
Yahoo! 4,500 (a) 1,947,094
18,675,782
TECHNOLOGY--19.5%
Altera 10,100 (a) 500,581
Applied Materials 11,800 (a) 1,494,913
BMC Software 13,700 (a) 1,095,144
Cisco Systems 65,250 (a) 6,989,906
Dell Computer 53,800 (a) 2,743,800
EMC 23,400 (a) 2,556,450
Intel 42,600 3,506,513
International Business Machines 28,600 3,088,800
COMMON STOCKS (CONTINUED) Shares Value ($)
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TECHNOLOGY (CONTINUED)
Lexmark International Group, Cl. A 14,800 (a) 1,339,400
Linear Technology 7,400 529,563
Maxim Integrated Products 20,200 (a) 953,187
Microsoft 92,400 (a) 10,787,700
Oracle 31,700 (a) 3,552,381
Sun Microsystems 36,200 (a) 2,803,237
41,941,575
UTILITIES--8.5%
AT&T 70,100 3,557,575
Bell Atlantic 28,684 1,765,859
Edison International 19,500 510,656
Florida Progress 13,300 562,756
GPU 17,700 529,894
GTE 21,900 1,545,319
MCI WorldCom 67,575 (a) 3,585,698
PECO Energy 14,100 489,975
Pinnacle West Capital 7,550 230,747
Public Service Enterprise Group 13,800 480,413
SBC Communications 45,526 2,219,392
Sprint(FON Group) 14,100 949,106
Telefonos de Mexico, Cl. L, ADS 9,400 1,057,500
Texas Utilities 19,550 695,247
18,180,137
TOTAL COMMON STOCKS
(cost $154,029,970) 211,809,693
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--1.1% Amount ($) Value ($)
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REPURCHASE AGREEMENT;
Greenwich Capital Markets, Tri-Party
Repurchase Agreement, 2.80%, dated
12/31/1999, due 1/3/2000, in the amount
of $2,400,560 (fully collateralized by
$2,625,000 Federal Home Loan Mortgage
Debs., 5.75%, 3/15/2009, value $2,449,624)
(cost $2,400,000) 2,400,000 2,400,000
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TOTAL INVESTMENTS (cost $156,429,970) 100.0% 214,209,693
CASH AND RECEIVABLES (NET) .0% 86,099
NET ASSETS 100.0% 214,295,792
(A) NON-INCOME PRODUCING.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 156,429,970 214,209,693
Cash 58,923
Dividends and interest receivable 197,341
Prepaid expenses 7,473
214,473,430
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 145,816
Accrued expenses 31,822
177,638
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NET ASSETS ($) 214,295,792
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 157,010,402
Accumulated undistributed investment income--net 18,042
Accumulated net realized gain (loss) on investments (512,375)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 57,779,723
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NET ASSETS ($) 214,295,792
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 7,959,984
NET ASSET VALUE, offering and redemption price per share ($) 26.92
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 $34,069 foreign taxes withheld at source) 2,161,764
Interest 81,358
TOTAL INCOME 2,243,122
EXPENSES:
Investment advisory fee--Note 3(a) 1,329,297
Custodian fees--Note 3(a) 45,299
Professional fees 29,758
Prospectus and shareholders' reports 19,117
Registration fees 11,651
Shareholder servicing costs 2,534
Trustees' fees and expenses--Note 3(b) 2,304
Loan commitment fees--Note 2 1,437
Miscellaneous 2,464
TOTAL EXPENSES 1,443,861
INVESTMENT INCOME--NET 799,261
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 1,387,387
Net unrealized appreciation (depreciation) on investments 29,155,029
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 30,542,416
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 31,341,677
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
--------------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 799,261 502,053
Net realized gain (loss) on investments 1,387,387 (394,248)
Net unrealized appreciation (depreciation)
on investments 29,155,029 22,134,929
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 31,341,677 22,242,734
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (781,219) (519,473)
Net realized gain on investments (1,294,140) (586,824)
TOTAL DIVIDENDS (2,075,359) (1,106,297)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 53,205,080 70,391,268
Dividends reinvested 2,075,359 1,106,297
Cost of shares redeemed (11,147,782) (5,053,929)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 44,132,657 66,443,636
TOTAL INCREASE (DECREASE) IN NET ASSETS 73,398,975 87,580,073
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NET ASSETS ($):
Beginning of Period 140,896,817 53,316,744
END OF PERIOD 214,295,792 140,896,817
Undistributed investment income--net 18,042 --
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 2,194,684 3,435,229
Shares issued for dividends reinvested 77,381 50,063
Shares redeemed (452,513) (258,565)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,819,552 3,226,727
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(a)
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<S> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 22.95 18.30 14.79 12.50
Investment Operations:
Investment income--net .11(b) .08 .08 .07
Net realized and unrealized gain (loss)
on investments 4.12 4.80 4.53 2.29
Total from Investment Operations 4.23 4.88 4.61 2.36
Distributions:
Dividends from investment income--net (.10) (.09) (.08) (.07)
Dividends from net realized gain on
investments (.16) (.14) (1.02) --
Total Distributions (.26) (.23) (1.10) (.07)
Net asset value, end of period 26.92 22.95 18.30 14.79
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TOTAL RETURN (%) 18.45 26.72 31.51 18.86(c,d)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .81 .88 1.02 .80(c)
Ratio of net investment income
to average net assets .45 .53 .68 .72(c)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- .16(c)
Portfolio Turnover Rate 48.95 56.28 79.74 30.62(c)
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Net Assets, end of period ($ x 1,000) 214,296 140,897 53,317 17,722
(A) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(C) NOT ANNUALIZED.
(D) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1,
1996 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
</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 Disciplined Stock 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 publicly-traded common stocks in the aggregate, as
represented by the Standard & Poor' s 500 Composite Stock Price 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. 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 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
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(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 $1,533 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 and dividends from net realized capital
gain are normally declared and paid annually, but the portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the portfolio not to distribute such
gain.
(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.
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 $107 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 $45,299 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.
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) During the period ended December 31, 1999, the portfolio incurred total
brokerage commissions of $199,781 of which $16,255 was paid to Dreyfus
Investment Services Corporation, 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
$126,443,122 and $85,595,550, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$57,779,723, consisting of $63,277,466 gross unrealized appreciation and
$5,497,743 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, Disciplined Stock Portfolio
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Variable Investment Fund, Disciplined
Stock Portfolio (one of the series constituting 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, Disciplined Stock 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 $.1641 per share as a
long-term capital gain distribution of the $.2630 per share paid on December 30,
1999.
The portfolio also designates 100% 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,
Disciplined Stock 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 150AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, DISCIPLINED STOCK
PORTFOLIO AND THE STANDARD & POOR'S 500 COMPOSITE
STOCK PRICE INDEX
EXHIBIT A:
DREYFUS VARIABLE
STANDARD & POOR'S 500 INVESTMENT FUND,
PERIOD COMPOSITE STOCK DISCIPLINED
PRICE INDEX * STOCK PORTFOLIO
5/1/96 10,000 10,000
12/31/96 11,499 11,886
12/31/97 15,334 15,632
12/31/98 19,719 19,809
12/31/99 23,867 23,463
* Source: Lipper Analytical Services, Inc.
