Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
SEMIANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by The
Dreyfus Corporation and the portfolio'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 portfolio
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the portfolio's investments and its share price.
<PAGE>
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
The Portfolio
Dreyfus Variable Investment Fund, Capital Appreciation Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Variable Investment
Fund, Capital Appreciation Portfolio, covering the six-month period from January
1, 1999 through June 30, 1999. Inside, you'll find valuable information about
how the portfolio was managed, including a discussion with the portfolio
manager, Fayez Sarofim of Fayez Sarofim & Co., the portfolio's sub-investment
adviser.
The past six months have been rewarding for most equity investors. Strong
economic growth, low inflation and high levels of consumer spending supported
continued strength in the stocks of many large companies. Several major market
indices set new records, including the Dow Jones Industrial Average's first-ever
close above the 10,000 level. The broader S&P 500 Index and the technology-laden
NASDAQ index also recorded new highs.
Beginning in April, many previously out-of-favor market sectors rallied
strongly, including value-oriented stocks. At the same time, large-cap growth
stocks appear to have paused in their advance. This has helped narrow the
valuation gap that had developed over the past several years between the growth
and value sectors of the large-cap stock market.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Variable Investment Fund, Capital
Appreciation Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF PERFORMANCE
Fayez Sarofim, Portfolio Manager Fayez Sarofim & Co., Sub-Investment Adviser
How did Dreyfus Variable Investment Fund, Capital Appreciation Portfolio perform
relative to its benchmark?
The portfolio produced a total return of 7.51% over the six-month period ended
June 30, 1999.(1) In comparison, the portfolio's benchmark, the Standard &
Poor' s 500 Composite Stock Price Index ("S&P 500") provided a 12.38% total
return.(2)
Our relative underperformance over the six-month period was the result of a
combination of factors. The technology sector, particularly the high-flying
internet stocks, performed very strongly during the period, and this is an area
in which we chose to de-emphasize, given that the constantly changing nature of
technology reduced our confidence in our ability to predict success factors more
than a year or two into the future. An additional contributor to our
underperformance was the substantial correction, after several years of good
performance, in the pharmaceutical sector, an area where we have committed over
one-sixth of the portfolio's capital. We believe that the long-term outlook for
the pharmaceutical industry remains attractive, and we currently intend to
remain committed to this sector.
What is the portfolio's investment approach?
We evaluate investment opportunities one company at a time in order to identify
large, established growth companies that we believe are well-positioned to
weather difficult economic climates and thrive during favorable times. Such
companies typically are selected for various reasons such as their sustained
patterns of profitability, strong balance sheets, talented management teams,
expanding global presence and above-average growth potential.
The Portfolio
<PAGE>
DISCUSSION OF PERFORMANCE (CONTINUED)
We also maintain a "buy-and-hold" investment strategy, which is based on
remaining fully invested and on targeting long-term growth over a three- to
five-year time frame, rather than going for short-term profits. Because we buy
and sell relatively few stocks over the course of the year, we strive to reduce
the portfolio's trading costs. During the recent six-month period, the portfolio
maintained a turnover rate of 1.04%, well within our goal of an annual turnover
rate below 10% .
Our investment strategy is also predicated on purchasing growth stocks at a
price we consider to be justified by a company's fundamentals. For example,
while the portfolio was invested in several leading technology companies during
the period, such as Intel and Microsoft, we avoided most Internet companies
because we found their prices to be higher than warranted by their financial
strength and growth rates.
What other factors influenced the portfolio's performance?
In addition to the remarkable rally of Internet-related stocks early in the
six-month period, the portfolio' s performance was influenced by a change in
market leadership that took place in April. When investors began to recognize
that economic growth in the United States and overseas might be stronger than
they had anticipated, they became concerned about a possible resurgence of
inflation. In fact, reports of low levels of U.S. unemployment and rising global
energy and commodity prices further fueled inflation fears. As a result,
interest rates rose sharply.
When interest rates rise, growth companies become less attractive to investors.
That' s because higher interest rates have the potential to erode profits.
Accordingly, many investors began to sell their holdings of growth companies and
buy more attractively priced value-oriented companies. In addition, investors
turned their attention to companies whose earnings are sensitive to changes in
economic conditions, such as paper and chemical producers. Because our long-term
perspective favors companies with consistent and long-standing track records of
earnings growth, some of the companies in which we invested were hurt by the
market' s short-term preference for value stocks.
<PAGE>
What is the portfolio's current strategy?
We continue to maintain the long-term investment strategy that produced the
portfolio's past success. Our company-by-company analyses led us to maintain the
portfolio' s relatively high level of exposure to stocks in the financial
services industry, and relatively low participation in cyclical and technology
stocks.
The portfolio's investments in financial services stocks performed particularly
well as investors became more comfortable that the worst-case scenarios were
unlikely to materialize for banks, brokerage firms and insurance companies doing
business in Asian and Latin American emerging markets. Financial giant Citigroup
provided particularly attractive returns in the wake of the apparently
successful merger of Citicorp and Travelers Group. Companies such as
BankAmerica, Merrill Lynch and Marsh & McLennan Cos. also provided attractive
returns.
The portfolio also benefited from good performance from individual companies in
a variety of sectors. Automobile manufacturer Ford Motor has reported record
sales in a favorable economic environment. More important, we believe that Ford
Motor is well-positioned to establish itself as a leading competitor in the
global automobile market. In our opinion, technology company Cisco Systems, a
dominant supplier of Internet infrastructure, is another example of a company
with a history of earnings growth that we believe is likely to continue.
Our investment strategy can be summarized as follows: we believe that, over the
long term, superior companies produce superior returns. We intend to maintain
that strategy regardless of short-term market influences.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, PORTFOLIO SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIO'S PERFORMANCE DOES NOT REFLECT
THE DEDUCTION OF ADDITIONAL CHARGES IMPOSED IN CONNECTION WITH INVESTING IN
VARIABLE INSURANCE CONTRACTS, WHICH WILL REDUCE RETURNS.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. -- REFLECTS THE REINVESTMENT OF
INCOME DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE STANDARD
& POOR'S 500 COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF
U.S. STOCK MARKET PERFORMANCE.
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
June 30, 1999 (Unaudited)
COMMON STOCKS--98.9% Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE--5.0%
DailmerChrysler 164,700 14,637,712
Delphi Automotive Systems 69,893 1,297,389
Ford Motor 425,094 23,991,242
General Motors 100,000 6,600,000
46,526,343
BANKING--6.5%
BankAmerica 262,108 19,215,793
Chase Manhattan 280,000 24,255,000
SunTrust Banks 250,000 17,359,375
60,830,168
BASIC MATERIALS--.7%
duPont (E.I.) deNemours 100,000 6,831,250
CAPITAL GOODS--9.2%
AlliedSignal 270,000 17,010,000
Boeing 85,000 3,755,937
Emerson Electric 170,000 10,688,750
General Electric 320,000 36,160,000
Philips Electronics 18,400 1,856,100
Rockwell International 270,000 16,402,500
85,873,287
COMMUNICATIONS SERVICE & MANUFACTURING--5.9%
Bell Atlantic 175,000 11,440,625
BellSouth 420,000 19,687,500
SBC Communications 420,144 24,368,352
55,496,477
ELECTRONICS--5.0%
Conexant Systems 100,000 (a) 5,806,250
Intel 680,000 40,460,000
Texas Instruments 6,400 928,000
47,194,250
ENERGY--5.3%
BP Amoco, A.D.S. 140,000 15,190,000
Chevron 80,000 7,615,000
Exxon 170,050 13,115,106
Mobil 110,050 10,894,950
Royal Dutch Petroleum, A.D.R. 52,000 3,133,000
49,948,056
<PAGE>
COMMON STOCKS (CONTINUED) Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
FINANCE-MISC.--9.6%
American Express 110,000 14,313,750
Associates First Capital, Cl. A 350,882 15,548,459
Citigroup 450,093 21,379,417
Federal National Mortgage Association 360,000 24,615,000
Goldman Sachs Group 35,000 2,528,750
Hertz, Cl. A 60,000 3,720,000
Merrill Lynch 90,000 7,194,375
89,299,751
FOOD & DRUGS--1.8%
Walgreen 575,000 16,890,625
FOOD, BEVERAGE & TOBACCO--7.7%
Anheuser-Busch Cos. 16,000 1,135,000
Coca-Cola 450,000 28,125,000
Kellogg 30,000 990,000
Nestle, A.D.R. 35,000 3,185,000
PepsiCo 420,000 16,248,750
Philip Morris Cos. 550,000 22,103,125
Sara Lee 5,000 113,438
71,900,313
HEALTH CARE--16.6%
Abbott Laboratories 350,000 15,925,000
American Home Products 305,000 17,537,500
Bristol-Myers Squibb 280,000 19,722,500
Johnson & Johnson 260,000 25,480,000
Merck & Co. 400,000 29,600,000
Pfizer 400,000 43,900,000
Roche Holdings, A.D.R. 33,000 3,394,875
155,559,875
HOUSEHOLD PRODUCTS-MISC.--5.1%
Colgate-Palmolive 130,000 12,837,500
Estee Lauder Cos. 50,000 2,506,250
Gillette 350,000 14,350,000
Procter & Gamble 200,000 17,850,000
47,543,750
INSURANCE--4.2%
American General 35,000 2,638,125
Berkshire Hathaway, Cl. A 287 (a) 19,774,300
The Portfolio
<PAGE>
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE (CONTINUED)
Berkshire Hathaway, Cl. B 15 (a) 33,600
Marsh & McLennan Cos. 225,000 16,987,500
39,433,525
MEDIA/ENTERTAINMENT--2.9%
Disney (Walt) 36,000 1,109,250
Fox Entertainment Group, Cl. A 300,000 8,081,250
McDonald's 315,000 13,013,438
Seagram 45,000 2,266,875
Tricon Global Restaurants 50,000 (a) 2,706,250
27,177,063
PUBLISHING--1.6%
McGraw-Hill Cos. 275,000 14,832,813
News Corp, A.D.S. 5,000 176,562
15,009,375
RETAIL--1.7%
Wal-Mart Stores 325,000 15,681,250
TECHNOLOGY--8.1%
Cisco Systems 350,000 22,575,000
Compaq Computer 140,000 3,316,250
Hewlett-Packard 185,000 18,592,500
Microsoft 350,000 31,565,625
76,049,375
TEXTILES-APPARREL--.7%
Christian Dior 20,000 3,269,020
Polo Ralph Lauren 160,000 (a) 3,040,000
6,309,020
TRANSPORTATION--1.3%
Norfolk Southern 400,000 12,050,000
TOTAL COMMON STOCKS
(cost $707,915,859) 925,603,753
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PREFERRED STOCKS--.6% Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUBLISHING;
News, A.D.S., Cum. $.4428
(cost $3,947,389) 175,000 5,523,438
- ----------------------------------------------------------------------------------------------------------------------------------
Principal
SHORT-TERM INVESTMENTS-.7% Amount($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bills:
4.30%, 7/22/1999 246,000 245,412
4.46%, 8/5/1999 302,000 300,868
4.56%, 9/9/1999 657,000 651,172
4.64%, 9/16/1999 1,271,000 1,258,548
4.57%, 9/23/1999 404,000 399,711
4.65%, 9/30/1999 2,277,000 2,250,222
4.67%, 10/7/1999 1,874,000 1,850,275
TOTAL SHORT-TERM INVESTMENTS
(cost $6,955,744) 6,956,208
TOTAL INVESTMENTS (cost $718,818,992) 100.2% 938,083,399
LIABILITIES, LESS CASH AND RECEIVABLES (.2%) (2,373,994)
NET ASSETS 100.0% 935,709,405
(A) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
The Portfolio
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 718,818,992 938,083,399
Cash 9,857
Receivable for shares of Beneficial Interest subscribed 1,150,358
Dividends receivable 571,734
Prepaid expenses 8,571
939,823,919
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 323,937
Due to Fayez Sarofim & Co. 238,335
Payable for shares of Beneficial Interest redeemed 1,810,372
Payable for investment securities purchased 1,660,822
Accrued expenses 81,048
4,114,514
- --------------------------------------------------------------------------------
NET ASSETS ($) 935,709,405
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 712,671,993
Accumulated undistributed investment income-net 2,765,118
Accumulated net realized gain (loss) on investments 1,008,153
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 219,264,141
- --------------------------------------------------------------------------------
NET ASSETS ($) 935,709,405
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 24,104,304
NET ASSET VALUE, offering and redemption price per share ($) 38.82
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 (Unaudited)
Value
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $159,266 foreign taxes withheld at source) 5,630,162
Interest 299,172
TOTAL INCOME 5,929,334
EXPENSES:
Investment advisory fee-Note 3(a) 1,723,690
Sub-Investment advisory fee-Note 3(a) 1,277,389
Registration fees 56,986
Professional fees 40,353
Custodian fees--Note 3(a) 35,545
Prospectus and shareholders' reports 11,967
Trustees' fees and expenses-Note 3(b) 5,282
Shareholder servicing costs 2,736
Loan commitment fees-Note 2 2,384
Interest expense-Note 2 1,188
Miscellaneous 7,700
TOTAL EXPENSES 3,165,220
INVESTMENT INCOME-NET 2,764,114
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments 1,412,292
Net unrealized appreciation (depreciation) on investments 53,417,304
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 54,829,596
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 57,593,710
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1999 Year Ended
(Unaudited) December 31, 1998
- -------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 2,764,114 3,609,911
Net realized gain (loss) on investments 1,412,292 (401,997)
Net unrealized appreciation (depreciation)
on investments 53,417,304 107,310,379
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 57,593,710 110,518,293
- -------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (43,237) (3,589,847)
Net realized gain on investments - (109,497)
TOTAL DIVIDENDS (43,237) (3,699,344)
- -------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 275,137,203 437,733,992
Dividends reinvested 43,202 3,699,344
Cost of shares redeemed (70,855,994) (121,428,269)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 204,324,411 320,005,067
TOTAL INCREASE (DECREASE) IN NET ASSETS 261,874,884 426,824,016
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 673,834,521 247,010,505
END OF PERIOD 935,709,405 673,834,521
Undistributed investment income--net 2,765,118 44,241
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 7,347,410 13,478,002
Shares issued for dividends reinvested 1,157 106,725
Shares redeemed (1,907,279) (3,773,542)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5,441,288 9,811,185
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 Year Ended December 31,
--------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 36.11 27.91 21.98 17.71 13.44 13.27
Investment Operations:
Investment income--net .13(a) .20 .22 .23 .23 .23
Net realized and unrealized
gain (loss) on investments 2.58 8.21 5.95 4.30 4.27 .17
Total from Investment Operations 2.71 8.41 6.17 4.53 4.50 .40
Distributions:
Dividends from investment
income--net -- (.20) (.22) (.23) (.23) (.23)
Dividends from net realized gain
on investments -- (.01) (.02) (.03) -- --
Total Distributions -- (.21) (.24) (.26) (.23) (.23)
Net asset value, end of period 38.82 36.11 27.91 21.98 17.71 13.44
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 7.51(b) 30.22 28.05 25.56 33.52 3.04
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .39(b) .80 .80 .84 .85 .25
Ratio of interest expense and loan
commitment fees to
average net assets -( b,c) .01 -- -- -- --
Ratio of net investment income
to average net assets .34(b) .84 1.08 1.46 2.08 2.99
Decrease reflected in above
expense ratios due to undertakings
by The Dreyfus Corporation -- -- -- -- .02 .86
Portfolio Turnover Rate 1.04(b) 1.34 1.69 2.47 2.81 .12
Net Assets, end of period
($ x 1,000) 935,709 673,835 247,011 103,745 46,930 16,118
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
(B) NOT ANNUALIZED.
(C) AMOUNT REPRESENTS LESS THAN $.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
<PAGE>
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, 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 "portfolio") and is
intended to be a funding vehicle for variable annuity contracts and variable
life insurance policies to be offered by the separate accounts of life insurance
companies. The portfolio is a diversified series. The portfolio's investment
objective is to provide long-term capital growth consistent with the
preservation of capital. The Dreyfus Corporation ("Dreyfus") serves as the
portfolio' s investment adviser. Dreyfus is a direct subsidiary of Mellon Bank,
N.A. (" Mellon" ). Fayez Sarofim & Co. ("Sarofim") serves as the portfolio's
sub-investment adviser. Premier Mutual Fund Services, Inc. is the distributor
of the portfolio's shares, which are sold without a sales charge.
The fund accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The portfolio' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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
<PAGE>
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 portfolio 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 portfolio's
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 portfolio 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 portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue The Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 portfolio
not to distribute such gain.
(E) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.
The portfolio 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 purpuses, as
arising in fiscal 1999. If not applied, the carryover expires in fiscal 2006.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $46,400, with a related weighted average annualized
interest rate of 5.09%.
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 portfolio's average daily net assets
and is computed at the following annual rates: .55 o
<PAGE>
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 portfolio's 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 portfolio compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
Dreyfus, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the portfolio. During the
period ended June 30, 1999, the portfolio was charged $161 pursuant to the
transfer agency agreement.
The portfolio compensates Mellon under a custody agreement for providing
custodial services for the portfolio. During the period ended June 30, 1999,
$35,545 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 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 1999, amounted to
$218,657,593 and $8,251,068, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$219,264,407, consisting of $223,603,886 gross unrealized appreciation and
$4,339,479 gross unrealized depreciation.
At June 30, 1999, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Portfolio
<PAGE>
NOTES
<PAGE>
The Portfolio
<PAGE>
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-554-4611 or 516-338-3300
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144 Attn: Institutional Servicing
(c) 1999 Dreyfus Service Corporation 112SA996
<PAGE>
