Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this annual report on the activity of
Dreyfus Variable Investment Fund - Capital Appreciation Portfolio for the
twelve-month period ended December 31, 1996. For the fiscal year, the
Portfolio's shares provided a total return of 25.56% based upon net asset
value.* During the same period, the Standard & Poor's 500 Composite Stock
Price Index returned 22.95%.**
PORTFOLIO COMPOSITION
At the close of the year, the Portfolio had 3.1% of its net assets in
short-term Treasuries and the balance in equities. In the equity portion of
the Portfolio, industry concentrations were in consumer nondurables,
technology, health care and financial services. As market conditions permit,
we will reduce the position in Treasuries and commit these assets to high
quality equities.
ECONOMIC OUTLOOK
The U.S. economy has expanded over a period of seventy months, in the
current economic cycle. We believe the expansion has become more balanced
than was the case in the first half of 1996 when GDP growth exceeded a
sustainable, noninflationary pattern. Overall, we expect the economy to
remain relatively healthy, with average annual GDP growth of about 1.5%-2.0%
in the first half of 1997, and a somewhat stronger rate of growth later in
the year, as lower interest rates contribute to a pickup in demand, and
inventories are rebuilt. We believe the yield curve will continue to flatten,
with short-term rates declining slightly from current levels, and the rate on
the 30-year bond breaking below 6.0%. In our view, inflation, as measured by
the GDP price deflator, will increase at an annual rate of 2.2% in 1997.
Export growth should pick up from current levels as our trading partners'
economies improve. Consumers, who have been fueling growth, are reliquifying
balance sheets from historically high debt levels, and bank lending has
become more selective. A sharp credit contraction reflects this trend, which
is weakening demand. In a related development, demographic trends support a
continued rise in the U.S. savings rate. Involuntary inventory accumulation al
so suggests both weaker production and declining employment growth in the
first half of 1997. Corporate profits will continue to improve, but with some
deceleration. In our view, earnings growth will be increasingly selective.
INVESTMENT STRATEGY
In the mature phase of a protracted economic cycle, corporate profit
growth comes under increasing pressure. We believe investors will
increasingly favor industry sectors which are less vulnerable to a sharp
falloff in demand, and will seek those companies that can be expected to
achieve above-average earnings growth from expanding global market share.
Technological innovation and new product development will also drive sales,
both domestically and abroad. To a lesser extent, but still a factor, corporat
e restructuring and cost cutting will continue to foster margin expansion.
Our investment strategy has led to structuring the portfolio so as to
outperform the S&P 500 Stock Index, in an indefinite period of extended
moderate growth among the more mature economies, and to benefit from exposure
to high relative growth among the newly industrialized and emerging economies
which will collectively take center stage in the global marketplace in the
decades ahead. Companies with competitive positioning, through branded
products and franchises and proprietary technologies and innovative services,
should command a market premium. In our view, the highest quality companies
which have, and can attract, world-class management teams with vision, and
have excess cash flow and strong balance sheets, can take advantage of the
challenges and uncertainties which these evolving dynamics present.
INVESTMENT HIGHLIGHTS
The performance of U.S. equity markets surpassed even the most optimistic
forecasts in 1996. From a long-term and fundamental perspective, it is clear
that the aggregate total return of the S&P 500 of 60.5% for 1995 and 1996 is
well in
excess of the historical trend. However, we continue to expect that an
average annual total return of 15% is achievable, bringing the Dow Jones
Industrial Average to the 10,000 level by the year 2000. Our investment
strategy, keyed to high quality growth companies that are global industry
leaders and innovators, contributed most significantly to your Portfolio's
absolute and relative performance.
Investor sentiment has swung in favor of the large capitalization,
multinational issues in which the Portfolio has invested, both because
investment time horizons have lengthened to meet retirement needs and in an
effort to capture the highest total returns. Individual stock selection and
strategic emphasis also influenced the Portfolio's performance favorably in
1996. As the choice among firms with high corporate profits becomes narrower,
and consistent earnings come to command a premium, we expect that equity
markets will reflect this selectivity, and investors will increasingly
understand that they should look at a market of stocks, rather than the stock
market in general. We expect the two-tier profile of the market will persist,
and that lower quality, smaller capitalization companies and the more
illiquid issues will underperform the higher quality, more visible companies.
The Portfolio's performance was led by the technology sector. The
strategic overweighting of Intel, at 3.7%, had the most favorable effect on
results, followed by shares of General Electric. The consumer nondurables
sector had the second most favorable effect, led by shares of Coca-Cola,
Philip Morris, Gillette and Procter & Gamble. The holdings in the financial
services sector were the third strongest group in the Fund, led by the
performance of Citicorp, Chase Manhattan and SunTrust Banks.
We appreciate your investment in the Portfolio and we will continue to
seek rewarding returns on your behalf.
Sincerely,
(Fayez Sarofim Signature Logo)
Fayez Sarofim
Portfolio Manager
January 15, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid. The Portfolio's performance does not reflect the deduction of
additional charges imposed in connection with investing in variable annuity
contracts and variable life insurance policies.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of stock market performance.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
DECEMBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND,
CAPITAL APPRECIATION PORTFOLIO AND THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX
$18,438
Dreyfus Variable
Investment Fund, Capital Appreciation Portfolio
Dollars
$18,066
Standard & Poor's 500
Composite Stock Price
Index*
*Source: Lipper Analytical Services, Inc.
Average Annual Total Returns
<TABLE>
One Year Ended From Inception (4/5/93)
December 31, 1996 to December 31, 1996
------------------- ------------------------
<S> <C> <C>
25.56% 17.76%
</TABLE>
Past performance is not predictive of future performance.
The Portfolio's performance does not reflect the deduction of additional
charges imposed in connection with investing in variable annuity contracts
and variable life insurance policies.
The above graph compares a $10,000 investment made in Dreyfus Variable
Investment Fund, Capital Appreciation Portfolio on 4/5/93 (Inception Date) to
a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price
Index on that date. For comparative purposes, the value of the Index on
3/31/93 is used as the beginning value on 4/5/93. All dividends and capital
gain distributions are reinvested.
The Portfolio's performance shown in the line graph takes into account all
applicable fees and expenses of the Portfolio. The Standard & Poor's 500
Composite Stock Price Index is a widely accepted, unmanaged index of overall
stock market performance, which does not take into account charges, fees and
other expenses. Further information relating to Portfolio performance,
including expense reimbursements, if applicable, is contained in the
Financial Highlights section of the Prospectus and elsewhere in this report.
<TABLE>
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
Statement of Investments December 31, 1996
Common Stocks-97.1% Shares Value
------------ ------------
<S> <C> <C> <C>
Aerospace & Electronics-14.4% Boeing................................. 11,050 $ 1,175,444
Emerson Electric....................... 9,000 870,750
General Electric....................... 40,050 3,959,944
Hewlett-Packard........................ 32,000 1,608,000
Intel.................................. 30,000 3,928,125
Motorola............................... 14,050 862,319
Philips Electronics, N.V., A.D.R....... 20,000 800,000
Rockwell International................. 25,000 1,521,875
Texas Instruments...................... 3,200 204,000
------------
14,930,457
------------
Auto Related-3.4% Chrysler............................... 45,000 1,485,000
Ford Motor............................. 65,094 2,074,871
------------
3,559,871
------------
Banking-7.9% Chase Manhattan........................ 30,000 2,677,500
Citicorp............................... 28,025 2,886,575
HSBC Holdings, A.D.R................... 3,500 756,000
HSBC Holdings PLC...................... 2,400 51,354
Keycorp................................ 1,800 90,900
SunTrust Banks......................... 36,000 1,773,000
------------
8,235,329
Capital Goods-2.0% AlliedSignal........................... 18,000 1,206,000
Caterpillar............................ 12,000 903,000
------------
2,109,000
------------
Chemicals-3.0% Dow Chemical........................... 10,000 783,750
duPont (E.I.) de Nemours............... 22,000 2,076,250
Rohm & Haas............................ 3,000 244,875
------------
3,104,875
------------
Energy-10.3% British Petroleum, A.D.S............... 15,000 2,120,625
Chevron................................ 30,000 1,950,000
Exxon.................................. 25,025 2,452,450
Mobil.................................. 15,025 1,836,806
Royal Dutch Petroleum.................. 13,000 2,219,750
Union Pacific Resources Group.......... 5,081 148,619
------------
10,728,250
------------
Finance-Miscellaneous-5.9% American General....................... 35,000 1,430,625
Associates First Capital, Cl. A........ 4,200 185,325
Berkshire Hathaway, Cl. A.............. 40 (a) 1,364,000
Federal National Mortgage Association.. 42,000 1,564,500
Marsh & McLennan....................... 15,000 1,560,000
------------
6,104,450
------------
Food, Beverage &
Tobacco-14.5% Anheuser-Busch Cos..................... 16,000 640,000
Coca-Cola.............................. 100,000 5,262,500
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
Common Stocks (continued) Shares Value
------------ ------------
Food, Beverage &
Tobacco (continued) Kellogg................................ 15,000 $ 984,375
Nestle, A.D.R.......................... 20,000 1,070,000
PepsiCo................................ 75,000 2,193,750
Philip Morris Cos...................... 35,000 3,941,875
Sara Lee............................... 2,500 93,125
Seagram................................ 21,500 833,125
------------
15,018,750
------------
Health Care-14.0% Abbott Laboratories.................... 35,000 1,776,250
American Home Products................. 32,000 1,876,000
Amgen.................................. 5,000 (a) 271,875
Johnson & Johnson...................... 60,000 2,985,000
Merck & Co............................. 40,000 3,170,000
Pfizer................................. 32,000 2,652,000
Roche Holdings, A.D.S.................. 23,000 1,791,125
------------
14,522,250
------------
Leisure Time-3.0% Disney (Walt).......................... 12,000 835,500
Eastman Kodak.......................... 15,000 1,203,750
McDonald's............................. 25,000 1,131,250
------------
3,170,500
------------
Media/Entertainment-1.1% McGraw-Hill............................ 22,000 1,014,750
News Corp, A.D.S....................... 5,000 104,375
------------
1,119,125
------------
Multi Industry-1.4% Minnesota Mining & Manufacturing....... 18,000 1,491,750
------------
Office &
Business Equipment-1.3% Compaq Computer........................ 18,000 (a) 1,336,500
------------
Paper & Forest Products-.5% International Paper.................... 12,500 504,687
------------
Personal Care-8.6% Christian Dior......................... 10,000 1,612,717
Estee Lauder, Cl.A..................... 12,500 635,938
Gillette............................... 37,000 2,876,750
International Flavors & Fragrances..... 17,000 765,000
Procter & Gamble....................... 27,000 2,902,500
Unilever, N.V.......................... 500 87,625
------------
8,880,530
------------
Retail-2.4% May Department Stores.................. 6,000 280,500
Wal-Mart Stores........................ 35,000 800,625
Walgreen............................... 35,000 1,400,000
------------
2,481,125
------------
Transportation-2.0% Norfolk Southern....................... 19,000 1,662,500
Union Pacific.......................... 6,000 360,750
------------
2,023,250
------------
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
Common Stocks (continued) Shares Value
------------ -------------
Utilities-1.4% Pacific Telesis Group................. 40,000 $ 1,470,000
-------------
TOTAL COMMON STOCKS
(cost $77,613,248)................... $100,790,699
============
Preferred Stock-.8%
Media/Entertainment News Corp., A.D.S., Cum., $.40
(cost $827,763)...................... 45,000 $ 793,125
============
Principal
Short-Term Investments-3.2% Amount
-------------
U.S. Treasury Bills: 4.98%, 3/6/1997....................... $ 1,920,000
$ 1,903,066
5.30%, 3/13/1997....................... 1,416,000 1,402,137
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,305,627).................... $ 3,305,203
============
TOTAL INVESTMENTS (cost $81,746,638)........................................ 101.1% $104,889,027
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.1%) $ (1,144,200)
====== ============
NET ASSETS.................................................................. 100.0% $103,744,827
====== ============
Notes to Statement of Investments:
(a) Non-income producing.
See notes to financial statements.
</TABLE>
<TABLE>
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
Statement of Assets and Liabilities December 31, 1996
Cost Value
------------ -------------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $ 81,746,638 $104,889,027
Dividends receivable....................... 150,000
Prepaid expenses........................... 64
-------------
105,039,091
-------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 67,251
Cash overdraft due to Custodian............ 1,196,328
Accrued expenses........................... 30,685
-------------
1,294,264
-------------
NET ASSETS.................................................................. $103,744,827
=============
REPRESENTED BY: Paid-in capital............................ $ 80,572,219
Accumulated undistributed investment income-net 8,290
Accumulated net realized gain (loss) on investments 21,929
Accumulated net unrealized appreciation (depreciation)
on investments-Note 5.................. 23,142,389
-------------
NET ASSETS.................................................................. $103,744,827
=============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 4,720,061
NET ASSET VALUE, offering and redemption price per share.................... $21.98
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
Statement of Operations Year Ended December 31, 1996
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Cash dividends (net of $24,376 foreign taxes
withheld at source).................... $ 1,512,715
Interest................................... 156,747
-----------
Total Income......................... $ 1,669,462
EXPENSES: Investment advisory fee-Note 4(a).......... 398,748
Sub-Investment advisory fee-Note 4(a)...... 145,000
Professional fees.......................... 34,118
Registration fees.......................... 12,533
Custodian fees-Note 4(a)................... 9,232
Prospectus and shareholders' reports....... 5,219
Trustees' fees and expenses-Note 4(b)...... 2,459
Shareholder servicing costs................ 236
Miscellaneous.............................. 1,430
-----------
Total Expenses....................... 608,975
-----------
INVESTMENT INCOME-NET....................................................... 1,060,487
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 5:
Net realized gain (loss) on investments.... $ 161,216
Net unrealized appreciation (depreciation) on investments 15,412,393
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 15,573,609
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $16,634,096
===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
Statement of Changes in Net Assets
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................... $ 1,060,487 $ 594,080
Net realized gain (loss) on investments............................. 161,216 (11,330)
Net unrealized appreciation (depreciation) on investments........... 15,412,393 7,555,530
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations... 16,634,096 8,138,280
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................... (1,054,688) (592,944)
Net realized gain on investments.................................... (128,629) ----
------------- -------------
Total Dividends................................................... (1,183,317) (592,944)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold....................................... 48,464,115 27,535,980
Dividends reinvested................................................ 1,183,317 592,944
Cost of shares redeemed............................................. (8,283,484) (4,862,457)
------------- -------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 41,363,948 23,266,467
------------- -------------
Total Increase (Decrease) in Net Assets....................... 56,814,727 30,811,803
NET ASSETS:
Beginning of Period................................................. 46,930,100 16,118,297
------------- -------------
End of Period....................................................... $103,744,827 $ 46,930,100
============= =============
Undistributed investment income-net..................................... $ 8,290 $ 2,491
------------- -------------
Shares Shares
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 2,450,508 1,722,064
Shares issued for dividends reinvested.............................. 53,418 34,096
Shares redeemed..................................................... (433,677) (305,274)
------------- -------------
Net Increase (Decrease) in Shares Outstanding..................... 2,070,249 1,450,886
============ ==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Series' financial statements.
<TABLE>
Year Ended December 31,
--------------------------------------------------
PER SHARE DATA: 1996 1995 1994 1993(1)
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..................... $17.71 $13.44 $13.27 $12.50
--------- --------- ---------- ----------
Investment Operations:
Investment income-net.................................... .23 .23 .23 .08
Net realized and unrealized gain (loss)
on investments......................................... 4.30 4.27 .17 .76
--------- --------- ---------- ----------
Total from Investment Operations......................... 4.53 4.50 .40 .84
--------- --------- ---------- ----------
Distributions:
Dividends from investment income-net..................... (.23) (.23) (.23) (.07)
Dividends from net realized gain on investments.......... (.03) -- -- --
--------- --------- ---------- ----------
Total Distributions...................................... (.26) (.23) (.23) (.07)
--------- --------- ---------- ----------
Net asset value, end of period........................... $21.98 $17.71 $13.44 $13.27
========= ========= ========== ==========
TOTAL INVESTMENT RETURN...................................... 25.56% 33.52% 3.04% 6.74%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. .84% .85% .25% .28%(2)
Ratio of net investment income
to average net assets.................................. 1.46% 2.08% 2.99% 1.89%(2)
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation...................................... -- .02% .86% 3.67%(2)
Portfolio Turnover Rate.................................. 2.47% 2.81% .12% .01%(2)
Average commission rate paid (3)......................... $.0705 -- -- --
Net Assets, end of period (000's Omitted)................ $103,745 $46,930 $16,118 $3,770
(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Not annualized.
(3) For fiscal years beginning January 1, 1996, the Series is required to
disclose its average commission rate paid per share for purchases and
sales of investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOTE 1-GENERAL:
Dreyfus Variable Investment Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as an open-end management investment
company, operating as a series company currently offering eleven series,
including the Capital Appreciation Portfolio (the "Series") and is intended
to be a funding vehicle for variable annuity contracts and variable life
insurance policies to be offered by the separate accounts of life insurance
companies. The Series is a diversified portfolio. The Series' investment
objective is to provide long-term capital growth consistent with the
preservation of capital. The Dreyfus Corporation ("Dreyfus") serves as the
Series' investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. ("Mellon"). Fayez Sarofim & Co. ("Sarofim") serves as the Series'
sub-investment adviser. Premier Mutual Fund Services, Inc. acts as the
distributor of the Series' shares, which are sold without a sales charge.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES:
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(b) Foreign currency transactions: The Series does not isolate that
portion of the results of operations resulting from changes in foreign
exchange rates on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Series' books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(c) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(d) Dividends to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Series not to distribute such gain.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(e) Federal income taxes: It is the policy of the Series to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 3-BANK LINE OF CREDIT:
The Series participates with other Dreyfus-managed funds in a $100
million unsecured line of credit primarily to be utilized for temporary or
emergency purposes, including the financing of redemptions. Interest is
charged to the Series at rates which are related to the Federal Funds rate in
effect at the time of borrowings. For the period ended December 31, 1996, the
Series did not borrow under the line of credit.
NOTE 4-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the
investment advisory fee is based on the value of the Series' average daily
net assets and is computed at the following annual rates: .55 of 1% of the
first $150 million; .50 of 1% of the next $150 million; and .375 of 1% over
$300 million. The fee is payable monthly. Pursuant to a Sub-Investment
Advisory Agreement with Sarofim, the sub-investment advisory fee is based
upon the value of the Series' average daily net assets and is computed at the
following annual rates: .20 of 1% of the first $150 million; .25 of 1% of the
next $150 million; and .375 of 1% over $300 million. The fee is payable
monthly.
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary
of Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series.
Effective May 10, 1996, the Series entered into a custody agreement with
Mellon to provide custodial services for the Series. During the period ended
December 31, 1996, $5,580 was charged by Mellon pursuant to the custody
agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 5-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1996,
amounted to $43,153,645 and $1,725,188, respectively.
At December 31, 1996, accumulated net unrealized appreciation on
investments was $23,142,389, consisting of $23,475,972 gross unrealized
appreciation and $333,583 gross unrealized depreciation.
At December 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Variable Investment Fund,
Capital Appreciation Portfolio, (one of the series constituting the Dreyfus
Variable Investment Fund) as of December 31, 1996, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
at December 31, 1996, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated years, in
conformity with generally accepted accounting principles.
(Ernst & Young LLP. signature)
New York, New York
January 29, 1997
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates $.025 per share as
a long-term capital gain distribution of the $.256 per share paid on December
20, 1996.
(Dreyfus lion "d" logo)
DREYFUS VARIABLE INVESTMENT FUND,
CAPITAL APPRECIATION PORTFOLIO
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISER
Fayez Sarofim & Co.
Two Houston Center,
Suite 2907
Houston, TX 77010
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 112AR9612
(Dreyfus Logo)
Variable
Investment Fund,
Capital Appreciation
Portfolio
Annual Report
December 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS VARIABLE INVESTMENT FUND, CAPTIAL
APPRECIATION PORTFOLIO AND THE STANDARD & POOR'S
500 COMPOSITE STOCK PRICE INDEX
EXHIBIT A:
STANDARD DREYFUS VARIABLE
& POOR'S 500 INVESTMENT FUND,
PERIOD COMPOSITE STOCK CAPITAL APPRECIATION
PRICE INDEX * PORTFOLIO
4/5/93 10,000 10,000
12/31/93 10,545 10,674
12/31/94 10,683 10,998
12/31/95 14,694 14,685
12/31/96 18,066 18,438
*Source: Lipper Analytical Services, Inc.
