YEAR 2000 ISSUES (UNAUDITED)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund' s other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus Variable
Investment Fund -- Capital Appreciation Portfolio for the 12-month period ended
December 31, 1998. Over this period, the Portfolio produced a total return of
30.22% ,* which compares with a total return of 28.60% for the Standard & Poor's
500 Composite Stock Price Index ("S&P 500").**
While we are happy to report these results, we'd also like to take the
opportunity to review our investment philosophy which guides our selection
process and the resulting composition of the portfolio. Succinctly stated, our
philosophy is guided by one basic principal: earnings growth is the ultimate
driver of stock price appreciation over the long term. We believe that large,
globally dominant and diverse companies are best positioned to grow earnings in
a consistent and predictable manner over time. By taking a long-term outlook, we
assess a company' s earnings growth prospects over a period of several years,
looking for businesses with sustainable competitive advantages in growing
industries that can perform in a variety of economic backdrops. Once we find a
company that meets these criteria, generally we will continue to hold it as long
as the industry outlook is strong and company fundamentals are sound. As a
result of our in-depth analysis and long-term outlook, changes to the Portfolio
within a year tend to be few and the turnover low. Our goal is to create a
well-diversified portfolio of companies that exhibits sustainable earnings
growth potential, possesses financial quality and an established growth record,
and offers a reasonable valuation.
Characteristics of companies in the Portfolio include a dominant industry
position, the possession of strong brand names and/or proprietary technologies,
and the ability to take strong domestic franchises into new geographic markets.
We believe all of these characteristics can be contributors to the production of
consistent and profitable earnings growth. The opportunity to expand
geographically can provide an excellent source of potential earnings growth as
companies roll out their products and develop their businesses in new markets.
While predominantly U.S.-based, these companies have global businesses, but the
majority of profits are derived from the U.S., Japan and western Europe;
generally, exposure to emerging markets is small, but can provide opportunities
for future growth over the long term.
The implementation of the above-described equity strategy has led us currently
to concentrate the portfolio in the consumer staples, health care and financial
sectors. The consumer staples sector has primarily benefited from geographic
expansion, as companies such as Coca-Cola, Gillette, Procter & Gamble and Philip
Morris Cos. have introduced their branded, low-cost products to an emerging
middle class around the world. With aging populations, increasing use of
prescription drugs, and strong new drug pipelines, we believe the health care
sector has excellent potential for earnings growth over the next five to ten
years. Last, we believe that the financial sector has solid earnings growth
potential going forward as consolidation and globalization of the industry
continues, prompted by deregulation.
MARKET OVERVIEW AND OUTLOOK
In spite of 1998' s global financial turmoil, positive fundamentals in the
United States economy trumped the forces of recession and deflation from
overseas. We continue to expect moderate economic growth coupled with very low
inflation for the next several years. We believe that any profit growth at
corporations will be achieved primarily through volume growth, new product
development and productivity improvement, not price increases. Although the risk
of financial shocks has diminished, it has not disappeared, and we want to own
what we believe are companies that can survive and perhaps take advantage of
periods of financial stress. Our investment strategy in this environment has
been to stay rigorously focused on quality, geographically diversified global
corporations, with dominant market share in their home markets and prospects for
growth in the developing economies.
We believe that liquidity trends have remained favorable, as individual
investors continued to shift assets from shorter term instruments to equities.
One of the significant lessons of the third quarter correction was the generally
steady behavior of individual and mutual fund investors in the face of bleak and
alarming headlines. We suspect that liquidity is still substantial among
individual investors, and that corrections will tend to be viewed as
opportunities to commit to longer term assets such as equities. As a result, we
currently intend to maintain a fully invested posture in the Capital
Appreciation Portfolio.
PERFORMANCE ANALYSIS
As already noted, the Portfolio not only achieved a total return of 30.22%,
but also outperformed the S& P 500 in 1998. During the year, the Portfolio's
overweight position in the health care sector, specifically pharmaceutical
companies, had the most positive impact on the Portfolio's absolute and relative
performance, led by Pfizer and Merck & Co. The attractive fundamentals of the
pharmaceutical sector, combined with several successful new drug introductions
and a lack of meaningful profit exposure to emerging markets, all worked to make
the health care sector one of the top performing in the index. While the
consumer staples and financial services sectors were positive contributors to
performance, our overweight positions in both of these sectors diminished the
Portfolio's relative performance as both underperformed the S&P 500. Many of our
global growth companies, such as Coca-Cola and Gillette, were adversely affected
by the currency devaluations and economic turmoil that arose in southeast Asia
and Russia in the third quarter. While these dislocations have hurt their
earnings outlook over the near term, we believe these companies have used the
crisis in an effort to strengthen their businesses and better position
themselves to ultimately gain market share when economic growth resumes. The
financial sector was also negatively affected by the global financial turmoil;
however we expect a resumption of potentially normalized earnings growth in
1999. We have avoided a large presence in the technology sector due to the
rapidly changing nature of technological products and the associated difficulty
of identifying predictable earnings growth. Because technology was the top
performing sector in the S&P 500 in 1998, the Portfolio's relative performance
was penalized by our underweight position. However, the technology holdings we
do own, such as Microsoft, Intel and Cisco Systems -- all possessing industry
leader status, strong brand names, proven track records and sustained periods of
profitability -- were positive contributors to the Portfolio's performance.
We appreciate your investment in the Dreyfus Variable Investment Fund--Capital
Appreciation Portfolio.
Sincerely,
Fayez Sarofim
Portfolio Manager
January 11, 1999
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.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO DECEMBER 31,
1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS VARIABLE
INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO AND THE STANDARD AND POOR'S 500
COMPOSITE STOCK PRICE INDEX
Dollars
<TABLE>
$30,980
Standard & Poor's 500 Composite Stock Price Index*
$30,743
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
*Source: Lipper Analytical Services Inc.
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended Five Years Ended From Inception (4/5/93)
December 31, 1998 December 31, 1998 to December 31, 1998
____________________ ____________________ __________________________
<S> <C> <C> <C>
30.22% 23.56% 21.61%
- ------------------------
</TABLE>
Past performance is not predictive of future performance.
THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT THE DEDUCTION OF ADDITIONAL CHARGES
AND EXPENSES IMPOSED IN CONNECTION WITH INVESTING IN VARIABLE INSURANCE
CONTRACTS WHICH WILL REDUCE RETURNS.
The above graph compares a $10,000 investment made in Dreyfus Variable
Investment Fund, 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, 1998
Common Stocks--98.2% Shares Value
- ------------------------------------------------------------------------------- ---------------- --------------------
<S> <C> <C>
Auto Related--5.2% DaimlerChrysler . . . . . . . . . . . . . . 134,700 $ 12,939,619
Ford Motor . . . . . . . . . . . . . . . . . 250,094 14,677,391
General Motors . . . . . . . . . . . . . . . 100,000 7,156,250
_____________
34,773,260
_____________
Banking--5.7% BankAmerica . . . . . . . . . . . . . . . . 162,108 9,746,743
Chase Manhattan . . . . . . . . . . . . . . 200,000 13,612,500
Keycorp . . . . . . . . . . . . . . . . . . 3,600 115,200
SunTrust Banks . . . . . . . . . . . . . . . 200,000 15,300,000
_____________
38,774,443
_____________
Basic Materials--1.0% Dow Chemical . . . . . . . . . . . . . . . . 10,000 909,375
dupont (E.I.) de Nemours . . . . . . . . . . 100,000 5,306,250
Rohm & Hass . . . . . . . . . . . . . . . . 9,000 271,125
_____________
6,486,750
_____________
Capital Goods--7.8% AlliedSignal . . . . . . . . . . . . . . . . 165,000 7,311,562
Boeing . . . . . . . . . . . . . . . . . . . 85,000 2,773,125
Caterpillar . . . . . . . . . . . . . . . . 60,000 2,760,000
Emerson Electric . . . . . . . . . . . . . . 95,000 5,943,438
General Electric . . . . . . . . . . . . . . 210,000 21,433,125
Minnesota Mining & Manufacturing . . . . . . 20,000 1,422,500
Philips Electronics . . . . . . . . . . . . 20,000 1,353,750
Rockwell International . . . . . . . . . . . 200,000 9,712,500
_____________
52,710,000
_____________
Communications--6.1% Bell Atlantic . . . . . . . . . . . . . . . 175,000 9,275,000
BellSouth . . . . . . . . . . . . . . . . . 270,000 13,466,250
SBC Communications . . . . . . . . . . . . . 345,144 18,508,347
_____________
41,249,597
_____________
Computers--7.0% Cisco Systems . . . . . . . . . . . . . . . 140,000(a) 12,993,750
Compaq Computer . . . . . . . . . . . . . . 140,000 5,871,250
Hewlett-Packard . . . . . . . . . . . . . . 150,000 10,246,875
Microsoft . . . . . . . . . . . . . . . . . 130,000(a) 18,029,375
_____________
47,141,250
_____________
Electronics--4.5% Intel . . . . . . . . . . . . . . . . . . . 250,000 29,640,625
Texas Instruments . . . . . . . . . . . . . 6,400 547,600
_____________
30,188,225
_____________
Energy--6.5% British Petroleum, A.D.S. . . . . . . . . . 130,000 12,350,000
Chevron . . . . . . . . . . . . . . . . . . 80,000 6,635,000
Exxon . . . . . . . . . . . . . . . . . . . 170,050 12,434,906
Mobil . . . . . . . . . . . . . . . . . . . 110,050 9,588,106
Royal Dutch Petroleum . . . . . . . . . . . 52,000 2,489,500
_____________
43,497,512
_____________
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- --------------------
Finance Miscellaneous--6.0% American General . . . . . . . . . . . . . . 35,000 $ 2,730,000
Associates First Capital, Cl. A . . . . . . 270,882 11,478,625
Federal National Mortgage Association . . . 250,000 18,500,000
Hertz, Cl. A . . . . . . . . . . . . . . . . 35,000 1,596,875
Merrill Lynch . . . . . . . . . . . . . . . 90,000 6,007,500
_____________
40,313,000
_____________
Food, Beverage & Tobacco--9.5% Anheuser-Busch Cos. . . . . . . . . . . . . 16,000 1,050,000
Coca-Cola . . . . . . . . . . . . . . . . . 345,000 23,071,875
Kellogg . . . . . . . . . . . . . . . . . . 30,000 1,023,750
Nestle, A.D.R. . . . . . . . . . . . . . . . 35,000 3,438,750
PepsiCo . . . . . . . . . . . . . . . . . . 220,000 9,006,250
Philip Morris Cos. . . . . . . . . . . . . . 460,000 24,610,000
Sara Lee . . . . . . . . . . . . . . . . . . 5,000 140,937
Seagram . . . . . . . . . . . . . . . . . . 45,000 1,710,000
Unilever, N.V. . . . . . . . . . . . . . . . 2,000 165,875
_____________
64,217,437
_____________
Food & Drugs--2.0% Walgreen . . . . . . . . . . . . . . . . . . 235,000 13,762,188
_____________
Health Care--19.0% Abbott Laboratories . . . . . . . . . . . . 260,000 12,740,000
American Home Products . . . . . . . . . . . 285,000 16,049,062
Bristol-Myers-Squibb . . . . . . . . . . . . 125,000 16,726,563
Johnson & Johnson . . . . . . . . . . . . . 220,000 18,452,500
Merck & Co. . . . . . . . . . . . . . . . . 150,000 22,153,125
Pfizer . . . . . . . . . . . . . . . . . . . 300,000 37,631,250
Roche Holdings, A.D.R. . . . . . . . . . . . 33,000 4,026,000
_____________
127,778,500
_____________
Insurance--6.4% Berkshire Hathaway, Cl. A . . . . . . . . . 272(a) 19,075,000
Citigroup . . . . . . . . . . . . . . . . . 270,062 13,368,094
Marsh & McLennan . . . . . . . . . . . . . . 180,000 10,518,750
_____________
42,961,844
_____________
Media/Entertainment--2.4% Disney (Walt) . . . . . . . . . . . . . . . 36,000 1,080,000
Fox Entertainment Group, Cl.A . . . . . . . 200,000 5,037,500
McDonald's . . . . . . . . . . . . . . . . . 100,000 7,662,500
Tricon Global Restaurants . . . . . . . . . 50,000(a) 2,506,250
_____________
16,286,250
_____________
Personal Care--5.5% Colgate-Palmolive . . . . . . . . . . . . . 90,000 8,358,750
Estee Lauder, Cl. A . . . . . . . . . . . . 25,000 2,137,500
Gillette . . . . . . . . . . . . . . . . . . 300,000 14,493,750
Procter & Gamble . . . . . . . . . . . . . . 135,000 12,327,188
_____________
37,317,188
_____________
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ---------------- --------------------
Photography--.3% Eastman Kodak . . . . . . . . . . . . . . . 25,000 $ 1,800,000
_____________
Publishing--.8% McGraw-Hill Cos. . . . . . . . . . . . . . . 50,000 5,093,750
News Corp., A.D.S. . . . . . . . . . . . . . 5,000 132,188
_____________
5,225,938
_____________
Retail--.4% Wal-Mart Stores . . . . . . . . . . . . . . 35,000 2,850,312
_____________
Textiles & Apparel--.8% Christian Dior . . . . . . . . . . . . . . . 20,000 2,212,595
Polo Ralph Lauren, Cl. A . . . . . . . . . . 160,000(a) 3,070,000
_____________
5,282,595
_____________
Transportation--1.3% Norfolk Southern . . . . . . . . . . . . . . 285,000 9,030,938
_____________
TOTAL COMMON STOCKS
(cost $496,176,945) . . . . . . . . . . $661,647,227
_____________
Preferred Stocks--.7%
- -------------------------------------------------------
Publishing; New Corp., A.D.S., Cum., $.40
(cost $3,947,389) . . . . . . . . . . . . 175,000 $ 4,320,313
_____________
Principal
Short-Term Investments--2.0% Amount
- ----------------------------------------------------------------------------------- -------------
----
U.S. Treasury Bills: 3.97%, 1/28/1999 . . . . . . . . . . . . . . $ 2,093,000 $ 2,087,119
4.31%, 2/4/1999 . . . . . . . . . . . . . . 1,818,000 1,810,548
4.38%, 2/18/1999 . . . . . . . . . . . . . . 1,811,000 1,801,148
4.35%, 3/4/1999 . . . . . . . . . . . . . . 757,000 751,302
4.38%, 3/18/1999 . . . . . . . . . . . . . . 5,298,000 5,251,113
4.44%, 3/25/1999 . . . . . . . . . . . . . . 1,513,000 1,497,859
4.48%, 4/1/1999 . . . . . . . . . . . . . . 409,000 404,542
_____________
TOTAL SHORT-TERM INVESTMENTS
(cost $13,600,052) . . . . . . . . . . . $ 13,603,631
_____________
TOTAL INVESTMENTS (cost $513,724,386). . . . . . . . . . . . . . . . . . . . . . 100.9% $679,571,171
_______ _____________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . (.9%) $ (5,736,650)
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $673,834,521
_______ _____________
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, 1998
Cost Value
_______________ _______________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . . . $513,724,386 $679,571,171
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,637,433
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 517,614
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 1,029
_____________
681,727,247
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . . . . 411,132
Payable for investment securities purchased . . . . . . . . . . 7,368,815
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 112,779
_____________
7,892,726
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $673,834,521
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . $508,347,582
Accumulated undistributed investment income--net . . . . . . . 44,241
Accumulated net realized gain (loss) on investments . . . . . . (404,139)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions . . . . . . . . . . . . . . . . . . . . . 165,846,837
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $673,834,521
_____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 18,663,016
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $36.11
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME: Cash dividends (net of $81,986 foreign taxes
withheld at source) . . . . . . . . . . . . . . . . . . . . $ 6,610,881
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 467,668
______________
Total Income . . . . . . . . . . . . . . . . . . . . . . $ 7,078,549
EXPENSES: Investment advisory fee--Note 3(a) . . . . . . . . . . . . . . 2,057,782
Sub-Investment advisory fee--Note 3(a) . . . . . . . . . . . . 1,171,093
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 88,962
Custodian fees--Note 3(a) . . . . . . . . . . . . . . . . . . . 36,548
Prospectus and shareholders' reports . . . . . . . . . . . . 36,338
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 31,766
Interest expense--Note 2 . . . . . . . . . . . . . . . . . . . 29,022
Trustees' fees and expenses--Note 3(b) . . . . . . . . . . . 6,571
Shareholder servicing costs . . . . . . . . . . . . . . . . . . 4,363
Loan commitment fees--Note 2 . . . . . . . . . . . . . . . . . 2,724
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 3,469
______________
Total Expenses . . . . . . . . . . . . . . . . . . . . . 3,468,638
______________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,609,911
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . . . . $ (401,997)
Net unrealized appreciation (depreciation) on investments . . . 107,310,379
______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 106,908,382
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $110,518,293
______________
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, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,609,911 $ 1,888,016
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . (401,997) 263,562
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 107,310,379 35,394,069
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 110,518,293 37,545,647
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,589,847) (1,872,129)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . (109,497) (178,136)
________________ ________________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,699,344) (2,050,265)
________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 437,733,992 122,238,262
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,699,344 2,050,265
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (121,428,269) (16,518,231)
________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . 320,005,067 107,770,296
________________ ________________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . 426,824,016 143,265,678
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,010,505 103,744,827
________________ ________________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $673,834,521 $247,010,505
________________ ________________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . $ 44,241 $ 24,177
________________ ________________
Shares Shares
________________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,478,002 4,667,439
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 106,725 75,244
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,773,542) (610,913)
________________ ________________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . 9,811,185 4,131,770
________________ ________________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<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.
Year Ended December 31,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $27.91 $21.98 $17.71 $13.44 $13.27
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .20 .22 .23 .23 .23
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 8.21 5.95 4.30 4.27 .17
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . 8.41 6.17 4.53 4.50 .40
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.20) (.22) (.23) (.23) (.23)
Dividends from net realized gain on investments . . . . . (.01) (.02) (.03) --- --
______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . . . . . (.21) (.24) (.26) (.23) (.23)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . $36.11 $27.91 $21.98 $17.71 $13.44
______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 30.22% 28.05% 25.56% 33.52% 3.04%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets . . . .. .80% .80% .84% .85% .25%
Ratio of interest expense and loan commitment fees
to average net assets . . . . . . . . . . . . . . . . . .01% -- -- -- --
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . . .84% 1.08% 1.46% 2.08% 2.99%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation . . . . -- -- -- .02% .86%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . 1.34% 1.69% 2.47% 2.81% .12%
Net Assets, end of period (000's Omitted) . . . . . . . $673,835 $247,011 $103,745 $46,930 $16,118
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Variable Investment Fund (the "Fund" ) is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end management
investment company, operating as a series company currently offering thirteen
series, including the 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 ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis. Under the terms of the custody agreement, the Series receives net
earnings credits based on available cash balances left on deposit.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the 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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The Series has an unused capital loss carryover of approximately $395,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998 which are treated for Federal income tax purposes, as
arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
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.
The average daily amount of borrowings outstanding during the period ended
December 31, 1998 was approximately $482,500, with a related weighted average
annualized interest rate of 6.01%.
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 December 31, 1998, the Series was charged $226 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 December 31, 1998, $36,548 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.
DREYFUS VARIABLE INVESTMENT FUND, CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1998,
amounted to $320,175,266 and $5,648,358, respectively.
At December 31, 1998, accumulated net unrealized appreciation on investments
was $165,846,785, consisting of $172,074,093 gross unrealized appreciation and
$6,227,308 gross unrealized depreciation.
At December 31, 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).
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, 1998, 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 and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1998 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,
1998, 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.
New York, New York
February 4, 1999
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Series hereby designates $.010 per share as a
long-term capital gain distribution of the $.013 per share paid on March 31,
1998. The Series also designates 100% of the ordinary dividends paid during the
fiscal year ended December 31, 1998 as qualifying for the corporate dividends
received deduction.
[reg.tm 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. 112AR9812
Variable
Investment Fund,
CAPITAL APPRECIATION
PORTFOLIO
Annual Report
December 31, 1998
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
12/31/97 24,091 23,609
12/31/98 30,980 30,743
*Source: Lipper Analytical Services, Inc.
