[dreyfus lion "d" logo] (reg.tm)
[dreyfus logo] (reg.tm)
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. 112SA986
Variable
Investment Fund,
CAPITAL APPRECIATION
PORTFOLIO
Semi-Annual
Report
June 30, 1998
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the Dreyfus
Variable Investment Fund -- Capital Appreciation Portfolio for the six-month
period ended June 30, 1998. During that period, your Portfolio produced a total
return of 20.73%.* During the same period, the Standard & Poor's 500 Composite
Stock Price Index provided a total return of 17.72%.**
PORTFOLIO COMPOSITION
At the close of the period, the Portfolio had 4.3% of its net assets in
short-term Treasuries and industry concentrations in consumer staples,
financials and health care as of the end of the period. Currently, we are
maintaining the Fund' s nearly fully invested posture, and investing the
short-term cash equivalent assets as we deem appropriate.
ECONOMIC OUTLOOK
We expect average annual Gross Domestic Product (GDP) in the U.S. will expand
this year in a range of 2.5% to 3.0%, compared to 4.0% in 1997. We believe that
annual CPI inflation should decline to 1.5%, or below, historically close to
price stability. Against the backdrop of a strong dollar and a budget surplus,
we expect long-term interest rates to decline to 5.5% or below by year end.
Sound corporate management and vigilant monetary policy have produced an
environment in which we believe job creation remains healthy and the economy can
expand, while wage inflation can be held in check. A secular increase in
productivity, which is continuing in the eighth year of the business cycle, and
global competition, which limits pricing power, are also responsible for the
positive backdrop for financial assets.
INVESTMENT STRATEGY
The United States economy continues to reap the benefits of its ability to
identify, confront and tackle structural inefficiencies in both the public and
private sectors. Leading American global corporations, hardened by the tough
competitive environment at home, are proving to be very effective competitors
internationally, as more and more economies expose their local companies to the
rigors of global competition. Particularly in the fields of brand consumer
products, pharmaceuticals, finance, and technology, these global companies are
able to bring to the growing class of middle-income consumers products and
services of high quality and reasonable price. The competitive advantage of
well-managed global corporations is the result of being able to share and spread
the substantial costs of research, development, advertising, and distribution
over a larger base of business than local companies can command. Furthermore, in
environments of financial panic as are currently occurring in some of the Asian
economies, the financial strength and geographic scope of the larger companies
can allow for continuation of an expansion strategy as weaker competitors
retrench.
Moderating growth, and the prospect of continued low inflation across the
general economy, provided a constructive backdrop for interest rates, as did
continued demand in the face of diminished supply. We believe that in the second
half, strong real income growth should support aggregate demand near current
levels, although we expect some weakness in job creation as growth moderates.
Somewhat slower growth among the expanding economies and continued weakness
among many developing economies generally should keep markets focused on high
quality, global companies, which have led equity performance year-to-date. In
the eighth year of the current economic cycle, consistency of earnings growth,
margin expansion and strong cash flow are fundamentals which we believe have
driven the current performance of the market in general as well as factors that
currently assist us is assessing possible future earnings streams of sectors and
individual companies in the Portfolio.
MARKET OVERVIEW
Measured broadly, the half-year ended June 30, 1998 was another period of
solid advance for the stock market. Yet that general statement did not apply to
all categories of stocks.
To be sure, the S& P 500 achieved a new record of 17.72% at the end of the
six-month period. The Dow Jones Industrial Average (DJIA), while it didn't reach
its all-time record, nonetheless gained 14.16% for the six months, closing the
half-year above 9000. Small and medium size stocks, however, underperformed the
large cap issues. The Standard & Poor's MidCap 400 Index gained just 8.63% for
the half-year, and the Russell 2000 index of small cap issues advanced 4.93%.
The first calendar quarter provided most of the strength for the six months,
particularly among the large cap companies. In the April-June quarter, the S&P
500 gained 3.32% and the DJIA 2.15%, while the Russell 2000 actually dropped by
4.66%.
Stock categories that were strongest during the half-year included financials,
particularly banks, brokerages, insurance and diversified financial services;
technology, especially communications and computer issues; and cyclical consumer
stocks such as advertising, airlines, automotive, broadcasting and home
construction.
The weak categories for the period included precious metals, oil drilling and
oilfield suppliers, and some industrial issues.
Corporate profits dropped sharply from the strong pace of last year. According
to the statistical service First Call, profits for stocks in the S&P 500 were
expected to show a rise of just 2.3% for the second quarter, compared to 3.8% in
the first quarter. Of course there were optimists forecasting a hefty rise in
profits for later this year and early 1999, which could potentially propel stock
prices upward. Yet most investors seemed preoccupied with the here and now,
which included the strike at General Motors plants and the continuing fallout
from financial troubles in Japan and Southeast Asia.
As expected, the Fed at its last meeting made no change in interest rates,
even though inflationary pressures are a constant worry for the Fed. The reason
for their inaction may well have been the precarious state of some economies
elsewhere in the world and the desire not to precipitate a major correction in
the U.S. stock market. Even so, the Fed thought it timely to issue a stern
warning to banks not to become over-extended with unwise loans, which happened
in the 1980s.
Despite warnings like this, and that stock prices are extremely high
historically in relation to earnings and cash flow, investors still appeared
eager to own equities. Moreover, surveys of consumer sentiment continued to show
that the average consumer was more confident about the future than had been the
case in a generation.
INVESTMENT HIGHLIGHTS
Our outlook for financial markets remains positive, with constructive
fundamentals continuing to provide a positive backdrop. Our emphasis on what we
believe are high quality, global industry leaders has benefited total return
over the short and longer term. Although the U.S. is enjoying an extremely
positive confluence of economic and fiscal variables markets remain volatile,
serving as a discounting mechanism for the future and reflecting current
uncertainties on numerous fronts. We believe our approach can continue to serve
as a more risk averse approach to equity investing, in seeking higher relative
and absolute rates of return over a long-term investment horizon.
We appreciate your investment in the Variable Investment Fund -- Capital
Appreciation Portfolio and we will continue to seek rewarding returns on your
behalf.
Sincerely,
[Fayez Sarofim signature logo]
Fayez Sarofim
Portfolio Manager
July 16, 1998
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 insurance contracts, which will
reduce returns.
**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
U.S. stock market performance.
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF INVESTMENTS JUNE 30,1998 (UNAUDITED)
Common Stocks--93.4% Shares Value
- -------------------------------------------------------
_____________ ____________
<S> <C> <C>
Auto Related--5.8% Chrysler 150,000 $ 8,456,250
Ford Motor 200,094 11,805,546
General Motors 100,000 6,681,250
_____________
26,943,046
_____________
Banking--8.5% BankAmerica 130,000 11,236,875
Chase Manhattan 140,000 10,570,000
Citicorp 70,025 10,451,235
HSBC Holdings, A.D.R. 3,500 850,500
HSBC Holdings PLC 2,400 58,706
Keycorp 3,600 128,250
SunTrust Banks 75,000 6,098,437
_____________
39,394,003
_____________
Basic Materials--1.7% Dow Chemical 10,000 966,875
duPont (E.I.) de Nemours 90,000 6,716,250
Rohm & Hass 3,000 311,813
_____________
7,994,938
_____________
Capital Goods--7.4% AlliedSignal 145,000 6,434,375
Boeing 85,000 3,787,812
Caterpillar 60,000 3,172,500
Emerson Electric 70,000 4,226,250
General Electric 125,000 11,375,000
Minnesota Mining & Manufacturing 20,000 1,643,750
Philips Electronics 20,000 1,700,000
Rockwell International 40,000 1,922,500
_____________
34,262,187
_____________
Communications--5.2% Bell Atlantic 160,000 7,300,000
BellSouth 110,000 7,383,750
SBC Communications 230,144 9,205,760
_____________
23,889,510
_____________
Computers--4.5% Cisco Systems 45,000 (a) 4,142,812
Compaq Computer 140,000 3,972,500
Hewlett-Packard 80,000 4,790,000
Microsoft 70,000 (a) 7,586,250
_____________
20,491,562
_____________
Electronics--2.3% Intel 140,000 10,377,500
Texas Instruments 6,400 373,200
_____________
10,750,700
_____________
Energy--7.4% British Petroleum, A.D.S 100,000 8,825,000
Chevron 70,000 5,814,375
Exxon 140,050 9,987,315
Mobil 85,050 6,516,956
Royal Dutch Petroleum 52,000 2,850,250
_____________
33,993,896
_____________
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30,1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
_____________ ____________
Finance-Miscellaneous--6.0% American General 35,000 $ 2,491,563
Associates First Capital, Cl. A 90,441 6,952,651
Federal National Mortgage Association 170,000 10,327,500
Hertz, Cl. A 35,000 (a) 1,550,937
Merrill Lynch 70,000 6,457,500
_____________
27,780,151
_____________
Food, Beverage & Tobacco--9.6% Anheuser-Busch Cos 16,000 755,000
Coca-Cola 210,000 17,955,000
Kellogg 30,000 1,126,875
Nestle, A.D.R. 35,000 3,736,250
PepsiCo 190,000 7,825,625
Philip Morris Cos 275,000 10,828,125
Sara Lee 2,500 139,844
Seagram 45,000 1,842,187
Unilever, N.V. 2,000 157,875
_____________
44,366,781
_____________
Food & Drugs--1.6% Walgreen 180,000 7,436,250
_____________
Health Care--17.0% Abbott Laboratories 210,000 8,583,750
American Home Products 175,000 9,056,250
Bristol-Myers-Squibb 75,000 8,620,312
Johnson & Johnson 170,000 12,537,500
Merck & Co 105,000 14,043,750
Pfizer 210,000 22,824,375
Roche Holdings, A.D.R. 33,000 3,229,875
_____________
78,895,812
_____________
Insurance--4.1% Berkshire Hathaway, Cl. A 75 (a) 5,872,875
General Re 25,000 6,337,500
Marsh & McLennan 112,500 6,799,219
_____________
19,009,594
_____________
Media/Entertainment--1.5% Disney (Walt) 12,000 1,260,750
McDonald's 65,000 4,485,000
Tricon Global Restaurants 50,000 (a) 1,584,375
_____________
7,330,125
_____________
Personal Care--6.8% Clogate-Palmolive 80,000 7,040,000
Estee Lauder, Cl. A 25,000 1,742,188
Gillette 200,000 11,337,500
Procter & Gamble 125,000 11,382,812
_____________
31,502,500
_____________
Photography--.4% Eastman Kodak 25,000 1,826,563
_____________
Publishing--.6% McGraw-Hill Cos 30,000 2,446,875
News Corp., A.D.S. 5,000 160,625
_____________
2,607,500
_____________
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30,1998 (UNAUDITED)
Common Stocks (continued) Shares Value
- -------------------------------------------------------
_____________ ____________
Retail--.5% Wal-Mart Stores 35,000 $ 2,126,250
_____________
Textiles-Apparrel--1.3% Christian Dior 20,000 2,511,178
Polo Ralph Lauren, Cl. A 125,000 (a) 3,500,000
_____________
6,011,178
_____________
Transportation--1.2% Norfolk Southern 190,000 5,664,375
_____________
TOTAL COMMON STOCKS
(cost $314,466,442) $432,276,921
_____________
Preferred Stocks--.4%
- -------------------------------------------------------
Publishing; News Corp., A.D.S., Cum.,$.40
(cost $1,260,264) 70,000 $ 1,977,500
=============
Principal
Short-Term Investments--4.3% Amount
- ------------------------------------------------------------------------------------------
_____________
U.S. Treasury Bills: 4.89%, 9/3/1998 $....1,817,000 $ 1,801,138
4.98%, 9/10/1998 823,000 815,075
4.97%, 9/17/1998 10,115,000 10,007,983
4.95%, 10/1/1998 4,356,000 4,300,635
4.97%, 10/8/1998 3,143,000 3,100,035
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $20,023,152) $ 20,024,866
=============
TOTAL INVESTMENTS (cost $335,749,858) 98.1% $454,279,287
======= =============
CASH AND RECEIVABLES (NET) 1.9% $ 8,734,796
======= =============
NET ASSETS 100.0% $463,014,083
======= =============
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
_____________ ____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $335,749,858 $454,279,287
Cash 19,449,126
Dividends receivable 400,007
Prepaid expenses 2,190
_____________
474,130,610
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 265,445
Payable for investment securities purchased 10,791,067
Accrued expenses 60,015
_____________
11,116,527
_____________
NET ASSETS $463,014,083
=============
REPRESENTED BY: Paid-in capital $343,830,318
Accumulated undistributed investment income--net 1,447,074
Accumulated net realized gain (loss) on investments (792,440)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 118,529,131
_____________
NET ASSETS $463,014,083
=============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) 13,753,053
NET ASSET VALUE, offering and redemption price per share $33.67
========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
INCOME: Cash dividends (net of $43,042 foreign taxes
<S> <C> <C>
withheld at source) $ 2,672,485
Interest 166,787
____________
Total Income $ 2,839,272
EXPENSES: Investment advisory fee--Note 3(a) 852,756
Sub-Investment advisory fee--Note 3(a) 417,391
Registration fees 45,869
Prospectus and shareholders' reports 25,998
Professional fees 18,009
Custodian fees--Note 3(a) 15,550
Trustees' fees and expenses--Note 3(b) 2,604
Shareholder servicing costs 2,280
Loan commitment fees--Note 2 1,473
Miscellaneous 1,596
____________
Total Expenses 1,383,526
____________
INVESTMENT INCOME--NET 1,455,746
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments $ (790,298)
Net unrealized appreciation (depreciation) on investments 59,992,673
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 59,202,375
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $60,658,121
============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
________________ _______________
OPERATIONS:
<S> <C> <C>
Investment income--net $ 1,455,746 $ 1,888,016
Net realized gain (loss) on investments (790,298) 263,562
Net unrealized appreciation (depreciation) on investments 59,992,673 35,394,069
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations 60,658,121 37,545,647
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (32,849) (1,872,129)
Net realized gain on investments (109,497) (178,136)
_____________ _____________
Total Dividends (142,346) (2,050,265)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold 186,439,580 122,238,262
Dividends reinvested 142,346 2,050,265
Cost of shares redeemed (31,094,123) (16,518,231)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 155,487,803 107,770,296
_____________ _____________
Total Increase (Decrease) in Net Assets 216,003,578 143,265,678
NET ASSETS:
Beginning of Period 247,010,505 103,744,827
_____________ _____________
End of Period $463,014,083 $247,010,505
============= =============
UNDISTRIBUTED INVESTMENT INCOME--NET $ 1,447,074 $ 24,177
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,874,758 4,667,439
Shares issued for dividends reinvested 4,425 75,244
Shares redeemed (977,961) (610,913)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding 4,901,222 4,131,770
============= ==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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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.
Six Months Ended
June 30, 1998 Year Ended December 31,
____________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993(1)
__________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $27.91 $21.98 $17.71 $13.44 $13.27 $12.50
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net .11 .22 .23 .23 .23 .08
Net realized and unrealized gain (loss)
on investments 5.66 5.95 4.30 4.27 .17 .76
______ ______ ______ ______ ______ ______
Total from Investment Operations 5.77 6.17 4.53 4.50 .40 .84
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net -- (.22) (.23) (.23) (.23) (.07)
Dividends from net realized gain on investments (.01) (.02) (.03) -- -- --
______ ______ ______ ______ ______ ______
Total Distributions (.01) (.24) (.26) (.23) (.23) (.07)
______ ______ ______ ______ ______ ______
Net asset value, end of period $33.67 $27.91 $21.98 $17.71 $13.44 $13.27
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 20.73%(2) 28.05% 25.56% 33.52% 3.04% 6.74%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .41%(2) .80% .84% .85% .25% .28%(2)
Ratio of net investment income
to average net assets .43%(2) 1.08% 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 1.45%(2) 1.69% 2.47% 2.81% .12% .01%(2)
Net Assets, end of period (000's Omitted) $463,014 $247,011 $103,745 $46,930 $16,118 $3,770
- -----------------------------
(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
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 thirteen 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. is 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.
(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. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Trustees. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
Forward currency exchange contracts are valued at the forward rate.
(B) 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 and 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 DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION
PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ex-dividend date and interest income, including, where applicable, amortization
of discount on investments, is recognized on the accrual basis. Under the terms
of the custodian agreement, the Series receives net earnings credits based on
available cash balances left on deposit.
(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.
(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 2--BANK LINE OF CREDIT:
The Series participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Series has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Series at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended June
30, 1998, the Series did not borrow under the Facility.
NOTE 3--INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS 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. During the period
ended June 30, 1998, the Series was charged $114 pursuant to the transfer agency
agreement.
The Series compensates Mellon under a custody agreement to provide custodial
services for the Series. During the period ended June 30, 1998, the Series was
charged $15,550 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.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended June 30, 1998, amounted
to $135,373,876 and $4,863,156, respectively.
At June 30, 1998, accumulated net unrealized appreciation on investments was
$118,529,429, consisting of $120,150,580 gross unrealized appreciation and
$1,621,151 gross unrealized depreciation.
At June 30, 1998, 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).
