Dreyfus Variable
Investment Fund,
Capital Appreciation
Portfolio
ANNUAL REPORT December 31, 1999
(reg.tm)
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
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. 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.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Portfolio Performance
7 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
18 Report of Independent Auditors
19 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Portfolio
Dreyfus Variable Investment Fund,
Capital Appreciation Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Variable Investment
Fund, Capital Appreciation Portfolio, covering the 12-month period from January
1, 1999 through December 31, 1999. Inside, you'll find valuable information
about how the portfolio was managed during the reporting period, including a
discussion with the portfolio manager, Fayez Sarofim of Fayez Sarofim & Co., the
portfolio's sub-investment adviser.
The past year has been both highly volatile and rewarding for many investors in
U.S. stocks. On December 31, the last trading day of 1999, most major stock
market indices hit new highs, including the Dow Jones Industrial Average, the S&
P 500 Index of large-cap stocks, the technology-heavy Nasdaq 100 and the Russell
2000 Index of small-capitalization stocks.
These simultaneous highs masked the remarkable narrowness of the stock market's
advance in 1999, however. Following the trend established over the past several
years, growth-oriented stocks handily outperformed value-oriented stocks.
Indeed, until a more broad-based rally in the fourth quarter, stellar
performance was generally limited to a handful of highly valued technology and
telecommunications companies. In our view, many fundamentally sound companies in
other market sectors may be selling at attractive valuations.
We appreciate your confidence over the past year, 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
January 14, 2000
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?
For the 12-month period ended December 31, 1999, the portfolio's total return
was 11.46% .(1) For the same period, the total return of the Standard & Poor's
500((reg.tm) ) Composite Stock Price Index ("S&P 500 Index"), the portfolio's
benchmark, was 21.03%.(2)
We attribute the portfolio's relative performance to the narrow base of stocks
that supported the S&P 500 Index's rise. Much of the Index's advance during the
period was driven by strong performance among a relative handful of
technology-related stocks. Since, as of December 31, 1999 technology stocks
comprised 24% of the Index but just 17% of the portfolio, the Index produced
higher returns than the portfolio.
What is the portfolio's investment approach?
The portfolio invests primarily in large, well-established, multinational growth
companies that we believe are well positioned to weather difficult economic
climates and thrive during favorable times. We focus on purchasing growth stocks
at a price we consider to be justified by a company's fundamentals. The result
is a portfolio of stocks in prominent companies selected for their sustained
patterns of profitability, strong balance sheets, expanding global presence and
above-average growth potential.
At the same time, we manage the portfolio in a manner with long-term investors
in mind. Our investment approach is based on targeting long-term growth
potential rather than short-term profit potential. We typically buy and sell
relatively few stocks during the course of the year, helping to reduce trading
costs. For the 12-month period ended December 31, 1999, the fund's portfolio
turnover rate was 3.87%, well within our goal of an annual turnover rate below
15% during normal market conditions.
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
What other factors influenced the portfolio's performance?
As we mentioned earlier, most of the benchmark's strong rise was driven by the
performance of an extremely narrow group of technology-related companies. Only a
handful of stocks in the S&P 500 Index accounted for most of the Index's return
in 1999. Although the portfolio benefited from owning significant positions in a
few of these stocks -- such as technology leaders Intel, Microsoft and Cisco
Systems -- our performance relative to our benchmark suffered because we held
fewer of these stocks than the S&P 500 Index.
A wide range of global, domestic and company-specific issues also affected the
portfolio' s performance. During the first half of the period, global economic
difficulties and weak consumer spending in many foreign markets created
challenging conditions for multinational consumer products companies such as
Gillette. During the second half of the period, rising interest rates took a
toll on interest-rate-sensitive sectors, including financials. Because we
allocated more of the portfolio's assets to consumer staples and financials than
other sectors, these conditions hurt the portfolio's overall performance.
What is the portfolio's current strategy?
Much of the portfolio's performance results from our sector selection process,
an analysis designed to identify industries we currently believe are likely to
enjoy long-term growth. During the reporting period, this process led us to
maintain the portfolio' s emphasis on the health care, consumer staple and
financial industries, and to de-emphasize commodities and basic industries. Our
investment discipline led us away from technology companies with stock prices
higher than we judged to be warranted by their financial strength and growth
rates.
Although our emphasis on health care and consumer staple stocks constrained the
portfolio' s ability to keep pace with the S&P 500 Index due to the factors
described above, many individual holdings in these sectors performed well. The
portfolio' s top performers included capital goods giant General Electric, which
has been the portfolio' s largest single position. Other winners included
pharmaceutical com
panies Johnson & Johnson and Bristol-Myers Squibb, and consumer products
companies Wal-Mart Stores and Colgate-Palmolive. Furthermore, despite the
challenging interest-rate environment and weakness in the overall financial
sector, our individual holdings of financial stocks boosted the portfolio's
performance relative to the S& P 500 Index, as did our underweighting of the
troubled commodities and basic industry sectors.
As of December 31, 1999, the long-term economic trends have led us to emphasize
large companies with global operations, established track records, predictable
business models and products that are sold directly to end-users. Specifically,
both the domestic and overseas economies have continued to perform well. Despite
rising interest rates, inflation has remained low while consumer confidence has
remained high. We currently believe that recovering economies in Japan and Asia
as well as continuing growth in Europe should support the earnings potential of
large, global companies. As a result, we have seen little reason to alter our
asset allocation strategy. Nor have we observed changes in company fundamentals
that might lead us to make current significant changes among our individual
holdings.
January 14, 2000
(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 AND EXPENSES 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((reg.tm)) COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED
UNMANAGED INDEX OF U.S. STOCK MARKET PERFORMANCE.
The Portfolio
PORTFOLIO PERFORMANCE
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
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Average Annual Total Returns AS OF 12/31/99
<TABLE>
Inception From
Date 1 Year 5 Years Inception
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<S> <C> <C> <C> <C>
PORTFOLIO 4/5/93 11.46% 25.52% 20.05%
</TABLE>
(+) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
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
$10,000 INVESTMENT MADE IN THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
ON THAT DATE. FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 3/31/93 IS
USED AS THE BEGINNING VALUE ON 4/5/93. ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS ARE REINVESTED.
THE PORTFOLIO'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT ALL
APPLICABLE FEES AND EXPENSES OF THE PORTFOLIO. THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX IS A WIDELY ACCEPTED, UNMANAGED INDEX OF U.S. STOCK
MARKET PERFORMANCE, WHICH DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO PORTFOLIO PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
STATEMENT OF INVESTMENTS
December 31, 1999
COMMON STOCKS--99.7% Shares Value ($)
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<S> <C> <C>
AUTOMOTIVE--4.0%
DaimlerChrysler 108,200 8,466,650
Ford Motor 475,094 25,387,836
General Motors 100,000 7,268,750
41,123,236
BANKING--5.1%
Bank of America 202,108 10,143,295
Chase Manhattan 300,000 23,306,250
SunTrust Banks 275,000 18,923,437
52,372,982
CAPITAL GOODS--8.9%
Emerson Electric 180,000 10,327,500
General Electric 325,000 50,293,750
Honeywell International 270,000 15,575,625
Philips Electronics, ADR 18,400 2,484,000
Rockwell International 270,000 12,926,250
91,607,125
COMMUNICATIONS SERVICES--5.0%
Bell Atlantic 175,000 10,773,437
BellSouth 430,000 20,129,375
SBC Communications 420,144 20,482,020
51,384,832
ELECTRONICS--7.0%
Conexant Systems 200,000 (a) 13,275,000
Intel 700,000 57,618,750
Texas Instruments 12,800 1,240,000
72,133,750
ENERGY--5.9%
BP Amoco, ADS 370,000 21,945,625
Chevron 110,000 9,528,750
Exxon Mobil 325,333 26,209,600
Royal Dutch Petroleum, ADR 52,000 3,142,750
60,826,725
FINANCE-MISC.--9.3%
American Express 110,000 18,287,500
Associates First Capital, Cl. A 400,882 10,999,200
Citigroup 520,093 28,897,667
Federal National Mortgage Association 360,000 22,477,500
The Portfolio
STATEMENT OF INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED) Shares Value ($)
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FINANCE--MISC. (CONTINUED)
Goldman Sachs Group 35,000 3,296,562
Hertz, Cl. A 80,000 4,010,000
Merrill Lynch 90,000 7,515,000
95,483,429
FOOD & DRUGS--1.9%
Walgreen 670,000 19,597,500
FOOD, BEVERAGE & TOBACCO--6.0%
Anheuser-Busch Cos. 16,000 1,134,000
Coca-Cola 450,000 26,212,500
Nestle, ADR 35,000 3,202,500
PepsiCo 470,000 16,567,500
Philip Morris Cos. 600,000 13,912,500
61,029,000
HEALTH CARE--13.9%
Abbott Laboratories 370,000 13,435,625
American Home Products 250,000 9,859,375
Bristol-Myers Squibb 280,000 17,972,500
Johnson & Johnson 285,000 26,540,625
Merck & Co. 435,000 29,172,188
Pfizer 1,300,000 42,168,750
Roche Holdings, ADR 33,000 3,914,625
143,063,688
HOUSEHOLD PRODUCTS--MISC.--5.6%
Colgate-Palmolive 260,000 16,900,000
Estee Lauder, Cl.A 50,000 2,521,875
Gillette 350,000 14,415,625
Procter & Gamble 220,000 24,103,750
57,941,250
INSURANCE--4.0%
American General 35,000 2,655,625
Berkshire Hathaway, Cl. A 287 (a) 16,100,700
Berkshire Hathaway, Cl. B 15 (a) 27,450
Marsh & McLennan Cos. 235,000 22,486,563
41,270,338
MEDIA/ENTERTAINMENT--3.7%
Fox Entertainment Group, Cl. A 300,000 (a) 7,481,250
McDonald's 325,000 13,101,562
COMMON STOCKS (CONTINUED) Shares Value ($)
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MEDIA/ENTERTAINMENT (CONTINUED)
Seagram 45,000 2,022,188
Tricon Global Restaurants 50,000 (a) 1,931,250
Viacom, Cl. B 225,000 (a) 13,598,438
38,134,688
PUBLISHING--1.8%
McGraw-Hill Cos. 300,000 18,487,500
News, ADR 5,000 191,250
18,678,750
RETAIL--2.5%
Wal-Mart Stores 370,000 25,576,250
TECHNOLOGY--13.3%
Cisco Systems 360,000 38,565,000
EMC 70,000 7,647,500
Hewlett-Packard 220,000 25,066,250
International Business Machines 220,000 23,760,000
Microsoft 360,000 42,030,000
137,068,750
TEXTILES-APPARREL--.8%
Christian Dior 20,000 4,958,376
Polo Ralph Lauren 160,000 (a) 2,730,000
7,688,376
TRANSPORTATION-1.0%
Norfolk Southern 400,000 8,200,000
United Parcel Service, Cl. B 32,700 2,256,300
10,456,300
TOTAL COMMON STOCKS
(cost $772,360,143) 1,025,436,969
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PREFERRED STOCKS--.6%
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PUBLISHING;
News,ADS, Cum., $.4428 175,000 5,851,563
(cost $3,947,389)
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TOTAL INVESTMENTS (cost $776,307,532) 100.3% 1,031,288,532
LIABILITIES, LESS CASH AND RECEIVABLES (.3%) (3,491,803)
NET ASSETS 100.0% 1,027,796,729
(A) NON-INCOMING PRODUCING.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 776,307,532 1,031,288,53
Cash 982,661
Receivable for investment securities sold 652,666
Dividends receivable 698,833
Prepaid expenses and other assets 3,780
1,033,626,472
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 392,363
Due to Fayez Sarofim & Co. 289,785
Bank loan payable--Note 2 3,850,000
Payable for shares of Beneficial Interest redeemed 1,176,857
Interest payable--Note 2 10,972
Accrued expenses 109,766
5,829,743
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NET ASSETS ($) 1,027,796,729
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 776,442,302
Accumulated undistributed investment income--net 26,136
Accumulated distribution in excess of net realized gain on investments
(3,668,276)
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 254,996,567
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NET ASSETS ($) 1,027,796,729
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
25,780,320
NET ASSET VALUE, offering and redemption price per share ($) 39.87
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INCOME:
Cash dividends (net of $137,176 foreign taxes withheld at source) 12,221,751
Interest 498,628
TOTAL INCOME 12,720,379
EXPENSES:
Investment advisory fee--Note 3(a) 3,788,264
Sub-Investment advisory fee--Note 3(a) 2,888,264
Registration fees 74,530
Custodian fees--Note 3(a) 72,804
Professional fees 58,965
Prospectus and shareholders' reports 49,681
Interest expense--Note 2 14,295
Trustees' fees and expenses--Note 3(b) 11,516
Loan commitment fees--Note 2 9,007
Shareholder servicing costs 5,138
Miscellaneous 14,810
TOTAL EXPENSES 6,987,274
INVESTMENT INCOME--NET 5,733,105
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and foreign currency transactions
584,225
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 89,149,730
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 89,733,955
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 95,467,060
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
------------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 5,733,105 3,609,911
Net realized gain (loss) on investments 584,225 (401,997)
Net unrealized appreciation (depreciation)
on investments 89,149,730 107,310,379
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 95,467,060 110,518,293
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DIVIDENDS TO SHAREHOLDERS ($):
From investment income--net (5,751,210) (3,589,847)
From net realized gain on investments (180,086) (109,497)
In excess of net realized gain on investments (3,668,276) --
TOTAL DIVIDENDS (9,599,572) (3,699,344)
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BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 463,853,413 437,733,992
Dividends reinvested 9,599,572 3,699,344
Cost of shares redeemed (205,358,265) (121,428,269)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 268,094,720 320,005,067
TOTAL INCREASE (DECREASE) IN NET ASSETS 353,962,208 426,824,016
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NET ASSETS ($):
Beginning of Period 673,834,521 247,010,505
END OF PERIOD 1,027,796,729 673,834,521
Undistributed investment income--net 26,136 44,241
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 12,265,230 13,478,002
Shares issued for dividends reinvested 243,827 106,725
Shares redeemed (5,391,753) (3,773,542)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 7,117,304 9,811,185
SEE NOTES TO FINANCIAL STATEMENTS.
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>
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 36.11 27.91 21.98 17.71 13.44
Investment Operations:
Investment income--net .25(a) .20 .22 .23 .23
Net realized and unrealized
gain (loss) on investments 3.88 8.21 5.95 4.30 4.27
Total from Investment Operations 4.13 8.41 6.17 4.53 4.50
Distributions:
Dividends from investment income--net (.22) (.20) (.22) (.23) (.23)
Dividends from net realized gain
on investments (.01) (.01) (.02) (.03) --
Dividends in excess of net realized gain
on investment (.14) -- -- -- --
Total Distributions (.37) (.21) (.24) (.26) (.23)
Net asset value, end of period 39.87 36.11 27.91 21.98 17.71
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TOTAL RETURN (%) 11.46 30.22 28.05 25.56 33.52
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .78 .80 .80 .84 .85
Ratio of interest expense and loan
commitment fees to average net assets .00(b) .01 - - -
Ratio of net investment income
to average net assets .64 .84 1.08 1.46 2.08
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation - - - - .02
Portfolio Turnover Rate 3.87 1.34 1.69 2.47 2.81
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Net Assets, end of period ($ x 1,000) 1,027,797 673,835 247,011 103,745 46,930
(A) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.
</TABLE>
(B) AMOUNT REPRESENTS LESS THAN .01%.
SEE NOTES TO FINANCIAL STATEMENTS.
The 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 "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" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation. 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
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 Code of 1986, as amended (the "Code"). To
the extent that net real
The Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ized capital gain can be offset by capital loss carryovers, if any, 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.
NOTE 2--Bank Line of Credit:
The portfolio participates with other Dreyfus-managed funds in a $500 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
December 31, 1999 was approximately $257,200, with a related weighted average
annualized interest rate of 5.56%.
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 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
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 December 31, 1999, the portfolio was charged
$417 pursuant to the transfer agency agreement.
The portfolio compensates Mellon under a custody agreement to provide custodial
services for the portfolio. During the period ended December 31, 1999, the
portfolio was charged $72,804 pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
received from the fund an annual fee of $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board received an additional 25% of such
compensation.
Each non-affiliated trustee is a Board member of one or more funds comprising a
certain group of funds (" Fund Group") within the Dreyfus complex. Effective
January 1, 2000, for their participation as a trustee in a Fund Group, the
trustees receive an annual fee of $40,000 each, $6,000 for each meeting attended
in person and $500 for each telephonic meeting in which they participate. These
fees are allocated among the funds in the Fund Group. The Chairman of the Board
receives an additional 25% of such compensation.
(c) During the period ended December 31, 1999, the portfolio incurred total
brokerage commissions of $266,551, of which $29,725 was paid to Dreyfus
Brokerage Services, a wholly-owned subsidiary of Mellon Financial Corporation.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended December 31, 1999, amounted to
$309,409,504 and $33,830,356, respectively.
At December 31, 1999, accumulated net unrealized appreciation on investments was
$254,981,000, consisting of $281,200,482 gross unrealized appreciation and
$26,219,482 gross unrealized depreciation.
At December 31, 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
REPORT OF 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, 1999, 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 auditing standards generally accepted
in the United States. 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, 1999 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,
1999, 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 accounting
principles generally accepted in the United States.
New York, New York
February 3, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For Federal tax purposes the portfolio hereby designates $.1490 per share as a
long-term capital gain distribution of the $.3700 per share paid on December 21,
1999.
The portfolio also designates 100% of the ordinary dividends paid during the
fiscal year ended December 31, 1999 as qualifying for the corporate dividends
received deduction.
The Portfolio
NOTES
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) 2000 Dreyfus Service Corporation 112AR9912
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
12/31/99 37,497 34,265
*Source: Lipper Analytical Services, Inc.
