Dreyfus Variable Investment Fund
Appreciation Portfolio
Investing in common stocks for long-term capital growth
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Appreciation Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objectives and policies may be similar to those
of other funds managed by the investment advisers, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks long-term capital growth consistent with the preservation of
capital; current income is a secondary goal. To pursue these goals, the
portfolio invests in common stocks focusing on "blue chip" companies with total
market values of more than $5 billion at the time of purchase. These established
companies have demonstrated sustained patterns of profitability, strong balance
sheets, an expanding global presence and the potential to achieve predictable,
above-average earnings growth.
In choosing stocks, the portfolio looks primarily for growth companies. The
portfolio first identifies economic sectors it believes will expand over the
next three to five years or longer. Using fundamental analysis, the portfolio
then seeks companies within these sectors that have demonstrated sustained
patterns of profitability, strong balance sheets, an expanding global presence
and the potential to achieve predictable, above-average earnings growth. The
portfolio is also alert to companies which it considers undervalued in terms of
earnings, assets or growth prospects. The portfolio generally maintains
relatively large positions in the securities it purchases.
The portfolio typically employs a "buy-and-hold" investment strategy, and seeks
to keep annual portfolio turnover below 15%. As a result, the portfolio invests
for long-term growth rather than short-term profits.
The portfolio typically sells a stock when there is a change in a company's
business fundamentals or in the portfolio's view of company management.
Concepts to understand
"BLUE CHIP" COMPANIES: established companies that are considered "known
quantities." These companies often have a long record of profit growth and
dividend payment and a reputation for quality management, products and services
"BUY-AND-HOLD" STRATEGY: an investment strategy characterized by a low portfolio
turnover rate, which helps reduce the portfolio's trading costs and minimizes
tax liability by limiting the distribution of capital gains.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Because different types of stocks tend to shift in and out of favor depending on
market and economic conditions, the portfolio's performance may sometimes be
lower or higher than that of other types of funds (such as those emphasizing
smaller companies) . Moreover, since the portfolio holds large positions in a
relatively small number of stocks, it can be volatile when the
large-capitalization sector of the market is out of favor with investors.
Growth companies are expected to increase their earnings at a certain rate. When
these expectations are not met, investors can punish the stocks inordinately --
even if earnings showed an absolute increase. In addition, growth stocks
typically lack the dividend yield to cushion stock prices in market downturns.
While many companies in which the portfolio invests are listed on a domestic
exchange, they have foreign operations that pose special risks such as exposure
to currency fluctuations and changing political climate.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its primary
investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goals, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the S&P 500((reg.tm)), a widely
recognized, unmanaged index of stock performance. Of course, past performance is
no guarantee of future results. As a new class, past performance information is
not available for Service shares as of the date of this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
3.04 33.52 25.56 28.05 30.22 11.46
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +20.77%
WORST QUARTER: Q3 '98 -10.69%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (4/5/93)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 11.46% 25.52% 20.05%
S&P 500 21.03% 28.54% 21.63%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 3/31/93 IS USED AS THE
BEGINNING VALUE ON 4/5/93.
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.03% 0.03%
--------------------------------------------------------------------------------
TOTAL 0.78% 1.03%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $80 $249 $433 $966
SERVICE SHARES $105 $328 $569 $1,259
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment advisers for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid an aggregate investment advisory fee at the annual rate of 0.75%
of the portfolio's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Fayez Sarofim, president and chairman of Fayez Sarofim & Co., has been the
portfolio' s primary portfolio manager since its inception in April 1993. Fayez
Sarofim & Co., Two Houston Center, Suite 2907, Houston, Texas 77010, serves as
the portfolio' s sub-investment adviser. Sarofim managed approximately $48.5
billion in discretionary separate accounts and provided investment advisory
services for five other investment companies having aggregate assets of
approximately $3.4 billion as of December 31, 1999.
The portfolio, Dreyfus, Fayez Sarofim & Co., and Dreyfus Service Corporation
(the portfolio's distributor) each has adopted a code of ethics that permits its
personnel, subject to such code, to invest in securities, including securities
that may be purchased or held by the portfolio. Each of the Dreyfus and Sarofim
code of ethics restricts the personal securities transactions of its employees,
and requires portfolio managers and other investment personnel to comply with
the code' s preclearance and disclosure procedures. Its primary purpose is to
ensure that personal trading by employees of Dreyfus or Sarofim does not
disadvantage any fund managed by Dreyfus or Sarofim, as the case may be.
<Page 6>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "Total return" shows how much your investment in
the portfolio would have increased (or decreased) during each period, assuming
you had reinvested all dividends and distributions. These figures (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 39.87 36.11 27.91 21.98 17.71 13.44
Investment operations: Investment income -- net .12(1) .25(1) .20 .22 .23 .23
Net realized and unrealized
gain (loss) on investments .99 3.88 8.21 5.95 4.30 4.27
Total from investment operations 1.11 4.13 8.41 6.17 4.53 4.50
Distributions: Dividends from investment
income -- net (.00)(2) (.22) (.20) (.22) (.23) (.23)
Dividends from net realized gain
on investments -- (.01) (.01) (.02) (.03) --
Dividends in excess of net realized
gain on investments -- (.14) -- -- -- --
Total distributions -- (.37) (.21) (.24) (.26) (.23)
Net asset value, end of period 40.98 39.87 36.11 27.91 21.98 17.71
Total return (%) 2.79(3) 11.46 30.22 28.05 25.56 33.52
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .38(3) .78 .80 .80 .84 .85
Ratio of interest expense and loan commitment fees
to average net assets (%) .00(3,4) .00(4) .01 -- -- --
Ratio of net investment income to average net assets (%) .29(3) .64 .84 1.08 1.46 2.08
Decrease reflected in above expense ratios due to
actions by Dreyfus (%) -- -- -- -- -- .02
Portfolio turnover rate (%) 1.26(3) 3.87 1.34 1.69 2.47 2.81
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,024,408 1,027,797 673,835 247,011 103,745 46,930
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(3) NOT ANNUALIZED.
(4) AMOUNT REPRESENTS LESS THAN .01%.
The Portfolio
<Page 7>
Account Information
</TABLE>
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Appreciation Portfolio/share
class) , for purchase of portfolio shares. The wire must include the portfolio
account number (for new accounts, a taxpayer identification number should be
included instead), account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually pays dividends from its net investment income and
distributes any net capital gains it has realized once a year.
Each share class will generate a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
Shareholders can exchange shares of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Appreciation Portfolio
(formerly, Capital Appreciation Portfolio)
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
112P1200
Dreyfus Variable Investment Fund
Balanced Portfolio
Investing in stocks and bonds for total return
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Balanced Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks to provide investment results that are greater than the
total return performance of common stocks and bonds represented by a hybrid
index, 60% of which is the Standard & Poor's 500 Composite Stock Price Index
(" S& P 500" ) and 40% of which is the Lehman Brothers Intermediate
Government/Corporate Bond Index ("Lehman Intermediate Index"). To pursue this
goal, the portfolio invests in a diversified mix of stocks and investment grade
bonds of both U.S. and foreign issuers. The portfolio's normal asset allocation
is approximately 60% stocks and 40% bonds. However, the portfolio is permitted
to invest up to 75%, and as little as 40%, of its assets in stocks and up to 60%
, and as little as 25%, of its assets in bonds.
In allocating assets between stocks and bonds, the portfolio managers assess the
relative return and risks of each asset class using a model which analyzes
several factors, including interest-rate-adjusted price/earnings ratios, the
valuation and volatility levels of stocks relative to bonds, and other economic
factors, such as interest rates.
In selecting stocks, Dreyfus uses a valuation model to identify and rank stocks
within an industry or sector, based on:
(pound) VALUE, or how a stock is priced relative to its perceived intrinsic
worth
(pound) GROWTH, in this case the sustainability or growth of earnings
(pound) FINANCIAL PROFILE, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities. Dreyfus then manages risk by diversifying across
companies and industries and by maintaining risk characteristics, such as
growth, size, quality and yield, that are similar to those of the S&P 500.
In choosing bonds, the portfolio managers review economic, market and other
factors, leading to valuations by sector, maturity and quality. The portfolio's
bond component consists primarily of domestic and foreign bonds issued by
corporations or governments and rated investment grade or considered to be of
comparable quality by Dreyfus. The dollar-weighted average maturity of the bond
component normally will not exceed 10 years.
Concepts to understand
S&P 500((reg.tm)): a widely recognized, unmanaged index of 500 common stocks
chosen to reflect the industries of the U.S. economy.
LEHMAN INTERMEDIATE INDEX: a recognized, unmanaged index of U.S. government and
investment grade corporate bonds.
<Page 2>
MAIN RISKS
The stock and bond markets can perform differently from each other, so the
portfolio will be affected by its asset allocation. If the portfolio favors an
asset class during a period when that class underperforms, performance may be
hurt. The value of a shareholder's investment in the portfolio will go up and
down, which means that shareholders could lose money.
The portfolio is exposed to risks of both growth and value companies. Value
stocks may never reach what the portfolio manager believes is their full market
value and, even though they are undervalued, may decline in price. While the
portfolio' s investments in value stocks may limit the overall downside risk of
the portfolio over time, they may produce smaller gains than riskier stocks.
Prices of growth stocks are based in part on future expectations, which means
they can fall sharply if the prospects for a stock, industry or the economy in
general are below the market' s expectations, even if earnings do increase.
Growth stocks also typically lack the dividend yield to cushion stock prices in
market downturns.
Prices of bonds tend to move inversely with changes in interest rates. Typically
a rise in rates will adversely affect bond prices and, accordingly, the
portfolio's share price. The longer the maturity and duration of the portfolio's
bond component, the more the portfolio' s share price is likely to react to
interest rates.
Failure of a bond issuer to make timely interest or principal payments, or a
decline or a perception of a decline in the credit quality of a bond, can cause
a bond's price to fall, potentially lowering the portfolio's share price.
The overall risk level of the bond component will depend on the market sectors
in which it is invested and the current interest rate, liquidity and credit
quality of such sectors unless there is no active trading market for specific
types of securities, and can become more difficult to sell or issue. In such a
market, the value of such securities and the portfolio's share price may fall
dramatically.
In general, the risks of foreign stocks and bonds are greater than the risks of
their U.S. counterparts because of less liquidity, changes in currency exchange
rates, a lack of comprehensive company information and political and economic
instability.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio may invest in derivative securities, such as options and futures
contracts, and certain mortgage-related and asset-backed securities. Derivatives
can be illiquid and their value can fall dramatically in response to rapid or
unexpected changes in their underlying instruments. A small investment in
certain derivatives can have a large impact on the portfolio's performance.
At times, the portfolio may also engage in short-term trading, which could
produce higher transaction costs and taxable distributions, lowering the
portfolio's after-tax performance.
The portfolio may buy securities on a forward commitment basis. This investment
strategy may have leveraging effect on the portfolio, thus potentially
increasing its overall volatility.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the S&P 500((reg.tm)), the Lehman
Intermediate Index, and a hybrid index composed of 60% S&P 500((reg.tm)) and 40%
Lehman Intermediate Index. Of course, past performance is no guarantee of future
results. As a new class, past performance information is not available for
Service shares as of the date of this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
22.34 8.13
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +14.14%
WORST QUARTER: Q3 '98 -1.39%
--------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (5/1/97)
--------------------------------------------------------------------------------
INITIAL SHARES 8.13% 18.33%
S&P 500 21.03% 27.36%*
LEHMAN
INTERMEDIATE INDEX -2.06% 5.78%*
HYBRID INDEX 12.78% 18.68%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/97 IS USED AS THE
BEGINNING VALUE ON 5/1/97.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.11% 0.11%
--------------------------------------------------------------------------------
TOTAL* 0.86% 1.11%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 1.00%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $88 $274 $477 $1,061
SERVICE SHARES $113 $353 $612 $1,352
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio managers are Ron Gala and Laurie Carroll. Mr.
Gala has managed the equity portion of the portfolio since the portfolio's
inception. Mr. Gala is a vice president and portfolio manager for Mellon Bank
and a portfolio manager for Mellon Equity Associates, an affiliate of Dreyfus.
Mr. Gala also is responsible for Mellon Equity Associates' asset allocation. Mr.
Gala has been employed by Mellon Bank in various capacities since 1982. Ms.
Carroll has managed the fixed-income portion of the portfolio since the
portfolio' s inception. Ms. Carroll is a vice president and portfolio manager at
Mellon Bank. Ms. Carroll has been employed by Mellon Bank since 1986. Mr. Gala
and Ms. Carroll have been employed by Dreyfus as portfolio managers since
October 1994.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997(1)
---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 16.02 15.94 14.04 12.50
Investment operations: Investment income -- net .27(2) .47(2) .43 .25
Net realized and unrealized gain (loss) on investments (.40) .80 2.67 2.06
Total from investment operations (.13) 1.27 3.10 2.31
Distributions: Dividends from investment income -- net (.26) (.46) (.43) (.25)
Dividends from net realized gain on investments (.09) (.73) (.77) (.52)
Total distributions (.35) (1.19) (1.20) (.77)
Net asset value, end of period 15.54 16.02 15.94 14.04
Total return (%) (.81)(3) 8.13 22.34 18.48(3)
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .42(3) .86 .87 .67(3)
Ratio of net investment income to average net assets (%) 1.72(3) 2.94 2.98 1.91(3)
Portfolio turnover rate (%) 47.17(3) 98.61 111.75 45.78(3)
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 94,102 90,130 59,841 41,144
</TABLE>
(1) FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: BALANCED PORTFOLIO/ SHARE
CLASS) , for purchase of portfolio shares. The wire must include the portfolio
account number (for new accounts, a taxpayer identification number should be
included instead) , account registration and dealer number if applicable of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund
Balanced Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
154P1200
Dreyfus Variable Investment Fund
Disciplined Stock Portfolio
Investing in growth and value stocks for investment returns that exceed the
total return performance of the S&P 500((reg.tm))
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Disciplined Stock Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks investment returns (consisting of capital appreciation and
income) that are greater than the total return performance of stocks represented
by the Standard & Poor's 500 Composite Stock Price Index. To pursue this goal,
the portfolio invests in a blended portfolio of growth and value stocks chosen
through a disciplined investment process. Consistency of returns and stability
of the portfolio' s share price compared to the S&P 500((reg.tm)) are primary
goals of the process.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector, based on:
(pound) VALUE, or how a stock is priced relative to its
perceived intrinsic worth
(pound) GROWTH, in this case the sustainability or
growth of earnings
(pound) FINANCIAL PROFILE, which measures the financial
health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities, drawing on information technology as well as Wall Street
sources and company management. Then Dreyfus manages risk by diversifying across
companies and industries, limiting the potential adverse impact from any one
stock or industry. The portfolio is structured so that its sector weightings and
risk characteristics, such as growth, size, quality and yield, are similar to
those of the S&P 500.
Concepts to understand
S&P 500((reg.tm)): a widely recognized, unmanaged index of 500 common stocks
chosen to reflect the industries of the U.S. economy.
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of 2,000 stocks, screening each stock for relative attractiveness within its
economic sector and industry. To ensure that the model remains effective,
Dreyfus reviews each of the screens on a regular basis, and maintains the
flexibility to adapt the screening criteria to changes in market and economic
conditions.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile very similar to the S&P 500, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase stocks of companies not listed in the
index can cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both, and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak, even if earnings do increase. Growth stocks also typically
lack the dividend yield that could cushion stock prices in market downturns.
With value stocks, there is the risk that they may never reach what the manager
believes is their full market value, either because the market fails to
recognize the companies' intrinsic worth, or the portfolio manager misgauged
that worth. They also may decline in price even though in theory they are
already underpriced. While investments in value stocks may limit downside risk
over time, they may produce smaller gains than riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio may invest in derivatives, such as options and futures contracts.
When employed, derivatives are used primarily to hedge the portfolio but may be
used to increase returns; however, they sometimes may reduce returns or increase
volatility. Derivatives can be illiquid, and a small investment in certain
derivatives could have a potentially large impact on the portfolio's
performance.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the S&P 500((reg.tm)). Of course, past
performance is no guarantee of future results. As a new class, past performance
information is not available for Service shares as of the date of this
prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
31.51 26.72 18.45
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +22.71%
WORST QUARTER: Q3 '98 -12.32%
--------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
--------------------------------------------------------------------------------
INITIAL SHARES 18.45% 26.16%
S&P 500 21.03% 26.75%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.06% 0.06%
--------------------------------------------------------------------------------
TOTAL* 0.81% 1.06%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 1.00%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $83 $259 $450 $1,102
SERVICE SHARES $108 $337 $585 $1,294
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio manager is Bert Mullins, who has managed the
portfolio since its inception, and has been employed by Dreyfus since October
1994. In addition to being a portfolio manager with Dreyfus, Mr. Mullins also
has been employed by Laurel Capital Advisors, an affiliate of Dreyfus, since
October 1990. Mr. Mullins also is a vice president, portfolio manager and senior
security analyst of Mellon, where he has been employed since 1966.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996(1)
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 26.92 22.95 18.30 14.79 12.50
Investment operations: Investment income -- net .06(2) .11(2) .08 .08 .07
Net realized and unrealized
gain (loss) on investments .02 4.12 4.80 4.53 2.29
Total from investment operations .08 4.23 4.88 4.61 2.36
Distributions: Dividends from investment income
-- net (.00)(3) (.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 27.00 26.92 22.95 18.30 14.79
Total return (%) .31(4) 18.45 26.72 31.51 18.86(4,5)
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .40(4) .81 .88 1.02 .80(4)
Ratio of net investment income to average net assets (%) .23(4) .45 .53 .68 .72(4)
Decrease reflected in above expense ratios due to
actions by Dreyfus (%) -- -- -- -- .16(4)
Portfolio turnover rate (%) 29.05(4) 48.95 56.28 79.74 30.62(4)
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 227,868 214,296 140,897 53,317 17,722
</TABLE>
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(4) NOT ANNUALIZED.
(5) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON
MAY 1, 1996 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: DISCIPLINED STOCK
PORTFOLIO/SHARE CLASS), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Disciplined Stock Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
150P1200
Dreyfus Variable Investment Fund
Growth and Income Portfolio
Investing in stocks, bonds and money market instruments for long-term capital
growth, current income and growth of income
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Growth and Income Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks long-term capital growth, current income and growth of
income consistent with reasonable investment risk. To pursue this goal, it
invests in stocks, bonds and money market instruments of domestic and foreign
issuers. The port-folio's stock investments may include common stocks, preferred
stocks and convertible securities.
The portfolio employs a "bottom-up" approach focusing primarily on low and
moderately priced stocks with market capitalizations of $1 billion or more at
the time of purchase. The portfolio manager uses fundamental analysis to create
a broadly diversified, value-tilted portfolio typically with a weighted average
P/E ratio less than that of the S&P 500, and a long-term projected earnings
growth greater than that of the S&P 500. The manager also considers balance
sheet and income statement items, such as return on equity and debt-to-capital
ratios, as well as projected dividend growth rates. The portfolio looks for
companies with strong positions in their industries that have the potential for
something positive to happen, including above-average earnings growth or
positive changes in company management or the industry.
The portfolio will invest in investment grade debt securities (other than
convertible securities) . The portfolio may invest up to 35% of its assets in
convertible debt securities rated, when purchased, at least Caa/CCC or the
unrated equivalent as determined by Dreyfus.
The portfolio typically sells a security when it has met the price target
established by the portfolio manager; the original reason for purchasing the
stock or bond is no longer valid; the company shows deteriorating fundamentals;
or another more attractive opportunity has been identified.
Concepts to understand
VALUE COMPANIES: companies that appear undervalued in terms of price relative to
other financial measurements of the intrinsic worth or business prospects (such
as price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price, such as new products or markets; opportunities for greater
market share; more effective management; positive changes in corporate structure
or market perception.
"BOTTOM-UP" APPROACH: an investment style that focuses on selecting outstanding
companies before looking at economic and industry trends.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Midsize companies carry additional risks because their earnings tend to be less
predictable, their share prices more volatile and their securities less liquid
than larger, more established companies.
The portfolio' s investments in value stocks are subject to the risk that they
may never reach what the portfolio manager believes is their full market value
either because the market fails to recognize the companies' intrinsic worth, or
the portfolio manager misgauged that worth. They may also decline in price even
though they are already underpriced. While the portfolio's investments in value
stocks also may limit the overall downside risk of the portfolio over time, the
portfolio may produce more modest gains than riskier stock funds as a trade-off
for this potentially lower risk.
Prices of bonds tend to move inversely with changes in interest rates.
Typically, a rise in rates will adversely affect bond prices and, accordingly,
the portfolio's share price.
The portfolio may also invest in lower-rated convertible securities which have
higher credit risk. With this type of investment, there is a greater likelihood
that interest and principal payments will not be made on a timely basis.
Foreign securities involve special risks such as changes in currency exchange
rates, a lack of comprehensive company information, political instability and
potentially less liquidity.
Under adverse market conditions, the portfolio could invest up to all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio may invest in derivatives, such as options and futures contracts.
The portfolio also may invest in foreign currencies and engage in short-selling.
These practices, when employed, are used primarily to hedge the portfolio but
may be used to increase returns; however, such practices may reduce returns or
increase volatility. Derivatives can be illiquid, and a small investment in
certain derivatives could have a potentially large impact on the portfolio's
performance.
Because a relatively high percentage of the portfolio's assets may be invested
in the securities of a limited number of issuers, its performance may be more
vulnerable to changes in the market value of a single issuer or group of
issuers.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains and losses.
At times, the portfolio may engage in short-term trading, which could produce
higher transaction costs and taxable distributions, lowering the portfolio's
after-tax performance.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares over time to that of the S&P 500((reg.tm)), a
widely recognized, unmanaged index of stock performance, and the Wilshire Large
Company Value Index, an unmanaged index of large companies that is constructed
by using a blend of price-to-book and forecast price-to-earnings ratios. Of
course, past performance is no guarantee of future results. As a new class, past
performance information is not available for Service shares as of the date of
this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
61.89 20.75 16.21 11.81 16.88
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +18.58%
WORST QUARTER: Q3 '98 -11.45%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (5/2/94)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 16.88% 24.31% 20.90%
S&P 500 21.03% 28.54% 25.65%*
WILSHIRE LARGE
COMPANY VALUE INDEX -7.11% 18.33% 15.54%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF EACH INDEX ON 4/30/94 IS USED AS THE
BEGINNING VALUE ON 5/2/94.
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.04% 0.04%
--------------------------------------------------------------------------------
TOTAL* 0.79% 1.04%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 1.00%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $81 $252 $439 $978
SERVICE SHARES $106 $331 $574 $1,271
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio manager is Douglas D. Ramos, CFA. He has been
the portfolio's primary portfolio manager and has been employed by Dreyfus since
July 1997. For more than five years prior thereto, Mr. Ramos was employed by
Loomis, Sayles & Company, L.P., most recently serving as a senior partner and
investment counselor.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 25.48 22.63 20.78 19.55 18.33 11.98
Investment operations: Investment income -- net .07(1) .16(1) .21 .28 .36 .28
Net realized and unrealized
gain (loss) on investments (.29) 3.64 2.23 2.79 3.43 7.07
Total from investment operations (.22) 3.80 2.44 3.07 3.79 7.35
Distributions: Dividends from investment
income -- net (.07) (.15) (.20) (.28) (.35) (.27)
Dividends from net realized gain
on investments (.01) (.70) (.39) (1.56) (2.22) (.73)
Dividends in excess of net realized
gain on investments -- (.10) -- -- -- --
Total distributions (.08) (.95) (.59) (1.84) (2.57) (1.00)
Net asset value, end of period 25.18(2) 25.48 22.63 20.78 19.55 18.33
Total return (%) (.89)(2) 16.88 11.81 16.21 20.75 61.89
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .39(2) .79 .78 .80 .83 .92
Ratio of net investment income to average net assets (%) .27(2) .67 1.00 1.37 1.96 2.21
Decrease reflected in above expense ratios due to
actions by Dreyfus (%) -- -- -- -- -- .03
Portfolio turnover rate (%) 29.78(2) 96.26 126.18 180.73 237.44 255.42
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 461,601 461,392 430,702 369,832 225,935 71,161
</TABLE>
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) NOT ANNUALIZED.
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Growth and Income Portfolio/
share class) , for purchase of portfolio shares. The wire must include the
portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number if
applicable of the participating insurance company.
The portfolio's investments are generally valued based on market value, or where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year
Each share class will generate a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
Shareholders can exchange shares of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Growth and Income Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting
the SEC's Public Reference Room in Washington, DC
(for information, call 1-202-942-8090) or by E-mail request to
[email protected], or by writing to the SEC's Public Reference Section,
Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
108P1200
Dreyfus Variable Investment Fund
International Equity Portfolio
Investing in stocks of foreign issuers for capital growth
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
International Equity Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks capital growth. To pursue this goal, the portfolio invests
primarily in the stocks of foreign companies. The portfolio expects to invest
primarily in the stocks of companies located in developed countries. Typically,
the portfolio invests in at least 15 to 25 markets around the world, including
emerging markets. The portfolio's stock investments may include common stocks,
preferred stocks and convertible securities.
In choosing stocks, the portfolio conducts a "bottom-up" approach, focusing on
individual stock selection rather than on macroeconomic factors. There are no
country allocation models or targets. The portfolio is particularly alert to
companies whose revenue and earnings growth potential are considered by
management to be faster than those of industry peers or the local market.
The portfolio typically sells a stock when its growth forecast is reduced, its
valuation target is reached, or the portfolio manager decides to reduce the
weighting in its market.
Concepts to understand
FOREIGN COMPANY: a company organized under the laws of a foreign country or for
which the principal trading market is in a foreign country; or a company
organized in the U.S. with a majority of its assets or business outside the U.S
GROWTH COMPANY: a company of any capitalization whose earnings are expected to
grow faster than the overall market. Often, growth stocks have relatively high
price-to-earnings, price-to-book and price-to-sales ratios, and tend to be more
volatile than value stocks.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
The portfolio's performance will be influenced by political, social and economic
factors affecting investments in foreign companies. Special risks associated
with investments in foreign companies include exposure to currency fluctuations,
less liquidity, less developed or less efficient trading markets, a lack of
comprehensive company information, political instability and differing auditing
and legal standards. Each of these risks could increase the portfolio's
volatility. The portfolio may invest in companies located in emerging markets,
which tend to be more volatile than the markets of more mature economies, and
generally have less diverse and less mature economic structures and less stable
political systems, than those of developed countries.
Because the stock prices of growth companies are based in part on future
expectations, these stocks may fall sharply if investors believe the prospects
for a stock, industry or the economy in general are weak, even if earnings do
increase. In addition, growth stocks typically lack the dividend yield that
could cushion stock prices in market downturns.
Under adverse market conditions, the portfolio could invest some or all of its
assets in the securities of U.S. issuers or money market securities. Although
the portfolio would do this to avoid losses, it could have the effect of
reducing the benefit from any upswing in the market. During such periods, the
portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivatives, such as options
and futures contracts. The portfolio also may invest in foreign currencies.
These practices, when employed, are used primarily to hedge the portfolio but
may be used to increase returns; however, such practices sometimes may reduce
returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
Because a relatively high percentage of the portfolio's assets may be invested
in the securities of a limited number of issuers, its performance may be more
vulnerable to changes in the market value of a single issuer or group of
issuers.
At times, the portfolio may engage in short-term trading, which could produce
higher transaction costs and taxable distributions, lowering the portfolio's
after-tax performance.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE((reg.tm) )) Index, an unmanaged index
composed of a representative sample of companies located in European and Pacific
Basin countries and includes net dividends reinvested. Of course, past
performance is no guarantee of future results. As a new class, past performance
information is not available for Service shares as of the date of this
prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
7.39 11.61 9.61 4.49 59.75
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '99 +41.20%
WORST QUARTER: Q3 '98 -20.29%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (5/2/94)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 59.76% 17.01% 14.45%
MSCI EAFE((reg.tm))
INDEX 26.96% 12.83% 11.21%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/94 IS USED AS THE
BEGINNING VALUE ON 5/2/94.
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.27% 0.27%
--------------------------------------------------------------------------------
TOTAL 1.02% 1.27%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $104 $325 $563 $1,248
SERVICE SHARES $129 $403 $697 $1,534
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio manager is Douglas A. Loeffler. Mr. Loeffler
has been the portfolio's primary portfolio manager since he joined Dreyfus in
February 1999. He is also employed by Founders Asset Management LLC, an
affiliate of Dreyfus, since 1997 as a vice president of investments and from
1995 to 1997, as a senior international equities analyst. For seven years prior
thereto, he served as an international equities analyst and a quantitative
analyst for Scudder, Stevens & Clark.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 22.34 14.50 14.02 13.76 12.82 12.02
Investment operations: Investment income -- net .05(1) .06(1) .15 .05 .10 .15
Net realized and unrealized
gain (loss) on investments (.37) 8.58 .48 1.27 1.16 .74
Total from investment operations (.32) 8.64 .63 1.32 1.26 .89
Distributions: Dividends from investment
income -- net -- (.06) (.15) (.07) (.09) (.08)
Dividends in excess of investment
income -- net -- -- .-- .-- .-- (.01)
Dividends from net realized
gain on investments (1.85) (.74) .-- (.34) (.39) .--
Dividends in excess of net realized
gain on investments -- -- .-- (.65) (.06) .--
Total distributions (1.85) (.80) (.15) (1.06) (.54) (.09)
Capital contribution from an affiliate of the adviser -- -- .-- .-- .22 .--
Net asset value, end of period 20.17 22.34 14.50 14.02 13.76 12.82
Total return (%) (1.94)(3) 59.76 4.49 9.61 11.61(2) 7.39
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .49(3) 1.02 .99 1.06 1.28 1.59
Ratio of net investment income to average net assets (%) .23(3) .38 1.04 .38 .92 1.13
Decrease reflected in above expense ratios due to
actions by Dreyfus (%) -- -- .-- .-- .-- .45
Portfolio turnover rate (%) 115.98(3) 261.64 204.50 165.75 181.13 70.22
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 74,619 69,208 45,811 39,388 24,355 7,672
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) HAD THE PORTFOLIO NOT HAD A CAPITAL CONTRIBUTION BY AN AFFILIATE OF THE ADVISER DURING THE PERIOD, THE TOTAL INVESTMENT RETURN
WOULD HAVE BEEN 9.89%.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: International Equity
Portfolio/share class), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment income
and distributes any net capital gains it has realized once a year.
Each share class will generate a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
Shareholders can exchange shares of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund International Equity Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
109P1200
Dreyfus Variable Investment Fund
International Value Portfolio
Investing in foreign stocks of value companies for long-term capital growth
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
International Value Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks long-term capital growth. To pursue this goal, the portfolio
ordinarily invests most of its assets in equity securities of foreign issuers
which Dreyfus considers to be "value" companies. To a limited extent, the
portfolio may invest in debt securities of foreign issuers. Though not
specifically limited, the portfolio ordinarily invests in companies in at least
three foreign countries, and limits its investments in any single company to no
more than 5% of its assets at the time of purchase.
The portfolio's investment approach is value oriented, research driven, and risk
averse. In selecting stocks, the portfolio manager identifies potential
investments through extensive quantitative and fundamental research. Emphasizing
individual stock selection rather than economic and industry trends, the
portfolio focuses on three key factors:
(pound) VALUE, or how a stock is valued relative to its intrinsic worth based
on traditional value measures
(pound) BUSINESS HEALTH, or overall efficiency and profit-
ability as measured by return on assets and return on equity
(pound) BUSINESS MOMENTUM, or the presence of a catalyst (such as corporate
restructuring, change in management or spin-off) that potentially will
trigger a price increase near term to midterm
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or declining momentum, or falls
short of the portfolio manager's expectations.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). For international investing, "value"
is determined relative to a company's home market. Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
The portfolio's performance will be influenced by political, social and economic
factors affecting investments in foreign companies. Special risks associated
with investments in foreign companies include exposure to currency fluctuations,
less liquidity, less developed or less efficient trading markets, a lack of
comprehensive company information, political instability and differing auditing
and legal standards. Each of these risks could increase the portfolio's
volatility. The portfolio may invest in companies located in emerging markets,
which tend to be more volatile than the markets of more mature economies, and
generally have less diverse and less mature economic structures and less stable
political systems, than those of developed countries.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value either because the market fails to
recognize the stock' s intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
underpriced. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
The portfolio may invest in companies of any size. Investments in small and
midsize companies carry additional risks because their earnings tend to be less
predictable (and some companies may be experiencing significant losses), their
share prices more volatile and their securities less liquid than larger, more
established companies.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in the
portfolio' s share price as well. In addition, if an issuer fails to make timely
interest or principal payments or there is a decline in the credit quality of a
bond, or perception of a decline, the bond's value could fall, potentially
lowering the portfolio's share price.
Under adverse market conditions, the portfolio could invest some or all of its
assets in the securities of U.S. issuers or money market securities. Although
the portfolio would do this to avoid losses, it could have the effect of
reducing the benefit from any upswing in the market. During such periods, the
portfolio may not achieve its investment objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio, at times, may invest some assets in derivatives, such as options
and futures contracts. The portfolio also may invest in foreign currencies.
These practices, when employed, are used primarily to hedge the portfolio, but
may be used to increase returns; however, such practices may lower returns or
increase volatility. Derivatives can be illiquid, and a small investment in
certain derivatives could have a potentially large impact on the portfolio's
performance.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Morgan Stanley Capital International
Europe, Australasia, Far East (EAFE((reg.tm) )) Index, an unmanaged index
composed of a representative sample of companies located in European and Pacific
Basin countries and includes net dividends reinvested. Of course, past
performance is no guarantee of future results. As a new class, past performance
information is not available for Service shares as of the date of this
prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
8.71 8.74 27.82
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +15.33%
WORST QUARTER: Q3 '98 -16.49%
--------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
--------------------------------------------------------------------------------
INITIAL SHARES 27.82% 12.93%
MSCI EAFE INDEX 26.96% 12.74%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
As with the performance information given previously, these figures do not
reflect any fees or charges imposed by participating insurance companies under
their VA contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 1.00% 1.00%
Rule 12b-1 fee none 0.25%
Other expenses 0.35% 0.35%
--------------------------------------------------------------------------------
TOTAL* 1.35% 1.60%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 1.40%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $137 $428 $739 $1,624
SERVICE SHARES $163 $505 $871 $1,900
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual return and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 1.00% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio manager is Sandor Cseh. He has been the
portfolio' s primary manager since the portfolio' s inception, and has been
employed by Dreyfus since May 1996 and by The Boston Company Asset Management,
Inc., an affiliate of Dreyfus, or its predecessor since October 1994. Prior to
joining The Boston Company Asset Management, Inc., Mr. Cseh was president of
Cseh International & Associates Inc., and was a securities analyst with several
banks.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996(1)
---------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 15.67 13.45 13.45 12.80 12.50
Investment operations: Investment income -- net .11(2) .13(2) .14 .07 .08
Net realized and unrealized gain (loss)
on investments (.34) 3.52 1.01 1.03 .34
Total from investment operations (.23) 3.65 1.15 1.10 .42
Distributions: Dividends from investment income -- net (.01) (.13) (.12) (.07) (.08)
Dividends from net realized gain
on investments (.33) (1.30) (1.03) (.30) (.04)
Dividends in excess of net realized
gain on investments -- -- -- (.08) --
Total distributions (.34) (1.43) (1.15) (.45) (.12)
Net asset value, end of period 15.10 15.67 13.45 13.45 12.80
Total return (%) (1.45)(3) 27.82 8.74 8.71 3.41(3,4)
-------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .69(3) 1.35 1.29 1.42 1.01(3)
Ratio of net investment income to average net assets (%) .76(3) .90 .94 .74 .76(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .34(3)
Portfolio turnover rate (%) 20.41(3) 41.90 42.14 25.67 24.48(3)
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 26,374 27,386 20,680 19,016 8,027
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) NOT ANNUALIZED.
(4) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31,
1996.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: INTERNATIONAL VALUE
PORTFOLIO/SHARE CLASS), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number if
applicable of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees. Foreign securities held by the portfolio
may trade on days when the portfolio does not calculate its NAV and thus affect
the portfolio's NAV on days when investors have no access to the portfolio.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund International Value Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
152P1200
Dreyfus Variable Investment Fund
Limited Term High Income Portfolio
Investing in high yield securities for maximum total return
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Limited Term High Income Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks to maximize total return, consisting of capital appreciation
and current income. To pursue this goal, the portfolio normally invests in
fixed-income securities rated, when purchased, below investment grade ("high
yield" or "junk" bonds) or the unrated equivalent as determined by Dreyfus. The
portfolio may invest in various types of fixed-income securities, including
corporate bonds and notes, mortgage-related securities, asset-backed securities,
zero coupon securities, convertible securities, preferred stock and other debt
instruments of U.S. and foreign issuers.
In choosing securities, the portfolio manager seeks to capture the higher yields
offered by junk bonds, while managing credit risk and the volatility caused by
interest rate movements. The portfolio attempts to reduce interest rate risk by
maintaining an average effective portfolio duration of 3.5 years or less and an
average effective portfolio maturity of 4 years or less, although there is no
limit on the maturity or duration of individual securities.
The portfolio's investment process is based on fundamental credit research and,
at times, focusing on companies that are currently out-of-favor. The portfolio
looks at a variety of factors when assessing a potential investment, including
the company's financial strength, the state of the industry or sector it belongs
to, the long-term fundamentals of that industry or sector, the company's
management, and whether there is sufficient equity value in the company. The
portfolio may also invest in investment grade bonds, typically when it takes a
defensive investment position.
Concepts to understand
HIGH YIELD BONDS: those rated below BBB or Baa by credit rating agencies such as
Standard & Poor's or Moody's. Because their issuers may be at an early stage of
development or may have been unable to repay past debts, these bonds typically
must offer higher yields than investment grade bonds to compensate investors for
greater credit risk.
DURATION: an indication of an investment's "interest rate risk," or how
sensitive a bond or mutual fund portfolio may be to changes in interest rates.
Generally, the longer a portfolio's duration, the more it will react to interest
rate fluctuations.
BOND RATING: a ranking of a bond's quality, based on its ability to pay interest
and repay principal. Bonds are rated from a high of "AAA" (highly unlikely to
default) through a low of "D" (companies already in default).
<Page 2>
MAIN RISKS
The portfolio' s principal risks are discussed below. The value of a
shareholder' s investment in the portfolio will go up and down, which means that
shareholders could lose money.
(pound) CREDIT RISK. Failure of an issuer to make timely interest or principal
payments, or a decline or perception of a decline in the credit quality
of a bond, can cause a bond's price to fall, potentially lowering the
portfolio's share price. High yield bonds involve greater credit risk,
including the risk of default, than investment grade bonds and are
considered speculative. They tend to be more volatile in price and less
liquid and are considered speculative. The prices of high yield bonds
can fall dramatically in response to bad news about the issuer or its
industry, or the economy in general.
(pound) INTEREST RATE RISK. Prices of bonds tend to move inversely with changes
in interest rates. Typically, a rise in rates will adversely affect
bond prices and, accordingly, the portfolio's share price. The longer
the portfolio's maturity and effective duration, the more its share
price is likely to react to interest rates.
(pound) MARKET RISK. The portfolio's overall risk level will depend on the
market sectors in which the portfolio is invested and the current
interest rate, liquidity and credit quality of such sectors.
(pound) ILLIQUIDITY. When there is no active trading market for specific
securities, it can become more difficult to sell the securities. In
such a market, the value of such securities and the fund's share price
may fall dramatically.
(pound) PREPAYMENT AND EXTENSION RISK. When interest rates fall, the principal
on mortgage-backed and certain asset-backed securities may be prepaid.
The loss of higher-yielding, underlying mortgages and the reinvestment
of proceeds at lower interest rates can reduce the portfolio' s
potential price gain in response to falling interest rates, reduce the
portfolio's yield, or cause the portfolio's share price to fall. When
interest rates rise, the portfolio's maturity may lengthen in response
to a drop in mortgage prepayments. This would increase the portfolio's
sensitivity to rising rates and its potential for price declines.
(pound) FOREIGN RISK. The prices and yields of foreign bonds can be affected by
political and economic instability or changes in currency exchange
rates. The bonds of issuers located in emerging markets can be more
volatile and less liquid than those of issuers in more mature
economies.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio may invest in derivatives, such as options and futures contracts,
and mortgage-related and asset-backed securities. Derivatives can be illiquid
and their value can fall dramatically in response to rapid or unexpected changes
in their underlying instruments. A small investment in certain derivatives can
have a large impact on the portfolio's performance. The portfolio also can
invest in foreign currencies.
At times, the portfolio may engage in short-term trading, which could produce
higher transaction costs and taxable distributions, and lower the portfolio's
after-tax performance.
The portfolio may buy securities on a forward commitment basis. This investment
strategy may have a leveraging effect on the portfolio, thus potentially
increasing its overall volatility.
In addition, the portfolio may borrow for certain purposes including to
facilitate trades in its portfolio securities (a form of leveraging), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
<Page 3> The Portfolio
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Merrill Lynch High Yield Master II
Index, an index of high yield bonds with at least $100 million par amount
outstanding and at least one year to maturity, and to a Customized Limited Term
High Yield Index*. Of course, past performance is no guarantee of future
results. As a new class, past performance information is not available for
Service shares as of the date of this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
0.29 -1.54
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '98 +3.90%
WORST QUARTER: Q3 '98 -5.46%
--------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (4/30/97)
--------------------------------------------------------------------------------
INITIAL SHARES -1.54% 3.01%
MERRILL LYNCH HIGH YIELD
MASTER II INDEX 2.51% 6.05%
CUSTOMIZED LIMITED TERM
HIGH YIELD INDEX* 5.23% 6.71%
*THIS INDEX IS COMPOSED OF FOUR SUB-INDEXES OF THE MERRILL LYNCH HIGH YIELD
MASTER II INDEX. THESE SUB-INDEXES, BLENDED AND MARKET WEIGHTED, ARE (I)
BB-RATED 1-3 YEARS, (II) B-RATED 1-3 YEARS, (III) BB-RATED 3-5 YEARS, AND (IV)
B-RATED 3-5 YEARS. UNLIKE THE CUSTOMIZED LIMITED TERM HIGH YIELD INDEX, WHICH IS
COMPOSED OF BONDS RATED NO LOWER THAN "B", THE PORTFOLIO CAN INVEST IN BONDS
WITH LOWER CREDIT RATINGS THAN "B" AND AS LOW AS "D".
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.65% 0.65%
Rule 12b-1 fee none 0.25%
Other expenses 0.19% 0.19%
--------------------------------------------------------------------------------
TOTAL* 0.84% 1.09%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 0.90%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $86 $268 $466 $1,037
SERVICE SHARES $111 $347 $601 $1,329
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. During the past fiscal year,
the portfolio paid Dreyfus an investment advisory fee at the annual rate of
0.65% of the portfolio's average daily net assets. Dreyfus is the primary mutual
fund business of Mellon Financial Corporation, a global financial services
company with approximately $2.8 trillion of assets under management,
administration or custody, including approximately $540 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio manager is Roger King. He has been the
portfolio' s primary portfolio manager since the portfolio's inception and has
been employed by Dreyfus since February 1996. Prior thereto, Mr. King was a vice
president of high yield research and, most recently, director of high yield
research at Citibank Securities, Inc.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997(1)
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C>
Net asset value, beginning of period 10.44 11.80 12.88 12.50
Investment operations: Investment income -- net .59 1.21 1.14 .78
Net realized and unrealized gain (loss)
on investments (.88) (1.38) (1.08) .41
Total from investment operations (.29) (.17) .06 1.19
Distributions: Dividends from investment income -- net (.62) (1.19) (1.14) (.77)
Dividends from net realized gain on investments -- -- -- (.04)
Total distributions (.62) (1.19) (1.14) (.81)
Net asset value, end of period 9.53 10.44 11.80 12.88
Total return (%) (5.66)(2) (1.54) .29 14.27(2)
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .76(2) .73 .77 .89(2)
Ratio of interest expense to average net assets (%) .32(2) .11 .32 .20(2)
Ratio of net investment income to average net assets (%) 10.86(2) 10.53 10.10 10.27(2)
Decrease reflected in above expense ratios due to actions by Dreyfus (%) -- -- -- .05(2)
Portfolio turnover rate (%) 8.32(3) 52.08 50.18 37.98(3)
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 50,910 66,357 83,418 31,454
(1) FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1997.
(2) ANNUALIZED.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: LIMITED TERM HIGH INCOME
PORTFOLIO/SHARE CLASS), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
quarterly, and distributes any net capital gains it has realized once a year
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Limited Term High Income Portfolio
------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
156P1200
Dreyfus Variable Investment Fund
Money Market
Portfolio
Investing in money market instruments for current income
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Money Market Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. As a money market
fund, the portfolio is subject to maturity, quality and diversification
requirements designed to help it maintain a stable share price of $1.00.
The portfolio invests in a diversified portfolio of high quality, short-term
debt securities, including the following:
(pound) securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities
(pound) certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by U.S. or foreign banks or their
subsidiaries or branches
(pound) repurchase agreements
(pound) asset-backed securities
(pound) domestic and dollar-denominated foreign commercial paper, and other
short-term corporate and bank obligations of U.S. and foreign issuers
(pound) obligations issued or guaranteed by one or more foreign governments or
their agencies, including obligations of supranational entities
Normally, the portfolio invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
(pound) maintain an average dollar-weighted portfolio maturity of 90 days or
less
(pound) buy individual securities that have remaining maturities of 13 months or
less
(pound) invest only in high-quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner.
An issuer with the highest credit rating has a very strong degree of certainty
(or safety) with respect to making all payments. An issuer with the
second-highest credit rating has strong capacity to make all payments, but the
degree of safety is somewhat less.
Generally, the portfolio is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second-highest credit rating.
<Page 2>
MAIN RISKS
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the portfolio. Additionally, the
portfolio's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the portfolio has maintained a constant share price since inception, and
will continue to try to do so, the following factors could reduce the
portfolio's income level and/or share price:
(pound) interest rates could rise sharply, causing the
value of the portfolio's securities, and share price, to drop
(pound) any of the portfolio's holdings could have its
credit rating downgraded or could default
(pound) the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and
regulatory developments relating to the banking industry
(pound) the risks generally associated with dollar-denominated foreign
investments, such as economic and political developments, seizure or
nationalization of deposits, imposition of taxes or other restrictions
on the payment of principal and interes
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table shows average annual total return over time. Both tables
assume the reinvestment of dividends and distributions. Of course, past
performance is no guarantee of future results.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.99 4.15 3.29 4.37 5.66 5.10 5.19 5.12 4.78
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '91 +1.57%
WORST QUARTER: Q2 '93 +0.78%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.78% 5.17% 4.94%
</TABLE>
For the portfolio's current yield, call toll-free:
1-800-645-6561.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price.
As with the performance information given previously, these figures do not
reflect any fees or charges imposed by participating insurance companies under
their VA contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
ANNUAL PORTFOLIO OPERATING EXPENSES
AS A % OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Other expenses 0.08%
--------------------------------------------------------------------------------
TOTAL 0.58%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$59 $186 $324 $726
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.50% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the portfolio's performance for the fiscal periods
indicated. Certain information reflects financial results for a single portfolio
share. "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 (other than those for the six-month
period ended June 30, 2000) have been independently audited by Ernst & Young
LLP, whose report, along with the portfolio's financial statements, is included
in the annual report, which is available upon request. Keep in mind that fees
and charges imposed by participating insurance companies, which are not
reflected in the table, would reduce the investment returns that are shown
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .028 .047 .050 .050 .050 .055
Distributions: Dividends from investment
income -- net (.028) (.047) (.050) (.050) (.050) (.055)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 5.64(1) 4.78 5.12 5.19 5.10 5.66
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .59(1) .58 .56 .61 .62 .62
Ratio of net investment income to average net assets (%) 5.56(1) 4.69 5.01 5.08 4.96 5.51
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- -- .03
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 95,848 102,727 89,025 64,628 56,186 45,249
(1) ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the portfolio's net asset value per share
(NAV) , which is generally calculated as of the close of trading on the New York
Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange is open.
Purchase and sale orders from separate accounts received in proper form by the
participating insurance company on a given business day are priced at the NAV
calculated on such day, provided that the orders are received by the portfolio
in proper form on the next business day. The participating insurance company is
responsible for properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: MONEY MARKET PORTFOLIO), for
purchase of portfolio shares. The wire must include the portfolio account number
(for new accounts, a taxpayer identification number should be included instead),
account registration and dealer number, if applicable, of the participating
insurance company.
The portfolio uses the amortized cost method of valuing its investments, which
does not take into account unrealized gains or losses.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES DIVIDENDS from its net investment income daily
and pays dividends monthly, and distributes any net capital gains it has
realized once a year.
DISTRIBUTIONS WILL BE REINVESTED in the portfolio unless the participating
insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS OF THE PORTFOLIO CAN EXCHANGE portfolio shares for shares of any
other fund/portfolio managed by Dreyfus offered only to separate accounts
established by insurance companies to fund VA contracts and VLI policies,
subject to the terms and conditions relating to exchanges of the applicable
insurance company prospectus. Owners of VA contracts or VLI policies should
refer to the applicable insurance company prospectus for more information on
exchanging portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Money Market Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
117P1200
Dreyfus Variable Investment Fund
Quality Bond Portfolio
Investing in fixed-income securities for maximum current income consistent with
the preservation of capital and maintenance of liquidity
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Quality Bond Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks to maximize current income as is consistent with the
preservation of capital and the maintenance of liquidity. To pursue this goal,
the portfolio invests at least 80% of net assets in fixed-income securities,
including corporate bonds, mortgage-related securities, collateralized mortgage
obligations (" CMOs" ), and asset-backed securities, that, when purchased, are
rated A or better or are the unrated equivalent as determined by Dreyfus, and in
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
The portfolio also may invest in:
(pound) high grade commercial paper of U.S. issuers
(pound) certificates of deposit, time deposits and bankers' acceptances
(pound) fixed-income securities rated lower than A (but not lower than B) or
the unrated equivalent as determined by Dreyfus
(pound) municipal obligations and zero coupon securities
The portfolio may invest up to 10% of net assets in foreign securities.
Concepts to understand
MORTGAGE-RELATED SECURITIES: pools of residential or commercial mortgages whose
cash flows are "passed through" to the holders of the securities via monthly
payments of interest and principal.
CMO (COLLATERALIZED MORTGAGE OBLIGATION): a security that pools together
mortgages and separates them into short-, medium-, and long-term positions
(called tranches). Tranches pay different rates of interest depending on their
maturity and cash flow predictability.
BOND RATING: a ranking of a bond's quality, based on its ability to pay interest
and repay principal. Bonds are rated from a high of "AAA" (highly unlikely to
default) through a low of "D" (companies already in default).
<Page 2>
MAIN RISKS
The portfolio' s principal risks are discussed below. The value of a
shareholder' s investment in the portfolio will go up and down, which means that
shareholders could lose money.
(pound) INTEREST RATE RISK. Prices of bonds tend to move inversely with changes
in interest rates. Typically, a rise in rates will adversely affect
bond prices and, accordingly, the portfolio' s share price. The longer
the portfolio's maturity and duration, the more its share price is
likely to react to interest rates.
(pound) CREDIT RISK. Failure of an issuer to make timely interest or principal
payments, or a decline or perception of a decline in the credit quality
of a bond, can cause a bond's price to fall, potentially lowering the
portfolio's share price. High yield bonds involve greater credit risk,
including the risk of default, than investment grade bonds and are
considered speculative. The prices of high yield bonds can fall
dramatically in response to bad news about the issuer or its industry,
or the economy in general.
(pound) MARKET RISK. The portfolio' s overall risk level will depend on the
market sectors in which the portfolio is invested and the current
interest rate, liquidity and credit quality of such sectors.
(pound) ILLIQUIDITY. When there is no active trading market for specific
securities, it can become more difficult to sell the securities. In
such a market, the value of such securities and the portfolio's share
price may fall dramatically.
(pound) PREPAYMENT AND EXTENSION RISK. When interest rates fall, the principal
on mortgage-backed and certain asset-backed securities may be prepaid.
The loss of higher yielding underlying mortgages and the reinvestment
of proceeds at lower interest rates can reduce the portfolio's
potential price gain in response to falling interest rates, reduce the
portfolio' s yield, or cause the portfolio' s share price to fall. When
interest rates rise, the portfolio's maturity may lengthen in response
to a drop in mortgage prepayments. This would increase the portfolio's
sensitivity to rising rates and its potential for price declines.
(pound) FOREIGN RISK. The prices and yields of foreign bonds can be affected by
political and economic instability or changes in currency exchange
rates. The bonds of issuers located in emerging markets can be more
volatile and less liquid than those of issuers in more mature
economies.
Under adverse market conditions, the portfolio could invest up to all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
Other potential risks
The portfolio may invest in derivatives, such as options and futures, and
mortgage-related and asset-backed securities. Derivatives can be illiquid and
their value can fall dramatically in response to rapid or unexpected changes in
their underlying instruments. A small investment in certain derivatives can have
a large impact on the portfolio's performance.
At times, the fund may engage in short-term trading, which could produce higher
transaction costs and taxable distributions, and lower the portfolio's after-tax
performance.
The portfolio may buy securities on a forward commitment basis and may enter
into reverse repurchase agreements. Those investment strategies may have a
leveraging effect on the portfolio, thus potentially increasing its overall
volatility.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Lehman Brothers Aggregate Bond
Index, an unmanaged index of corporate, U.S. government and agency debt
instruments, and mortgage-backed and asset-backed securities, and the Merrill
Lynch Domestic Master Index (Subindex D010) , an unmanaged index of U.S.
government, mortgage and corporate securities rated A or better. Of course past
performance is no guarantee of future results. As a new class, past performance
information is not available for Service shares as of the date of this
prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
14.12 12.08 15.33 -4.59 20.42 3.13 9.42 5.49 0.18
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q3 '92 +7.99%
WORST QUARTER: Q1 '94 -4.57%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 0.18% 7.50% 8.10%
LEHMAN BROTHERS
AGGREGATE BOND INDEX* -0.82% 7.73% 7.94%
MERRILL LYNCH
DOMESTIC MASTER
INDEX (SUBINDEX D010) -0.96% 7.70% 7.96%
* LEHMAN BROTHERS AGGREGATE BOND INDEX IS THE PORTFOLIO'S PRIMARY INDEX BECAUSE
SUCH INDEX PROVIDES MORE FREQUENT STATISTICAL INFORMATION.
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.65% 0.65%
Rule 12b-1 fee none 0.25%
Other expenses 0.09% 0.09%
--------------------------------------------------------------------------------
TOTAL 0.74% 0.99%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $76 $237 $411 $918
SERVICE SHARES $101 $315 $547 $1,213
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in more than 190 mutual fund portfolios. For the past fiscal year,
the portfolio paid Dreyfus an investment advisory fee at the annual rate of
0.65% of the portfolio's average daily net assets. Dreyfus is the primary mutual
fund business of Mellon Financial Corporation, a global financial services
company with approximately $2.8 trillion of assets under management,
administration or custody, including approximately $540 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The Dreyfus taxable fixed income team, which consists of sector specialists,
collectively makes investment decisions for the portfolio. The team' s
specialists focus on, and monitor conditions in, the different sectors of the
fixed income market. Once different factors have been analyzed, the sector
specialists then decide on allocation weights for the portfolio and recommend
securities for investment.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 10.89 11.50 11.73 11.50 11.81 10.53
Investment operations: Investment income -- net .33 .62 .67 .73 .66 .68
Net realized and unrealized
gain (loss) on investments .05 (.61) (.04) .32 (.31) 1.42
Total from investment operations .38 .01 .63 1.05 .35 2.10
Distributions: Dividends from investment
income -- net (.28) (.62) (.68) (.73) (.66) (.69)
Dividends from net realized gain
on investments -- -- (.18) (.09) .-- (.13)
Total distributions (.28) (.62) (.86) (.82) (.66) (.82)
Net asset value, end of period 10.99 10.89 11.50 11.73 11.50 11.81
Total return (%) 7.06(1) .18 5.49 9.42 3.13 20.42
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of operating expenses to average net assets (%) .71(1) .74 73 .75 .79 .81
Ratio of interest expense to average net assets (%) -- -- .-- .02 .-- .--
Ratio of net investment income to average net assets (%) 6.01(1) 5.66 5.74 6.27 5.86 6.13
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- .-- -- .-- .-- .04
Portfolio turnover rate (%) 253.92(2) 521.51 244.95 374.76 258.36 263.53
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 131,064 135,822 121,461 88,292 60,936 37,447
(1) ANNUALIZED.
(2) NOT ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: QUALITY BOND PORTFOLIO/SHARE
CLASS) , for purchase of portfolio shares. The wire must include the portfolio
account number (for new accounts, a taxpayer identification number should be
included instead) , account registration and dealer number if applicable of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
monthly, and distributes any net capital gains it has realized once a year
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Quality Bond Portfolio
------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
120P1200
Dreyfus Variable Investment Fund
Small Cap Portfolio
Investing in stocks of small-cap companies for maximum capital appreciation
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Small Cap Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks to maximize capital appreciation. To pursue this goal, the
portfolio primarily invests in small-cap companies with total market values of
less than $1.5 billion at the time of purchase. The portfolio may continue to
hold the securities of companies as their market capitalizations grow and, thus,
at any given time, a substantial portion of the portfolio's holdings may have
market capitalizations in excess of $1.5 billion. The investments may include
common stocks, preferred stocks and convertible securities, including those
issued in initial public offerings.
In choosing stocks, the portfolio uses a blended approach, investing in growth
stocks, value stocks or stocks that exhibit characteristics of both. The
portfolio seeks companies characterized by new or innovative products or
services which should enhance prospects for growth of future earnings. The
portfolio also invests based on economic or political changes and may invest in
special situations, such as corporate restructurings, mergers or acquisitions.
The portfolio managers use a sector management approach, supervising a team of
sector managers who each make buy and sell decisions within their respective
areas of expertise.
The portfolio typically sells a stock when the reasons for buying it no longer
apply or when the company begins to show deteriorating fundamentals or poor
relative performance, or when the stock is fully valued by the market.
Concepts to understand
SMALL-CAP COMPANIES: these companies tend to grow faster than large-cap
companies and typically use profits for expansion rather than to pay dividends.
They are more volatile than larger companies and fail more often.
GROWTH COMPANIES: companies whose earnings are expected to grow faster than the
overall market. Often, growth stocks have relatively high price-to-earnings,
price-to-book and price-to-sales ratios, and tend to be more volatile than value
stocks.
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements (such as price-to-earnings or price-to-book ratios).
Because a stock can remain undervalued for years, value investors often look for
factors that could trigger a rise in price.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Small companies carry additional risks because their earnings are less
predictable (and some companies may be experiencing significant losses), their
share prices more volatile and their securities less liquid than larger, more
established companies. Small companies may have limited product lines, markets,
or financial resources, or may depend on a limited management group. Some of the
portfolio' s investments will rise and fall based on investor perception rather
than economics. Other investments, including special situations, anticipate
future products, services or events whose delay could cause the stock price to
drop.
Securities of companies within specific sectors of the economy can perform
differently than the overall market. Because the portfolio may overweight
certain market sectors, the portfolio's performance may be more sensitive to
developments that affect those sectors emphasized by the portfolio.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Investments in growth companies may lack the dividend yield
that can cushion stock prices in market downturns. These companies are expected
to increase their earnings at a certain rate. If expectations are not met,
investors can punish the stocks inordinately, even if earnings do increase.
The portfolio' s investments in value stocks are subject to the risk that they
may never reach what the manager believes is their full market value, either
because the market fails to recognize the companies' intrinsic worth or the
manager misgauged that worth. They also may decline in price, even though in
theory they are already undervalued. Further, while the portfolio's investments
in value stocks may limit the overall downside risk of the portfolio over time,
the portfolio may produce more modest gains than riskier small-company stock
funds as a trade-off for this potentially lower risk.
Other potential risks
The portfolio may purchase securities of companies in initial public offerings
("IPOs"). The prices of securities purchased in IPOs can be very volatile. The
effect of IPOs on the portfolio's performance depends on a variety of factors,
including the number of IPOs the portfolio invests in, whether and to what
extent a security purchased in an IPO appreciates in value, and the asset base
of the portfolio. As a portfolio's asset base increases, IPOs often have a
diminished effect on such portfolio's performance.
At times, the fund will engage in short-term trading, which could produce higher
brokerage costs and taxable distributions and lower the fund's after-tax
performance accordingly.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Russell 2000 Index, a widely
recognized, unmanaged index of smaller capitalization common stocks. Of course,
past performance is no guarantee of future results. As a new class, past
performance information is not available for Service shares as of the date of
this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
159.73 71.28 68.31 7.75 29.38 16.60 16.75 -3.44 23.15
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q3 '91 +32.09%
WORST QUARTER: Q3 '98 -23.45%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 23.15% 15.93% 35.65%
RUSSELL 2000 INDEX 21.26% 16.69% 16.57%
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.03% 0.03%
--------------------------------------------------------------------------------
TOTAL 0.78% 1.03%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $80 $249 $433 $966
SERVICE SHARES $105 $328 $569 $1,259
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio's primary portfolio managers are Hilary R. Woods and Paul Kandel.
Ms. Woods and Mr. Kandel have been the portfolio's primary managers since
October 1996. Ms. Woods and Mr. Kandel have been employed by Dreyfus since 1987
and 1994, respectively.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 66.34 53.91 57.14 52.08 46.13 36.52
Investment operations: Investment income -- net .05(1) .04(1) .04 .07 .10 .16
Net realized and unrealized
gain (loss) on investments 9.71 12.43 (2.21) 8.49 7.53 10.54
Total from investment operations 9.76 12.47 (2.17) 8.56 7.63 10.70
Distributions: Dividends from investment
income -- net (.05) (.04) (.00)(2) (.07) (.10) (.18)
Dividends from net realized
gain on investments -- -- (1.06) (3.43) (1.51) (.91)
Dividends in excess of net realized
gain on investments -- -- -- -- (.07) --
Total distributions (.05) (.04) (1.06) (3.50) (1.68) (1.09)
Net asset value, end of period 76.05 66.34 53.91 57.14 52.08 46.13
Total return (%) 14.71(3) 23.15 (3.44) 16.75 16.60 29.38
---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .39(3) .78 .77 .78 .79 .83
Ratio of net investment income to average net assets (%) .07(3) .07 .07 .12 .24 .54
Portfolio turnover rate (%) 21.32(3) 40.60 75.04 79.00 89.10 99.02
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,471,189 1,295,698 1,246,804 1,274,292 960,365 543,281
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
Portfolio shares may be purchased or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
The price for portfolio shares is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders.
Wire purchase payments may be made if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/Dreyfus Variable Investment Fund: Small Cap Portfolio/share
class) , for purchase of portfolio shares. The wire must include the portfolio
account number (for new accounts, a taxpayer identification number should be
included instead), account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
The portfolio usually declares and pays dividends from its net investment
income, and distributes any net capital gains it has realized once a year
Each share class will generate a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
Shareholders can exchange shares of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, for shares of any such fund/portfolio offered without a separate class
designation or which makes available only one class, subject to the terms and
conditions relating to exchanges of the applicable insurance company prospectus.
Owners of VA contracts or VLI policies should refer to the applicable insurance
company prospectus for more information on exchanging portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Small Cap Portfolio
------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
121P1200
Dreyfus Variable Investment Fund
Small Company Stock Portfolio
Investing in stocks of small and midsize companies for investment returns that
exceed the total return performance of the Russell 2500(tm) Stock Index
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Small Company Stock Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and VLI policies are described in the separate prospectuses issued by
the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks investment returns (consisting of capital appreciation and
income) that are greater than the total return performance of stocks represented
by the Russell 2500(tm) Stock Index ("Russell 2500"). To pursue this goal, the
portfolio normally invests in a blended portfolio of growth and value stocks of
small and midsize domestic companies, whose market values generally range
between $500 million and $5 billion at the time of purchase. However, since the
portfolio can continue to hold its securities as their market capitalizations
grow, a substantial portion of the portfolio' s holdings can have market
capitalizations in excess of $5 billion at any given time. Stocks are chosen
through a disciplined process combining computer modeling techniques,
fundamental analysis and risk management. Consistency of returns and stability
of the portfolio's share price compared to the Russell 2500 are primary goals of
the investment process.
Dreyfus uses a computer model to identify and rank stocks within an industry or
sector, based on:
(pound) VALUE, or how a stock is priced relative to its perceived intrinsic
worth
(pound) GROWTH, in this case the sustainability or growth of earnings
(pound) FINANCIAL PROFILE, which measures the financial health of the company
Next, Dreyfus uses fundamental analysis to select the most attractive of the
top-ranked securities, drawing on information technology as well as Wall Street
sources and company management. Then Dreyfus manages risk by diversifying across
companies and industries, limiting the potential adverse impact from any one
stock or industry. The portfolio is structured so that its sector weightings and
risk characteristics, such as growth, size, quality and yield, are similar to
those of the Russell 2500. The portfolio may invest in securities in all
available domestic trading markets, including initial public offerings and the
after-market.
Concepts to understand
COMPUTER MODEL: a proprietary computer model that evaluates and ranks a universe
of over 2,000 stocks, screening each stock for relative attractiveness within
its economic sector and industry. To ensure that the model remains effective,
Dreyfus reviews each of the screens on a regular basis, and maintains the
flexibility to adapt the screening criteria to changes in market and economic
conditions.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Small and midsize companies carry additional risks because their earnings are
less predictable (and some companies may be experiencing significant losses),
their share prices more volatile and their securities less liquid than larger,
more established companies. Some of the portfolio's investments will rise and
fall based on investor perception rather than economics.
Although the portfolio seeks to manage risk by broadly diversifying among
industries and by maintaining a risk profile similar to the Russell 2500, the
portfolio is expected to hold fewer securities than the index. Owning fewer
securities and the ability to purchase companies not listed in the index can
cause the portfolio to underperform the index.
By investing in a mix of growth and value companies, the portfolio assumes the
risks of both and may achieve more modest gains than funds that use only one
investment style. Because the stock prices of growth companies are based in part
on future expectations, they may fall sharply if earnings expectations are not
met or investors believe the prospects for a stock, industry or the economy in
general are weak, even if earnings do increase. Growth stocks also typically
lack the dividend yield that could cushion stock prices in market downturns.
Value stocks involve the risk that they may never reach what the manager
believes is their full market value, either because the market fails to
recognize the companies' intrinsic worth, or the portfolio manager misgauged
that worth. They also may decline in price even though in theory they are
already undervalued. While investments in value stocks may limit downside risk
over time, they may produce smaller gains than riskier stocks.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio, at times, may invest in derivatives, such as options and futures
contracts. These practices, when employed, are used primarily to hedge the
portfolio but may be used to increase returns; however, such practices may
reduce returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
The Portfolio
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Russell 2500 Index, a widely
recognized, unmanaged index of small-cap and mid-cap stock performance. Of
course, past performance is no guarantee of future results. As a new class, past
performance information is not available for Service shares as of the date of
this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
21.77 -5.97 10.60
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +16.44%
WORST QUARTER: Q3 '98 -21.84%
--------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
Since
inception
1 Year (5/1/96)
--------------------------------------------------------------------------------
INITIAL SHARES 10.60% 9.11%
RUSSELL 2500 24.15% 14.91%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/96 IS USED AS THE
BEGINNING VALUE ON 5/1/96.
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using this portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.22% 0.22%
--------------------------------------------------------------------------------
TOTAL 0.97% 1.22%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $99 $309 $536 $1,190
SERVICE SHARES $124 $387 $670 $1,477
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio managers are Anthony Galise and James
Wadsworth. Mr. Galise has been a portfolio manager of the portfolio since its
inception. He has been a portfolio manager with Dreyfus since April 1996 and
also is a portfolio manager at Laurel Capital Advisors, an affiliate of Dreyfus.
Mr. Galise is a vice president and portfolio manager at Mellon. He joined Mellon
in 1993 with over 20 years of equity investment experience. Mr. Wadsworth has
managed the portfolio since its inception. In addition to being a portfolio
manager with Dreyfus, Mr. Wadsworth has been employed by Laurel Capital
Advisors, an affiliate of Dreyfus, since October 1990, serving as chief
investment officer of Laurel Capital Advisors since June 1994. Mr. Wadsworth
also is a senior vice president of Mellon, where he has been employed since
1977.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996(1)
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 16.69 15.09 16.13 13.52 12.50
Investment operations: Investment income -- net .00(2,3) .04(2) .04 .05 .05
Net realized and unrealized
gain (loss) on investments .86 1.56 (.99) 2.89 1.03
Total from investment operations .86 1.60 (.95) 2.94 1.08
Distributions: Dividends from investment
income -- net (.03) -- (.04) (.04) (.05)
Dividends from net realized
gain on investments -- -- (.05) (.29) (.01)
Total distributions (.03) -- (.09) (.33) (.06)
Net asset value, end of period 17.52 16.69 15.09 16.13 13.52
Total return (%) 5.17(4) 10.60 (5.97) 21.77 8.73(4,5)
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .47(4) .97 .98 1.12 .75(4)
Ratio of net investment income to average net assets (%) .03(4) .24 .26 .53 .39(4)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .19(4)
Portfolio turnover rate (%) 52.28(4) 47.01 45.09 34.48 35.68(4)
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 33,597 32,530 34,857 28,154 8,148
(1) FROM APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996.
(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(3) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(4) NOT ANNUALIZED.
(5) CALCULATED BASED ON NET ASSET VALUE ON THE CLOSE OF BUSINESS ON MAY 1, 1996
(COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1996.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: SMALL COMPANY STOCK
PORTFOLIO/SHARE CLASS), for purchase of portfolio shares. The wire must include
the portfolio account number (for new accounts, a taxpayer identification number
should be included instead) , account registration and dealer number, if
applicable, of the participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Small Company Stock Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
151P1200
Dreyfus Variable Investment Fund
Special Value Portfolio
Investing in stocks of value companies for maximum total return
PROSPECTUS December 31, 2000
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The Portfolio
Dreyfus Variable Investment Fund
Special Value Portfolio
Contents
The Portfolio
--------------------------------------------------------------------------------
Goal/Approach 2
Main Risks 3
Past Performance 4
Expenses 5
Management 6
Financial Highlights 7
Account Information
--------------------------------------------------------------------------------
Account Policies 8
Distributions and Taxes 8
Exchange Privilege 9
For More Information
--------------------------------------------------------------------------------
INFORMATION ON THE PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN
THE CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Portfolio shares are offered only to separate accounts established by insurance
companies to fund variable annuity contracts ("VA contracts") and variable life
insurance policies (" VLI policies" ). Individuals may not purchase shares
directly from, or place sell orders directly with, the portfolio. The VA
contracts and the VLI policies are described in the separate prospectuses issued
by the participating insurance companies, over which the portfolio assumes no
responsibility. Conflicts may arise between the interests of VA contract holders
and VLI policyholders. The board of trustees will monitor events to identify any
material conflicts and, if such conflicts arise, determine what action, if any,
should be taken.
The portfolio currently offers two classes of shares: Initial shares and Service
shares. VA contract holders and VLI policyholders should consult the applicable
prospectus of the separate account of the participating insurance company to
determine which class of portfolio shares may be purchased by the separate
account.
While the portfolio's investment objective and policies may be similar to those
of other funds managed by the investment adviser, the portfolio's investment
results may be higher or lower than, and may not be comparable to, those of the
other funds.
The Portfolio
GOAL/APPROACH
The portfolio seeks to maximize total return, consisting of capital appreciation
and current income. To pursue this goal, the portfolio invests primarily in
stocks of value companies of any size. The portfolio's stock investments may
include common stocks, preferred stocks and convertible securities of both U.S.
and foreign issuers, including those purchased in initial public offerings. In
choosing stocks, the portfolio manager looks for value companies that provide
opportunities for capital growth. The manager then reviews these stocks for
factors that could signal a rise in price, such as:
(pound) new products or markets
(pound) opportunities for greater market share
(pound) more effective management
(pound) positive changes in corporate structure or market perception
(pound) potential for improved earnings
The portfolio typically sells a stock when it is no longer considered a value
company, appears less likely to benefit from the current market and economic
environment, shows deteriorating fundamentals or falls short of the manager's
expectations.
The portfolio also may invest in bonds that offer opportunities for capital
growth. These bonds may be investment grade or below investment grade in
quality.
Concepts to understand
VALUE COMPANIES: companies that appear underpriced according to certain
financial measurements of their intrinsic worth or business prospects (such as
price-to-earnings or price-to-book ratios). Because a stock can remain
undervalued for years, value investors often look for factors that could trigger
a rise in price.
<Page 2>
MAIN RISKS
While stocks have historically been a leading choice of long-term investors,
they do fluctuate in price depending on the performance of the companies that
issued them, general market and economic conditions and investor confidence. The
value of a shareholder's investment in the portfolio will go up and down, which
means that shareholders could lose money.
Value stocks involve the risk that they may never reach what the portfolio
manager believes is their full market value, either because the market fails to
recognize the companies' intrinsic worth or the portfolio manager misgauged that
worth. They also may decline in price, even though in theory they are already
undervalued. Because different types of stocks tend to shift in and out of favor
depending on market and economic conditions, the portfolio's performance may
sometimes be lower or higher than that of other types of funds (such as those
emphasizing growth stocks).
Securities of companies within specific sectors of the economy can perform
differently than the overall market. Because the portfolio may overweight
certain market sectors, the portfolio's performance may be more sensitive to
developments that affect those sectors emphasized by the portfolio.
The portfolio may invest in companies of any size. Investments in small and
midsize companies carry additional risks because their earnings tend to be less
predictable (and some companies may be experiencing significant losses), their
share prices more volatile and their securities less liquid than larger, more
established companies. Foreign securities involve special risks such as changes
in currency exchange rates, a lack of comprehensive company information,
political instability, and potentially less liquidity.
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in the
portfolio' s share price as well. In addition, if an issuer fails to make timely
interest or principal payments or there is a decline in the credit quality of a
bond, or perception of a decline, the bond's value could fall, potentially
lowering the portfolio's share price.
Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. Although the portfolio would do this to avoid
losses, it could have the effect of reducing the benefit from any upswing in the
market. During such periods, the portfolio may not achieve its investment
objective.
Other potential risks
The portfolio may purchase securities of companies in initial public offerings
("IPOs"). The prices of securities purchased in IPOs can be very volatile. The
effect of IPOs on the portfolio's performance depends on a variety of factors,
including the number of IPOs the portfolio invests in, whether and to what
extent a security purchased in an IPO appreciates in value, and the asset base
of the portfolio. As a portfolio's asset base increases, IPOs often have a
diminished effect on such portfolio's performance.
The portfolio may invest in derivatives, such as options and futures contracts.
The portfolio also may invest in foreign currencies and engage in short-selling.
These practices, when employed, are used primarily to hedge the portfolio but
may be used to increase returns; however, such practices sometimes may reduce
returns or increase volatility. Derivatives can be illiquid, and a small
investment in certain derivatives could have a potentially large impact on the
portfolio's performance.
At times, the portfolio may engage in short-term trading, which could produce
higher transaction costs and taxable distributions, and lower the portfolio's
after-tax performance.
The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.
What the portfolio is -- and isn't
The portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in the portfolio is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. Shareholders could lose money in the portfolio, but
shareholders also have the potential to make money.
<Page 3>
PAST PERFORMANCE
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the performance of the portfolio's
Initial shares from year to year. The table compares the average annual total
return of the Initial shares to that of the Russell 1000 Value Index, an
unmanaged index that measures the performance of those Russell 1000 companies
with lower price-to-book ratios and lower forecasted growth values; the S&P
500((reg.tm) ), a widely recognized, unmanaged index of stock performance; and
the Wilshire Midcap Value Index, an unmanaged index of midcap stocks that is
constructed by using a blend of price-to-book and forecast price-to-earnings
ratios. Of course, past performance is no guarantee of future results. As a new
class, past performance information is not available for Service shares as of
the date of this prospectus.
--------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INITIAL SHARES
10.60 1.07 28.69 -1.56 -0.26 -3.62 23.14 15.69 7.27
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '98 +17.23%
WORST QUARTER: Q3 '99 -10.11%
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average annual total return AS OF 12/31/99
Since
inception
1 Year 5 Years (8/31/90)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INITIAL SHARES 7.27% 8.00% 8.37%
RUSSELL 1000
VALUE INDEX* 7.35% 23.07% 18.23%
S&P 500 21.03% 28.54% 20.49%
WILSHIRE MIDCAP
VALUE INDEX -8.53% 13.58% 15.59%
*THE RUSSELL 1000 VALUE INDEX IS THE PORTFOLIO'S PRIMARY INDEX BECAUSE OF THE
PORTFOLIO'S AND THE INDEX'S LARGE-CAP VALUE ORIENTATION.
</TABLE>
Additional costs
Performance information reflects the portfolio's expenses only and does not
reflect the fees and charges imposed by participating insurance companies under
their VA contracts or VLI policies. Because these fees and charges will reduce
total return, VA contract holders and VLI policyholders should consider them
when evaluating and comparing the portfolio's performance. VA contract holders
and VLI policyholders should consult the prospectus for their contract or policy
for more information.
<Page 4>
EXPENSES
Investors using the portfolio to fund a VA contract or VLI policy will pay
certain fees and expenses in connection with the portfolio, which are described
in the table below. Annual portfolio operating expenses are paid out of
portfolio assets, so their effect is included in the portfolio's share price. As
with the performance information given previously, these figures do not reflect
any fees or charges imposed by participating insurance companies under their VA
contracts or VLI policies.
--------------------------------------------------------------------------------
Fee table
Initial Service
shares shares
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.75% 0.75%
Rule 12b-1 fee none 0.25%
Other expenses 0.11% 0.11%
--------------------------------------------------------------------------------
TOTAL* 0.86% 1.11%
* THE DREYFUS CORPORATION HAS UNDERTAKEN, UNTIL APRIL 30, 2001, TO WAIVE RECEIPT
OF ITS FEES AND/OR ASSUME THE EXPENSES OF THE PORTFOLIO SO THAT THE EXPENSES OF
NEITHER CLASS (EXCLUDING TAXES, BROKERAGE COMMISSIONS, EXTRAORDINARY EXPENSES,
INTEREST EXPENSES AND COMMITMENT FEES ON BORROWINGS) EXCEED 1.00%.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INITIAL SHARES $88 $274 $477 $1,061
SERVICE SHARES $113 $353 $612 $1,352
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether investors sold their shares at the end
of a period or kept them. Because actual returns and expenses will be different,
the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of the portfolio's operations.
RULE 12B-1 FEE: the fee paid to the portfolio's distributor for distributing
Service shares, for advertising and marketing related to Service shares, and for
providing account service and maintenance for holders of Service shares. The
distributor may pay all or part of this fee to participating insurance companies
and the broker-dealer acting as principal underwriter for their variable
insurance products. Because this fee is paid on an ongoing basis out of
portfolio assets attributable to Service shares, over time it will increase the
cost of an investment in Service shares which could be more than that payable
with respect to other types of sales charges.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees. Other expenses for
Service shares are based on other expenses for Initial shares for the past
fiscal year.
The Portfolio
<Page 5>
MANAGEMENT
The investment adviser for the portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$154 billion in over 190 mutual fund portfolios. For the past fiscal year, the
portfolio paid Dreyfus an investment advisory fee at the annual rate of 0.75% of
the portfolio' s average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.8 trillion of assets under management, administration or
custody, including approximately $540 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The portfolio' s primary portfolio manager is Timothy M. Ghriskey. He has been
the portfolio' s primary manager since January 1, 1997. Mr. Ghriskey has been
employed by Dreyfus since July 1995. For more than five years prior thereto, he
was vice president and associate managing partner of Loomis, Sayles & Company,
L.P.
The portfolio, Dreyfus and Dreyfus Service Corporation (the portfolio' s
distributor) each has adopted a code of ethics that permits its personnel,
subject to such code, to invest in securities, including securities that may be
purchased or held by the portfolio. The Dreyfus code of ethics restricts the
personal securities transactions of its employees, and requires portfolio
managers and other investment personnel to comply with the code's preclearance
and disclosure procedures. Its primary purpose is to ensure that personal
trading by Dreyfus employees does not disadvantage any Dreyfus-managed fund.
<Page 6>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table describes the performance of the portfolio's Initial shares
for the fiscal periods indicated. Certain information reflects financial results
for a single portfolio share. "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 (other than
those for the six-month period ended June 30, 2000) have been independently
audited by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report, which is available upon request.
Keep in mind that fees and charges imposed by participating insurance companies,
which are not reflected in the table, would reduce the investment returns that
are shown. Since Service shares are new, financial highlights information is not
available for that class as of the date of this prospectus.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
INITIAL SHARES 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.64 14.93 12.99 10.60 11.70 12.37
Investment operations: Investment income -- net .10(1) .11(1) .10 .06 .63 .51
Net realized and unrealized
gain (loss) on investments (.68) .95 1.94 2.40 (1.05) (.54)
Total from investment operations (.58) 1.06 2.04 2.46 (.42) (.03)
Distributions: Dividends from investment
income -- net (.02) (.10) (.10) (.01) (.56) (.64)
Dividends in excess of investment
income -- net -- -- -- (.00)(2) (.06) --
Dividends from net realized
gain on investments (.06) (1.25) -- (.06) -- --
Paid-in capital -- -- -- -- (.06) --
Total distributions (.08) (1.35) (.10) (.07) (.68) (.64)
Net asset value, end of period 13.98 14.64 14.93 12.99 10.60 11.70
Total return (%) (4.05)(3) 7.27 15.69 23.14 (3.62) (.26)
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .45(3) .86 .83 .99 .93 .94
Ratio of dividends on securities sold short
to average net assets (%) -- -- -- .02 -- --
Ratio of net investment income to average net assets (%) .73(3) .70 .67 .38 4.12 3.56
Portfolio turnover rate (%) 63.35(3) 171.41 252.24 188.57 124.19 53.88
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Net assets, end of period ($ x 1,000) 48,132 57,099 63,264 52,981 21,101 25,272
(1) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(2) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(3) NOT ANNUALIZED.
</TABLE>
The Portfolio
<Page 7>
Account Information
ACCOUNT POLICIES
Buying/Selling shares
PORTFOLIO SHARES MAY BE PURCHASED or sold (redeemed) by separate accounts of
participating insurance companies. VA contract holders and VLI policyholders
should consult the prospectus of the separate account of the participating
insurance company for more information about buying or selling portfolio shares
THE PRICE FOR PORTFOLIO SHARES is the net asset value per share (NAV) of the
relevant class, which is generally calculated as of the close of trading on the
New York Stock Exchange (usually 4:00 p.m. Eastern time) every day the exchange
is open. Purchase and sale orders from separate accounts received in proper form
by the participating insurance company on a given business day are priced at the
NAV calculated on such day, provided that the orders are received by the
portfolio in proper form on the next business day. The participating insurance
company is responsible for properly transmitting purchase and sale orders.
WIRE PURCHASE PAYMENTS MAY BE MADE if the bank account of the participating
insurance company is in a commercial bank that is a member of the Federal
Reserve System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire to The Bank of New York
(DDA#8900337605/DREYFUS VARIABLE INVESTMENT FUND: SPECIAL VALUE PORTFOLIO/SHARE
CLASS) , for purchase of portfolio shares. The wire must include the portfolio
account number (for new accounts, a taxpayer identification number should be
included instead), account registration and dealer number, if applicable, of the
participating insurance company.
The portfolio's investments are generally valued based on market value or, where
market quotations are not readily available, based on fair value as determined
in good faith by the board of trustees or by one or more pricing services
approved by the board.
DISTRIBUTIONS AND TAXES
THE PORTFOLIO USUALLY DECLARES AND PAYS dividends from its net investment income
and distributes any net capital gains it has realized once a year.
EACH SHARE CLASS WILL GENERATE a different dividend because each has different
expenses. Distributions will be reinvested in the portfolio unless the
participating insurance company instructs otherwise.
Since the portfolio's shareholders are the participating insurance companies and
their separate accounts, the tax treatment of dividends and distributions will
depend on the tax status of the participating insurance company. Accordingly, no
discussion is included as to the federal income tax consequences to VA contract
holders or VLI policyholders. For this information, VA contract holders and VLI
policyholders should consult the prospectus of the separate account of the
participating insurance company or their tax advisers.
Participating insurance companies should consult their tax advisers about
federal, state and local tax consequences.
Who the shareholders are
The participating insurance companies and their separate accounts are the
shareholders of the portfolio. From time to time, a shareholder may own a
substantial number of portfolio shares. The sale of a large number of shares
could hurt the portfolio's NAV.
<Page 8>
EXCHANGE PRIVILEGE
SHAREHOLDERS CAN EXCHANGE SHARES of a class for shares of the same class of any
other fund/portfolio managed by Dreyfus that is offered only to separate
accounts established by insurance companies to fund VA contracts and VLI
policies, or for shares of any such fund/portfolio offered without a separate
class designation or which makes available only one class, subject to the terms
and conditions relating to exchanges of the applicable insurance company
prospectus. Owners of VA contracts or VLI policies should refer to the
applicable insurance company prospectus for more information on exchanging
portfolio shares.
Account Information
<Page 9>
For More Information
Dreyfus Variable Investment Fund Special Value Portfolio
-------------------------------------
SEC file number: 811-5125
More information on the portfolio is available free upon request, including the
following:
Annual/Semiannual Report
Describes the portfolio's performance, lists portfolio holdings and contains a
letter from the portfolio manager(s) discussing recent market conditions,
economic trends and portfolio strategies that significantly affected the
portfolio's performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the portfolio and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
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
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from: http://www.sec.gov
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation
118P1200
