DREYFUS VARIABLE INVESTMENT FUND, 485BPOS, 1997-09-29

DREYFUS VARIABLE INVESTMENT FUND
485BPOS, 1997-09-29

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File Nos. 33-13690
811-5125

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 20 [ X ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 20 [ X ]

(Check appropriate box or boxes.)

DREYFUS VARIABLE INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)

c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 922-6000

Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate
box)

immediately upon filing pursuant to paragraph (b)
----

X on October 1, 1997 pursuant to paragraph (b)
----

60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----

If appropriate, check the following box:

this post-effective amendment designates a new effective date
for a
previously filed post-effective amendment.
----

Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended December 31, 1996 was filed on February 27, 1997.
DREYFUS VARIABLE INVESTMENT FUND
Cross-Reference Sheet Pursuant to Rule 495(a)

Items in
Part A of
Form N-1A Caption Page
_________ _______ ____

1 Cover Page Cover

2 Synopsis *

3 Condensed Financial Information 4

4 General Description of Registrant 12, 34

5 Management of the Fund 28

5(a) Management's Discussion of Fund's Performance *

6 Capital Stock and Other Securities 34

7 Purchase of Securities Being Offered 32

8 Redemption or Repurchase 32

9 Pending Legal Proceedings *

Items in
Part B of
Form N-1A
- ---------

10 Cover Page Cover

11 Table of Contents Cover

12 General Information and History B-42

13 Investment Objectives and Policies B-2

14 Management of the Fund B-20

15 Control Persons and Principal B-24
Holders of Securities

16 Investment Advisory and Other B-26
Services

____________________________________

NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS VARIABLE INVESTMENT FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)

Items in
Part B of
Form N-1A Caption Page
_________ _______ _____

17 Brokerage Allocation B-36

18 Capital Stock and Other Securities B-40

19 Purchase, Redemption and Pricing B-32
of Securities Being Offered

20 Tax Status *

21 Underwriters B-32

22 Calculations of Performance Data B-38

23 Financial Statements B-51

Items in
Part C of
Form N-1A
_________

24 Financial Statements and Exhibits C-1

25 Persons Controlled by or Under C-5
Common Control with Registrant

26 Number of Holders of Securities C-5

27 Indemnification C-5

28 Business and Other Connections of C-6
Investment Adviser

29 Principal Underwriters C-11

30 Location of Accounts and Records C-14

31 Management Services C-14

32 Undertakings C-14

_____________________________________

NOTE: * Omitted since answer is negative or inapplicable.

PROSPECTUS OCTOBER 1, 1997

DREYFUS VARIABLE INVESTMENT FUND
DREYFUS VARIABLE INVESTMENT FUND (THE "FUND") IS AN OPEN-END,
MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. Fund shares are
offered only to variable annuity and variable life insurance separate
accounts established by insurance companies ("Participating Insurance
Companies") to fund variable annuity contracts ("VA contracts") and variable
life insurance policies ("VLI policies"). INDIVIDUALS MAY NOT PURCHASE SHARES
DIRECTLY FROM THE FUND.
THE FUND PERMITS INVESTORS TO INVEST IN THIRTEEN SEPARATE PORTFOLIOS
(EACH, A "SERIES"), ALTHOUGH CERTAIN PORTFOLIOS MAY NOT BE AVAILABLE FOR
INVESTMENT THROUGH CERTAIN VA CONTRACTS OR VLI POLICIES OFFERED BY CERTAIN
PARTICIPATING INSURANCE COMPANIES. A PURCHASER OF A VA CONTRACT OR VLI POLICY
SHOULD REFER TO THE PROSPECTUS FOR HIS OR HER CONTRACT OR POLICY FOR
INFORMATION AS TO WHICH PORTFOLIOS OF THE FUND ARE AVAILABLE FOR INVESTMENT
THROUGH THE CONTRACT OR POLICY. A GENERAL DESCRIPTION OF EACH SERIES IS SET
FORTH ON THE FOLLOWING PAGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT ADVISER.
(CONTINUED ON NEXT PAGE)

THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
AN INVESTOR SHOULD KNOW BEFORE INVESTING IN A SERIES THROUGH A VA CONTRACT OR
VLI POLICY OFFERED BY A PARTICIPATING INSURANCE COMPANY. IT SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.

THE STATEMENT OF ADDITIONAL INFORMATION, DATED OCTOBER 1, 1997, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-554-4611. WHEN TELEPHONING, ASK
FOR OPERATOR 144.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. THE NET ASSET VALUE OF FUNDS OTHER THAN MONEY MARKET FUNDS
WILL FLUCTUATE FROM TIME TO TIME.

TABLE OF CONTENTS

PAGE

CONDENSED FINANCIAL INFORMATION........ 4
PERFORMANCE INFORMATION................ 11
DESCRIPTION OF THE FUND................ 12
MANAGEMENT OF THE FUND................. 28
HOW TO BUY SHARES...................... 32

PAGE

HOW TO REDEEM SHARES................... 32
DIVIDENDS, DISTRIBUTIONS AND TAXES..... 33
GENERAL INFORMATION.................... 34
APPENDIX............................... 36

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

[Page 1]

(CONTINUED FROM COVER PAGE)
The MONEY MARKET PORTFOLIO'S investment objective is to provide as
high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. This Series
invests in short-term money market instruments. AN INVESTMENT IN THE MONEY
MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
The CAPITAL APPRECIATION PORTFOLIO'S primary investment objective is
to provide long-term capital growth consistent with the preservation of
capital; current income is a secondary investment objective. This Series
invests primarily in the common stocks of domestic and foreign issuers.
The GROWTH AND INCOME PORTFOLIO'S investment objective is to provide
long-term capital growth, current income and growth of income, consistent
with reasonable investment risk. This Series invests primarily in equity
securities, debt securities and money market instruments of domestic and
foreign issuers.

The SPECIAL VALUE PORTFOLIO'S investment objective is to maximize
total return, consisting of capital appreciation and current income. This
Series is managed as a "contrary value" portfolio and its investments include
equity securities, debt securities and money market instruments of domestic
and foreign issuers.

The SMALL CAP PORTFOLIO'S investment objective is to maximize capital
appreciation. This Series invests primarily in common stocks of domestic and
foreign issuers. This Series will be particularly alert to companies that The
Dreyfus Corporation considers to be emerging smaller-sized companies which
are believed to be characterized by new or innovative products, services or
processes which should enhance prospects for growth in future earnings.
The SMALL COMPANY STOCK PORTFOLIO'S investment objective is to
provide investment results that are greater than the total return performance
of publicly-traded common stocks in the aggregate, as represented by the
Russell 2500trademark Index. This Series invests primarily in a portfolio of
equity securities of small- to medium-sized domestic issuers, while
attempting to maintain volatility and diversification similar to that of the
Russell 2500trademark Index.
The DISCIPLINED STOCK PORTFOLIO'S investment objective is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks in the aggregate, as represented by the
Standard & Poor's 500 Composite Stock Price Index. This Series will use
quantitative statistical modeling techniques to construct a portfolio in an
attempt to achieve its investment objective, without assuming undue risk
relative to the broad stock market.
The INTERNATIONAL VALUE PORTFOLIO'S investment objective is long-term
capital growth. This Series invests primarily in a portfolio of
publicly-traded equity securities of foreign issuers which would be
characterized as "value" companies according to criteria established by The
Dreyfus Corporation.
The INTERNATIONAL EQUITY PORTFOLIO'S investment objective is to
maximize capital growth. This Series invests primarily in the equity
securities of foreign issuers located throughout the world.
The QUALITY BOND PORTFOLIO'S investment objective is to provide the
maximum amount of current income to the extent consistent with the
preservation of capital and the maintenance of liquidity. This Series invests
principally in debt obligations of corporations, the U.S. Government and its
agencies and instrumentalities, and U.S. major banking institutions.
The ZERO COUPON 2000 PORTFOLIO'S investment objective is to provide
as high an investment return as is consistent with the preservation of
capital. This Series invests primarily in debt obligations of the U.S.
Treasury that have been stripped of their unmatured interest coupons, interest
coupons that have been stripped from debt obligations issued by the U.S.
Treasury, receipts and certificates for such stripped debt obligations, and
stripped coupons and zero coupon securities issued by domestic corporations,
which will mature on or about December 31, 2000.

(CONTINUED ON NEXT PAGE)

[Page 2]
(CONTINUED FROM PREVIOUS PAGE)
The BALANCED PORTFOLIO'S investment objective is to provide
investment results that are greater than the total return performance of
common stocks and bonds in the aggregate, as represented by a hybrid index,
60% of which is composed of the common stocks in the Standard & Poor's 500
Composite Stock Price Index and 40% of which is composed of the bonds in the
Lehman Brothers Intermediate Government/Corporate Bond Index. This Series
invests primarily in common stocks and bonds in proportion consistent with
their expected returns and risks as determined by The Dreyfus Corporation.

The LIMITED TERM HIGH INCOME PORTFOLIO'S investment objective is to
maximize total return, consisting of capital appreciation and current income.
This Series seeks to achieve its objective by investing up to all of its
assets in a portfolio of lower rated fixed-income securities, commonly known
as "junk bonds," that, under normal market conditions, has an effective
duration of three and one-half years or less and an effective average
portfolio maturity of four years or less. INVESTMENTS IN LOWER RATED
FIXED-INCOME SECURITIES ARE SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL
AND NON-PAYMENT OF INTEREST. INVESTORS SHOULD CAREFULLY ASSESS THE RISKS
ASSOCIATED WITH AN INVESTMENT IN THE SERIES.

[Page 3]
CONDENSED FINANCIAL INFORMATION

The information in the following tables has been audited (except
where noted) by Ernst & Young LLP, the Fund's independent auditors. Further
financial data, related notes and reports of independent auditors accompany
the Statement of Additional Information, available upon request.

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. The
total investment return information set forth below does not reflect certain
expenses charged the separate accounts or related insurance policies by the
Participating Insurance Companies, the inclusion of which would reduce the
Series' total investment return for each period indicated.
<TABLE>
<CAPTION>

MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------------
SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
------------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996 (UNAUDITED)

--- --- --- --- --- --- --- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00.....$ 1.00
--- --- --- --- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net........ .024 .058 .041 .032 .043 .055 .050 .025
--- --- --- --- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net (.024) (.058) (.041) (.032) (.043) (.055) (.050) (.025)
--- --- --- --- --- --- --- ---
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00.....$ 1.00
=== === === === === === === ===
TOTAL INVESTMENT RETURN........ 7.27%(2) 5.99% 4.14% 3.29% 4.37% 5.66% 5.10% 5.08%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .03%(2) - - - - .62% .62% .62%(2)
Ratio of net investment income to
average net assets........... 7.18%(2) 5.78% 4.10% 3.23% 4.62% 5.51% 4.96% 5.04%(2)
Decrease reflected in above
expense ratios due to undertakings
by The Dreyfus Corporation... 30.51%(2) 3.94% 4.25% 2.81% .88% .03% - -
Net assets, end of period
(000's omitted) $741 $1,619 $790 $ 7,651 $34,728 $45,249 $56,186 $62,025
</TABLE>

(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Annualized.

[Page 4]

CAPITAL APPRECIATION PORTFOLIO
--------------------------------------------------------------------

SIX-MONTH
PERIOD ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1997
----------------------------------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 (UNAUDITED)
--- --- --- --- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $12.50 $13.27 $13.44 $17.71 $21.98
--- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net............................ .08 .23 .23 .23 .12
Net realized and unrealized gain
on investments................................... .76 .17 4.27 4.30 4.44
--- --- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS................. .84 .40 4.50 4.53 4.56
--- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net............. (.07) (.23) (.23) (.23) -
Dividends from net realized gain on investments.. - - - (.03) -
--- --- --- --- ---
TOTAL DISTRIBUTIONS.............................. (.07) (.23) (.23) (.26) -
--- --- --- --- ---
Net asset value, end of period................... $13.27 $13.44 $17.71 $21.98 $26.54
--- --- --- --- ---
--- --- --- --- ---
TOTAL INVESTMENT RETURN............................ 6.74%(2) 3.04% 33.52% 25.56% 20.78%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... .28%(2) .25% .85% .84% .41%(2)
Ratio of net investment income to
average net assets............................... 1.89%(2) 2.99% 2.08% 1.46% .60%(2)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.......... 3.67%(2) .86% .02% - -
Portfolio Turnover Rate.......................... .01%(2) .12% 2.81% 2.47% 1.09%(2)
Average commission rate paid(3).................. - - - $.0705 $.0624
Net assets, end of period (000's omitted)........ $3,770 $16,118 $46,930 $103,745 $176,063
</TABLE>

(1) From April 5, 1993 (commencement of operations) to December 31, 1993.
(2) Not annualized.
(3) For fiscal years beginning January 1, 1996, the Series is
required to disclose its average commission rate paid per
share for purchases and sales of investment securities.

GROWTH AND INCOME PORTFOLIO
------------------------------------------------------
SIX-MONTH PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
------------------------------------
PER SHARE DATA: 1994(1) 1995 1996 (UNAUDITED)
--- --- --- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $12.50 $11.98 $18.33 $19.55
--- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net...................................... .28 .28 .36 .17
Net realized and unrealized gain (loss)
on investments............................................. (.43) 7.07 3.43 1.60
--- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS........................... (.15) 7.35 3.79 1.77
--- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net....................... (.28) (.27) (.35) (.17)
Dividends from net realized gain on investments............ (.09) (.73) (2.22) (.20)
--- --- --- ---
TOTAL DISTRIBUTIONS........................................ (.37) (1.00) (2.57) (.37)
--- --- --- ---
Net asset value, end of period............................. $11.98 $18.33 $19.55 $20.95
--- --- --- ---
--- --- --- ---
TOTAL INVESTMENT RETURN...................................... (1.22%)(2) 61.89% 20.75% 9.23%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... .22%(2) .92% .83% .40%(2)
Ratio of net investment income to
average net assets......................................... 2.25%(2) 2.21% 1.96% .91%(2)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.................... 1.28%(2) .03% - -
Portfolio Turnover Rate.................................... 237.09%(2) 255.42% 237.44% 98.55%(2)
Average commission rate paid(3)............................ - - $.1904 $.0607
Net assets, end of period (000's omitted).................. $1,040 $71,161 $225,935 $304,614

</TABLE>

(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
(3) For fiscal years beginning January 1, 1996, the Series is
required to disclose its average commission rate paid per
share for purchases and sales of investment securities.

[Page 5]
<TABLE>
<CAPTION>

SPECIAL VALUE PORTFOLIO
--------------------------------------------------------------------------------------

SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
--------------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996 (UNAUDITED)
--- --- --- --- --- --- --- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.11 $10.76 $10.14 $12.92 $12.37 $11.70 $10.60
--- --- --- --- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net......... .08 .41 .22 .20 .35 .51 .63 .03
Net realized and unrealized gain
(loss) on investments......... .11 .66 (.11) 2.71 (.56) (.54) (1.05) 2.14
--- --- --- --- --- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS .19 1.07 .11 2.91 (.21) (.03) (.42) 2.17
--- --- --- --- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net (.08) (.42) (.31) (.13) (.32) (.64) (.56) -
Dividends in excess of
investment income-net - - - - (.02) - (.06) -
Dividends from net realized gain
on investments - - (.42) - - - - -
Paid-in capital............... - - - - - - (.06) -
--- --- --- --- --- --- --- ---
TOTAL DISTRIBUTIONS........... (.08) (.42) (.73) (.13) (.34) (.64) (.68) -
--- --- --- --- --- --- --- ---
Net asset value, end of period $10.11 $10.76 $10.14 $12.92 $12.37 $11.70.....$10.60 $12.77
=== === === === === === === ===
TOTAL INVESTMENT RETURN......... 1.85%(2) 10.60% 1.07% 28.59% (1.56%) (.26%) (3.62%) 20.47%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets .34%(2) 1.00% .97% .27% .25% .94% .93% .60%(2)
Ratio of net investment income to average
net assets.................... 2.11%(2) 4.46% 1.88% 1.87% 3.54% 3.56% 4.12% .20%(2)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation and Comstock Partners, Inc. 8.82%(2) 2.83% 1.70% 2.25% .88% - - -
Portfolio Turnover Rate....... - 91.97% 118.78% 99.08% 25.96% 53.88% 124.19% 94.68%(2)
Average commission rate paid(3) - - - - - - $.0250 $.0472
Net assets, end of period
(000's omitted) $ 716 $2,179 $1,865 $7,957 $30,510 $25,272 $21,101.....$33,074

</TABLE>

(1) From August 31, 1990 (commencement of operations) to
December 31, 1990.
(2) Not annualized.
(3) For fiscal years beginning January 1, 1996, the
Series is required to disclose its average
commission rate paid per share for purchases and
sales of investment securities.
<TABLE>
<CAPTION>

SMALL CAP PORTFOLIO
-------------------------------------------------------------------------------------
SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
-----------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996 (UNAUDITED)
--- --- --- --- --- --- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.21 $20.60 $22.71 $34.45 $36.52 $46.13.....$52.08
--- --- --- --- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net......... .21(2) .14(2) .18(2) .14 .17 .16 .10 .06
Net realized and unrealized gain
on investments................ - 15.85(2) 13.10(2) 14.93 2.50 10.54 7.53 4.06
--- --- --- --- --- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS .21(2) 15.99(2) 13.28(2) 15.07 2.67 10.70 7.63 4.12
--- --- --- --- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net - (.15) (.15) (.14) (.16) (.18) (.10) -
Dividends in excess of
investment income-net......... - - - (.01) - - - -
Dividends from net realized
gain on investments.......... - (5.45) (11.02) (3.18) (.33) (.91) (1.51) -
Dividends in excess of net realized gain
on investments................ - - - - (.11) - (.07) -
--- --- --- --- --- --- --- ---
TOTAL DISTRIBUTIONS........... - (5.60) (11.17) (3.33) (.60) (1.09) (1.68) -
--- --- --- --- --- --- --- ---
Net asset value, end of period $10.21 $ 20.60 $22.71 $34.45 $36.52 $46.13.....$52.08 $56.20
--- --- --- --- --- --- --- ---
--- --- --- --- --- --- --- ---
TOTAL INVESTMENT RETURN......... 2.10%(3) 159.73% 71.28% 68.31% 7.75% 29.38% 16.60% 7.91%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .34%(3) 1.16% .94% .25% .55% .83% .79% .39%(3)
Ratio of net investment income to
average net assets............ 2.10%(3) .77% .76% .89% 1.18% .54% .24% .11%(3)
Decrease reflected in above expense ratios due
to undertakings by
The Dreyfus Corporation 84.84%(3) 3.64% 2.29% 1.79% .52% - - -
Portfolio Turnover Rate....... - 388.70% 358.27% 244.59% 106.00% 99.02% 89.10% 33.72%(3)
Average commission rate paid(4) - - - - - - $.0571 $.0559
Net assets, end of period (000's omitted) $36 $1,554 $2,679 $18,337 $173,215 $543,281 $960,365 $1,101,308

</TABLE>

(1) From August 31, 1990 (commencement of operations) to
December 31, 1990.
(2) Based on average shares outstanding.
(3) Not annualized.
(4) For fiscal years beginning January 1, 1996, the
Series is required to disclose its average commission
rate paid per share for purchases and sales of investment securities.

[Page 6]
<TABLE>
<CAPTION>

SMALL COMPANY STOCK PORTFOLIO
----------------------------------------------
SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
---------- ----------
1996(1) (UNAUDITED)
---- --------
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period.......................... $12.50 $13.52
---- ----
INVESTMENT OPERATIONS:
Investment income-net......................................... .05 .05
Net realized and unrealized gain
on investments................................................ 1.03 1.22
---- ----
TOTAL FROM INVESTMENT OPERATIONS.............................. 1.08 1.27
---- ----
DISTRIBUTIONS:
Dividends from investment income-net.......................... (.05) -
Dividends from net realized gain investments.................. (.01) (.02)
---- ----
TOTAL DISTRIBUTIONS........................................... .06 (.02)
---- ----
Net asset value, end of period................................ $13.52 $14.77
==== ====
TOTAL INVESTMENT RETURN................................ 8.73%(2,3) 9.29%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .75%(2) .60%(2)
Ratio of net investment income to
average net assets................................... .39%(2) .48%(2)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation............... .19%(2) -
Portfolio Turnover Rate.............................. 35.68%(2) 16.28%(2)
Average commission rate paid(4)...................... $.0412 $.0370
Net assets, end of period (000's omitted)............ $8,148 $13,029

</TABLE>

(1) From April 30, 1996 (commencement of operations) to December 31, 1996.
(2) Not annualized.
(3) Calculated based on net asset value on the close of business on
May 1, 1996 (commencement of initial offering) to December 31, 1996.
(4) The Series is required to disclose its average commission rate paid
per share for purchases and sales of investment securities.

DISCIPLINED STOCK PORTFOLIO
----------------------------------------------
SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
---------------- --------------------
1996(1) (UNAUDITED)
---- ----------------
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period.......................... $12.50 $14.79
---- ----
INVESTMENT OPERATIONS:
Investment income-net......................................... .07 .05
Net realized and unrealized gain
on investments................................................ 2.29 2.51
---- ----
TOTAL FROM INVESTMENT OPERATIONS.............................. 2.36 2.56
---- ----
DISTRIBUTIONS:
Dividends from investment income-net.......................... (.07) -
Dividends from net realized gain on investments............... - (.05)
---- ----
TOTAL DISTRIBUTIONS........................................... (.07) (.05)
---- ----
Net asset value, end of period................................ $14.79 $17.30
==== ====
TOTAL INVESTMENT RETURN................................ 18.86%(2,3) 17.37%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .80%(2) .54%(2)
Ratio of net investment income to
average net assets................................... .72%(2) .35%(2)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation............... .16%(2) -
Portfolio Turnover Rate.............................. 30.62%(2) 60.56%(2)
Average commission rate paid(4)...................... $.0450 $.0436
Net assets, end of period (000's omitted)............ $17,722 $29,095

</TABLE>

[Page 7]
<TABLE>
<CAPTION>

BALANCED PORTFOLIO
--------------------------------------------------
FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS)
TO AUGUST 31, 1997 (UNAUDITED)
--------------------------------------------------
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period................. $12.50
----
INVESTMENT OPERATIONS:
Investment income-net................................ .11
Net realized and unrealized gain
on investments....................................... 1.45
----
TOTAL FROM INVESTMENT OPERATIONS..................... 1.56
----
Distributions:
Dividends from investment income-net................. (.05)
----
Net asset value, end of period....................... $14.01
====
TOTAL INVESTMENT RETURN................................ 12.41%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .33%(1)
Ratio of net investment income to
average net assets................................... .87%(1)
Portfolio Turnover Rate.............................. 30.15%(1)
Average commission rate paid(2)...................... $.0474
Net assets, end of period (000's omitted)............ $32,394

</TABLE>

(1) Not annualized.
(2) The Series is required to disclose its average commission
rate paid per share for purchases and sales of investment securities.

INTERNATIONAL VALUE PORTFOLIO
-----------------------------------------
SIX-MONTH
PERIOD ENDED YEAR ENDED
DECEMBER 31, JUNE 30, 1997
------------------- -------------------
1996(1) (UNAUDITED)
--- ------------
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period................. $12.50 $12.80
---- ----
INVESTMENT OPERATIONS:
Investment income-net................................ .08 .08
Net realized and unrealized gain
on investments....................................... .34 1.55
---- ----
TOTAL FROM INVESTMENT OPERATIONS..................... .42 1.63
---- ----

DISTRIBUTIONS:
Dividends from investment income-net................. (.08) -
Dividends from net realized gain on investments...... (.04) (.04)
---- ----
TOTAL DISTRIBUTIONS.................................. (.12) (.04)
---- ----
Net asset value, end of period....................... $12.80 $14.39
==== ====
TOTAL INVESTMENT RETURN................................ 3.41%(2,3) 12.74%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. 1.01%(2) .80%(2)
Ratio of net investment income to
average net assets................................... .76%(2) .76%(2)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation............... .34%(2) -
Portfolio Turnover Rate.............................. 24.48%(2) 14.71%(2)
Average commission rate paid(4)...................... $.0351 $.0320
Net assets, end of period (000's omitted)............ $8,027 $14,127

</TABLE>

[Page 8]
<TABLE>
<CAPTION>

INTERNATIONAL EQUITY PORTFOLIO
------------------------------------------------------
SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
-------------------------------------
1994(1) 1995 1996 (UNAUDITED)
--- --- --- ------
PER SHARE DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................... $12.50 $12.02 $12.82 $13.76
--- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net................................... .15 .15 .10 .06
Net realized and unrealized gain (loss)
on investments.......................................... (.40) .74 1.16 2.11
--- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS........................ (.25) .89 1.26 2.17
--- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net.................... (.14) (.08) (.09) -
Dividends in excess of investment income-net............ (.09) (.01) - -
Dividends from net realized gain on investments......... - - (.39) -
Dividends in excess of net realized gain on investments. - - (.06) -
--- --- --- ---
TOTAL DISTRIBUTIONS..................................... (.23) (.09) (.54) -
--- --- --- ---
CAPITAL CONTRIBUTION FROM AN AFFILIATE OF THE DREYFUS CORPORATION - - .22 -
--- --- --- ---
Net asset value, end of period.......................... $12.02 $12.82 $13.76 $15.93
=== === === ===
TOTAL INVESTMENT RETURN................................... (2.00%)(2) 7.39% 11.61%(3) 15.77%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. .23%(2) 1.59% 1.28% .55%(2)
Ratio of net investment income to
average net assets...................................... 1.11%(2) 1.13% .92% .47%(2)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation................. 1.70%(2) .45% - -
Portfolio Turnover Rate................................. 16.75%(2) 70.22% 181.13% 78.34%(2)
Average commission rate paid (4)........................ - - $.0255 $.0200
Net assets, end of period (000's omitted)............... $1,089 $7,672 $24,355 $34,402

</TABLE>

(1) From May 2, 1994 (commencement of operations) to December 31, 1994.
(2) Not annualized.
(3) Had the Series not had a capital contribution by an affiliate of
The Dreyfus Corporation during the period, the total investment
return would have been 9.89%.
(4) For fiscal years beginning January 1, 1996, the Series is required
to disclose its average commission rate paid per share
for purchases and sales of investment securities.

LIMITED TERM HIGH INCOME PORTFOLIO
--------------------------------------------------
FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS)
TO AUGUST 31, 1997 (UNAUDITED)
--------------------------------------------------

PER SHARE DATA:
<S> <C>
Net asset value, beginning of period................. $12.50
----
INVESTMENT OPERATIONS:
Investment income-net................................ .38
Net realized and unrealized gain (loss)
on investments....................................... .45
----
TOTAL FROM INVESTMENT OPERATIONS..................... .83
----
DISTRIBUTIONS:
Dividends from investment income-net................. (.16)
----
Net asset value, end of period....................... $13.17
====
TOTAL INVESTMENT RETURN................................ 6.70%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets.... .98%(2)
Ratio of interest expenses to average net assets..... .04%(2)
Ratio of net investment income to
average net assets................................... 10.39%(2)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation............... .13%(2)
Portfolio Turnover Rate.............................. 16.30%(1)
Net assets, end of period (000's omitted)............ $19,601

</TABLE>

(1) Not annualized.
(2) Annualized.

[Page 9]
<TABLE>
<CAPTION>

QUALITY BOND PORTFOLIO
--------------------------------------------------------------------------------------

SIX-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, 1997
------------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996 (UNAUDITED)
--- --- --- --- --- --- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.01 $10.67 $10.94 $11.81 $10.53 $11.81... $11.50
--- --- --- --- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net......... .23 .70 .92 .76 .73 .68 .66 .35
Net realized and unrealized gain
(loss) on investments......... .01 .66 .30 .88 (1.27) 1.42 (.31) (.05)
--- --- --- --- --- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS .24 1.36 1.22 1.64 (.54) 2.10 .35 .30
--- --- --- --- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net (.23) (.70) (.92) (.76) (.73) (.69) (.66) (.29)
Dividends from net realized
gain on investments........... - - (.03) (.01) (.01) (.13) - -
--- --- --- --- --- --- --- ---
TOTAL DISTRIBUTIONS........... (.23) (.70) (.95) (.77) (.74) (.82) (.66) (.29)
--- --- --- --- --- --- --- ---
Net asset value, end of period $10.01 $10.67 $10.94 $11.81 $10.53 $11.81.....$11.50 $11.51
=== === === === === === === ===
TOTAL INVESTMENT RETURN......... 7.12%(2) 14.12% 12.09% 15.33% (4.59%) 20.42% 3.13% 5.42%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .15%(2) - - - - .81% .79% .77%(2)
Ratio of net investment income
to average net assets......... 7.20%(2) 7.52% 8.54% 6.51% 7.03% 6.13% 5.86% 6.33%(2)
Decrease reflected in above expense ratios due
to undertakings by
The Dreyfus Corporation 137.05%(2) 13.13% 5.33% 3.51% 1.20% .04% - -
Portfolio Turnover Rate....... - - 9.39% 110.62% 64.80% 263.53% 258.36% 239.75%(3)
Net assets, end of period
(000's omitted) $59 $410 $405 $4,706 $13,244 $37,447 $60,936 $70,974

</TABLE>

(1) From August 31, 1990 (commencement of operations) to December 31, 1990.
(2) Annualized.
(3) Not annualized.
<TABLE>
<CAPTION>

ZERO COUPON 2000 PORTFOLIO
--------------------------------------------------------------------------------------
SIX-MONTH
PERIOD ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1997
------------------------------------------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993 1994 1995 1996 (UNAUDITED)
---- ---- --- --- --- --- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.45 $11.64 $11.77 $12.57 $11.39 $12.70 $12.29
---- ---- --- --- --- --- --- ---
INVESTMENT OPERATIONS:
Investment income-net......... .22 .76 .83 .79 .69 .69 .68 .40
Net realized and unrealized gain (loss)
on investments................ .45 1.25 .15 .96 (1.18) 1.31 (.36) (.09)
---- ---- --- --- --- --- --- ---
TOTAL FROM INVESTMENT OPERATIONS .67 2.01 .98 1.75 (.49) 2.00 .32 .31
---- ---- --- --- --- --- --- ---
DISTRIBUTIONS:
Dividends from investment income-net (.22) (.76) (.84) (.78) (.68) (.69) (.68) (.34)
Dividends from net realized
gain on investments........... - (.06) (.01) (.17) (.01) - (.05) -
---- ---- --- --- --- --- --- ---
TOTAL DISTRIBUTIONS........... (.22) (.82) (.85) (.95) (.69) (.69) (.73) (.34)
---- ---- --- --- --- --- --- ---
Net asset value, end of period $10.45 $11.64 $11.77 $12.57 $11.39 $12.70.....$12.29 $12.26
---- ---- --- --- --- --- --- ---
---- ---- --- --- --- --- --- ---
TOTAL INVESTMENT RETURN......... 20.09%(2) 20.09% 8.87% 15.19% (3.91%) 17.95% 2.59% 4.30%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .70%(2) .72% .64% - - .68% .66% .62%(2)
Ratio of net investment income to
average net assets............ 8.03%(2) 7.41% 7.15% 6.21% 6.04% 5.73% 5.54% 5.69%(2)
Decrease reflected in above expense ratios due
to undertakings by
The Dreyfus Corporation 81.13%(2) 5.04% 2.28% 2.43% 1.05% .03% - -
Portfolio Turnover Rate....... - 42.82% 3.08% 106.35% - 49.43% 98.28% 109.75%(3)
Net assets, end of period
(000's omitted) $155 $1,296 $1,362 $5,696 $10,913 $22,291 $31,796 $32,782

</TABLE>

(1) From August 31, 1990 (commencement of operations) to
December 31, 1990.
(2) Annualized.
(3) Not annualized.

[Page 10]
Further information about the performance of each Series (other than
Balanced and Limited Term High Income Portfolios) is
contained in such Series' annual report which may be obtained without charge
by writing to the address or calling the number set forth on the cover page
of this Prospectus.
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO - From time to time, the Series will
advertise its yield and effective yield. It can be expected that these yields
will fluctuate substantially. Both yield figures are based on historical
earnings and are not intended to indicate future performance. The yield of
the Series refers to the income generated by an investment in the Series over
a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly, but, when annualized, the income earned by an
investment in the Series is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of
this assumed reinvestment.

BALANCED, CAPITAL APPRECIATION, DISCIPLINED STOCK, GROWTH AND INCOME,
INTERNATIONAL EQUITY, INTERNATIONAL VALUE, SPECIAL VALUE, SMALL CAP AND SMALL
COMPANY STOCK PORTFOLIOS - The Series may calculate performance on an
average annual total return or total return basis. Average annual total
return is calculated pursuant to a standardized formula which assumes that an
investment in the Series was purchased with an initial payment of $1,000 and
that the investment was redeemed at the end of a stated period of time, after
giving effect to the reinvestment of dividends and distributions during the
period. The return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of the Series'
performance will include the Series' average annual total return for one,
five and ten year periods, or for shorter time periods depending upon the
length of time the Series has operated.

Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period, which assumes the
application of the percentage rate of total return.
LIMITED TERM HIGH INCOME, QUALITY BOND AND ZERO COUPON 2000
PORTFOLIOS - For purposes of advertising, performance may be calculated on
several bases, including current yield, average annual total return and/or
total return.
Current yield refers to the Series' annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period.
Average annual total return and total return for these Series will be
calculated as described above.
In addition, the Zero Coupon 2000 Portfolio will calculate on each
business day its anticipated growth rate, which is the annualized rate of
growth investors may expect from the time they purchase a share until the
Series' target date. The anticipated growth rate cannot be guaranteed, as it
involves certain assumptions about variable factors such as reinvestment of
dividends and distributions, the Series' expense ratio and its portfolio
composition. The rate will vary from day-to-day due to changes in interest
rates and other market factors affecting the value of such Series'
investments. Furthermore, differences in the price changes of securities with
different maturities can affect investment return, as can the

[Page 11]
skill of the investment adviser in managing the Series. Under certain
circumstances, shareholder redemptions also could affect the anticipated
growth rate. See "Description of the Fund - Investment Considerations and
Risks - Special Considerations Relating to Stripped Securities."
APPLICABLE TO ALL SERIES - Performance will vary from time to time
and past results are not necessarily representative of future results.
Investors should remember that performance is a function of portfolio
management in selecting the type and quality of portfolio securities and is
affected by operating expenses. Performance information, such as that
described above, may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance. Performance information of any Series should not be
compared with other funds that offer their shares directly to the public
since the figures provided do not reflect charges imposed by Participating
Insurance Companies under their VA contracts or VLI policies. The effective
yield and total return for a Series should be distinguished from the rate of
return of a corresponding sub-account or investment division of a separate
account of a Participating Insurance Company, which rate will reflect the
deduction of additional charges, including mortality and expense risk
charges, and will therefore be lower. Variable annuity contract holders and
variable life insurance policy holders should consult the prospectus for
their contract or policy.
Calculations of the Series' yield or performance information may
reflect absorbed expenses pursuant to any undertaking that may be in effect.
See "Management of the Fund." Comparative performance information may be used
from time to time in advertising a Series' shares, including data from the
Consumer Price Index, Lipper Analytical Services, Inc., IBC's Money Fund
Reporttrademark, Money Magazine, Bank Rate Monitortrademark, N. Palm Beach,
Fla. 33408, Standard & Poor's 500 Composite Stock Price Index, Standard &
Poor's MidCap 400 Index, Russell 2500trademark Index, Morgan Stanley Capital
International World Index, the Dow Jones Industrial Average, Moody's Bond
Survey Bond Index, Lehman Brothers Intermediate Government/Corporate Bond
Index, Morningstar, Inc., Value Line Mutual Fund Survey and other industry
publications.
DESCRIPTION OF THE FUND
GENERAL
The Fund is intended to be a funding vehicle for VA contracts and VLI
policies to be offered by the separate accounts of Participating Insurance
Companies. The VA contracts and the VLI policies are described in separate
prospectuses issued by the Participating Insurance Companies over which the
Fund assumes no responsibility. The Fund currently does not foresee any
disadvantages to the holders of VA contracts and VLI policies arising from
the fact that the interests of the holders of such contracts and policies may
differ.
Nevertheless, the Fund's Board intends to monitor events in order to
identify any material conflicts which may arise and to determine what action,
if any, should be taken in response thereto. Resolution of an irreconcilable
conflict might result in the withdrawal of a substantial amount of a Series'
assets which could adversely affect such Series' net asset value per share.
Individual VA contract holders and VLI policy holders are not the
"shareholders" of the Fund. Rather, the Participating Insurance Companies and
their separate accounts are the shareholders (the "shareholders"), although
such companies will pass through voting rights to their VA contract holders
and VLI policy holders.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
Each Series has a different investment objective which it pursues
through separate investment policies, as described herein. The differences in
objectives and policies among the Series determine the types of portfolio
securities in which each Series invests, and can be expected to affect the
degree of risk to which each Series is subject and each Series' yield or
return. Each Series' investment objective cannot be changed without approval
by the holders of a majority (as defined in the Investment

[Page 12]
Company Act of 1940, as amended (the "1940 Act")) of such Series'
outstanding voting shares. There can be no assurance that a Series'
investment objective will be achieved. The types of portfolio securities in
which each Series may invest are described in greater detail below and under
"Appendix-Certain Portfolio Securities."
MONEY MARKET PORTFOLIO - The Money Market Portfolio is a diversified
portfolio, the investment objective of which is to provide as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. The Series invests in U.S. dollar denominated
short-term money market instruments, including securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations issued by domestic banks, foreign branches or foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, repurchase agreements, asset-backed securities, and high quality
domestic and foreign commercial paper and other short-term corporate and bank
obligations, including those with floating and variable rates of interest,
issued by domestic and foreign corporations. The Series will invest in U.S.
dollar denominated obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supranational entities. The
Series currently does not intend to invest more than 20% of its assets in
foreign securities. Securities in which the Series will invest may not earn
as high a level of current income as long-term or lower quality securities
which generally have less liquidity, greater market risk and more fluctuation
in market value. In addition, the Series may engage in lending portfolio
securities and may enter into reverse repurchase agreements. See
"Appendix-Investment Techniques." During normal market conditions, at least
25% of the Series' assets will be invested in bank obligations. See
"Investment Considerations and Risks."
The Money Market Portfolio seeks to maintain a net asset value of
$1.00 per share for purchases and redemptions. To do so, the Series uses the
amortized cost method of valuing its securities pursuant to Rule 2a-7 under
the 1940 Act, which Rule includes various maturity, quality and
diversification requirements, certain of which are summarized below. In
accordance with Rule 2a-7, the Series is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 13 months or less and invest only
in U.S. dollar denominated securities determined in accordance with
procedures established by the Fund's Board to present minimal credit risks
and which are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated by only
one such organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Fund's Board. The
nationally recognized statistical rating organizations currently rating
instruments of the type the Money Market Portfolio may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Duff & Phelps Credit Rating Co. ("Duff"), Fitch Investors Service, L.P.
("Fitch"), IBCA Limited and IBCA Inc. and Thomson BankWatch, Inc. and their
rating criteria are described in the "Appendix" to the Statement of Additional
Information. For further information regarding the amortized cost method of
valuing securities, see "Determination of Net Asset Value" in the Statement
of Additional Information. There can be no assurance that the Money Market
Portfolio will be able to maintain a stable net asset value of $1.00 per
share.
CAPITAL APPRECIATION PORTFOLIO - The Capital Appreciation Portfolio
is a diversified portfolio, the primary investment objective of which is to
provide long-term capital growth consistent with the preservation of capital;
current income is a secondary investment objective. During periods which
Fayez Sarofim & Co. ("Sarofim"), the Series' sub-investment adviser,
determines to be of market strength, the Series acts aggressively to increase
shareholders' capital by investing principally in common stocks of domestic
and foreign issuers, common stocks with warrants attached and debt securities
of foreign governments. The Series will seek investment opportunities
generally in large capitalization companies
[Page 13]
(those with market capitalizations exceeding $500 million) which
Sarofim believes have the potential to experience above average and
predictable earnings growth. Market capitalization of a company's stock is
its market price per share times the number of shares outstanding. The Series
will be alert to those foreign and domestic issuers, which it considers
undervalued by the stock market in terms of current earnings, assets or
growth prospects. These companies will include those that management believes
have new or innovative products, services or processes which can enhance
prospects for growth in future earnings. Other than in periods of anticipated
market weakness, the Series will invest at least 80% of its net assets in
common stocks. In periods of market weakness, the Series may adopt a
temporary defensive posture to preserve shareholders' capital by investing
the Series' assets in money market instruments of the type in which the Money
Market Portfolio invests ("Money Market Instruments"). When market conditions
warrant, all of the Series' assets may be so invested.
The Series may invest up to 10% of the value of its assets in
securities of foreign governments and foreign companies which are not
publicly-traded in the United States. By investing in foreign securities, the
Series seeks to further its objective of capital growth. See "Investment
Considerations and Risks -Foreign Securities" below.
In addition, the Series may engage in various investment techniques,
such as lending portfolio securities and foreign currency transactions. For a
discussion of the investment techniques and their related risks, see
"Investment Considerations and Risks" and "Appendix-Investment Techniques"
below and "Investment Objectives and Management Policies - Management
Policies" in the Statement of Additional Information.
GROWTH AND INCOME PORTFOLIO - The Growth and Income Portfolio is a
non-diversified portfolio, the investment objective of which is long-term
capital growth, current income and growth of income, consistent with
reasonable investment risk. The Series invests in equity securities, debt
securities and Money Market Instruments of domestic and foreign issuers. The
proportion of the Series' assets invested in each type of security will vary
from time to time in accordance with The Dreyfus Corporation's assessment of
economic conditions and investment opportunities.
The equity securities in which the Series may invest consist of
common stocks, preferred stocks and securities convertible into common
stocks, including those in the form of Depositary Receipts, as well as
warrants to purchase such securities. The Series will be particularly alert
to companies which offer opportunities for capital appreciation and growth of
earnings, while paying current dividends.
The debt securities in which the Series may invest include bonds,
debentures, notes, mortgage-related securities and municipal obligations.
Debt securities (other than convertible debt securities) purchased by the
Series must be rated at least Baa by Moody's or at least BBB by S&P, Fitch or
Duff or, if unrated, deemed to be of comparable quality by The Dreyfus
Corporation. Debt securities rated Baa by Moody's or BBB by S&P, Fitch or
Duff are considered investment grade obligations which lack outstanding
investment characteristics and have speculative characteristics as well. The
Series may invest up to 35% of the value of its net assets in convertible
debt securities rated not lower than Caa by Moody's or CCC by S&P, Fitch or
Duff, or, if unrated, deemed to be of comparable quality by The Dreyfus
Corporation. Debt securities rated Caa by Moody's and CCC by S&P, Fitch and
Duff are considered to have predominantly speculative characteristics with
respect to capacity to pay interest and repay principal and are considered to
be of poor standing. See "Investment Considerations and Risks-Lower Rated
Securities" below.
While the Series does not intend to limit the amount of its assets
invested in Money Market Instruments, except to the extent believed necessary
to achieve its investment objective, it does not expect under normal market
conditions to have a substantial portion of its assets invested in Money
Market Instruments. However, when The Dreyfus Corporation determines that
adverse market conditions exist, the Series may adopt a temporary defensive
posture and invest its entire portfolio in Money Market Instruments. The
Series also may invest in Money Market Instruments in anticipation of
investing cash positions.

[Page 14]
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions,
leveraging, lending portfolio securities and short-selling. For a discussion
of the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix-Investment Techniques" below and
"Investment Objectives and Management Policies-Management Policies" in the
Statement of Additional Information.

SPECIAL VALUE PORTFOLIO - The Special Value Portfolio is a
diversified portfolio, the investment objective of which is to maximize total
return, consisting of capital appreciation and current income. The Series is
managed as a "contrary value" portfolio and its investments will include (i)
securities which are out-of-favor and whose price to earnings ratios are
lower than the rest of the market or industry, (ii) securities which are
temporarily depressed but for which a turnaround is expected and (iii)
special situations, such as corporate restructurings, gold stocks and high
yield bonds. In connection therewith, the Series follows an asset allocation
strategy by investing in equity securities, debt securities and Money Market
Instruments of domestic and foreign issuers. The Series will not be managed
as a balanced portfolio and is not required to maintain a portion of its
investments in each of the Series' permitted investment categories at all
times. The asset allocation mix selected will be a primary determinant of the
Series' investment performance.

The equity securities in which the Series may invest include common
stocks, preferred stocks, convertible securities and warrants. The debt
securities in which the Series may invest include bonds, debentures and
notes. The Series may invest up to 60% of the value of its total assets in
the securities of foreign issuers, including those issued in the form of
Depositary Receipts. The Series may invest up to 20% of the value of its
total net assets in securities of issuers principally located in any one
foreign country, except that the Series may invest up to 35% of the value of
its total net assets in securities of issuers located in any one of the
following foreign countries: Australia, Canada, France, Japan, the United
Kingdom or Germany. The Series may invest in the securities of companies whose
principal activities are in, or governments of, emerging markets. See
"Investment Considerations and Risks-Foreign Securities" below.
The Series generally seeks to invest in equity securities determined
to offer above average potential for total return. In making this
determination, factors including price-earnings ratios, cash flow and the
relationship of asset value to market value of the securities will be taken
into account. The Series will be alert to companies engaged in restructuring
efforts, such as mergers, acquisitions and divestitures of less profitable
units.
The Series generally seeks to invest in debt securities where the
yield and potential for capital appreciation of the security are considered
sufficiently attractive in light of the risks of ownership of the security.
In determining whether the Series should invest in particular debt
securities, the factors considered may include: the price, coupon and yield
to maturity; assessment of the credit quality of the issuer; the issuer's
available cash flow and the related coverage ratios; the property, if any,
securing the obligation; and the terms of the debt securities, including the
subordination, default, sinking fund and early redemption provisions.
Ratings, if any, assigned to the securities by Moody's or S&P or other
recognized rating agencies also will be considered. The judgment of The
Dreyfus Corporation as to credit quality of a debt security may differ,
however, from that suggested by the ratings published by a rating service.
The Series is not subject to any limit on the percentage of its assets that
may be invested in securities having a certain rating. Low-rated and unrated
securities have special risks relating to the ability of the Series to
receive timely, or perhaps ultimate, payment of principal and interest. Such
securities are considered to have speculative characteristics and to be of
poor quality; some obligations in which the Series may invest may be in
default. See "Investment Considerations and Risks-Lower Rated Securities"
below. The Series also may invest in Stripped Treasury Securities (as defined
below).

The Series may invest up to 100% of its assets in Money Market
Instruments, but at no time will the Series' investments in bank obligations,
including time deposits, exceed 25% of its assets.

[Page 15]
To the extent permitted under the 1940 Act, the Series may invest in
securities issued by closed-end investment companies which principally invest
in securities of foreign issuers. The Series also may purchase to a limited
extent securities representing the right to receive the capital appreciation
above a certain amount, and other securities representing the right to
receive dividends and all other attributes of beneficial ownership, in
respect of an entity's common stock or other similar instrument. These
securities typically are sold as shares in unit investment trusts.
In addition, the Series may engage in various investment techniques,
such as leveraging, foreign currency transactions, options and futures
transactions, lending portfolio securities and short-selling. For a
discussion of the investment techniques and their related risks, see
"Investment Considerations and Risks" and "Appendix-Investment Techniques"
below and "Investment Objectives and Management Policies-Management Policies"
in the Statement of Additional Information.
SMALL CAP PORTFOLIO - The Small Cap Portfolio is a diversified
portfolio, the investment objective of which is to maximize capital
appreciation. The Series seeks out companies that The Dreyfus Corporation
believes have the potential for significant growth. During periods The
Dreyfus Corporation judges to be of market strength, the Series will act
aggressively to increase shareholders' capital by investing principally in
common stocks (some of which may be dividend paying) of domestic and foreign
issuers. Under normal market conditions, the Series will invest at least 65%
of its total assets in companies, both domestic and foreign, with market
capitalizations of less than $1.5 billion at the time of purchase, which the
Series believes to be characterized by new or innovative products or services
which should enhance prospects for growth in future earnings. The Series also
will make investments based on prospective economic or political changes.
Further, the Series will invest in special situations such as corporate
restructurings, mergers or acquisitions, thereby seeking out undervalued
securities. In periods of market weakness, the Series may adopt a temporary
defensive posture to preserve shareholders' capital by investing the Series'
assets in Money Market Instruments. When the Series has adopted a temporary
defensive posture, the entire portfolio may be so invested.
The Series may invest up to 25% of the value of its assets in the
common stocks of foreign companies which are not publicly-traded in the
United States. The Series currently does not intend to invest more than 20%
of its assets in foreign securities. See "Investment Considerations and
Risks-Foreign Securities" below.
The Series also may invest in debt securities rated as low as the
lowest rating assigned by Moody's or S&P, and in unrated debt securities,
which have special risks. See "Investment Considerations and
Risks-Fixed-Income Securities" and "-Lower Rated Securities" below.
In addition, the Series may engage in various investment techniques,
such as lending portfolio securities, foreign currency transactions and, to a
limited extent, short-selling. For a discussion of the investment techniques
and their related risks, see "Investment Considerations and Risks" and
"Appendix-Investment Techniques" below and "Investment Objectives and
Management Policies-Management Policies" in the Statement of Additional
Information.
SMALL COMPANY STOCK PORTFOLIO - The Small Company Stock Portfolio is
a diversified portfolio, the investment objective of which is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks in the aggregate, as represented by the Russell
2500trademark Index.* The Russell 2500trademark Index is composed of common
stocks issued by small- and medium-sized companies, typically with market
capitalizations between $100 million and $3 billion. The Series invests
primarily in a portfolio of equity securities of small- to medium-sized
domestic issuers, while attempting to maintain volatility and diversification
similar to that of the Russell 2500trademark Index. The Series will invest in
the securities of such issuers that are considered by The Dreyfus Corporation
to offer above-average growth potential. The Series also may invest in
initial public offerings of stock when The
* Russell 2500trademark is a trademark of Frank Russell Company. The Series
is not sponsored, endorsed, sold or promoted by
Frank Russell Company.
[Page 16]
Dreyfus Corporation determines that such offerings provide above-
average short-term appreciation opportunities. The
equity securities in which the Series invests consist of common stocks,
preferred stocks and securities convertible into common stocks, including
those in the form of American Depositary Receipts. The Series also may invest
up to 20% of its assets in foreign securities. See "Investment Considerations
and Risks-Foreign Securities" below.
While seeking desirable investments, the Series may invest in Money
Market Instruments. Under normal market conditions, the Series does not
expect to have a substantial portion of its assets invested in Money Market
Instruments. However, when The Dreyfus Corporation determines that adverse
market conditions exist, the Series may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
In an effort to increase returns, the Series may engage in various
investment techniques, such as lending portfolio securities, foreign currency
transactions, and options and futures transactions, and may enter into
reverse repurchase agreements. For a discussion of the investment techniques
and their related risks, see "Investment Considerations and Risks" and
"Appendix-Investment Techniques" below and "Investment Objectives and
Management Policies-Management Policies" in the Statement of Additional Inform
ation.
DISCIPLINED STOCK PORTFOLIO - The Disciplined Stock Portfolio is a
diversified portfolio, the investment objective of which is to provide
investment results that are greater than the total return performance of
publicly-traded common stocks in the aggregate, as represented by the Standard
& Poor's 500 Composite Stock Price Index ("S&P 500 Index").** The S&P 500
Index is composed of 500 common stocks, most of which are listed on the New
York Stock Exchange, chosen to reflect the industries of the U.S. economy.
The Series uses quantitative statistical modeling techniques to identify
equity securities which emphasize certain attributes expected to produce in
the aggregate total return greater than that of the S&P 500 Index. This
investment process utilizes disciplined control of fund risk and a process of
rigorous security selection. The Series is not an index fund and its
investments are not limited to securities of issuers in the S&P 500 Index.
Individual security selection is the foundation of the Series'
investment approach. Consistency of returns which exceed those of the S&P 500
Index and stability of the Series' asset value relative to the S&P 500 Index
are primary goals of the investment process. Information from diverse sources
is collected and used to construct valuation models which are combined to
form a comprehensive computerized valuation ranking system identifying common
stocks which appear to be over or under valued. These models include measures
of actual and estimated earnings changes and relative value based on dividend
discount calculations, book values to stock price ratios, earnings to stock
price ratios and return on equity ratios. The computerized ranking system
incorporates information from the most recent time period available to the
system and categorizes individual securities within each industry according
to relative attractiveness. The Dreyfus Corporation then uses the data
provided by the model to construct a portfolio in an attempt to achieve the
Series' investment objective, while attempting to maintain risk
characteristics similar to those of the S&P 500 Index.
Under normal circumstances, at least 65% of the Series' total assets
will be invested in equity securities, consisting of common stocks, preferred
stocks and securities convertible into common stocks, including those in the
form of American Depositary Receipts. While seeking desirable investments,
the Series may invest in Money Market Instruments. Under normal market
conditions, the Fund does not expect to have a substantial portion of its
assets invested in Money Market Instruments. However, when The Dreyfus
Corporation determines that adverse market conditions exist, the Series may
adopt a temporary defensive posture and invest all of its assets in Money
Market Instruments.

**"S&P Registration Mark," "S&P 500Registration Mark" and "Standard & Poor's
500 Composite Stock Price Index" are trademarks of
The McGraw-Hill
Companies, Inc. The Series is not sponsored, endorsed, sold or promoted by
S&P or The McGraw-Hill Companies, Inc.
[Page 17]
In an effort to increase returns, the Series may engage in various
investment techniques, such as options and futures
transactions. For a discussion of the investment techniques and their related
risks, see "Investment Considerations and Risks" and "Appendix-Investment
Techniques" below and "Investment Objectives and Management
Policies-Management Policies" in the Statement of Additional Information.
INTERNATIONAL VALUE PORTFOLIO - The International Value Portfolio is
a diversified portfolio, the investment objective of which is long-term
capital growth. The Series anticipates that at least 65% of the value of its
total assets (except when maintaining a temporary defensive position) will be
invested in equity securities principally of foreign issuers which would be
characterized as "value" companies according to criteria established by The
Dreyfus Corporation. Under normal market conditions, the Series expects that
substantially all of its assets will be invested in securities of foreign
issuers. While there are no prescribed limits on geographic asset
distribution outside the United States, the Series ordinarily will seek to
invest its assets in not less than three foreign countries. The Series'
securities selections generally will be made without regard to an issuer's
market capitalization. Equity securities consist of common stocks,
convertible securities and preferred stocks.

The Series' investment approach is value-oriented, research-driven
and risk adverse. To manage the Series, The Dreyfus Corporation classifies
issuers as "growth" or "value" companies. In general, The Dreyfus Corporation
believes that companies with relatively low price to book ratios, low price
to earnings ratios or higher than average dividend payments in relation to
price should be classified as value companies. Alternatively, companies which
have above average earnings or sales growth and retention of earnings and
command higher price to earnings ratios fit the classic growth description.
In addition, The Dreyfus Corporation intends to consider broader measures of
value, including operating return characteristics, overall financial health
and positive changes in business momentum. This value-oriented, bottom-up
investment style is both quantitative and fundamentally based, focusing first
on stock selection then enhanced by country allocation guidelines.

The Series may invest, to a limited extent, in debt securities issued
by foreign governments and securities issued by closed-end investment
companies. While seeking desirable investments, the Series may invest in
Money Market Instruments. Under normal market conditions, the Series does not
expect to have a substantial portion of its assets invested in Money Market
Instruments. However, when The Dreyfus Corporation determines that adverse
market conditions exist, the Series may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques
and their related risks, see "Investment Considerations and Risks" and
"Appendix-Investment Techniques" below and "Investment Objectives and
Management Policies-Management Policies" in the Statement of Additional
Information.

INTERNATIONAL EQUITY PORTFOLIO - The International Equity Portfolio
is a non-diversified portfolio, the investment objective of which is capital
growth. It is a fundamental policy of the Series that at least 65% of the
value of its total assets (except when maintaining a temporary defensive
position) will be invested in equity securities of foreign issuers. Equity
securities consist of common stocks, convertible securities and preferred
stocks. The Series also may invest in debt securities of foreign issuers that
management believes, based on market conditions, the financial condition of
the issuer, general economic conditions and other relevant factors, offer
opportunities for capital growth. Under normal market conditions, it is
expected that substantially all of the Series' assets will be invested in
securities of foreign issuers. While there are no prescribed limits on
geographic asset distribution outside the United States, the Series
ordinarily will seek to invest its assets in no fewer than three foreign
countries. The Series may invest without restriction in companies in, or
governments of, developing countries. The Series may

[Page 18]
invest up to 5% of its assets in securities of companies that have
been in continuous operation for fewer than three years.

The debt securities in which the Series may invest must be rated at
least Baa by Moody's or at least BBB by S&P, Fitch or Duff or, if unrated,
deemed to be of comparable quality by The Dreyfus Corporation. Debt
securities rated Baa by Moody's or BBB by S&P, Fitch or Duff are considered
investment grade obligations which lack outstanding investment
characteristics and have speculative characteristics as well. See "Investment
Considerations and Risks-Fixed-Income Securities" below.
While seeking desirable equity investments, the Series may invest in
Money Market Instruments. Under normal market conditions, the Series does not
expect to have a substantial portion of its assets invested in Money Market
Instruments. However, when The Dreyfus Corporation determines that adverse
market conditions exist, the Series may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions and
lending portfolio securities. For a discussion of the investment techniques
and their related risks, see "Investment Considerations and Risks" and
"Appendix-Investment Techniques" below and "Investment Objectives and
Management Policies-Management Policies" in the Statement of Additional
Information.
QUALITY BOND PORTFOLIO - The Quality Bond Portfolio is a diversified
portfolio, the investment objective of which is to provide the maximum amount
of current income to the extent consistent with the preservation of capital
and the maintenance of liquidity. The Series invests principally in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities, and major U.S. banking institutions. At least 80% of the
value of the Series' net assets will consist of obligations of corporations
which, at the time of purchase by the Series, are rated at least A by Moody's
or S&P, or determined to be of comparable quality by The Dreyfus Corporation,
and of securities issued or guaranteed as to principal and interest by the
U.S. Government or its agencies or instrumentalities. The Series also may
invest in mortgage-related securities, municipal obligations and zero coupon
securities as described herein. At least 65% of the value of the Series' net
assets (except when maintaining a temporary defensive position) will be
invested in bonds, debentures and other debt instruments.
Up to 20% of the Series' assets may consist of high grade commercial
paper of U.S. issuers, certificates of deposit, time deposits and bankers'
acceptances, and corporate bonds which are rated in any category lower than A
by both Moody's and S&P. When deemed necessary for temporary defensive
purposes or in connection with loans of portfolio securities, the Series'
investment in high grade commercial paper, certificates of deposit, time
deposits and bankers' acceptances may exceed 20% of its assets, although the
Series currently does not intend to invest more than 5% of its assets in any
one of these types of instruments. Under no circumstances will the Series
invest more than 20% of its assets in corporate bonds which are rated lower
than A, but in no case lower than B, by both Moody's and S&P or are unrated.
In addition, the Series will invest no more than 5% of its assets in bonds
rated Ba or B by Moody's and BB or B by S&P. The Series may invest up to 10%
of its assets in securities of foreign issuers. See "Investment
Considerations and Risks - Foreign Securities" below.
In addition, the Series may engage in various investment techniques,
such as lending portfolio securities. For a discussion of the investment
techniques and their related risks, see "Investment Considerations and Risks"
and "Appendix-Investment Techniques-Lending Portfolio Securities" below and
"Investment Objectives and Management Policies" in the Statement of
Additional Information.
ZERO COUPON 2000 PORTFOLIO - The Zero Coupon 2000 Portfolio is a
diversified portfolio, the investment objective of which is to provide as
high an investment return as is consistent with the preservation of capital.
The Zero Coupon 2000 Portfolio invests in a portfolio consisting primarily
(but currently not anticipated to be in excess of 55% of the Series' assets)
of debt obligations issued by the U.S.
[Page 19]
Treasury that have been stripped of their unmatured interest coupons,
interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury, and receipts and certificates for stripped debt obligations
and stripped coupons, including U.S. Government trust certificates
(collectively, "Stripped Treasury Securities"). See "Appendix-Certain
Portfolio Securities-Stripped Treasury Securities." The Series also may
purchase other zero coupon securities issued by the U.S. Government and its
agencies and instrumentalities, by a variety of tax exempt issuers such as
state and local governments and their agencies and instrumentalities and by
"mixed-ownership government corporations" (collectively, "Stripped Government
Securities"). In addition, the Series may purchase zero coupon securities
issued by domestic corporations which consist of corporate debt obligations
without interest coupons, and, if available, interest coupons that have been
stripped from corporate debt obligations, and receipts and certificates for
such stripped debt obligations and stripped coupons (collectively, "Stripped
Corporate Securities"). Stripped Corporate Securities held by the Series will
be rated at least Baa by Moody's or BBB by S&P. In addition, the Series may
purchase stripped Eurodollar obligations, which are debt securities denominated
in U.S. dollars that are issued by foreign issuers, often guaranteed
subsidiaries of domestic corporations. The Series may invest up to 25% of its
assets in securities of foreign issuers. At the present time, the Series does
not intend to invest more than 20% of its assets in securities of foreign
issuers. See "Investment Considerations and Risks - Foreign Securities." To
the extent that a liquid secondary market is not available for Stripped
Treasury Securities, Stripped Government Securities, Stripped Corporate
Securities or stripped Eurodollar obligations, the Series will invest no more
than 15% of its net assets in such securities and in other securities that
are illiquid. For a further discussion concerning stripped securities,
including stripped Eurodollar obligations, see "Investment Considerations and
Risks-Special Considerations Relating to Stripped Securities" below.
Stripped Treasury Securities, Stripped Government Securities,
Stripped Corporate Securities and stripped Eurodollar obligations are
referred to collectively herein as "Stripped Securities." The Zero Coupon
2000 Portfolio is so designated because at least 65% of the value of the
Series' assets will consist of portfolio securities which will mature on or
about December 31, 2000.
In addition to investing at least 65% of its net assets in Stripped
Securities, the Series will purchase interest-bearing U.S. Government
securities and other Money Market Instruments held for the purpose of
providing income with which to pay the expenses of the Series and to provide
funds with which to meet redemption requests.
There can be no assurance that the Series' objective can be met if
Series shares are redeemed prior to maturity of the underlying Stripped
Securities because market prices of the Stripped Securities before maturity
will vary with changes in interest rates. Stripped Securities, including
stripped Eurodollar obligations, do not make any periodic payments of
interest prior to maturity and the stripping of the interest coupons causes
the Stripped Securities to be offered at a substantial (or "deep") discount
from their face amounts. The market value of Stripped Securities, and
therefore of the shares of the Series, will fluctuate with changes in
interest rates and other factors and may be subject to greater fluctuations
in response to changing interest rates than would a fund consisting of debt
obligations of comparable maturities that pay interest currently. The amount
of fluctuation increases with a longer period to maturity.
On December 31, 2000, the maturity date for the Zero Coupon 2000
Portfolio, the portfolio will be liquidated. Some of the Series' portfolio
securities may mature up to several months earlier than the planned maturity
date of the Series. Attempts will be made to match the maturity dates of the
portfolio assets with the Series' maturity date as closely as possible, but
securities may be purchased with earlier maturities where additional revenue
for the Series may be achieved by such purchases. Prior to December 31, 2000,
shareholders will be informed of the liquidation of the Series and will be
offered the opportunity to exchange their investment upon maturity for
another Series of the Fund. In the event the Zero Coupon 2000 Portfolio has
not received instructions from shareholders as to the
dispo-
[Page 20]
sition of funds upon maturity of the Series, such funds will be
invested automatically in the Money Market Portfolio.
In addition, the Series may engage in various investment techniques,
such as options and futures transactions and lending portfolio securities.
For a discussion of the investment techniques and their related risks, see
"Investment Considerations and Risks" and "Appendix-Investment Techniques"
below and "Investment Objectives and Management Policies-Management Policies"
in the Statement of Additional Information.
LIMITED TERM HIGH INCOME PORTFOLIO-The Limited Term High Income
Portfolio is a diversified portfolio, the investment objective of which is to
maximize total return, consisting of capital appreciation and current income.
Under normal market conditions, the Series will invest at least 65% of the
value of its net assets in bonds, debentures, notes and other debt
instruments rated below investment grade, or, if unrated, determined by The
Dreyfus Corporation to be of comparable quality. The securities in which the
Series invests also include mortgage-related securities, asset-backed
securities, zero coupon securities, municipal obligations, preferred stock,
convertible debt obligations and convertible preferred stock. The issuers of
such securities may include domestic and foreign corporations, partnerships,
trusts or similar entities, and governmental entities or their political
subdivisions, agencies or instrumentalities. The Series may invest in
companies in, or governments of, developing countries.
Under normal market conditions, the Series will invest in a portfolio
of securities that has an effective duration of three and one-half years or
less. As a measure of a fixed-income security's cash flow, duration is an
alternative to the concept of "term to maturity" in assessing the price
volatility associated with changes in interest rates. Generally, the longer
the duration, the more volatility an investor should expect. For example, the
market price of a bond with a duration of two years would be expected to
decline 2% if interest rates rose 1%. Conversely, the market price of the
same bond would be expected to increase 2% if interest rates fell 1%. The
market price of a bond with a duration of four years would be expected to
increase or decline twice as much as the market price of a bond with a
two-year duration. Duration is a way of measuring a security's maturity in
terms of the average time required to receive the present value of all
interest and principal payments as opposed to its term to maturity. The
maturity of a security measures only the time until final payment is due; it
does not take account of the pattern of a security's cash flows over time,
which would include how cash flow is affected by prepayments and by changes
in interest rates. Incorporating a security's yield, coupon interest
payments, final maturity and option features into one measure, duration is
computed by determining the weighted average maturity of a bond's cash flows,
where the present values of the cash flows serve as weights. In computing the
duration of the Series, The Dreyfus Corporation will estimate the duration of
obligations that are subject to features such as prepayment or redemption by
the issuer, put options retained by the investor or other imbedded options,
taking into account the influence of interest rates on prepayments and coupon
flows. This method of computing duration is known as option-adjusted
duration.
The Series' investment in high yield debt securities may cause the
Series' share price to be highly volatile at times. Securities rated below
investment grade carry a high degree of risk and are considered speculative
by the credit rating agencies. Bond prices are inversely related to interest
rate changes; however, bond price volatility also is inversely related to
coupon. Accordingly, below investment grade debt securities may be relatively
less sensitive to interest rate changes than higher quality debt securities
of comparable maturity, because of their higher coupon. This higher coupon is
what the investor receives in return for bearing greater credit risk. The
higher credit risks associated with below investment grade debt securities
potentially can have greater affect on the value of such securities than may
be the case with higher quality issues of comparable maturity. These
securities may be particularly susceptible to economic downturns. It is
likely that an economic recession could disrupt severely the market for such
securities and may have an adverse impact on the value of such securities. In
addition, it is
[Page 21]
likely that any such economic downturn could adversely affect the
ability of the issuers of such securities to repay principal and pay interest
thereon and increase the incidence of default for such securities. See
"Investment Considerations and Risks - Lower Rated Securities" and "Appendix
- - Certain Portfolio Securities - Ratings" below for a discussion of certain
risks, and "Appendix" in the Statement of Additional Information. The Series
may hold investment grade rated debt securities (or unrated securities of
comparable quality) when the yield differential between below investment
grade and investment grade securities narrows and the risk of loss may be
reduced with only a relatively small reduction in yield. The Series also may
invest in investment grade rated debt securities when The Dreyfus Corporation
determines that a defensive investment position is appropriate in light of
market or economic conditions.
The Series may invest in Money Market Instruments. Under normal
market conditions, the Series does not expect to have a substantial portion
of its assets invested in Money Market Instruments. However, when The Dreyfus
Corporation determines that adverse market conditions exist, the Series may
adopt a temporary defensive posture and invest all of its assets in Money
Market Instruments.
In addition, the Series may engage in various investment techniques,
such as foreign currency transactions, options and futures transactions,
swaps, lending portfolio securities and short-selling. For a discussion of
the investment techniques and their related risks, see "Investment
Considerations and Risks" and "Appendix-Investment Techniques" below and
"Investment Objectives and Management Policies - Management Policies" in the
Statement of Additional Information.
BALANCED PORTFOLIO-The Balanced Portfolio is a diversified
portfolio, the investment objective of which is to provide investment results
that are greater than the total return performance of common stocks and bonds
in the aggregate, as represented by a hybrid index, 60% of which is composed
of the common stocks in the S&P 500 Index and 40% of which is composed of the
bonds in the Lehman Brothers Intermediate Government/Corporate Bond Index
(the "Intermediate Index"). The Series invests in common stocks and bonds in
proportions consistent with their expected returns and risks as determined by
The Dreyfus Corporation.
To outperform the hybrid index, The Dreyfus Corporation first employs
a disciplined valuation methodology to determine the return and risks of
common stocks and bonds. The Dreyfus Corporation considers various factors,
including an interest rate adjusted market price/earnings ratio, interest
rate spreads reflecting the term structure of interest rates, and the level
and volatility of the return premium for common stocks. The Dreyfus
Corporation then decides which asset class is relatively more attractive
based on a formal decision rule process which includes extensive research.
After developing the expected return and risks of each asset class,
The Dreyfus Corporation uses computer models designed to identify imbalances
in the pricing of common stocks and bonds. The Dreyfus Corporation then
invests the Series' assets in common stocks and bonds in proportions intended
to exploit the perceived imbalances. Under normal circumstances, the Series'
total assets will be allocated approximately 60% to common stocks and 40% to
bonds. However, the Series may invest up to 75%, and as little as 40%, of its
total assets in common stocks and up to 60%, and as little as 25%, of its
total assets in bonds, as deemed advisable by The Dreyfus Corporation.
Common stocks are selected so that, in the aggregate, the investment
characteristics and risk profile of the equity portion of the Series are
similar to the S&P 500. These characteristics include such measures as
dividend yield (before expenses), price-to-earnings ratio, "beta" (relative
volatility), return on equity, and market price-to-book value ratio. However,
while it may maintain aggregate investment characteristics similar to the S&P
500, the Series seeks to invest in individual common stocks which together
will provide a higher total return than the S&P 500. The Series will not be
operated as an index fund, and the Series' equity portion will not be limited
to stocks included in the S&P 500. Individual security selection is the
foundation upon which The Dreyfus Corporation seeks to implement the
investment objective and

[Page 22]
policies of the equity portion of the Series. The Dreyfus Corporation
collects information from diverse sources from which The Dreyfus Corporation
constructs and combines valuation models into a computerized valuation
ranking system identifying common stocks that are undervalued and should be
purchased or retained by the Series. These models include measures of changes
in earnings and relative value based on present and historical
price-to-earnings ratios, as well as dividend discount calculations. Once the
ranking of common stocks is complete, The Dreyfus Corporation's experienced
investment analysts construct the right component of the Series to resemble
in the aggregate the S&P 500 Index, but weighted toward the most attractive
stocks as determined by the valuation models.
The bond portion of the Series' portfolio ordinarily is invested in
U.S. dollar-denominated fixed-income obligations of domestic and foreign
issuers. The Series' dollar-weighted average maturity may not exceed ten
years. Investment selections are based on fundamental economic, market, and
other factors leading to valuation by sector, maturity, and quality. The
Series invests in bonds rated investment grade by Moody's, S&P or Fitch, or
if unrated, determined to be of comparable quality by The Dreyfus Corporation.
The Series will, in a prudent and orderly fashion, sell bonds whose ratings
drop below these minimum ratings.
The S&P 500 is composed of 500 common stocks which are chosen by S&P
to best capture the price performance of a large cross-section of the U.S.
publicly traded stock market.
The Intermediate Index is an index established by Lehman Brothers,
Inc. which includes fixed rate debt issues rated investment grade or higher
by Moody's, S&P or Fitch. All issues have at least one year to maturity and
an outstanding par value of at least $100 million for U.S. Government issues
and $50 million for all others. The Intermediate Index includes bonds with
maturities of up to ten years.
While seeking desirable investments, the Series may invest in Money
Market Instruments. Under normal market conditions, the Series does not
expect to have a substantial portion of its assets invested in Money Market
Instruments. However, when The Dreyfus Corporation determines that adverse
market conditions exist, the Series may adopt a temporary defensive posture
and invest all of its assets in Money Market Instruments.
The Series also may engage in various investment techniques, such as
lending portfolio securities and options and futures transactions, and may
enter into reverse repurchase agreements. For a discussion of the investment
techniques and their related risks, see "Investment Considerations and Risks"
and "Appendix-Investment Techniques" below and "Investment Objectives and
Management Policies" in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS

GENERAL - Since each Series will pursue different types of
investments, the risks of investing will vary depending on the Series
selected for investment. Before selecting a Series in which to invest, the
investor should assess the risks associated with the types of investments
made by the Series. The net asset value per share of each Series, other than
the Money Market Portfolio, should be expected to fluctuate. Investors should
consider each Series as a supplement to an overall investment program and
should invest only if they are willing to undertake the risks involved. See
"Investment Objectives and Management Policies" in the Statement of
Additional Information for a further discussion of certain risks.

EQUITY SECURITIES - (Balanced, Capital Appreciation, Disciplined
Stock, Growth and Income, International Equity, International Value, Special
Value, Small Cap and Small Company Stock Portfolios) Equity securities
fluctuate in value, often based on factors unrelated to the value of the
issuer of the securities, and such fluctuations can be pronounced. Changes in
the value of the Series' investments will result in changes in the value of
its shares and thus the Series' total return to investors.

The securities of the smaller capitalization companies in which the
Series may invest may be subject to more abrupt or erratic market movements
than larger, more established companies, because these securities typically
are traded in lower volume and the issuers typically are more subject to
changes in earnings and prospects.

[Page 23]
FIXED-INCOME SECURITIES - (All Series) Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities generally are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Certain securities that may be purchased by a Series, such as
those with interest rates that fluctuate directly or indirectly based on
multiples of a stated index, are designed to be highly sensitive to changes
in interest rates and can subject the holders thereof to extreme reductions
of yield and possibly loss of principal.
The values of fixed-income securities also may be affected by changes
in the credit rating or financial condition of the issuer. Certain securities
purchased by the Limited Term High Income, Special Value, Growth and Income,
International Equity and Quality Bond Portfolios, such as those rated Baa or
lower by Moody's and BBB or lower by S&P, Fitch and Duff, may be subject to
such risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining whether
to continue to hold the security. See "Appendix-Certain Portfolio
Securities-Ratings" below and "Appendix" in the Statement of Additional
Information.

MORTGAGE-RELATED SECURITIES - (Growth and Income, Quality Bond and
Limited Term High Income Portfolios) Mortgage-related securities are complex
derivative instruments, subject to both credit and prepayment risk, and may
be more volatile and less liquid than more traditional debt securities.
Mortgage-related securities are subject to credit risks associated with the
performance of the underlying mortgage properties. Adverse changes in
economic conditions and circumstances are more likely to have an adverse
impact on mortgage-related securities secured by loans on certain types of
commercial properties than on those secured by loans on residential
properties. In addition, these securities are subject to prepayment risk,
although commercial mortgages typically have shorter maturities than
residential mortgages and prepayment protection features. Some
mortgage-related securities have structures that make their reactions to
interest rate changes and other factors difficult to predict, making their
value highly volatile. See "Appendix-Certain Portfolio
Securities-Mortgage-Related Securities."

SPECIAL CONSIDERATIONS RELATING TO STRIPPED SECURITIES - (Zero
Coupon 2000 Portfolio and, to a limited extent, all other Series) A Stripped
Security is a debt obligation that does not entitle the holder to any
periodic payments of interest prior to maturity and therefore is issued and
traded at a discount from its face amount. The discount from face value at
which Stripped Securities are purchased varies depending on the time
remaining until maturity, prevailing interest rates, the liquidity of the
security and the perceived credit quality of the issuer. Because the discount
from face value is known at the time of investment, investors holding
Stripped Securities until maturity know the total amount of their investment
return at the time of investment. In contrast, a portion of the total
realized return from conventional interest-paying obligations comes from the
reinvestment of periodic interest. Since the rate to be earned on these
reinvestments may be higher or lower than the rate quoted on the
interest-paying obligations at the time of the original purchase, the
investment's total return is uncertain even for investors holding the
securities to their maturity. This uncertainty is commonly referred to as
reinvestment risk and can have a significant impact on total realized
investment return. With Stripped Securities, however, there are no cash
distributions to reinvest, so investors bear no reinvestment risk if they
hold the Stripped Securities to maturity.
Stripped Securities can be sold prior to their due date in the
secondary market at their then prevailing market value, which depends
primarily on the time remaining to maturity, prevailing levels of interest
rates and the perceived credit quality of the issuer, which may be more or
less than the securities' value. The market prices of Stripped Securities are
generally more volatile than the market prices of securities that pay
interest periodically and, accordingly, are likely to respond to a greater
degree to changes in interest rates than do other debt obligations having
similar maturities and credit quality characteristics. As a result, the net
asset value of shares of the Zero Coupon 2000 Portfolio may fluctuate over a
greater
[Page 24]
range than shares of other mutual funds that invest in obligations of
the U.S. Government or corporations having similar maturities but that make
current distributions of interest.
As an open-end investment company, the Zero Coupon 2000 Portfolio
will be issuing new shares and will be required to redeem its shares upon the
request of any shareholder at the net asset value next determined after
receipt of the request. However, because of the price volatility of Stripped
Securities prior to maturity, a shareholder who redeems shares may realize an
amount that is less or greater than the entire amount initially invested.
Accordingly, the Zero Coupon 2000 Portfolio may not be appropriate for
investors that expect to have a current need for income from the investment
or wish to liquidate their investment prior to December 31, 2000.
Each year the Zero Coupon 2000 Portfolio will be required to accrue
an increasing amount of income on its Stripped Securities. To maintain its
tax status as a regulated investment company and to avoid imposition of
excise taxes, however, the Zero Coupon 2000 Portfolio and any other Series
that invests in Stripped Securities will be required to distribute dividends
equal to substantially all of its net investment income, including the
accrued income, derived from its Stripped Securities for which it receives no
payments in cash prior to their maturity.
The Series cannot assure that it will be able to achieve a certain
level of return due to the possible necessity of having to sell certain
Stripped Securities to pay expenses or dividends or to meet redemptions at
times and at prices that might be disadvantageous, or, alternatively, to
invest assets received from new purchases at prevailing interest rates, which
would expose the Series to reinvestment risk. In addition, no assurance can
be given as to the liquidity of the market for certain of these securities.
Determination as to the liquidity of such securities will be made in
accordance with guidelines established by the Fund's Board. In accordance
with such guidelines, The Dreyfus Corporation will monitor the Series'
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.

LOWER RATED SECURITIES -(Growth and Income, Limited Term High
Income, Special Value, Quality Bond and, to a limited extent, Small Cap
Portfolios) The Limited Term High Income Portfolio invests primarily, and
each other such Series may invest a portion of its assets, in higher yielding
(and, therefore, higher risk) debt securities (convertible debt securities
with respect to the Growth and Income Portfolio) such as those rated Ba by
Moody's or BB by S&P, Fitch or Duff, or as low as those rated B by Moody's,
S&P, Fitch or Duff in the case of the Quality Bond Portfolio, or as low as
those rated Caa by Moody's or CCC by S&P, Fitch or Duff in the case of the
Growth and Income Portfolio, or as low as the lowest rating assigned by
Moody's, S&P, Fitch or Duff in the case of the Limited Term High Income,
Special Value and Small Cap Portfolios (commonly known as junk bonds). They
may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated
fixed-income securities. The retail secondary market for these securities may
be less liquid than that of higher rated securities; adverse conditions could
make it difficult at times for the Series to sell certain securities or could
result in lower prices than those used in calculating the Series' net asset
value. See "Appendix - Certain Portfolio Securities - Ratings."

FOREIGN SECURITIES - (All Series) Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable U.S. issuers. Similarly, volume and liquidity in
most foreign securities markets are less than in the United States and, at
times, volatility of price can be greater than in the United States.
Because evidences of ownership of such securities usually are held
outside the United States, the Series will be subject to additional risks
which include possible adverse political and economic developments, seizure
or nationalization of foreign deposits and adoption of governmental
restrictions which might adversely affect or restrict the payment of
principal and interest on the foreign securities to investors located outside
the country of the issuer, whether from currency blockage or otherwise.

[Page 25]
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Series have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have
adverse effects on the economies and securities markets of certain of these
countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations.
The percentage of a Series' assets which may be invested in foreign
securities as noted above is not a fundamental policy and may be changed at
any time without shareholder approval.

FOREIGN CURRENCY TRANSACTIONS - (Capital Appreciation, Growth and
Income, International Equity, International Value, Limited Term High Income,
Special Value, Small Cap and Small Company Stock Portfolios) Currency
exchange rates may fluctuate significantly over short periods of time. They
generally are determined by the forces of supply and demand in the foreign
exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates
also can be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad. See
"Appendix-Investment Techniques-Foreign Currency Transactions."

USE OF DERIVATIVES - (Balanced, Disciplined Stock, Growth and
Income, International Value, International Equity, Limited Term High Income,
Special Value, Quality Bond, Small Company Stock and Zero Coupon 2000
Portfolios) These Series may invest in derivatives ("Derivatives"). These are
financial instruments which derive their performance, at least in part, from
the performance of an underlying asset, index or interest rate. The
Derivatives the Series may use include options and futures (except in the
case of the Quality Bond Portfolio) and, in the case of the Growth and Income
and Quality Bond Portfolios, mortgage-related securities, and, in the case of
the Limited Term High Income Portfolio, mortgage-related securities,
asset-backed securities and swaps. While Derivatives can be used effectively
in furtherance of the Series' investment objective, under certain market
conditions, they can increase the volatility of the Series' net asset value,
decrease the liquidity of the Series' portfolio and make more difficult the
accurate pricing of the Series' portfolio. See "Appendix-Investment
Techniques-Use of Derivatives" below, and "Investment Objectives and
Management Policies-Management Policies-Derivatives" in the Statement of
Additional Information.

BANK SECURITIES - (Money Market Portfolio) To the extent the Money
Market Portfolio's investments are concentrated in the banking industry, the
Series will have correspondingly greater exposure to the risk factors which
are characteristic of such investments. Sustained increases in interest rates
can adversely affect the availability or liquidity and cost of capital funds
for a bank's lending activities, and a deterioration in general economic
conditions could increase the exposure to credit losses. In addition, the
value of and the investment return on the Money Market Portfolio's shares could
be affected by economic or regulatory developments in or related to the
banking industry, and competition within the banking industry as well as with
other types of financial institutions. The Money Market Portfolio, however,
will seek to minimize its exposure to such risks by investing only in debt
securities which are determined to be of high quality.
MUNICIPAL LEASE/PURCHASE OBLIGATIONS - (Growth and Income, Limited
Term High Income and Quality Bond Portfolios) Certain municipal
lease/purchase obligations in which the Series may invest may contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease
[Page 26]
payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease/purchase
obligations are secured by the leased property, disposition of the leased
property in the event of foreclosure might prove difficult. In evaluating the
credit quality of a municipal lease/purchase obligation that is unrated, The
Dreyfus Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.

PORTFOLIO TURNOVER - (All Series) No Series will consider portfolio
turnover to be a limiting factor in making investment decisions. Under normal
market conditions, the portfolio turnover rates are anticipated to exceed
100% for the Limited Term High Income, Special Value and Small Cap Portfolios,
to be less than 100% for the Balanced (for both common stock and bond
portions of its portfolio), Capital Appreciation, Disciplined Stock and Small
Company Stock Portfolios, to be less than 150% for the Zero Coupon 2000,
International Value and International Equity Portfolios and to be less than
300% for the Growth and Income and Quality Bond Portfolios. A turnover rate
of 100% is equivalent to the Series buying and selling all of the securities
in its portfolio once in the course of a year. Higher portfolio turnover
rates are likely to result in comparatively greater brokerage commissions and
transaction costs. In addition, short-term gains realized from portfolio
transactions are taxable to shareholders as ordinary income. The Money Market
Portfolio may have a high portfolio turnover, but that should not adversely
affect the Series since it (as is the case for the Quality Bond and Zero
Coupon 2000 Portfolios) usually does not pay brokerage commissions when it
purchases short-term debt obligations.

NON-DIVERSIFIED PORTFOLIOS - (Growth and Income and International
Equity Portfolios) The Growth and Income and International Equity Portfolios
are classified as "non-diversified" investment companies, which means that
the proportion of such Series' assets that may be invested in the securities
of a single issuer is not limited by the 1940 Act. A "diversified" investment
company is required by the 1940 Act generally, with respect to 75% of its
total assets, to invest not more than 5% of such assets in the securities of
a single issuer. Since a relatively high percentage of each of these Series'
assets may be invested in the securities of a limited number of issuers, some
of which may be within the same industry, the Series' portfolio may be more
sensitive to changes in the market value of a single issuer or industry.
However, to meet Federal tax requirements, at the close of each quarter no
Series may have more than 25% of its total assets invested in any one issuer
and, with respect to 50% of total assets, more than 5% of its total assets
invested in any one issuer. These limitations do not apply to U.S. Government
securities.
STATE INSURANCE REGULATION - (All Series) The Fund is intended to be
a funding vehicle for VA contracts and VLI policies to be offered by
Participating Insurance Companies and will seek to be offered in as many
jurisdictions as possible. Certain states have regulations concerning
concentration of investments, purchase and sale of futures contracts and short
sales of securities, among other techniques. If applied to the Fund, each
Series may be limited in its ability to engage in such techniques and to
manage its portfolio with the flexibility provided herein. It is the Fund's
intention that each Series operate in material compliance with current
insurance laws and regulations, as applied, in each jurisdiction in which the
Series is offered.
SIMULTANEOUS INVESTMENT BY OTHER SERIES OR FUNDS - (All Series)
Investment decisions for each Series are made independently from those of the
other Series and investment companies managed by The Dreyfus Corporation
(and, where applicable, the Series' sub-investment adviser). If, however,
such other Series or investment companies desire to invest in, or dispose of,
the same securities as the Series, available investments or opportunities for
sales will be allocated equitably to each. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by a
Series or the price paid or received by a Series.

[Page 27]
MANAGEMENT OF THE FUND

INVESTMENT ADVISER - The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of July 31, 1997, The Dreyfus Corporation managed
or administered approximately $92 billion in assets for approximately 1.7
million investor accounts nationwide.

The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under an Investment Advisory Agreement with
the Fund, subject to the authority of the Fund's Board in accordance with
Massachusetts law.

Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$286 billion in assets as of June 30, 1997, including approximately $94
billion in proprietary mutual fund assets. As of June 30, 1997, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.306 trillion in assets
including approximately $63 billion in mutual fund assets.

In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. Brokerage transactions for the Fund may
be conducted through Dreyfus Investment Services Corporation, an affiliate of
The Dreyfus Corporation, in accordance with procedures adopted by the Fund's
Board. See "Portfolio Transactions" in the Statement of Additional
Information.
The Dreyfus Corporation, from time to time, may make payments from
its own assets to Participating Insurance Companies in connection with the
provision of certain administrative services to one or more Series and/or to
purchasers of VA contracts or VLI policies.
The primary portfolio managers of the Series are as follows:

BALANCED PORTFOLIO - Ron Gala and Laurie Carroll. Mr. Gala has
managed the equity portion of the Series since the Series commenced
operations. Mr. Gala is a Vice President and portfolio manager for Mellon
Bank, N.A. and a portfolio manager for Mellon Equity Associates, an affiliate
of The Dreyfus Corporation. Mr. Gala also is responsible for Mellon Equity
Associates' asset allocation. Mr. Gala has been employed by Mellon Bank, N.A.
in various capacities since 1982. Ms. Carroll has managed the fixed-income
portion of the Series since the Series commenced operations. Ms. Carroll is a
Vice President and portfolio manager at Mellon Bank, N.A. Ms. Carroll has
been employed by Mellon Bank, N.A. since 1986. Mr. Gala and Ms. Carroll have
been employed by The Dreyfus Corporation as portfolio managers since October
1994.

CAPITAL APPRECIATION PORTFOLIO - Fayez Sarofim. He has been the
Series' primary portfolio manager since the Series commenced operations and
has been employed by Sarofim since 1958.

GROWTH AND INCOME PORTFOLIO - Douglas D. Ramos. He has been the
Series' primary portfolio manager and has been employed by The Dreyfus
Corporation since July 1997. For more than five years prior thereto, Mr.
Ramos was employed by Loomis, Sayles & Company, L.P., most recently serving
as a Senior Partner and Investment Counselor.

[Page 28]
LIMITED TERM HIGH INCOME PORTFOLIO - Roger King. He has been the
Series' primary portfolio manager since the Series commenced operations and
has been employed by The Dreyfus Corporation since February 1996. Prior
thereto, Mr. King was a Vice President of High Yield Research and, most recent
ly, director of High Yield Research at Citibank Securities, Inc.

SPECIAL VALUE PORTFOLIO - Timothy M. Ghriskey. He has been the
Series' primary portfolio manager since January 1, 1997. Mr. Ghriskey has
been employed by The Dreyfus Corporation since July 1995. For more than five
years prior thereto, he was Vice President and Associate Managing Partner of
Loomis, Sayles & Company, L.P.

SMALL CAP PORTFOLIO - Hilary R. Woods and Paul Kandel. Ms. Woods and
Mr. Kandel have been the Series' primary portfolio managers since October
1996. Ms. Woods and Mr. Kandel have been employed by The Dreyfus Corporation
since 1987 and 1994, respectively. Prior to joining The Dreyfus Corporation,
Mr. Kandel was a Manager at Ark Asset Management.

SMALL COMPANY STOCK PORTFOLIO - James Wadsworth. He has been the
Series' primary portfolio manager since the Series commenced operations. In
addition to being a portfolio manager with The Dreyfus Corporation, Mr.
Wadsworth also has been employed by Laurel Capital Advisors, an affiliate of
The Dreyfus Corporation, since October 1990, and has been Chief Investment
Officer of Laurel Capital Advisors since June 1994. Mr. Wadsworth also is a
First Vice President of Mellon, where he has been employed since 1977.
DISCIPLINED STOCK PORTFOLIO - Bert Mullins. He has been the Series'
primary portfolio manager since the Series commenced operations, and has been
employed by The Dreyfus Corporation since October 1994. In addition to being
a portfolio manager with The Dreyfus Corporation, Mr. Mullins also has been
employed by Laurel Capital Advisors, an affiliate of The Dreyfus Corporation,
since October 1990. Mr. Mullins also is a Vice President, Portfolio Manager
and Senior Security Analyst of Mellon, where he has been employed since 1966.
INTERNATIONAL VALUE PORTFOLIO - Sandor Cseh. He has been the Series'
primary portfolio manager since the Series commenced operations and has been
employed by The Dreyfus Corporation since May 1996 and by The Boston Company
Asset Management, Inc., an affiliate of The Dreyfus Corporation, or its
predecessor since October 1994. Prior to joining The Boston Company Asset
Management, Inc., Mr. Cseh was President of Cseh International & Associates
Inc., the international money management division of Cashman, Farrell &
Association, and was a securities analyst with several banks.
INTERNATIONAL EQUITY PORTFOLIO - Ronald Chapman. He has been the
Series' primary portfolio manager since April 1996 and has been employed by
The Dreyfus Corporation since January 1996. Prior thereto, Mr. Chapman served
for ten years as Vice President of the Global Strategy and Management Group
for Northern Trust Company.
QUALITY BOND PORTFOLIO - Investment decisions are made by the
Taxable Fixed-Income Committee of The Dreyfus Corporation, and no person is
primarily responsible for making recommendations to that committee.

ZERO COUPON 2000 PORTFOLIO - Gerald E. Thunelius. He has been the
Series' primary portfolio manager since March 1997 and a portfolio manager of
the Series since June 1994. He has been employed by The Dreyfus Corporation
since September 1989.

Under the terms of the Investment Advisory Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate set
forth below as a percentage of the relevant Series' average daily net assets.
The effective annual rate of the monthly investment advisory fee the Fund
paid The Dreyfus Corporation pursuant to any undertaking in effect for the
fiscal year ended December 31, 1996 (from commencement of operations on April
30, 1997 and May 1, 1997 through August 31, 1997 with respect to Limited Term
High Income Portfolio and Balanced Portfolio, respectively) as a percentage
of the relevant Series' average daily net assets also is set forth below:

[Page 29]
ANNUAL RATE OF EFFECTIVE ANNUAL
INVESTMENT ADVISORY RATE OF INVESTMENT
NAME OF SERIES FEE PAYABLE ADVISORY FEE PAID
---------------- ------------------ ------------------
<S> <C> <C>

Money Market Portfolio .50% .50%
Growth and Income Portfolio .75% .75%
Special Value Portfolio .75% .375%*
Small Cap Portfolio .75% .75%
Small Company Stock Portfolio .75% .47%
Disciplined Stock Portfolio .75% .52%
International Value Portfolio 1.00% .50%
International Equity Portfolio .75% .75%
Quality Bond Portfolio .65% .65%
Zero Coupon 2000 Portfolio .45% .45%
Balanced Portfolio .75% .75%
Limited Term High Income Portfolio .65% .52%
Capital Appreciation Portfolio .55%

</TABLE>

0 to $150 million of average daily net assets .55%
$150 million to $300 million of average daily net assets .50%
$300 million or more of average daily net assets .375%

*Prior to termination of the Sub-Investment Advisory Agreement with
Comstock Partners, Inc. on December 31, 1996, as set
forth below, the Fund paid The Dreyfus Corporation and Comstock Partners,
Inc. advisory fees each at the annual rate of .375% of the Series'
average daily net assets.

SUB-INVESTMENT ADVISERS - With respect to the Capital Appreciation
Portfolio, Sarofim, a registered investment adviser located at Two Houston
Center, Suite 2907, Houston, Texas 77010, serves as the Series'
sub-investment adviser. Sarofim was formed in 1958 and, as of June 30, 1997,
managed approximately $2.05 billion in assets for three other investment
companies and provided investment advisory services to discretionary accounts
having aggregate assets of approximately $38.7 billion. Sarofim, subject to
the supervision and approval of The Dreyfus Corporation, provides investment
advisory assistance and the day-to-day management of the Capital Appreciation
Portfolio, as well as investment research and statistical information, under
a Sub-Investment Advisory Agreement with the Fund, subject to the overall
authority of the Fund's Board in accordance with Massachusetts law. Under the
terms of the Sub-Investment Advisory Agreement with respect to the Capital
Appreciation Portfolio, the Fund has agreed to pay Sarofim a monthly fee at
the annual rate set forth below as a percentage of the Capital Appreciation
Portfolio's average daily net assets. The effective annual rate of the
monthly sub-investment advisory fee the Fund paid Sarofim for the fiscal year
ended December 31, 1996, as a percentage of the Capital Appreciation
Portfolio's average daily net assets also is set forth below:

EFFECTIVE ANNUAL RATE OF
ANNUAL RATE OF SUB-INVESTMENT SUB-INVESTMENT
CAPITAL APPRECIATION PORTFOLIO ADVISORY FEE PAYABLE ADVISORY FEE PAID
---------------------------- ---------------------------- -------------------------
<S> <C> <C>
0 to $150 million of average daily net assets .20% .20%
$150 million to $300 million of average daily net assets .25%
$300 million or more of average daily net assets .375%
</TABLE>

With respect to the Special Value Portfolio, from August 31, 1990
(commencement of operations) through December 31, 1996,
Comstock Partners, Inc. ("Comstock Partners"), a registered investment
adviser located at 10 Exchange Place, Jersey City, New Jersey 07302, served
as the Series' sub-investment adviser. Comstock Partners, subject to the
supervision and approval of The Dreyfus Corporation, provided
[Page 30]
investment advisory assistance and the day-to-day management of the
Special Value Portfolio, as well as research and statistical information
under a Sub-Investment Advisory Agreement with the Fund, subject to the
overall authority of the Fund's Board in accordance with Massachusetts law.
For the fiscal year ended December 31, 1996, the Fund paid Comstock Partners
a monthly sub-investment advisory fee at the annual rate of .375 of 1% of the
value of the Special Value Portfolio's average daily net assets. Effective
December 31, 1996, the Sub-Investment Advisory Agreement with Comstock
Partners was terminated.

With respect to the International Equity Portfolio, from May 2, 1994
(commencement of operations) through March 31, 1996, The Dreyfus Corporation
engaged M&G Investment Management Limited ("M&G"), a registered investment
adviser located at Three Quays Tower Hill, London EC3R 6BQ, England, to serve
as the Series' sub-investment adviser. For the period January 1, 1996 through
March 31, 1996, The Dreyfus Corporation paid M&G a monthly sub-investment
advisory fee at the effective annual rate of .30 of 1% of the value of the
International Equity Portfolio's average daily net assets. Effective April 1,
1996, the Sub-Investment Advisory Agreement between The Dreyfus Corporation
and M&G was terminated.
EXPENSES - All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by The Dreyfus
Corporation or a sub-investment adviser. The expenses borne by the Fund
include: organizational costs, taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
The Dreyfus Corporation or any sub-investment adviser or their affiliates,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing services, costs of
maintaining the Fund's existence, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders, costs
of shareholders' reports and meetings, and any extraordinary expenses.
Expenses attributable to a particular Series are charged against the assets
of that Series; other expenses of the Fund are allocated among the Series on
the basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Series.
From time to time, The Dreyfus Corporation (and, with respect to the
Capital Appreciation Portfolio, Sarofim) may waive receipt of its fees and/or
voluntarily assume certain expenses of a Series, which would have the effect
of lowering the expense ratio of that Series and increasing yield to
investors. The Fund will not pay The Dreyfus Corporation (or, with respect to
the Capital Appreciation Portfolio, Sarofim) at a later time for any amounts
it may waive nor will the Fund reimburse The Dreyfus Corporation (or, with
respect to the Capital Appreciation Portfolio, Sarofim) for any amounts it
may assume.
DISTRIBUTOR - The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at 60 State Street, Boston,
Massachusetts 02109. The Distributor's ultimate parent is Boston
Institutional Group, Inc. 02940-9671.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN - Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90
Washington Street, New York, New York 10286, serves as the Fund's Custodian
with respect to the International Equity, International Value, Special Value
and Money Market Portfolios. Mellon Bank, N.A., One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's Custodian with respect
to the Balanced, Capital Appreciation, Growth and Income, Limited Term High
Income, Quality Bond, Small Cap, Zero Coupon 2000, Small Company Stock and
Disciplined Stock Portfolios.

[Page 31]
HOW TO BUY SHARES
FUND SHARES CURRENTLY ARE OFFERED ONLY TO SEPARATE ACCOUNTS OF
PARTICIPATING INSURANCE COMPANIES. INDIVIDUALS MAY NOT PLACE PURCHASE ORDERS
DIRECTLY WITH THE FUND.
Separate accounts of the Participating Insurance Companies place
orders based on, among other things, the amount of premium payments to be
invested pursuant to VA contracts and VLI policies. See the prospectus of
the separate account of the Participating Insurance Company for more
information on the purchase of Fund shares and with respect to the
availability for investment in specific portfolios of the Fund. The Fund does
not issue share certificates.
Purchase orders from separate accounts based on premiums and
transaction requests received by the Participating Insurance Company on a
given business day in accordance with procedures established by the
Participating Insurance Company will be effected at the net asset value of
the applicable Series determined on such business day if the orders are
received by the Fund in proper form and in accordance with applicable
requirements on the next business day and Federal Funds (monies of member
banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) in the net amount of such orders are received by the
Fund on the next business day in accordance with applicable requirements. It
is each Participating Insurance Company's responsibility to properly transmit
purchase orders and Federal Funds in accordance with applicable requirements.
VA contract holders and VLI policy holders should refer to the prospectus for
their contracts or policies in this regard.
Fund shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day that the New York
Stock Exchange is open for business. For purposes of determining net asset
value, options and futures will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset value per
share is computed by dividing the value of the net assets of each Series
(i.e., the value of its assets less liabilities) by the total number of such
Series' shares outstanding. The Limited Term High Income, Zero Coupon 2000
and Quality Bond Portfolios' investments are valued each business day by an
independent pricing service approved by the Fund's Board and are valued at
fair value as determined by the pricing service. The pricing service's
procedures are reviewed under the general supervision of the Fund's Board.
The Money Market Portfolio uses the amortized cost method of valuing its
investments. The Balanced, Disciplined Stock, Special Value, Capital
Appreciation, International Equity, International Value, Growth and Income,
Small Cap and Small Company Stock Portfolios' investments are valued based on
market value, or where market quotations are not readily available, based on
fair value as determined in good faith by the Fund's Board. For further
information regarding the methods employed in valuing each Series'
investments, see "Determination of Net Asset Value" in the Statement of
Additional Information.
HOW TO REDEEM SHARES
Series shares may be redeemed at any time by the separate accounts of
the Participating Insurance Companies. INDIVIDUALS MAY NOT PLACE REDEMPTION
ORDERS DIRECTLY WITH THE FUND. Redemption requests from separate accounts
based on premiums and transaction requests received by the Participating
Insurance Company on a given business day in accordance with procedures
established by the Participating Insurance Company will be effected at the
net asset value of the applicable Series determined on such business day if
the requests are received by the Fund in proper form and in accordance with
applicable requirements on the next business day. It is each Participating
Insurance Company's responsibility to properly transmit redemption requests
in accordance with applicable requirements. VA contract holders and VLI
policy holders should consult their Participating Insurance Company in this
regard. The value of the shares redeemed may be more or less than their
original cost, depending on the Series' then-current net asset value. No
charges are imposed by the Fund when shares are redeemed.

[Page 32]
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
Should any conflict between VA contract holders and VLI policy
holders arise which would require that a substantial amount of net assets be
withdrawn, orderly portfolio management could be disrupted to the potential
detriment of such contract holders and policy holders.
DIVIDENDS, DISTRIBUTIONS AND TAXES
MONEY MARKET PORTFOLIO - Declares dividends from net investment
income on each day that the Fund determines its net asset value. Dividends
usually are paid on the last calendar day of each month. The earnings for
Saturdays, Sundays and holidays are declared as dividends on the next
business day.
ZERO COUPON 2000 AND QUALITY BOND PORTFOLIOS - Declare and pay
dividends from net investment income monthly.
BALANCED, GROWTH AND INCOME AND LIMITED TERM HIGH INCOME PORTFOLIOS -
Declare and pay dividends from net investment income quarterly.

CAPITAL APPRECIATION, DISCIPLINED STOCK, INTERNATIONAL EQUITY,
INTERNATIONAL VALUE, SPECIAL VALUE, SMALL CAP AND SMALL COMPANY STOCK
PORTFOLIOS - Declare and pay dividends from net investment income annually.

APPLICABLE TO ALL SERIES - Under the Internal Revenue Code of 1986,
as amended (the "Code"), each Series of the Fund is treated as a separate
entity for purposes of qualification and taxation as a regulated investment
company. Each Series will make distributions from net realized securities
gains, if any, once a year, but may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the 1940 Act. No Series will
make distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. Dividends are
automatically reinvested in additional shares at net asset value unless
payment in cash is elected. Shares begin earning dividends on the day the
purchase order is effective. If all shares in an account are redeemed at any
time, all dividends to which the shareholder is entitled will be paid along
with the proceeds of the redemption. An omnibus accountholder may indicate in
a partial redemption request that a portion of any accrued dividends to which
such account is entitled belongs to an underlying accountholder who has
redeemed all shares in his or her account, and such portion of the accrued
dividends will be paid to the accountholder along with the proceeds of the
redemption. All expenses are accrued daily and deducted before declaration of
dividends to investors.
Section 817(h) of the Code requires that the investments of a
segregated asset account of an insurance company be "adequately diversified"
as provided therein or in accordance with U.S. Treasury Regulations in order
for the account to serve as the basis for VA contracts or VLI policies.
Section 817(h) and the U.S. Treasury Regulations issued thereunder provide
the manner in which a segregated asset account will treat investments in a
regulated investment company for purposes of the diversification requirements.
If a Series satisfies certain conditions, a segregated asset account owning
shares of the Series will be treated as owning multiple investments
consisting of the account's proportionate share of each of the assets of the
Series. Each Series intends to satisfy the requisite conditions so that the
shares of the Series owned by a segregated asset account of a Participating
Insurance Company will be treated as multiple investments. By meeting these
and other requirements, the Participating Insurance Companies, rather than VA
contract holders or VLI holders, should be subject to tax on distributions
received with respect to Series shares. The tax treatment on distributions
made to a Participating Insurance Company will depend on the Participating
Insurance Company's tax status.
Notice as to the tax status of dividends and distributions will be
mailed to shareholders annually. Dividends from net investment income,
together with distributions of net realized short-term securities gains and
all or a portion of any gains realized from the sale or other disposition of
certain market discount
[Page 33]
bonds, generally are taxable as ordinary income whether received in
cash or reinvested in additional shares. Distributions from net realized
long-term securities gains generally are taxable as long-term capital gains
whether received in cash or reinvested in additional shares. Since the Fund's
shareholders are the Participating Insurance Companies and their separate
accounts, no discussion is included herein as to the Federal income tax
consequences to VA contract holders and VLI policy holders. For information
concerning the Federal income tax consequences to such holders, see the
prospectus for such contract or policy.
Management of the Fund believes that each Series (other than the
Balanced and Limited Term High Income Portfolios which had not commenced
operations as of December 31, 1996) has qualified for the fiscal year ended
December 31, 1996 as a "regulated investment company" under the Code. Each
Series intends to continue to so qualify if such qualification is in the best
interests of its shareholders. It is expected that each of the Balanced and
Limited Term High Income Portfolios will qualify as a "regulated investment
company" under the Code so long as such qualification is in the best
interests of its shareholders. Qualification as a regulated investment
company relieves the Series of any liability for Federal income taxes to the
extent its earnings are distributed in accordance with applicable provisions
of the Code. The Series may be subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of investment income
and capital gains. Participating Insurance Companies should consult their tax
advisers regarding specific questions as to Federal, state or local taxes.
GENERAL INFORMATION

The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated October 29, 1986, and
commenced operations on August 31, 1990. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
Each share has one vote. In accordance with current law, the Fund anticipates
that a Participating Insurance Company issuing a VA contract or VLI policy
that participates in the Fund will request voting actions from policy holders
and will vote shares in proportion to the voting instructions received. For
further information on voting rights, see the prospectus for the VA contract
or VLI policy for information in respect of voting.

The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. Before October 1, 1997, the name of Special Value
Portfolio was Managed Assets Portfolio.

To date, the Board has authorized the creation of thirteen Series of
shares. All consideration received by the Fund for shares of one of the
Series, and all assets in which such consideration is invested, will belong
to that Series (subject only to the rights of creditors of the Fund) and will
be subject to the liabilities related thereto. The income attributable to,
and the expenses of, one Series would be treated separately from those of the
other Series. The Fund has the ability to create, from time to time, new
series without shareholder approval.
Under Massachusetts law, shareholders, under certain circumstances,
could be held personally liable for the obligations of the Fund. However, the
Trust Agreement disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or a
Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Fund intends to conduct its operations in such a way so as to avoid, as
[Page 34]
far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As described under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent maintains a record of each shareholder's ownership
and will send confirmations and statements of account. Shareholder inquiries
may be made by writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale,
New York 11556-0144, or by calling 516-338-3300.
Owners of VLI policies and VA contracts issued by Participating
Insurance Companies for which shares of one or more Series are the investment
vehicle will receive from the Participating Insurance Companies unaudited
semi-annual financial statements and audited year-end financial statements.
Each report will show the investments owned by each Series and the market
values thereof as determined by the Fund's Board and will provide other
information about the Fund and its operations.

[Page 35]
APPENDIX
INVESTMENT TECHNIQUES

FOREIGN CURRENCY TRANSACTIONS - (Capital Appreciation, Growth and Income,
Limited Term High Income, Special Value, Small Company Stock, International
Equity and International Value Portfolios) Foreign currency transactions may
be entered into for a variety of purposes, including: to fix in U.S. dollars,
between trade and settlement date, the value of a security the Series has
agreed to buy or sell; to hedge the U.S. dollar value of securities the
Series already owns, particularly if it expects a decrease in the value of
the currency in which the foreign security is denominated; or to gain
exposure to the foreign currency in an attempt to realize gains.

Foreign currency transactions may involve, for example, the Series'
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Series agreeing to
exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency the Fund contracted to receive in the
exchange. The Series' success in these transactions will depend principally
on The Dreyfus Corporation's (and, where applicable, the Series'
sub-investment adviser's) ability to predict accurately the future exchange
rates between foreign currencies and the U.S. dollar.

SHORT-SELLING - (Growth and Income, Limited Term High Income, Special Value
and, to a limited extent, Small Cap Portfolios) In these transactions, the
Series sells a security it does not own in anticipation of a decline in the
market value of the security. To complete the transaction, the Series must
borrow the security to make delivery to the buyer. The Series is obligated to
replace the security borrowed by purchasing it subsequently at the market
price at the time of replacement. The price at such time may be more or less
than the price at which the security was sold by the Series, which would
result in a loss or gain, respectively.

Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Series' net assets. The Series may not sell
short the securities of any single issuer listed on a national securities
exchange to the extent of more than 5% of the value of the Series' net
assets. The Series may not make a short sale which results in the Series
having sold short in the aggregate more than 5% of the outstanding securities
of any class of an issuer.

The Growth and Income, Limited Term High Income and Special Value
Portfolios also may make, and the Small Cap Portfolio only may make, short
sales "against the box," in which the Series enters into a short sale of a
security it owns. At no time will more than 15% of the value of the Series'
net assets be in deposits on short sales against the box.

BORROWING MONEY - (All Series) Each Series is permitted to borrow to the
extent permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331\3% of the value of its total assets. Each
Series, other than the Growth and Income, Special Value and Limited Term High
Income Portfolios, currently intends to borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 15% of the value of
its total assets (including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount borrowed) at the time
the borrowing is made. While borrowings exceed 5% of the Series' total
assets, the Series will not make any additional investments. In addition, the
Balanced, Money Market and Small Company Stock Portfolios may borrow for
investment purposes on a secured basis through entering into reverse
repurchase agreements as described below.

LEVERAGE- (Growth and Income, Special Value, Limited Term High Income and,
to a limited extent, Balanced, Money Market and Small Company Stock
Portfolios) Leveraging exaggerates the effect on net asset value of any
increase or decrease in the market value of the Series' portfolio. Money
borrowed for leveraging will be limited to 331\3% of the value of the Series'
total assets. These borrowings will be subject to interest costs which may or
may not be recovered by appreciation of the securities purchased; in certain
cases, interest costs may exceed the return received on the securities
purchased. See "Forward Commitments" below.

[Page 36]
The Series may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the
Series of an underlying debt instrument in return for cash proceeds based on
a percentage of the value of the security. The Series retains the right to
receive interest and principal payments on the security. At an agreed upon
future date, the Series repurchases the security at principal plus accrued
interest. Except for these transactions, the Growth and Income and Limited
Term High Income Portfolios' borrowings generally will be unsecured.

USE OF DERIVATIVES - (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Special
Value, Quality Bond, Small Company Stock and Zero Coupon 2000 Portfolios) The
Series may invest in, or enter into, the types of Derivatives enumerated
under "Description of the Fund - Investment Considerations and Risks - Use
of Derivatives." These instruments and certain related risks are described
more specifically under "Investment Objectives and Management Policies -
Management Policies - Derivatives" in the Statement of Additional Information.

Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Series to increase or decrease
the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Series can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Series' performance.

If the Series invests in Derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Series' return
or result in a loss. The Series also could experience losses if its
Derivatives were poorly correlated with its other investments or if the
Series were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable
changes in the prices for Derivatives.

Although neither the Fund nor any Series will be a commodity pool,
certain Derivatives subject the Series to the rules of the Commodity Futures
Trading Commission which limit the extent to which the Series can invest in
such Derivatives. The Series (other than the Quality Bond Portfolio) may
invest in futures contracts and options with respect thereto for hedging
purposes without limit. However, the Series may not invest in such contracts
and options for other purposes if the sum of the amount of initial margin
deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Series' assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.

The Series (other than the Quality Bond Portfolio) may invest up to
5% of its assets, represented by the premium paid, in the purchase of call
and put options, and may write (i.e., sell) covered call and put option
contracts to the extent of 20% of the value of its net assets at the time
such option contracts are written. When required by the Securities and
Exchange Commission, the Series will set aside permissible liquid assets in a
segregated account to cover its obligations relating to its transactions in
Derivatives. To maintain this required cover, the Series may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES - (All Series) Each Series may lend securities
from its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Series
continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities which
affords the Series an opportunity to earn interest on the amount of the loan
and on the loaned securities' collateral. Loans of portfolio securities
[Page 37]
may not exceed 331\3% (20% with respect to the Special Value and Zero Coupon
2000 Portfolios and 10% with respect to the Capital Appreciation, Small Cap
and Quality Bond Portfolios) of the value of the Series' total assets, and
the Series will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. Such loans are terminable by the Series at any time upon
specified notice. The Series might experience risk of loss if the institution
with which it has engaged in a portfolio loan transaction breaches its
agreement with the Series.

FORWARD COMMITMENTS - (All Series) Each Series may purchase or sell
securities on a forward commitment, when-issued or delayed delivery basis,
which means that delivery and payment take place a number of days after the
date of the commitment to purchase or sell the securities at a predetermined
price and/or yield. Typically, no interest accrues to the purchaser until the
security is delivered. When purchasing a security on a forward commitment
basis, the Series assumes the rights and risks of ownership of the security,
including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the
Series is not required to pay for these securities until the delivery date,
these risks are in addition to the risks associated with the Series' other
investments. If the Series is fully or almost fully invested when forward
commitment purchases are outstanding, such purchases may result in a form of
leverage. Each Series may engage in forward commitments to increase its
portfolio's financial exposure to the types of securities in which it
invests. Leveraging the portfolio in this manner will increase the Series'
exposure to changes in interest rates and will increase the volatility of its
returns. A segregated account of the Series consisting of permissible liquid
assets at least equal at all times to the amount of the Series' purchase
commitments will be established and maintained at the Fund's custodian bank.
At no time will a Series have more than 331\3% of its assets committed to
purchase securities on a forward commitment basis.
CERTAIN PORTFOLIO SECURITIES

CONVERTIBLE SECURITIES - (Balanced, Capital Appreciation, Disciplined Stock,
Growth and Income, International Equity, International Value, Limited Term
High Income, Special Value, Small Cap and Small Company Stock Portfolios)
Convertible securities may be converted at either a stated price or stated
rate into underlying shares of common stock. Convertible securities have
characteristics similar to both fixed-income and equity securities.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible
securities.

WARRANTS - (Balanced, Capital Appreciation, Growth and Income, International
Equity, International Value, Special Value, Small Cap and Small Company Stock
Portfolios) A warrant is an instrument issued by a corporation which gives
the holder the right to subscribe to a specified amount of the corporation's
capital stock at a set price for a specified period of time. The Series may
invest up to 5% (2% in the case of the Special Value, Capital Appreciation
and Small Cap Portfolios) of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Series that are sold
in units with, or attached to, other securities. Included in such amount, but
not to exceed 2% of the value of the Series' net assets, may be warrants
which are not listed on the New York or American Stock Exchange.

MORTGAGE-RELATED SECURITIES - (Growth and Income, Limited Term High Income
and Quality Bond Portfolios) Mortgage-related securities are a form of
Derivative collateralized by pools of commercial or residential mortgages.
Pools of mortgage loans are assembled as securities for sale to investors by
various governmental, government-related and private organizations. These
securities may include complex instruments such as collateralized mortgage
obligations, stripped mortgage-backed securities, mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs"),
adjustable rate mortgages, real estate investment trusts ("REITs"), including
debt and preferred stock
[Page 38]
issued by REITs, as well as other real estate-related securities. The
mortgage-related securities which may be purchased include those with fixed,
floating and variable interest rates, those with interest rates that change
based on multiples of changes in a specified index of interest rates and
those with interest rates that change inversely to changes in interest rates,
as well as those that do not bear interest.

In certain instances, the credit risk associated with
mortgage-related securities can be reduced by third party guarantees or other
forms of credit support. Improved credit risk does not reduce prepayment risk
which is unrelated to the rating assigned to the mortgage-related security.
Prepayment risk can lead to fluctuations in value of the mortgage-related
security which may be pronounced. If a mortgage-related security is purchased
at a premium, all or part of the premium may be lost if there is a decline in
the market value of the security, whether resulting from changes in interest
rates or prepayments on the underlying mortgage collateral. Certain
mortgage-related securities that may be purchased by the Series, such as
inverse floating rate collateralized mortgage obligations, have coupons that
move inversely to a multiple of a specific index which may result in a form
of leverage. As with other interest-bearing securities, the prices of certain
mortgage-related securities are inversely affected by changes in interest
rates. However, although the value of a mortgage-related security may decline
when interest rates rise, the converse is not necessarily true, since in
periods of declining interest rates the mortgages underlying the security are
more likely to be prepaid. For this and other reasons, a mortgage-related
security's stated maturity may be shortened by unscheduled prepayments on the
underlying mortgages, and, therefore, it is not possible to predict
accurately the security's return to the Series. Moreover, with respect to
certain stripped mortgage-backed securities, if the underlying mortgage
securities experience greater than anticipated prepayments of principal, the
Series may fail to fully recoup its initial investment even if the securities
are rated in the highest rating category by a nationally recognized
statistical rating organization. During periods of rapidly rising interest
rates, prepayments of mortgage-related securities may occur at slower than
expected rates. Slower prepayments effectively may lengthen a
mortgage-related security's expected maturity which generally would cause the
value of such security to fluctuate more widely in response to changes in
interest rates. Were the prepayments on the Series' mortgage-related
securities to decrease broadly, the Series' effective duration, and thus
sensitivity to interest rate fluctuations, would increase.

RESIDENTIAL MORTGAGE-RELATED SECURITIES. The Series may invest in
mortgage-related securities representing participation interests in pools of
one- to four-family residential mortgage loans issued or guaranteed by
governmental agencies or instrumentalities, such as the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), and the Federal Home Loan Mortgage Corporation ("FHLMC"), or issued
by private entities. Similar to commercial mortgage-related securities,
residential mortgage-related securities have been issued using a variety of
structures, including multi-class structures featuring senior and
subordinated classes.

COMMERCIAL MORTGAGE-RELATED SECURITIES. The Series may invest in
commercial mortgage-related securities, which generally are multi-class debt
or pass-through certificates secured by mortgage loans on commercial
properties. These mortgage-related securities generally are structured to
provide protection to the senior class investors against potential losses on
the underlying mortgage loans. This protection is generally provided by
having the holders of subordinated classes of securities ("Subordinated
Securities") take the first loss if there are defaults on the underlying
commercial mortgage loans. Other protections, which may benefit all of the
classes or particular classes, may include issuer guarantees, reserve funds,
additional Subordinated Securities, cross-collateralization and over-
collateralization.

SUBORDINATED SECURITIES. The Series also may invest in Subordinated
Securities issued or sponsored by commercial banks, savings and loan
institutions, mortgage bankers, private mortgage insurance companies and
other non-governmental issuers. Subordinated Securities have no governmental
guarantee, and are subordinated in some manner as to the payment of principal
and/or interest to the holders of more senior mortgage-related securities
arising out of the same pool of mortgages. The holders of
[Page 39]
Subordinated Securities typically are compensated with a higher
stated yield than are the holders of more senior mortgage-related securities.
On the other hand, Subordinated Securities typically subject the holder to
greater risk than senior mortgage-related securities and tend to be rated in
a lower rating category, and frequently a substantially lower rating
category, than the senior mortgage-related securities issued in respect of
the same pool of mortgages. Subordinated Securities generally are likely to
be more sensitive to changes in prepayment and interest rates and the market
for such securities may be less liquid than is the case for traditional
fixed-income securities and senior mortgage-related securities.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS PASS-THROUGH
SECURITIES. Collateralized mortgage obligations or "CMOs" are multiclass
bonds backed by pools of mortgage pass-through certificates or mortgage
loans. CMOs may be collateralized by (a) pass-through certificates issued or
guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured
by the Federal Housing Administration or guaranteed by the Department of
Veterans' Affairs, (c) unsecuritized conventional mortgages, (d) other
mortgage-related securities or (e) any combination thereof.

Each class of CMOs, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be
retired substantially earlier than the stated maturities or final
distribution dates. The principal and interest on the underlying mortgages
may be allocated among the several classes of a series of a CMO in many ways.
One or more tranches of a CMO may have coupon rates which reset periodically
at a specified increment over an index, such as the London Interbank Offered
Rate ("LIBOR") (or sometimes more than one index). These floating rate CMOs
typically are issued with lifetime caps on the coupon rate thereon. The
Series also may invest in inverse floating rate CMOs. Inverse floating rate
CMOs constitute a tranche of a CMO with a coupon rate that moves in the
reverse direction to an applicable index such as the LIBOR. Accordingly, the
coupon rate thereon will increase as interest rates decrease. Inverse
floating rate CMOs are typically more volatile than fixed or floating rate
tranches of CMOs.

STRIPPED MORTGAGE-BACKED SECURITIES. The Series also may invest in
stripped mortgage-backed securities which are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or
more new securities, each with a specified percentage of the underlying
security's principal or interest payments. Mortgage securities may be
partially stripped so that each investor class received some interest and
some principal. When securities are completely stripped, however, all of the
interest is distributed to holders of one type of security, known as an
interest-only security, or IO, and all of the principal is distributed to
holders of another type of security known as a principal-only security, or
PO. Strips can be created in a pass-through structure or as tranches of a
CMO. The yields to maturity on IOs and POs are very sensitive to the rate of
principal payments (including prepayments) on the related underlying mortgage
assets. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, the Series may not fully recoup its initial
investment in IOs. Conversely, if the underlying mortgage assets experience
less than anticipated prepayments of principal, the yield on POs could be
materially and adversely affected.

REAL ESTATE INVESTMENT TRUSTS. A REIT is a corporation, or a business
trust that would otherwise be taxed as a corporation, which meets the
definitional requirements of the Code. The Code permits a qualifying REIT to
deduct dividends paid, thereby effectively eliminating corporate level
Federal income tax and making the REIT a pass-through vehicle for Federal
income tax purposes. To meet the definitional requirements of the Code, a
REIT must, among other things, invest substantially all of its assets in
interests in real estate (including mortgages and other REITs) or cash and
government securities, derive most of its income from rents from real
property or interest on loans secured by mortgages on real property, and
distribute to shareholders annually a substantial portion of its otherwise
taxable income. REITs are subject to heavy cash flow dependency, defaults by
borrowers or tenants, self-liquidation and the possibility of failing to
qualify for tax-free status under the Code or to maintain exemption from the
1940 Act.

[Page 40]
PRIVATE ENTITY SECURITIES. These mortgage-related securities are
issued by commercial banks, savings and loan institutions, mortgage bankers,
private mortgage insurance companies and other non-governmental issuers.
Timely payment of principal and interest on mortgage-related securities
backed by pools created by non-governmental issuers often is supported
partially by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance.

ASSET-BACKED SECURITIES-(Limited Term High Income and, to a limited extent,
Money Market Portfolios) Asset-backed securities are a form of Derivative.
The securitization techniques used for asset-backed securities are similar to
those used for mortgage-related securities. These securities include debt
securities and securities with debt-like characteristics. The collateral for
these securities has included home equity loans, automobile and credit card
receivables, boat loans, computer leases, airplane leases, mobile home loans,
recreational vehicle loans and hospital account receivables. The Series may
invest in these and other types of asset-backed securities that may be
developed in the future.
Asset-backed securities present certain risks that are not presented
by mortgage-related securities. Primarily, these securities may provide the
Series with a less effective security interest in the related collateral than
do mortgage-related securities. Therefore, there is the possibility that
recoveries on the underlying collateral may not, in some cases, be available
to support payments on these securities.
The asset-backed securities in which the Money Market Portfolio may
invest are securities issued by special purpose entities whose primary assets
consist of a pool of mortgages, loans, receivables or other assets. Payment
of principal and interest may depend largely on the cash flows generated by
the assets backing the securities and in certain cases, supported by letters
of credit, surety bonds or other forms of credit or liquidity enhancements.
The value of these asset-backed securities also may be affected by the
creditworthiness of the servicing agent for the pool of assets, the
originator of the loans or receivables or the financial institution providing
the credit support.
MUNICIPAL OBLIGATIONS - (Growth and Income, Limited Term High Income and
Quality Bond Portfolios) Municipal obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. Municipal obligations bear fixed,
floating or variable rates of interest. Certain municipal obligations are
subject to redemption at a date earlier than their stated maturity pursuant
to call options, which may be separated from the related municipal
obligations and purchased and sold separately. The Series also may acquire
call options on specific municipal obligations. The Series generally would
purchase these call options to protect the Series from the issuer of the
related municipal obligation redeeming, or other holder of the call option
from calling away, the municipal obligation before maturity.
While, in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain municipal obligations are taxable
obligations, offering yields comparable to, and in some cases greater than,
the yields available on other permissible Series investments. Dividends
received by shareholders on Series shares which are attributable to interest
income received by the Series from municipal obligations generally will be
subject to Federal income tax. The Series will invest in municipal obligations,
the ratings of which correspond with the ratings of other permissible Series
investments. The Series currently intends to invest no more than 25% of its
assets in municipal obligations. However, this percentage may be varied from
time to time without shareholder approval.

DEPOSITARY RECEIPTS - (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Special Value and Small Company
Stock Portfolios) The Series may invest in the securities of foreign issuers
in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") and other forms of depositary receipts. These securities
may not necessarily be denominated in the same currency as the securities
into which they may be converted. ADRs are receipts typically issued by a
United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes
referred to as
[Page 41]
Continental Depositary Receipts ("CDRs"), are receipts issued in Europe
typically by non-United States banks and trust companies that evidence
ownership of either foreign or domestic securities. Generally, ADRs in
registered form are designed for use in the United States securities markets
and EDRs and CDRs in bearer form are designed for use in Europe.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES - (All
Series) Each Series may invest in obligations issued or guaranteed by one or
more foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by The Dreyfus Corporation (and, if
applicable, the Series' sub-investment adviser) to be of comparable quality
to the other obligations in which the Series may invest. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction or development and
international banking institutions and related government agencies. Examples
include the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development Bank and
the InterAmerican Development Bank.
MONEY MARKET INSTRUMENTS - (All Series) Each Series may invest in the
following types of Money Market Instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Series buys,
and the seller agrees to repurchase, a security at a mutually agreed upon
time and price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Series' ability to dispose of the underlying
securities. The Series may enter into repurchase agreements with certain
banks or non-bank dealers.
BANK OBLIGATIONS. The Series may purchase certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations issued
by domestic banks, foreign subsidiaries or foreign branches of domestic
banks, domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign subsidiaries or foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, the Series may be
subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. See "Description of the Fund - Investment Considerations
and Risks - Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.

[Page 42]
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Series will consist only of direct obligations which,
at the time of their purchase, are (a) rated not lower than Prime-1 by
Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies
having an outstanding unsecured debt issue currently rated at least A3 by
Moody's or A- by S&P, Fitch or Duff, or (c) if unrated, determined by The
Dreyfus Corporation (and, if applicable, the Series' sub-investment adviser)
to be of comparable quality to those rated obligations which may be purchased
by the Series.
PARTICIPATION INTERESTS. The Series may purchase from financial
institutions participation interests in securities in which the Series may
invest. A participation interest gives the Series an undivided interest in
the security in the proportion that the Series' participation interest bears
to the total principal amount of the security. These instruments may have
fixed, floating or variable rates of interest with remaining maturities of 13
months or less. If the participation interest is unrated, or has been given a
rating below that which is permissible for purchase by the Series, the
participation interest will be backed by an irrevocable letter of credit or
guarantee of a bank, or the payment obligation otherwise will be
collateralized by U.S. Government securities, or, in the case of unrated
participation interests, The Dreyfus Corporation (and, if applicable, the
Series' sub-investment adviser) must have determined that the instrument is
of comparable quality to those instruments in which the Series may invest.

INVESTMENT COMPANIES - (Balanced, Special Value and Small Company Stock
Portfolios) The Series may invest in securities issued by investment
companies. Under the 1940 Act, the Series' investment in such securities,
subject to certain exceptions, currently is limited to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the Series' total
assets with respect to any one investment company and (iii) 10% of the
Series' total assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain
other expenses.

U.S. TREASURY SECURITIES - (Quality Bond and Zero Coupon Portfolios) U.S
Treasury securities include Treasury Inflation-Protection Securities
("TIPS"), which are newly created securities issued by the U.S. Treasury
designed to provide investors a long term investment vehicle that is not
vulnerable to inflation. The interest rate paid by TIPS is fixed, while the
principal value rises or falls semi-annually based on changes in a published
Consumer Price Index. Thus, if inflation occurs, the principal and interest
payments on the TIPS are adjusted accordingly to protect investors from
inflationary loss. During a deflationary period, the principal and interest
payments decrease, although the TIPS' principal will not drop below its face
amount at maturity.
In exchange for the inflation protection, TIPS generally pay lower
interest rates than typical Treasury securities. Only if inflation occurs
will TIPS offer a higher real yield than a conventional Treasury bond of the
same maturity. In addition, it is not possible to predict with assurance how
the market for TIPS will develop; initially, the secondary market for these
securities may not be as active or liquid as the secondary market for
conventional Treasury securities. Principal appreciation and interest
payments on TIPS will be taxed annually as ordinary interest income for
Federal income tax calculations. As a result, any appreciation in principal
must be counted as interest income in the year the increase occurs, even
though the investor will not receive such amounts until the TIPS are sold or
mature. Principal appreciation and interest payments will be exempt from
state and local income taxes.

STRIPPED TREASURY SECURITIES - (Zero Coupon 2000 Portfolio and, to a limited
extent, all other Series) Stripped Treasury Securities are U.S. Treasury
securities that have been stripped of their unmatured interest coupons (which
typically provide for interest payments semi-annually), interest coupons that
have been stripped from such U.S. Treasury securities, and receipts and
certificates for such stripped debt obligations and stripped coupons.

[Page 43]
Stripped bonds and stripped coupons are sold at a deep discount
because the buyer of those securities receives only the right to receive a
future fixed payment on the security and does not receive any rights to
periodic interest payments on the security.
Stripped Treasury Securities will include one or more of the
following types of securities: (a) U.S. Treasury debt obligations originally
issued as bearer coupon bonds which have been stripped of their unmatured
interest coupons, (b) coupons which have been stripped from U.S. Treasury
bonds, either of which may be held through the Federal Reserve Bank's book
entry system called "Separate Trading of Registered Interest and Principal of
Securities" ("STRIPS") or "Coupon Under Book-Entry Safekeeping" ("CUBES"),
and (c) receipts or certificates for stripped U.S. Treasury debt obligations
evidencing ownership of future interest or principal payments on U.S.
Treasury notes or bonds which are direct obligations of the United States.
The receipts or certificates must be issued in registered form by a major
bank which acts as custodian and nominal holder of the underlying stripped
U.S. Treasury obligation (which may be held by it either in physical or in
book-entry form). See "Investment Objectives and Management
Policies-Portfolio Securities" in the Statement of Additional Information.

STRIPPED CORPORATE SECURITIES - (Growth and Income, International Equity,
Limited Term High Income, Special Value, Quality Bond and Zero Coupon 2000
Portfolios) Stripped Corporate Securities consist of corporate debt
obligations issued by domestic corporations without interest coupons, and, if
available, interest coupons that have been stripped from corporate debt
obligations, and receipts and certificates for such stripped debt obligations
and stripped coupons. Stripped Corporate Securities purchased by the Limited
Term High Income, Special Value, Growth and Income, International Equity or
Quality Bond Portfolios will bear ratings comparable to non-stripped
corporate obligations that may be purchased by such Series. Stripped
Corporate Securities purchased by the Zero Coupon 2000 Portfolio will be
rated at least Baa by Moody's or BBB by S&P. With respect to other features
of Stripped Corporate Securities, such as sales at deep discounts, see
"Stripped Treasury Securities" above and "Description of the Fund-Investment
Considerations and Risks-Special Considerations Relating to Stripped
Securities."

ILLIQUID SECURITIES - (All Series) Each Series may invest up to 15% (10%
with respect to the Money Market Portfolio) of the value of its net assets in
securities as to which a liquid trading market does not exist, provided such
investments are consistent with the Series' investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, repurchase agreements providing for settlement in more than seven
days after notice, certain mortgage-backed securities, and certain privately
negotiated, non-exchange traded options and securities used to cover such
options. As to these securities, the Series is subject to a risk that should
the Series desire to sell them when a ready buyer is not available at a price
the Series deems representative of their value, the value of the Series' net
assets could be adversely affected.

RATINGS - (Balanced, Growth and Income, Limited Term High Income, Special
Value, Small Cap and Quality Bond Portfolios) Securities rated Baa by Moody's
are considered medium grade obligations; they are neither highly protected
nor poorly secured, and are considered by Moody's to have speculative
characteristics. Bonds rated BBB by S&P, Fitch and Duff are investment grade
and regarded as having adequate capacity to pay interest and repay principal;
however, adverse changes in economic conditions and circumstances are more
likely to have an adverse impact on these bonds and, therefore, impair timely
payment. Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having
predominantly speculative characteristics and, while such obligations have
less near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal
[Page 44]
payments. Securities rated Caa by Moody's or CCC by S&P, Fitch and Duff are
of poor standing and may be in default or there may be present elements of
danger with respect to principal or interest. Securities rated C by Moody's
are regarded as having extremely poor prospects of ever attaining any real
investment standing. Securities rated D by S&P, Fitch and Duff are in default
and the payment of interest and/or repayment of principal is in arrears. Such
securities, though high yielding, are characterized by great risk. See
"Appendix" in the Statement of Additional Information for a general
description of securities ratings.

The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. Ratings
are relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, The Dreyfus
Corporation also will evaluate these securities and the ability of the issuers
of such securities to pay interest and principal. The Series' ability to
achieve its investment objective may be more dependent on The Dreyfus
Corporation's credit analysis than might be the case for a fund that invested
in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.

[Page 45]
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[Page 46]
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[Page 47]
Variable
Investment
Fund

Prospectus
Registration Mark
Copy Rights 1997, Dreyfus Service Corporation
VIFp1097
[Page 48]

____________________________________________________________________________

DREYFUS VARIABLE INVESTMENT FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)

OCTOBER 1, 1997

____________________________________________________________________________

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Variable Investment Fund (the "Fund"), dated October 1, 1997, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call (516) 338-3300.

The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.

Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.

TABLE OF CONTENTS

Page

Investment Objectives and Management Policies B-2
Management of the Fund B-20
Investment Advisory Agreements B-26
Purchase of Shares B-32
Redemption of Shares B-32
Determination of Net Asset Value B-32
Dividends, Distributions and Taxes B-34
Portfolio Transactions B-36
Yield and Performance Information B-38
Information About the Fund B-42
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-43
Appendix B-44
Financial Statements and Reports of Independent Auditors B-52

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."

Portfolio Securities

Depositary Receipts. (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Special Value and Small Company
Stock Portfolios) These securities may be purchased through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depositary, whereas a depositary may
establish an unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts generally
bear all the costs of such facilities and the depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities.

Repurchase Agreements. (All Series) The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by a Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Series. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, each Series will enter into
repurchase agreements only with domestic banks with total assets in excess
of $1 billion, or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type in
which the Series may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below the resale price.

Commercial Paper and Other Short-Term Corporate Obligations. (All
Series) These instruments include variable amount master demand notes, which
are obligations that permit a Series to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the
Series, as lender, and the borrower. These notes permit daily changes in
the amounts borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest, at any time. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, the Series' right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies, and a Fund
may invest in them only if at the time of an investment the borrower meets
the criteria set forth in the Fund's Prospectus for other commercial paper
issuers.

Convertible Securities. (Balanced, Capital Appreciation, Disciplined
Stock, Growth and Income, International Equity, International Value, Limited
Term High Income, Special Value, Small Cap and Small Company Stock
Portfolios) Although to a lesser extent than with fixed-income securities
generally, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value
of convertible securities tends to vary with fluctuations in the market
value of the underlying common stock. A unique feature of convertible
securities is that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent as
the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities
generally entail less risk than investments in common stock of the same
issuer.

Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations. A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate. Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.

Municipal Obligations. (Quality Bond, Limited Term High Income and
Growth and Income Portfolios) Municipal obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Industrial development bonds, in most cases,
are revenue bonds and generally do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity
on whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or
equipment issued by municipalities.

Mortgage-Related Securities. (Balanced, Growth and Income, Limited Term
High Income and Quality Bond Portfolios) Mortgage-related securities are a
form of Derivative collateralized by pools of commercial or residential
mortgages. Pools of mortgage loans are assembled as securities for sale to
investors by various governmental, government-related and private
organizations. These securities may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed securities,
mortgage pass-through securities, interests in REMICs or other kinds of
mortgage-backed securities, including those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in a specified index of interest rates and those with
interest rates that change inversely to changes in interest rates.

Government-Agency Securities--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage Pass-
Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee
is backed by the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the department of Housing
and Urban Development. GNMA certificates also are supported by the authority
of GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee.

Government Related Securities--Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are not backed by or entitled to the full
faith and credit of the United States. FNMA is a government-sponsored
organization owned entirely by private stockholders. Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA.

Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). FHLMC is a corporate
instrumentality of the United States created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Bank and do not
constitute a debt or obligation of the United States or of any Federal Home
Loan Bank. Freddie Macs entitle the holder to timely payment of interest,
which is guaranteed by FHLMC. FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans.
When FHLMC does not guarantee timely payment of principal, FHLMC may remit
the amount due on account of its guarantee of ultimate payment of principal
at any time after default on an underlying mortgage, but in no event later
than one year after it becomes payable.

Private Entity Securities--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance. The insurance and guarantees are issued by
government entities, private insurers and the mortgage poolers. There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss. No insurance
or guarantee covers the Series or the price of the Series' shares. Mortgage-
related securities issued by non- governmental issuers generally offer a
higher rate of interest than government-agency and government-related
securities because there are no direct or indirect government guarantees of
payment. The Series will not invest more than 5% of its assets in such
private entity securities issued by any one issuer, including any one bank
or savings and loan institution.

Collateralized Mortgage Obligations ("CMOs")--A CMO is a multiclass bond
backed by a pool of mortgage pass-through certificates or mortgage loans.
CMOs may be collateralized by (a) Ginnie Mae, Fannie Mae, or Freddie Mac
pass-through certificates, (b) unsecuritized mortgage loans insured by the
Federal Housing Administration or guaranteed by the Department of Veterans'
Affairs, (c) unsecuritized conventional mortgages, (d) other mortgage-
related securities, or (e) any combination thereof. Each class of CMOs,
often referred to as a "tranche," is issued at a specific coupon rate and
has a stated maturity or final distribution date. Principal prepayments on
collateral underlying a CMO may cause it to be retired substantially earlier
than the stated maturities or final distribution dates. The principal and
interest on the underlying mortgages may be allocated among the several
classes of a series of a CMO in many ways. One or more tranches of a CMO
may have coupon rates which reset periodically at a specified increment over
an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes
more than one index). These floating rate CMOs typically are issued with
lifetime caps on the coupon rate thereon. The Series also may invest in
inverse floating rate CMOs. Inverse floating rate CMOs constitute a tranche
of a CMO with a coupon rate that moves in the reverse direction to an
applicable index such a LIBOR. Accordingly, the coupon rate thereon will
increase as interest rates decrease. Inverse floating rate CMOs are
typically more volatile than fixed or floating rate tranches of CMOs.

Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes. The effect of the coupon varying
inversely to a multiple of an applicable index creates a leverage factor.
Inverse floaters based on multiples of a stated index are designed to be
highly sensitive to changes in interest rates and can subject the holders
thereof to extreme reductions of yield and loss of principal. The markets
for inverse floating rate CMOs with highly leveraged characteristics at
times may be very thin. The Series' ability to dispose of its positions in
such securities will depend on the degree of liquidity in the markets for
such securities. It is impossible to predict the amount of trading interest
that may exist in such securities, and therefore the future degree of
liquidity.

Adjustable-Rate Mortgage Loans ("ARMs")--ARMs eligible for inclusion in a
mortgage pool l generally will provide for a fixed initial mortgage interest
rate for a specified period of time, generally for either the first three,
six, twelve, thirteen, thirty-six, or sixty scheduled monthly payments.
Thereafter, the interest rates are subject to periodic adjustment based on
changes in an index. ARMs typically have minimum and maximum rates beyond
which the mortgage interest rate may not vary over the lifetime of the
loans. Certain ARMs provide for additional limitations on the maximum
amount by which the mortgage interest rate may adjust for any single
adjustment period. Negatively amortizing ARMs may provide limitations on
changes in the required monthly payment. Limitations on monthly payments
can result in monthly payments that are greater or less than the amount
necessary to amortize a negatively amortizing ARM by its maturity at the
interest rate in effect during any particular month.

Other Mortgage-Related Securities--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage
loans on real property, including CMO residuals. Other mortgage-related
securities may be equity or debt securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.

Stripped Treasury Securities. (Zero Coupon 2000 Portfolio and, to a
limited extent, all other Series) The U.S. Government does not issue
Stripped Treasury Securities directly. The STRIPS program, which is ongoing,
is designed to facilitate the secondary market stripping of selected U.S.
Treasury notes and bonds into separate interest and principal components.
Under the program, the U.S. Treasury continues to sell its notes and bonds
through its customary auction process. A purchaser of those specified notes
and bonds who has access to a book-entry account at a Federal Reserve bank,
however, may separate the Treasury notes and bonds into interest and
principal components. The selected Treasury securities thereafter may be
maintained in the book-entry system operated by the Federal Reserve in a
manner that permits the separate trading and ownership of the interest and
principal payments. Investment banks also may strip U.S. Treasury securities
and sell them under proprietary names. Such securities may not be as liquid
as STRIPS and CUBES and are not viewed by the staff of the Securities and
Exchange Commission as U.S. Government securities for purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"). CUBES, like
STRIPS, are direct obligations of the U.S. Government. CUBES are coupons
that have previously been physically stripped from U.S. Treasury notes and
bonds, but which were deposited with the Federal Reserve Bank's book-entry
system and are now carried and transferable in book-entry form only. Only
stripped U.S. Treasury coupons maturing on or after January 15, 1988, that
were stripped prior to January 5, 1987, were eligible for conversion to book-
entry form under the CUBES program.

By agreement, the underlying debt obligations will be held separate
from the general assets of the custodian and nominal holder of such
securities, and will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of or against the custodian or any person
claiming through the custodian, and the custodian will be responsible for
applying all payments received on those underlying debt obligations to the
related receipts or certificates without making any deductions other than
applicable tax withholding. The custodian is required to maintain insurance
for the protection of holders of receipts or certificates in customary
amounts against losses resulting from the custody arrangement due to
dishonest or fraudulent action by the custodian's employees. The holders of
receipts or certificates, as the real parties in interest, are entitled to
the rights and privileges of the underlying debt obligations, including the
right, in the event of default in payment of principal or interest, to
proceed individually against the issuer without acting in concert with other
holders of those receipts or certificates or the custodian.

Publicly filed documents state that counsel to the underwriters of
certificates or other evidences of ownership of U.S. Treasury securities
have stated that for Federal tax and securities purposes, purchasers of such
certificates most likely will be deemed the beneficial holders of the
underlying U.S. Government securities, which are payable in full at their
stated maturity amount and are not subject to redemption prior to maturity.
See "Description of the Fund-Investment Considerations and Risks-Special
Considerations Relating to Stripped Securities" in the Prospectus.

Illiquid Securities. (All Series) When purchasing securities that have
not been registered under the Securities Act of 1933, as amended, and are
not readily marketable, a Series will endeavor, to the extent practicable,
to obtain the right to registration at the expense of the issuer. Generally,
there will be a lapse of time between the Series' decision to sell any such
security and the registration of the security permitting sale. During any
such period, the price of the securities will be subject to market
fluctuations. However, where a substantial market of qualified institutional
buyers develops for certain unregistered securities purchased by the Series
pursuant to Rule 144A under the Securities Act of 1933, as amended, the
Series intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for specific restricted securities
sold pursuant to Rule 144A will develop, the Fund's Board has directed the
Manager to monitor carefully the relevant Series' investments in such
securities with particular regard to trading activity, availability of
reliable price information and other relevant information. To the extent
that, for a period of time, qualified institutional buyers cease purchasing
restricted securities pursuant to Rule 144A, a Series' investing in such
securities may have the effect of increasing the level of illiquidity in its
investment portfolio during such period.

Management Policies

Leverage. (Growth and Income, Special Value, Limited Term High Income
and, to a limited extent, Balanced, Money Market and Small Company Stock
Portfolios) For borrowings for investment purposes, the 1940 Act requires
the Series to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of
the amount borrowed. If the required coverage should decline as a result of
market fluctuations or other reasons, the Series may be required to sell
some of its portfolio securities within three days to reduce the amount of
its borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time. The Series also may be required to maintain minimum average balances
in connection with such borrowing or pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate. To the extent a Series
enters into a reverse repurchase agreement, the Series will maintain in a
segregated custodial account permissible liquid assets at least equal to the
aggregate amount of its reverse repurchase obligations, plus accrued
interest, in certain cases, in accordance with releases promulgated by the
Securities and Exchange Commission. The Securities and Exchange Commission
views reverse repurchase transactions as collateralized borrowings by a
Series.

Short-Selling. (Growth and Income, Limited Term High Income, Special
Value and, to a limited extent, Small Cap Portfolios) Until a Series closes
its short position or replaces the borrowed security, it will: (a) maintain
a segregated account, containing permissible liquid assets, at such a level
that the amount deposited in the account plus the amount deposited with the
broker as collateral always equals the current value of the security sold
short; or (b) otherwise cover its short position.

Lending Portfolio Securities. (All Series) In connection with its
securities lending transactions, a Series may return to the borrower or a
third party which is unaffiliated with the Series, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.

The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Series must
be able to terminate the loan at any time; (4) the Series must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Series may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned securities may pass
to the borrower, the Fund's Board must terminate the loan and regain the
right to vote the securities if a material event adversely affecting the
investment occurs.

Derivatives. (Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Special
Value, Small Company Stock, Quality Bond and Zero Coupon 2000 Portfolios) A
Series may invest in, or enter into, Derivatives (as defined in the Fund's
Prospectus) for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Series to invest
than "traditional" securities would.

Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit a Series to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Series can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.

Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager (or, if applicable, the Series' sub-investment
adviser) will consider the creditworthiness of counterparties to over-the-
counter Derivatives in the same manner as it would review the credit quality
of a security to be purchased by a Series. Over-the-counter Derivatives are
less liquid than exchange-traded Derivatives since the other party to the
transaction may be the only investor with sufficient understanding of the
Derivative to be interested in bidding for it.

Futures Transactions-In General--(Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Limited Term High Income,
Special Value, Small Company Stock and Zero Coupon 2000 Portfolios) A
Series may enter into futures contracts in U.S. domestic markets, such as
the Chicago Board of Trade and the International Monetary Market of the
Chicago Mercantile Exchange, or, if permitted in the Fund's Prospectus, on
exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited. Foreign markets may offer advantages such as trading opportunities
or arbitrage possibilities not available in the United States. Foreign
markets, however, may have greater risk potential than domestic markets.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits that a Series might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the Series could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not. Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.

Engaging in these transactions involves risk of loss to the Series
which could adversely affect the value of the Series' net assets. Although
each Series intends to purchase or sell futures contracts only if there is
an active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Series to substantial losses.

Successful use of futures by a Series also is subject to the ability of
the Manager (or, if applicable, the Series' sub-investment adviser) to
predict correctly movements in the direction of the relevant market and, to
the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged
and the price movements of the futures contract. For example, if a Series
uses futures to hedge against the possibility of a decline in the market
value of securities held in its portfolio and the prices of such securities
instead increase, the Series will lose part or all of the benefit of the
increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. Furthermore, if in such
circumstances the Series has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. A Series may have to
sell such securities at a time when it may be disadvantageous to do so.

Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Series may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting a Series' ability otherwise
to invest those assets.

Specific Futures Transactions--The Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Special Value and Small
Company Stock Portfolios may purchase and sell stock index futures
contracts. A stock index future obligates the Series to pay or receive an
amount of cash equal to a fixed dollar amount specified in the futures
contract multiplied by the difference between the settlement price of the
contract on the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the opening of
trading in such securities on the next business day.

The Growth and Income, International Equity, International Value,
Limited Term High Income, Special Value and Small Company Stock Portfolios
may purchase and sell currency futures. A foreign currency future obligates
the Series to purchase or sell an amount of a specific currency at a future
date at a specific price.

The Growth and Income, International Equity, International Value,
Limited Term High Income, Special Value and Zero Coupon 2000 Portfolios may
purchase and sell interest rate futures contracts. An interest rate future
obligates the Series to purchase or sell an amount of a specific debt
security at a future date at a specific price.

Interest Rate Swaps--(Limited Term High Income Portfolio) Interest rate
swaps involve the exchange by the Series with another party of their
respective commitments to pay or receive interest (for example, an exchange
of floating rate payments for fixed-rate payments). The exchange commitments
can involve payments to be made in the same currency or in different
currencies. The use of interest rate swaps is a highly specialized activity
which involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If the Manager is
incorrect in its forecasts of market values, interest rates and other
applicable factors, the investment performance of the Series would diminish
compared with what it would have been if these investment techniques were
not used. Moreover, even if the Manager is correct in its forecasts, there
is a risk that the swap position may correlate imperfectly with the price of
the asset or liability being hedged. There is no limit on the amount of
interest rate swap transactions that may be entered into by the Series.
These transactions do not involve the delivery of securities or other
underlying assets or principal. Accordingly, the risk of loss with respect
to interest rate swaps is limited to the net amount of interest payments
that the Series is contractually obligated to make. If the other party to
an interest rate swap defaults, the Series' risk of loss consists of the net
amount of interest payments that the Series contractually is entitled to
receive.

Credit Derivatives--(Limited Term High Income Portfolio) The Series may
engage in credit derivative transactions. There are two broad categories of
credit derivatives: default price risk derivatives and market spread
derivatives. Default price risk derivatives are linked to the price of
reference securities or loans after a default by the issuer or borrower,
respectively. Market spread derivatives are based on the risk that changes
in market factors, such as credit spreads, can cause a decline in the value
of a security, loan or index. There are three basic transactional forms for
credit derivatives: swaps, options and structured instruments. The use of
credit derivatives is a highly specialized activity which involves
strategies and risks different from those associated with ordinary portfolio
security transactions. If the Manager is incorrect in its forecasts of
default risks, market spreads or other applicable factors, the investment
performance of the Series would diminish compared with what it would have
been if these techniques were not used. Moreover, even if the Manager is
correct in its forecasts, there is a risk that a credit derivative position
may correlate imperfectly with the price of the asset or liability being
hedged. There is no limit on the amount of credit derivative transactions
that may be entered into by the Series. The Series' risk of loss in a
credit derivative transaction varies with the form of the transaction. For
example, if the Series purchases a default option on a security, and if no
default occurs with respect to the security, the Series' loss is limited to
the premium it paid for the default option. In contrast, if there is a
default by the grantor of a default option, the Series' loss will include
both the premium that it paid for the option and the decline in value of the
underlying security that the default option hedged.

Options-In General--(Balanced, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Special
Value, Small Company Stock and Zero Coupon 2000 Portfolios) The Series may
purchase and write (i.e., sell) call or put options with respect to specific
securities. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying security or securities
at the exercise price at any time during the option period, or at a specific
date. Conversely, a put option gives the purchaser of the option the right
to sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period, or at
a specific date.

A covered call option written by a Series is a call option with respect
to which the Series owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written
by a Series is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. A Series
receives a premium from writing covered call or put options which it retains
whether or not the option is exercised.

There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible
to effect closing transactions in particular options. If, as a covered call
option writer, the Series is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.

Specific Options Transactions--The Balanced, Disciplined Stock, Growth and
Income, International Equity, International Value, Special Value and Small
Company Stock Portfolios may purchase and sell call and put options in
respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or
traded in the over-the- counter market. An option on a stock index is
similar to an option in respect of specific securities, except that
settlement does not occur by delivery of the securities comprising the
index. Instead, the option holder receives an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in
the case of a call, or less than, in the case of a put, the exercise price
of the option. Thus, the effectiveness of purchasing or writing stock index
options will depend upon price movements in the level of the index rather
than the price of a particular stock.

The Growth and Income, International Equity, Limited Term High Income,
Special Value and Small Company Stock Portfolios may purchase and sell call
and put options on foreign currency. These options convey the right to buy
or sell the underlying currency at a price which is expected to be lower or
higher than the spot price of the currency at the time the option is
exercised or expires.

Each of the Disciplined Stock, Growth and Income, International Equity,
Special Value and Small Company Stock Portfolios may purchase cash-settled
options on equity index swaps and the Limited Term High Income Portfolio may
purchase cash-settled options on interest rate swaps in pursuit of its
investment objective. Equity index swaps involve the exchange by the Series
with another party of cash flows based upon the performance of an index or a
portion of an index of securities which usually includes dividends. A cash-
settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These
options typically are purchased in privately negotiated transactions from
financial institutions, including securities brokerage firms.

Successful use by a Series of options will be subject to the ability of
the Manager (or, if applicable, the Series' sub-investment adviser) to
predict correctly movements in the prices of individual stocks, the stock
market generally, foreign currencies or interest rates. To the extent such
predictions are incorrect, a Series may incur losses.

Future Developments. A Series may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Series or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Series'
investment objective and legally permissible for the Series. Before entering
into such transactions or making any such investment on behalf of a Series,
the Fund will provide appropriate disclosure in its Prospectus or Statement
of Additional Information.

Forward Commitments. (All Series) Securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of
the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a forward commitment or
when-issued basis may expose a Series to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on a
when-issued basis can involve the additional risk that the yield available
in the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Series is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Series' net assets and its net asset value per share.

Portfolio Maturity. (Limited Term High Income Portfolio) Under normal
market conditions, the average effective portfolio maturity is expected to
be four years or less for the Limited Term High Income Portfolio. For
purposes of calculating average effective portfolio maturity, a security
that is subject to redemption at the option of the issuer on a particular
date (the "call date") which is prior to the security's stated maturity may
be deemed to mature on the call date rather than on its stated maturity
date. The call date of a security will be used to calculate average
effective portfolio maturity when the Manager reasonably anticipates, based
upon information available to it, that the issuer will exercise its right to
redeem the security. The Manager may base its conclusion on such factors as
the interest rate paid on the security compared to prevailing market rates,
the amount of cash available to the issuer of the security, events affecting
the issuer of the security, and other factors that may compel or make it
advantageous for the issuer to redeem a security prior to its stated
maturity.

Investment Considerations and Risks

Lower Rated Securities. (Growth and Income, Limited Term High Income,
Special Value, Small Cap and Quality Bond Portfolios) Each of the Growth and
Income, Special Value, Small Cap and Quality Bond Portfolios is permitted to
invest in securities (convertible debt securities with respect to the Growth
and Income Portfolio) rated Ba or lower by Moody's Investors Service, Inc.
("Moody's") or BB or lower by Standard & Poor's Ratings Group ("S&P"), Fitch
Investors Service, L.P. ("Fitch") and Duff & Phelps Credit Rating Co.
("Duff"). In no case, however, will the Quality Bond Portfolio invest in
bonds rated lower than B by Moody's and S&P and in no case will the Growth
and Income Portfolio invest in convertible debt securities rated lower than
Caa by Moody's and CCC by S&P, Fitch and Duff. Such securities, though
higher yielding, are characterized by risk. See "Description of the Fund--
Investment Considerations and Risks--Lower Rated Securities" in the
Prospectus for a discussion of certain risks and "Appendix" for a general
description of Moody's, S&P, Fitch and Duff ratings. Although ratings may
be useful in evaluating the safety of interest and principal payments, they
do not evaluate the market value risk of these securities. The Series will
rely on the Manager's (or, if applicable, the Series' sub-investment
adviser's) judgment, analysis and experience in evaluating the
creditworthiness of an issuer.

Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities. These securities generally are considered by S&P, Moody's,
Fitch and Duff to be predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in
the higher rating categories.

Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher rated
securities and will fluctuate over time. For example, during an economic
downturn or a sustained period of rising interest rates, highly leveraged
issuers of these securities may experience financial stress. During such
periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations also may be affected adversely by specific corporate
developments, or the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss
because of default by the issuer is significantly greater for the holders of
these securities because such securities generally are unsecured and often
are subordinated to other creditors of the issuer.

Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it
generally is not as liquid as the secondary market for higher rated
securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Series' ability to dispose of
particular issues when necessary to meet such Series' liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid security market for
certain securities also may make it more difficult for the Series to obtain
accurate market quotations for purposes of valuing the Series' portfolio and
calculating its net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable, objective data may be available.

These securities may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.

The Series may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The
Series has no arrangement with any persons concerning the acquisition of
such securities, and the Manager (or, if applicable, the Series' sub-
investment adviser) will review carefully the credit and other
characteristics pertinent to such new issues.

The credit risk factors pertaining to lower rated securities also apply
to lower rated Stripped Corporate Securities in which each Series other than
the Quality Bond Portfolio may invest and pay-in-kind bonds in which each
Series may invest up to 5% of its total assets. Stripped Corporate
Securities are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified cash payment
date when the securities begin paying current interest (the "cash payment
date") and therefore are issued and traded at a discount from their face
amounts or par value. The discount varies depending on the time remaining
until maturity or cash payment date, prevailing interest rates, liquidity of
the security and perceived credit quality of the issuer. The discount, in
the absence of financial difficulties of the issuer, decreases as the final
maturity or cash payment date of the security approaches.

The market prices of Stripped Corporate Securities generally are more
volatile than the market prices of securities that pay interest periodically
and are likely to respond to changes in interest rates to a greater degree
than do non-zero coupon securities having similar maturities and credit
quality. Such Stripped Corporate Securities, pay-in-kind or delayed
interest bonds carry an additional risk in that, unlike bonds which pay
interest throughout the period to maturity, the relevant Series will realize
no cash until the cash payment date unless a portion of such securities are
sold and, if the issuer defaults, the Series may obtain no return at all on
its investment. See "Dividends, Distributions and Taxes."

Investment Restrictions

Capital Appreciation, Special Value, Money Market, Quality Bond, Small
Cap and Zero Coupon 2000 Portfolios. Each of these Series (except as noted
below) has adopted investment restrictions numbered 1 through 14 as
fundamental policies. These restrictions cannot be changed, as to a Series,
without approval by the holders of a majority (as defined in the 1940 Act)
of such Series' outstanding voting shares. However, the amendment of these
restrictions to add an additional Series, which amendment does not
substantively affect the restrictions with respect to an existing Series,
will not require approval as described in the preceding sentence. Investment
restrictions numbered 15 and 16 are not fundamental policies and may be
changed, as to a Series, by vote of a majority of the Fund's Board members
at any time. With respect to the Capital Appreciation Portfolio, investment
restrictions numbered 2 and 3, 10 through 12 and 14 are not fundamental
policies and may be changed, as to that Series, by vote of a majority of the
Fund's Board members at any time. Except where otherwise expressly stated,
none of these Series may:

1. Borrow money, except, with respect to each Series other than
the Money Market Portfolio, to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Series' total assets); the Money Market Portfolio may borrow money only
(i) from banks for temporary or emergency (not leveraging) purposes in an
amount up to 15% of the value of its total assets (including the amount
borrowed) based on the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made and (ii) in
connection with the entry into reverse repurchase agreements to the extent
described in the Prospectus. While borrowings under (i) above exceed 5% of a
Series' total assets, the Series will not make any additional investments.

2. Sell securities short or purchase securities on margin, except
that the Special Value and Small Cap Portfolios may engage in short sales
and each Series may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities.

3. Purchase or write puts and calls or combinations thereof,
except as described in the Prospectus and Statement of Additional
Information.

4. Act as an underwriter of securities of other issuers.

5. Purchase or sell real estate or real estate investment trust
securities, but each Series may purchase and sell securities that are
secured by real estate and may purchase and sell securities issued by
companies that invest or deal in real estate.

6. Invest in commodities, except that the Special Value, Capital
Appreciation and Zero Coupon 2000 Portfolios may invest in futures
contracts, including those related to indices, and options on futures
contracts or indices, and commodities underlying or related to any such
futures contracts as well as invest in forward contracts and currency
options.

7. Lend any funds or other assets, except through the purchase of
bonds, debentures or other debt securities, or the purchase of bankers'
acceptances, commercial paper of corporations, and repurchase agreements.
However, each Series may lend its portfolio securities to the extent set
forth in the Prospectus. Any portfolio securities will be loaned according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board.

8. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Series' total assets may
be invested, and securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities may be purchased, without regard to any
such limitations. Notwithstanding the foregoing, to the extent required by
the rules of the Securities and Exchange Commission, the Money Market
Portfolio will not invest more than 5% of its assets in the obligations of
any one bank.

9. Purchase the securities of any issuer if such purchase would
cause the Series to hold more than 10% of the voting securities of such
issuer. This restriction applies only with respect to 75% of such Series'
total assets.

10. Invest in the securities of a company for the purpose of
exercising management or control, but the Series will vote the securities it
owns as a shareholder in accordance with its views.

11. Purchase or retain the securities of any issuer if the
officers or Board members of the Fund or the officers or Directors of the
Manager (and, with respect to the Capital Appreciation Portfolio, the
officers and Directors of Fayez Sarofim & Co.) individually own beneficially
more than 1/2 of l% of the securities of such issuer or together own
beneficially more than 5% of the securities of such issuer.

12. Purchase securities of any company having less than three
years' continuous operations (including operations of any predecessors) if
such purchase would cause the value of its investments in all such companies
to exceed 5% of the value of its total assets.

13. Invest, except in the case of the Money Market Portfolio, more
than 25% of its total assets in the securities of issuers in any single
industry; provided that for temporary defensive purposes, there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Money Market Portfolio
may not invest less than 25% of its assets in obligations issued by banks
under normal market conditions.

14. Purchase warrants, except each of the Capital Appreciation,
Special Value and Small Cap Portfolios may purchase warrants not to exceed
2% of its respective net assets. For purposes of this restriction, such
warrants shall be valued at the lower of cost or market, except that
warrants acquired by the Series in units or attached to securities shall not
be included within this 2% restriction.

15. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to the extent necessary to secure permitted borrowings. The
Special Value, Capital Appreciation, Zero Coupon 2000 and Small Cap
Portfolios' entry into collateral arrangements with respect to options,
currency options, futures contracts, including those related to indices, and
options on futures contracts or indices and arrangements with respect to
initial or variation margin for futures contracts or options will not be
deemed to be pledges of such Series' assets.

16. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid
if, in the aggregate, more than 15% (10% with respect to the Money Market
Portfolio) of the value of the Series' net assets would be so invested.

* * *

Balanced, Disciplined Stock, Growth and Income, International Equity,
International Value, Limited Term High Income and Small Company Stock
Portfolios. Each of these Series has adopted investment restrictions
numbered 1 through 8 as fundamental policies, and each of the Balanced,
Disciplined Stock, International Value, Limited Term High Income and Small
Company Stock Portfolios has adopted investment restrictions numbered 16 and
17 as additional fundamental policies. These restrictions cannot be
changed, as to a Series, without approval by the holders of a majority (as
defined in the 1940 Act) of such Series' outstanding voting shares.
However, the amendment of these restrictions to add an additional Series,
which amendment does not substantively effect the restrictions with respect
to an existing Series, will not require approval as described in the
preceding sentence. Investment restrictions numbered 9 through 15 are not
fundamental policies and may be changed, as to a Series, by vote of a
majority of the Fund's Board members at any time. None of these Series may:

1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there shall be
no limitation on the purchase of obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.

2. Invest in commodities, except that a Series may purchase and
sell options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices.

3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but a Series may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.

4. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Series' total assets). For purposes of this Investment Restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.

5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, a Series may
lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.

6. Act as an underwriter of securities of other issuers, except to
the extent a Series may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.

7. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 2, 4, 11 and 12 may be deemed to give rise to a
senior security.

8. Purchase securities on margin, but a Series may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.

9. Purchase securities of any company having less than three
years' continuous operations (including operations of any predecessor) if
such purchase would cause the value of its investments in all such companies
to exceed 5% of the value of its total assets.

10. Invest in the securities of a company for the purpose of
exercising management or control, but the Series will vote the securities it
owns as a shareholder in accordance with its views.

11. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to
the purchase of securities on a when-issued or forward commitment basis and
the deposit of assets in escrow in connection with writing covered put and
call options and collateral and initial or variation margin arrangements
with respect to options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices.

12. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Prospectus and Statement of Additional
Information.

13. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid,
if, in the aggregate, more than 15% of the value of its net assets would be
so invested.

14. Purchase securities of other investment companies, except to
the extent permitted under the 1940 Act.

15. Purchase warrants in excess of 5% of its net assets. For
purposes of this restriction, such warrants shall be valued at the lower of
cost or market, except that warrants acquired by a Series in units or
attached to securities shall not be included within this restriction.

The following investment restrictions numbered 16 and 17 apply only to
the Balanced, Disciplined Stock, International Value, Limited Term High
Income and Small Company Stock Portfolios. None of these Series may:

16. Invest more than 5% of its assets in the obligations of any
single issuer, except that up to 25% of the value of the Series' total
assets may be invested, and securities issued or guaranteed by the U.S.
Government, or its agencies or instrumentalities may be purchased, without
regard to any such limitation.

17. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to 75%
of the Series' total assets.

* * *

If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.

The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of a Series' shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series' shares in the
state involved.

In addition, each Series has adopted the following policies as non-
fundamental policies. Each Series intends (i) to comply with the
diversification requirements prescribed in regulations under Section 817(h)
of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to
comply in all material respects with insurance laws and regulations that the
Fund has been advised are applicable to investments of separate accounts of
Participating Insurance Companies. In addition, each Series, except the
Growth and Income and International Equity Portfolios, has agreed not to
invest more than 10% of its total assets in the obligations of any one
issuer (excluding U.S. Government securities) and to purchase no more than
10% of an issuer's outstanding securities. As non-fundamental policies,
these policies may be changed by vote of a majority of the Board members at
any time.

MANAGEMENT OF THE FUND

Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below.

Board Members of the Fund

JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company, and Staffing Resources, Inc., a temporary placement
service agency; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, a provider of marketing,
administrative and risk management services to health and other benefit
programs, Carlyle Industries, Inc. (formerly Belding Heminway Company,
Inc.), a button packager and distributor, and Curtis Industries, Inc.,
a national distributor of security products, chemicals, and automotive
and other hardware. For more than five years prior to January 1995, he
was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager
and, until August 24, 1994, the Fund's distributor. From August 1994
until December 31, 1994, he was a director of Mellon Bank Corporation.
He is 54 years old and his address is 200 Park Avenue, New York, New
York 10166.

DAVID P. FELDMAN, Board Member. Trustee of Corporate Property Investors, a
real estate investment company. He is also a director of several
mutual funds in the 59 Wall Street Mutual Funds Group and The Jeffrey
Company, a private investment company. From July 1961 until his
retirement in April 1997, he was employed by AT&T Investment Management
Corporation, principally serving as Chairman and Chief Executive
Officer. He is 58 years old and his address is One Oak Way, Berkeley
Heights, New Jersey 07922.

JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a service
company for planning and arranging corporate meetings and other events.
From September 1975 to June 1978, he was Executive Vice President of
Flagship Cruises, Ltd. Prior thereto, he was Senior Vice President and
Resident Director of the Swedish-American Line for the United States
and Canada. He is 76 years old and his address is 133 East 64th Street,
New York, New York 10021.

ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University, since January 1992. He is also a director of MidOcean
Reinsurance Co., Ltd., Cooke & Bieler, Inc., investment counselors,
NASD Regulation, Inc. and the Federal Reserve Bank of Boston. He was
Under Secretary of the Treasury for Finance at the U.S. Treasury
Department, from May 1989 to January 1992. For more than five years
prior thereto, he was a Professor of Finance at the Graduate School of
Business Administration of Harvard University. He is 58 years old and
his address is 79 John F. Kennedy Street, Cambridge, Massachusetts
02138.

JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, a non-profit organization principally engaged in the
development of alternatives to business litigation. He was of counsel
to the law firm of Lovejoy, Wasson & Ashton from October 1975 to
December 1976 and from October 1979 to June 1983, and was a partner of
the firm from January 1977 to September 1979. He was President and a
director of the Edna McConnell Clark Foundation, a philanthropic
organization, from September 1971 to December 1976. Mr. Henry is 67
years old and his address is c/o CPR Institute for Dispute Resolution,
366 Madison Avenue, New York, New York 10017.

ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and Marketing
for Corporate Property Investors, a real estate investment company.
From 1974 to 1976, she was owner and manager of a merchandise and
marketing consulting firm. Prior to 1974, she was a Vice President of
Macy's, New York. Mrs. Jacobs is 72 years old and her address is c/o
Corporate Property Investors, 305 East 47th Street, New York, New York
10017.

IRVING KRISTOL, Board Member. John M. Olin Distinguished Fellow of the
American Enterprise Institute for Public Policy Research, co-editor of
The Public Interest magazine, and an author or co-editor of several
books. From May 1981 to December 1994, he was a consultant to the
Manager on economic matters; from 1969 to 1988, he was Professor of
Social Thought at the Graduate School of Business Administration, New
York University; and from September 1969 to August 1979, he was Henry
R. Luce Professor of Urban Values at New York University. Mr. Kristol
is 77 years old and his address is c/o The Public Interest, 1112 16th
Street, N.W., Suite 530, Washington, D.C. 20036.

DR. PAUL A. MARKS, Board Member. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He is also a director emeritus
of Pfizer, Inc., a pharmaceutical company, where he served as a
director from 1978 to 1996; a director of Tularik, Inc., a
biotechnology company; and a general partner of LINC Venture Lease
Partners II, L.P., a limited partnership engaged in leasing. He was
Vice President for Health Sciences and Director of the Cancer Center at
Columbia University from 1973 to 1980; Professor of Medicine and of
Human Genetics and Development at Columbia University from 1968 to
1982; and a director of Life Technologies, Inc., a life science company
producing products for cell and molecular biology and microbiology,
from 1986 to 1996, Biotechnology General, Inc., a biotechnology
development company, from 1992 to 1993, and National Health
Laboratories, a national chemical diagnostic laboratory, from 1991 to
1995. Dr. Marks is 71 years old and his address is c/o Memorial Sloan-
Kettering Cancer Center, 1275 York Avenue, New York, New York 10021.

DR. MARTIN PERETZ, Board Member. Editor-in-Chief of The New Republic
magazine and a lecturer in Social Studies at Harvard University, where
he has been a member of the faculty since 1965. He is a trustee of The
Center for Blood Research at the Harvard Medical School and of the
Academy for Liberal Education, an accrediting agency for colleges and
universities certified by the U.S. Department of Education; and a
director of LeukoSite Inc., a biopharmaceutical company, and Co-
Chairman of TheStreet.com, a financial daily on the Web. From 1988 to
1991, he was a director of Carmel Container Corporation. Dr. Peretz is
58 years old and his address is c/o The New Republic, 1220 19th Street,
N.W., Washington, D.C. 20036.

BERT W. WASSERMAN, Board Member. Financial Consultant. He is also a
director of The New Germany Fund, Mountasia Entertainment
International, Inc., the Lillian Vernon Corporation, Winstar
Communications, Inc. and International Discount Telecommunications
Corporation. From January 1990 to March 1995, Executive Vice President
and Chief Financial Officer, and, from January 1990 to March 1993, a
director of Time Warner Inc. From 1981 to 1990, he was a member of the
office of the President and a director of Warner Communications, Inc.
Mr. Wasserman is 65 years old and his address is 126 East 56th Street,
Suite 12 North, New York, New York 10022-3613.

There ordinarily will be no meetings of shareholders for the purpose of
electing Board members unless and until such time as less than a majority of
the Board members holding office have been elected by shareholders, at which
time the Board members then in office will call a shareholders' meeting for
the election of Board members. Under the 1940 Act, shareholders of record of
not less than two-thirds of the outstanding shares of the Fund may remove a
Board member through a declaration in writing or by vote cast in person or
by proxy at a meeting called for that purpose. The Board members are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any such Board members when requested in writing
to do so by the shareholders of record of not less than 10% of the Fund's
outstanding shares.

The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund, and by all other funds
in the Dreyfus Family of Funds for which such person is a Board member (the
number of which is set forth in parenthesis next to each Board member's
total compensation) for the year ended December 31, 1996, were as follows:
Total
Compensation
Aggregate From Fund and
Name of Board Compensation Fund Complex
Member From Fund* Paid to Board
Member
Joseph S. $5,000 $517,076 (93)
DiMartino
David P. Feldman $4,000 $122,257 (25)
John M. Fraser, $4,000 $ 73,563 (14)
Jr.
Robert R. Glauber $3,750 $103,549 (20)
James F. Henry $4,000 $ 59,973 (10)
Rosalind Gersten $3,750 $ 93,900 (20)
Jacobs
Irving Kristol $4,000 $ 59,973 (10)
Dr. Paul A. Marks $3,750 $ 55,223 (10)
Dr. Martin Peretz $4,000 $ 59,973 (10)
Bert W. Wasserman $4,000 $ 59,973 (10)
- ---------------
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $3,093 for all Board members as a group.

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 40 years old.

JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President,
General Counsel, Secretary and Clerk of the Distributor and Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From February 1992 to July 1994, he
served as Counsel for The Boston Company Advisors, Inc. He is 33 years
old.

RICHARD W. INGRAM, Vice President and Assistant Treasurer. Executive Vice
President of the Distributor and Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From March 1994 to November 1995, he was Vice President and
Division Manager for First Data Investor Services Group. From 1989 to
1994, he was Vice President, Assistant Treasurer and Tax Director -
Mutual Funds of The Boston Company, Inc. He is 42 years old.

MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 33 years old.

MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Senior Vice
President of Funds Distributor, Inc. and an officer of other investment
companies advised or administered by the Manager. From December 1989
through November 1996, he was employed by GE Investments where he held
various financial, business development and compliance positions. He
also served as Treasurer of the GE Funds and as Director of GE
Investment Services. He is 36 years old.

JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 35 years old.

DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. From December 1991 to March 1993, he
was employed as a Fund Accountant at The Boston Company, Inc. He is 28
years old.

ELIZABETH A. KEELEY, Vice President and Assistant Secretary. Vice President
of the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. She has
been employed by the Distributor since September 1995. She is 28 years
old.

The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.

The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on September 2, 1997.

The following shareholders are known by the Fund to own of record 5% or
more of the indicated Series' shares outstanding on September 2, 1997:

Shareholder Series Percentage of
Shares

Transamerica Occidental Balanced 7.50%
Life Insurance Capital 75.03%
Company Appreciation 61.51%
Separate Account VA-2L Disciplined Stock 55.60%
P.O. Box 33849 Growth and Income 85.98%
Charlotte, NC 28233- International 54.09%
3849 Equity 32.32%
International Value 78.11%
Limited Term High 69.73%
Income 15.78%
Money Market 73.59%
Quality Bond 69.02%
Small Cap 62.43%
Small Company Stock
Special Value
Zero Coupon 2000

First Transamerica Life Balanced 5.70%
Insurance Company Capital 20.94%
Separate Account VA - Appreciation 38.49%
2LNY Disciplined Stock 16.75%
P.O. Box 33849 Growth and Income 14.02%
Charlotte, NC 28233- International 8.62%
3849 Equity 10.54%
International Value 21.40%
Limited Term High 16.08%
Income 5.58%
Money Market 26.38%
Quality Bond 28.41%
Small Cap 18.37%
Small Company Stock
Special Value
Zero Coupon 2000

Nationwide Life Growth and Income 11.62%
Insurance
Nationwide NWVA-II
c/o IPO Portfolio
Accounting
P.O. Box 182029
Columbus, OH 43218-2029

MBCIC Balanced 86.79%
c/o Mellon Bank, N.A. Limited Term High 57.14%
919 North Market Street Income
Wilmington, DE 19801-
3023

Providian Life and Growth and Income 6.91%
Health Quality Bond 8.84%
Insurance Company
Insurance Company
Separate Account V
P.O. Box 32830
Louisville, KY
40232-2830

Provident Mutual Life & Growth and Income 5.16%
Annuity Company of Zero Coupon 2000 14.84%
America
P.O. Box 1717
Valley Forge, PA
19482-1717

APT Holdings Disciplined Stock 24.25%
Corporation International Value 37.29%
4500 New Linden Hill
Road
Wilmington, DE 19808-
2922

VALIC Separate Account Small Cap 67.57%
A
Division 18
2929 Allen Parkway L7-
01
Houston, Texas
77019-2197

A shareholder that beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed to be a "control person"
(as defined in the 1940 Act) of the Fund.

INVESTMENT ADVISORY AGREEMENTS

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."

The Manager provides advisory services pursuant to the Investment
Advisory Agreement (the "Agreement") with the Fund dated August 24, 1994, as
amended January 31, 1997. As to each Series, the Agreement is subject to
annual approval by (i) the Fund's Board or (ii) vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such
Series, provided that in either event the continuance also is approved by a
majority of the Board members who are not "interested persons" (as defined
in the 1940 Act) of the Fund or the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Agreement was
approved by shareholders of each Series (other than the Balanced, Growth and
Income, International Equity, Disciplined Stock, Limited Term High Income,
Small Company Stock and International Value Portfolios) on August 22, 1994
and by the shareholder of the Growth and Income and International Equity
Portfolios on August 2, 1994. The Agreement was last approved by the Fund's
Board, including a majority of the Board members who are not "interested
persons" of any party to the Agreement, at a meeting held on March 10, 1997.
As to each Series, the Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of the
shares of such Series, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically, as to the relevant
Series, in the event of its assignment (as defined in the 1940 Act).

The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President-Corporate Communications; Mary Beth Leibig, Vice President- Human
Resources; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Andrew
S. Wasser, Vice President-Information Systems; William V. Healey, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt and Frank V. Cahouet,
directors.

With respect to the Capital Appreciation Portfolio, the Fund has
entered into a Sub-Investment Advisory Agreement (the "Sarofim Sub-Advisory
Agreement") with Fayez Sarofim & Co. dated August 17, 1992. As to such
Series, the Sarofim Sub-Advisory Agreement is subject to annual approval by
(i) the Fund's Board or (ii) vote of a majority (as defined in the 1940 Act)
of the Series' outstanding voting securities, provided that in either event
the continuance also is approved by a majority of the Board members who are
not "interested persons" (as defined in the 1940 Act) of the Fund or Fayez
Sarofim & Co., by vote cast in person at a meeting called for the purpose of
voting on such approval. The Sarofim Sub-Advisory Agreement was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Sarofim Sub-Advisory
Agreement, at a meeting held on March 10, 1997. The Sarofim Sub-Advisory
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of the holders of a majority of the Series' outstanding
voting securities, or, upon not less than 90 days' notice, by Fayez Sarofim
& Co. The Sarofim Sub-Advisory Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).

The following persons are officers and/or directors of Fayez Sarofim &
Co.: Fayez S. Sarofim, Chairman of the Board and President; Raye G. White,
Executive Vice President, Secretary, Treasurer and a director; Russell M.
Frankel, Russell B. Hawkins, William K. McGee, Jr., Charles E. Sheedy and
Ralph B. Thomas, Senior Vice Presidents; and Nancy Daniel, Frank P. Lee and
James A. Reynolds, III, Vice Presidents.

The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. With respect to the Capital Appreciation Portfolio, Fayez Sarofim &
Co. provides day-to-day management of such Series' portfolio of investments,
subject to the supervision of the Manager and the Fund's Board. The Series'
adviser is responsible for investment decisions, and provides the Fund with
portfolio managers who are authorized by the Fund's Board to execute
purchases and sales of securities. The Series' portfolio managers are:

Series Portfolio Manager

Money Market Bernard W. Kiernan, Jr.
Patricia A. Larkin
Thomas Riordan

Quality Bond Michael Hoeh
Zero Coupon 2000 Roger King
Limited Term High Income Kevin M. McClintock
C. Matthew Olson
Gerald E. Thunelius

Small Cap Hilary R. Woods
Paul Kandel

Growth and Income Richard Hoey
Douglas D. Ramos

International Equity Ronald Chapman

Special Value Timothy M. Ghriskey
Kevin M. McClintock

Capital Appreciation Russell B. Hawkins
Fayez S. Sarofim

Disciplined Stock Bert Mullins

Small Company Stock James Wadsworth
Anthony J. Galise

International Value Sandor Cseh

Balanced Laurie Carroll
Ron Gala

The Manager and Fayez Sarofim & Co. maintain research departments with
professional portfolio managers and securities analysts who provide research
services for the Fund and for other funds advised by the Manager or Fayez
Sarofim & Co. All purchases and sales of each Series are reported for the
Board's review at the meeting subsequent to such transactions.

All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager (or, if
applicable, the Series' sub-investment adviser). The expenses borne by the
Fund include: organizational costs, taxes, interest, loan commitment fees,
dividends and interest on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager or any sub-investment adviser or any affiliates thereof,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of shareholders' reports and meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, and any
extraordinary expenses. Expenses attributable to a particular Series are
charged against the assets of that Series; other expenses of the Fund are
allocated among the Series on the basis determined by the Fund's Board,
including, but not limited to, proportionately in relation to the net assets
of each Series.

The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.

As compensation for its services, the Fund has agreed to pay the
Manager a monthly fee at the annual rate set forth in the Fund's Prospectus.
The fees paid by the Fund to the Manager with respect to each Series (other
than the Balanced and Limited Term High Income Portfolios) for the fiscal
years ended December 31, 1994, 1995 and 1996 (to the extent the Series was
operational) were as follows:

Fee Paid For
Year Ended
December 31, 1994

Advisory Reduction Net
Series Fee Payable in Fee Fee Paid

Capital $ 49,561 $ 49,561 $ 0
Appreciation
Growth and 5,069 5,069 0
Income*
International 5,080 5,080 0
Equity*
Money Market 108,958 108,958 0

Special Value 79,001 79,001 0

Zero Coupon 38,947 38,947 0
2000
Quality Bond 60,106 60,106 0
Small Cap 487,316 340,893 146,423
- ---------------

* From May 2, 1994 (commencement of operations) through December 31, 1994.

Fee Paid For
Year Ended
December 31, 1995

Advisory Reduction Net
Series Fee Payable in Fee Fee Paid

Capital $ 157,346 $ 6,445 $ 150,901
Appreciation
Growth and 194,344 8,743 185,601
Income
International 29,314 17,393 11,921
Equity
Money Market 187,396 10,251 177,145

Special Value 108,913 0 108,913

Zero Coupon 70,948 4,371 66,577
2000
Quality Bond 147,830 10,017 137,813
Small Cap 2,610,562 0 2,610,562

Fee Paid For
Year Ended
December 31, 1996

Advisory Reduction Net
Series Fee Payable in Fee Fee Paid

Capital $ 398,748 $ 0 $ 398,748
Appreciation
Growth and 1,135,998 0 1,135,998
Income
International 130,616 0 130,616
Equity
Money Market 258,755 0 258,755
Special Value 92,396 0 92,396
Zero Coupon 2000 128,717 0 128,717
Quality Bond 330,181 0 330,181
Small Cap 5,766,905 0 5,766,905
Disciplined 55,091 17,101 37,990
Stock*
International 43,069 21,498 21,571
Value*
Small Company 36,492 13,463 23,029
Stock*

_________________
* From April 30, 1996 (commencement of operations) through December 31,
1996.

As compensation for Fayez Sarofim & Co.'s services, the Fund has agreed
to pay Fayez Sarofim & Co. a monthly sub-advisory fee at the annual rate set
forth in the Fund's Prospectus. The fees payable by the Fund to Fayez
Sarofim & Co. with respect to the Capital Appreciation Portfolio for fiscal
years ended December 31, 1994, 1995 and 1996 amounted to $18,022, $57,217
and $145,000, respectively. However, no sub-advisory fee was paid to Fayez
Sarofim & Co. for the fiscal year ended December 31, 1994 pursuant to an
undertaking then in effect.

Prior to December 31, 1996, Comstock Partners, Inc. served as sub-
investment adviser for the Special Value Portfolio pursuant to a Sub-
Investment Advisory Agreement (the "Comstock Sub-Advisory Agreement") with
the Fund dated May 21, 1990. The Comstock Sub-Advisory Agreement was
terminated as of December 31, 1996. As compensation for Comstock Partners,
Inc.'s services, the Fund agreed to pay Comstock Partners, Inc. a monthly
sub-advisory fee at the annual rate of .375 of 1% of the value of the
Special Value Portfolio's average daily assets. The fees payable by the Fund
to Comstock Partners, Inc. with respect to the Special Value Portfolio for
the fiscal years ended December 31, 1994, 1995 and 1996 amounted to $79,001,
$108,913 and $92,396, respectively. The sub-advisory fee payable to Comstock
Partners, Inc. for fiscal 1994 was reduced by $44,151 pursuant to an
undertaking in effect, resulting in a net fee paid to Comstock Partners,
Inc. of $34,850 for fiscal 1994.

Prior to April 1, 1996, M&G Investment Management Limited served as sub-
investment adviser for the International Equity Portfolio pursuant to a Sub-
Investment Advisory Agreement with the Manager. Pursuant to such agreement,
the Manager agreed to pay M&G Investment Management Limited a monthly fee at
the annual rate of .30 of 1% of the value of the International Equity
Portfolio's average daily net assets. For the period May 2, 1994
(commencement of operations) through December 31, 1994, no sub-advisory fee
was paid by the Manager to M&G Investment Management Limited with respect to
the International Equity Portfolio pursuant to an undertaking then in
effect. For the fiscal year ended December 31, 1995 and for the period
January 1, 1996 through April 1, 1996, the Manager paid M&G Investment
Management Limited sub-advisory fees in the amount of $4,800 and $10,307,
respectively.

Prior to May 24, 1996, The Boston Company Asset Management, Inc. served
as sub-investment adviser for the International Value Portfolio pursuant to
a Sub-Investment Advisory Agreement with the Manager. Pursuant to such
agreement, the Manager agreed to pay The Boston Company Asset Management,
Inc. a monthly sub-advisory fee at the annual rate of .50 of 1% of the value
of the International Value Portfolio's average daily net assets. For the
period April 30, 1996 (commencement of operations) through May 24, 1996
(termination date of the Sub-Investment Advisory Agreement between the
Manager and The Boston Company Asset Management, Inc.), no sub-advisory fee
was paid by the Manager to The Boston Company Asset Management, Inc.

Prior to May 24, 1996, Laurel Capital Advisors served as sub-investment
adviser for the Disciplined Stock and Small Company Stock Portfolios
pursuant to a Sub-Investment Advisory Agreement with the Manager. Pursuant
to such agreement, the Manager agreed to pay Laurel Capital Advisors a
monthly sub-advisory fee at the annual rate set forth below:

Annual Fee as a Percentage
of Average Daily Net Assets
Average Daily Net Assets of each such Series

0 to $100 million .25%
$100 million to $1 billion .20%
$1 billion to $1.5 billion .15%
$1.5 billion or more .10%

For the period April 30, 1996 (commencement of operations) through May 24,
1996 (termination date of the Sub-Investment Advisory Agreement between the
Manager and Laurel Capital Advisors), no sub-advisory fee was paid by the
Manager to Laurel Capital Advisors.

The Manager (and, with respect to the Capital Appreciation Portfolio,
Fayez Sarofim & Co.) has agreed that if, in any fiscal year, the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the advisory fees, exceed
the expense limitation of any state having jurisdiction over the Fund, the
Fund may deduct from the payment to be made to the Manager (and, with
respect to the Capital Appreciation Portfolio, Fayez Sarofim & Co.), or the
Manager (and, with respect to the Capital Appreciation Portfolio, Fayez
Sarofim & Co.) will bear, such excess expense to the extent required by
state law. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.

The aggregate of the fees payable to the Manager (other than for the
Capital Appreciation Portfolio) is not subject to reduction as the value of
a Series' assets increases.

PURCHASE OF SHARES

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."

The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies.

REDEMPTION OF SHARES

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."

Redemption Commitment. The Fund has committed to pay in cash all
redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of a Series'
net assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Securities and Exchange Commission. In the
case of requests for redemption in excess of such amount, the Fund's Board
reserves the right to make payments in whole or part in securities or other
assets of the Series in case of an emergency or any time a cash distribution
would impair the liquidity of the Series to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Series' portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.

Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of
its net asset value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit to
protect the Fund's shareholders.

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."

Money Market Portfolio. The valuation of the Money Market Portfolio's
securities is based upon their amortized cost which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Series would receive if it sold the instrument.

The Fund's Board has established, as a particular responsibility within
the overall duty of care owed to the Money Market Portfolio's shareholders,
procedures reasonably designed to stabilize the Series' price per share as
computed for the purpose of purchases and redemptions at $1.00. Such
procedures include review of the Series' portfolio holdings by the Fund's
Board, at such intervals as it deems appropriate, to determine whether the
Series' net asset value per share calculated by using available market
quotations or market equivalents deviates from $1.00 per share based on
amortized cost. In such review, investments for which market quotations are
readily available will be valued at the most recent bid price or yield
equivalent for such securities or for securities of comparable maturity,
quality and type, as obtained from one or more of the major market makers
for the securities to be valued. Other investments and assets will be valued
at fair value as determined in good faith by the Fund's Board.

The extent of any deviation between the Money Market Portfolio's net
asset value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Fund's
Board. If such deviation exceeds 1/2 of l%, the Board members promptly will
consider what action, if any, will be initiated. In the event the Board
determines that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, it has agreed to
take such corrective action as it regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or establishing a net asset value per share by
using available market quotations or market equivalents.

Zero Coupon 2000, Limited Term High Income and Quality Bond Portfolios.
Substantially all of each Series' investments are valued each business day
by an independent pricing service (the "Service") approved by the Fund's
Board. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of municipal bonds of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. The Service's procedures are reviewed by the Fund's officers
under the general supervision of the Board. Short-term investments are not
valued by the Service and are carried at amortized cost, which approximates
value. Other investments that are not valued by the Service are valued at
the average of the most recent bid and asked prices in the market in which
such investments are primarily traded, or at the last sales price for
securities traded primarily on an exchange. In the absence of reported sales
of investments traded primarily on an exchange, the average of the most
recent bid and asked prices is used. Bid price is used when no asked price
is available. Investments traded in foreign currencies are translated to
U.S. dollars at the prevailing rates of exchange. Expenses and fees of a
Series, including the advisory fee (reduced by the expense limitation, if
any), are accrued daily and taken into account for the purpose of
determining the net asset value of shares.

Balanced, Capital Appreciation, Disciplined Stock, Growth and Income,
International Equity, International Value, Special Value, Small Company
Stock and Small Cap Portfolios. Each Series' portfolio securities are valued
at the last sale price on the securities exchange or national securities
market on which such securities are primarily traded. Securities not listed
on an exchange or national securities market, or securities in which there
were no transactions, are valued at the average of the most recent bid and
asked prices, except in the case of open short positions where the asked
price is used for valuation purposes. Bid price is used when no asked price
is available. Market quotations for foreign securities in foreign currencies
are translated into U.S. dollars at the prevailing rates of exchange.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value may not
take place contemporaneously with the determination of prices of many of the
Series' portfolio securities. Short-term investments are carried at
amortized cost, which approximates value. Any securities or other assets for
which recent market quotations are not readily available are valued at fair
value as determined in good faith by the Fund's Board. Expenses and fees,
including the advisory fees (reduced by the expense limitation, if any), are
accrued daily and taken into account for the purpose of determining the net
asset value of shares.

Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Fund's Board, are valued at fair value as determined
in good faith by the Fund's Board. The Fund's Board will review the method
of valuation on a current basis. In making their good faith valuation of
restricted securities, the Board members generally will take the following
factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a
public market exists usually will be valued at market value less the same
percentage discount at which purchased. This discount will be revised
periodically by the Fund's Board if the Board members believe that it no
longer reflects the value of the restricted securities. Restricted
securities not of the same class as securities for which a public market
exists usually will be valued initially at cost. Any subsequent adjustment
from cost will be based upon considerations deemed relevant by the Fund's
Board.

New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions
and Taxes."

Each Series (other than the Balanced and Limited Term High Income
Portfolios which had not commenced operations as of December 31, 1996) has
qualified as a "regulated investment company" under the Code for the fiscal
year ended December 31, 1996. It is expected that each of the Balanced and
Limited Term High Income Portfolios will qualify as a regulated investment
company under the Code. Each Series intends to continue to so qualify as
long as such qualification is in the best interests of its shareholders. As
a regulated investment company, each Series will pay no Federal income tax
on net investment income and net realized securities gains to the extent
that such income and gains are distributed to shareholders in accordance
with applicable provisions of the Code. To qualify as a regulated investment
company, the Series must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to its
shareholders, and meet certain asset diversification and other requirements.
The term "regulated investment company" does not imply the supervision of
management or investment practices or policies by any government agency.

Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
cost of the investment. Such a dividend or distribution would be a return of
investment in an economic sense, although taxable as stated in the
Prospectus. In addition, the Code provides that if a shareholder holds
shares of the Series for six months or less and has received a capital gain
distribution with respect to such shares, any loss incurred on the sale of
such shares will be treated as long-term capital loss to the extent of the
capital gain distribution received.

Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains and losses. However, all or a portion of the
gain or loss realized from the disposition of foreign currency, non-U.S.
dollar denominated debt instruments, and certain financial futures and
options, may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of the gain realized from the
disposition of certain market discount bonds will be treated as ordinary
income under Section 1276 of the Code. Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258 of the Code. "Conversion transactions"
are defined to include certain forward, futures, option and straddle
transactions, transactions marketed or sold to produce capital gains, or
transactions described in Treasury regulations to be issued in the future.

Under Section 1256 of the Code, gain or loss realized by a Series from
certain financial futures and options transactions (other than those taxed
under Section 988 of the Code) will be treated as 60% long-term capital gain
or loss and 40% short-term capital gain or loss. Gain or loss will arise
upon the exercise or lapse of such futures and options as well as from
closing transactions. In addition, any such futures or options remaining
unexercised at the end of the Series' taxable year will be treated as sold
for their then fair market value, resulting in additional gain or loss to
the Series characterized in the manner described above.

Offsetting positions held by a Series involving financial futures and
options may constitute "straddles." Straddles are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of straddles is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Sections 988 and 1256 of the Code. As such, all or a portion of any short-
or long-term capital gain from certain "straddle" transactions may be
recharacterized as ordinary income.

If a Series were treated as entering into straddles by reason of its
futures or options transactions, such straddles could be characterized as
"mixed straddles" if the futures or options transactions comprising such
straddles were governed by Section 1256 of the Code. The Series may make one
or more elections with respect to "mixed straddles." Depending upon which
election is made, if any, the results to the Series may differ. If no
election is made, to the extent the straddle rules apply to positions
established by the Series, losses realized by the Series will be deferred to
the extent of unrealized gain in any offsetting positions. Moreover, as a
result of the straddle and conversion transaction rules, short-term capital
loss on straddle positions may be recharacterized as long-term capital loss,
and long-term capital gain may be recharacterized as short- term capital
gain or ordinary income.

Recently enacted legislation added constructive sale provisions that
may apply if a Series enters into short sales, or futures, forwards, or
offsetting notional principal contracts with respect to appreciated stock
and certain debt obligations that it holds. In such event, the Series will
be taxed as if the appreciated property were sold at its fair market value
on the date the Series entered into such short sale or contract. Such
legislation similarly may apply if the Series has entered into a short sale,
option, futures or forward contact, or other position with respect to
property, that has appreciated in value, and the Series acquires that same
or substantially identical property. In such event, the Series will be
taxed as if the appreciated position were sold at its fair market value on
the date of such acquisition. Transactions that are identified hedging or
straddle transactions under other provisions of the Code can be subject to
the constructive sale provisions.

Investment by a Series in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders by causing a Series to recognize
income prior to the receipt of cash payments. For example, the Series could
be required to recognize annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute an amount
equal to such income in order to maintain its qualification as a regulated
investment company. In such case, the Series may have to dispose of
securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.

Since shareholders of the Fund will be the separate accounts of
Participating Insurance Companies, no discussion is included herein as to
the Federal income tax consequences at the level of the holders of the VA
contracts or VLI policies. For information concerning the Federal income tax
consequences to such holders, see the prospectuses for such VA contracts or
VLI policies.

PORTFOLIO TRANSACTIONS

General. Transactions are allocated to various dealers by the Fund's
portfolio managers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager (and, if applicable, the
Series' sub-investment adviser) to supplement its own research and analysis
with the views and information of other securities firms.

Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager (or, if applicable, the
Series' sub-investment adviser) in advising other funds or accounts and,
conversely, research services furnished to the Manager (or, if applicable,
the Series' sub-investment adviser) by brokers in connection with other
funds or accounts may be used in advising a Series. Although it is not
possible to place a dollar value on these services, it is the opinion of the
Manager (and, if applicable, the Series' sub-investment adviser) that the
receipt and study of such services should not reduce the overall research
department expenses.

The Fund contemplates that, consistent with the policy of obtaining the
most favorable net price, brokerage transactions may be conducted through
the Manager or its affiliates, including Dreyfus Investment Services
Corporation. The Fund's Board has adopted procedures in conformity with
Rule 17e-1 under the 1940 Act to ensure that all brokerage commissions paid
to the Manager or its affiliates are reasonable and fair. For the fiscal
years ended December 31, 1994 and 1995, no brokerage commissions were paid
to the Manager or its affiliates.

Money Market, Quality Bond and Zero Coupon 2000 Portfolios. Purchases
and sales of portfolio securities usually are principal transactions.
Portfolio securities ordinarily are purchased directly from the issuer or
from an underwriter or market maker. Usually no brokerage commissions are
paid by the Series for such purchases and sales. The prices paid to
underwriters of newly-issued securities usually include a concession paid by
the issuer to the underwriter, and purchases of securities from market
makers may include the spread between the bid and asked price. No brokerage
commissions were paid for the fiscal years ended December 31, 1994, 1995 and
1996. There were no concessions on principal transactions for the fiscal
years ended December 31, 1994, 1995 and 1996.

Balanced, Capital Appreciation, Disciplined Stock, Growth and Income,
International Equity, International Value, Limited Term High Income, Special
Value, Small Company Stock and Small Cap Portfolios. Brokers also will be
selected because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided the primary
consideration is met. Large block trades may, in certain cases, result from
two or more funds in the Dreyfus Family of Funds being engaged
simultaneously in the purchase or sale of the same security. Certain of the
Series' transactions in securities of foreign issuers may not benefit from
the negotiated commission rates available for transactions in securities of
domestic issuers. Higher portfolio turnover rates are likely to result in
comparatively greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated based upon knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.

In connection with its portfolio securities transactions for the fiscal
years ended December 31, 1994, 1995 and 1996 (except as otherwise
indicated), each Series indicated below paid brokerage commissions and,
where determinable, concessions on principal transactions, none of which was
paid to the Distributor, in the following amounts:

Brokerage Commissions on Principal
Commissions Paid Transactions

Name of Series 1994 1995 1996 1994 1995 1996

Special Value $38,724 $45,926 $78,823 $21,115 $3,165 0-

Small Cap 409,523 1,240,75 1,990,723 402,933 3,918,624 6,498,223

Capital
Appreciation 8,911 26,346 44,129 -0- 5,720 5,460

Growth and
Income 6,175(1) 277,680 897,148 -0-(1) 1,006,258 2,330,734

International
Equity 5,171(1) 41,932 240,958 -0-(1) -0- 47,150

Disciplined
Stock N/A N/A 20,541(2,3) N/A N/A -0-(2)

International
Value N/A N/A 35,327(2) N/A N/A -0-(2)

Small Company
Stock N/A N/A 12,888(2) N/A N/A 519(2)
_____________________________

(1) From May 2, 1994 (commencement of operations) through December 31,
1994.

(2) From April 30, 1996 (commencement of operations) through December 31,
1996.

(3) $7,143 was paid to Dreyfus Investment Services Corporation, a
subsidiary of Mellon Bank Corporation. This amount represents
approximately 35% of the aggregate brokerage commissions paid by the
Series for transactions involving approximately 37% of the aggregate
dollar value of transactions for which the Series paid brokerage
commissions.

YIELD AND PERFORMANCE INFORMATION

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."

The performance figures shown below do not reflect the separate charges
applicable to the variable annuity contracts and variable life policies
offered by Participating Insurance Companies.

The yield and effective yield for the seven-day period ended June 30,
1997 for the following Series were:

Effective
Series Yield Yield

Money Market 5.14% 5.27%

Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical pre-
existing Money Market Portfolio account having a balance of one share at the
beginning of a seven calendar day period for which yield is to be quoted,
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of
the account reflects the value of additional shares purchased with dividends
declared on the original share and any such additional shares and fees that
may be charged to shareholder accounts, in proportion to the length of the
base period and the Series' average account size, but does not include
realized gains and losses or unrealized appreciation and depreciation.
Effective annualized yield is computed by adding 1 to the base period return
(calculated as described above), raising that sum to a power equal to 365
divided by 7, and subtracting 1 from the result.

Yields will fluctuate and are not necessarily representative of future
results. The investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed.
See "Determination of Net Asset Value" for a discussion of the manner in
which the Series' price per share is determined.

The current yields for the 30-day period ended June 30, 1997 for each
of the following Series was:

Current
Series Yield

Zero Coupon 2000 5.84%
Quality Bond 6.42%

The current yield for the 30-day period ended August 31, 1997 for the
following Series was:

Current
Series Yield

Limited Term High Income 9.55%

Current yield is computed pursuant to a formula which operates as
follows: The amount of the relevant Series' expenses accrued for the 30-day
period (net of reimbursements) is subtracted from the amount of the
dividends and interest earned (computed in accordance with regulatory
requirements) by such Series during the period. That result is then divided
by the product of: (a) the average daily number of such Series' shares
outstanding during the period that were entitled to receive dividends, and
(b) the net asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be declared as
a dividend shortly thereafter. The quotient is then added to 1, and that sum
is raised to the 6th power, after which 1 is subtracted. The current yield
is then arrived at by multiplying the result by 2.

The average annual total return for the periods indicated for each of
the following Series was:

1-year period 5-year period 6.8 3 year
Series ended June 30, ended June 30, period
1997 1997 ended June 30,
1997

Zero Coupon 6.21% 7.99% 9.93%
Quality Bond 7.94% 8.75% 9.32%
Special Value 12.00% 7.58% 7.80%
Small Cap 13.69% 35.38% 46.24%

1-year period 4.24-year period
ended June 30, ended June 30,
1997 1997

Capital 36.31% 20.78%
Appreciation

1-year period 3.16-year period
ended June 30, ended June 30,
1997 1997

Growth and 12.22% 26.64%
Income
International 17.82% 10.22%
Equity

1-year period 1.17-year period
ended June 30, ended June 30,
1997 1997

Small Company 19.40% 15.89%
Stock
Disciplined 32.72% 32.92%
Stock
International 16.58% 14.01%
Value

0.34-year period
ended August 31,
1997

Balanced 41.07%
Limited Term
High Income 21.01%

Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. Computations of
average annual total return for periods of less than one year represent an
annualization of the Series' actual total return.

Total return for each of the following Series for the period indicated was:

Series August 31, 1990 (commencement of operations) to June 30, 1997

Zero Coupon 2000 90.93%
Quality Bond 83.81%
Special Value 67.04%
Small Cap 1,240.95%

April 5, 1993 (commencement of operations) to June 30, 1997

Capital Appreciation 122.69%

May 2, 1994 (commencement of operations) to June 30, 1997

Growth and Income 110.92%
International Equity 35.99%

May 1, 1996 (date in inception) to June 30, 1997

Small Company Stock 18.83%
Disciplined Stock 39.51%
International Value 16.58%

April 30, 1996 (commencement of operations) to June 30, 1997

Limited Term High Income 6.70%

May 1, 1997 (commencement of operations) to August 31, 1997

Balanced 12.41%

Total return is calculated by subtracting the amount of the relevant
Series' net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of the
period.

From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events. From time to time advertising materials for the Fund also may
refer to Morningstar ratings and related analyses supporting the rating.
From time to time, advertising materials from the Fund may refer to, or
include, commentary by the Fund's portfolio managers relating to their
investment strategy, asset growth of the Series, current or past business,
political, economic or financial conditions and other matters of general
interest to shareholders.

INFORMATION ABOUT THE FUND

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."

Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive, subscription or conversion rights and are freely
transferable.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of any
investment company, such as the Fund, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the rule.

The Fund sends annual and semi-annual financial statements to all its
shareholders.

TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS

Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses. For the fiscal year ended December 31, 1996, the Fund
paid the Transfer Agent $577.

The Bank of New York, 90 Washington Street, New York, New York 10286,
serves as custodian of the Fund's investments with respect to the
International Equity, International Value, Special Value and Money Market
Portfolios.

Mellon Bank, N.A., the Manager's parent, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, serves as the Fund's custodian with respect
to the Balanced, Capital Appreciation, Growth and Income, Limited Term High
Income, Quality Bond, Small Cap, Zero Coupon 2000, Small Company Stock and
Disciplined Stock Portfolios. Under a custody agreement with the Fund,
Mellon Bank, N.A. holds each such Series' securities and keeps all necessary
accounts and records. For its custody services, Mellon Bank, N.A. receives a
monthly fee based on the market value of each Series' assets held in custody
and receives certain securities transaction charges. For the period May 10,
1996 (effective date of Custody Agreement) through December 31, 1996,
$96,920 was charged to the Fund by Mellon Bank, N.A. pursuant to the Custody
Agreement.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX

Description of certain ratings:

S&P

Bond Ratings

AAA

Bonds rated AAA have the highest rating assigned to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher
rated categories.

BBB

Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.

Bonds rated BB have less near-term vulnerability to default than other
speculative grade bonds. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.

Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.

CCC

Bonds rated CCC have a current identifiable vulnerability to default,
and are dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, they are not likely
to have the capacity to pay interest and repay principal.

The rating CC is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC rating.

The rating C is typically applied to bonds subordinated to senior debt
which is assigned an actual or implied CCC- rating.

Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major ratings
categories, except in the AAA (Prime Grade) category.

Commercial Paper Ratings

An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1

This designation indicates the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.

A-2

Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.

Moody's

Bond Ratings

Aaa

Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

Baa

Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a rating for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.

Commercial Paper Ratings

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Fitch

Bond Ratings

The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.

AAA

Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB

Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements.

Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

CCC

Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.

Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.

Bonds rated C are in imminent default in payment of interest or
principal.

DDD, DD and D

Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.

Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.

Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

F-1+

Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1

Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.

Duff

Bond Ratings

AAA

Bonds rated AAA are considered highest credit quality. The risk factors
are negligible, being only slightly more than for risk-free U.S. Treasury
debt.

Bonds rated AA are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because
of economic conditions.

Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.

BBB

Bonds rated BBB are considered to have below average protection factors
but still considered sufficient for prudent investment. Considerable
variability in risk exists during economic cycles.

Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the
category.

Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.

CCC

Bonds rated CCC are well below investment grade securities. Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal. Protection factors are
narrow and risk can be substantial with unfavorable economic or industry
conditions and/or with unfavorable company developments.

Defaulted debt obligations. Issuer has failed to meet scheduled
principal and/or interest payments.

Plus (+) and minus (-) signs are used with a rating symbol (except AAA)
to indicate the relative position of a credit within the rating category.

Commercial Paper Rating

The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample asset
protection. Risk factors are minor.

FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS

The Fund's Annual Report to Shareholders for the fiscal year ended
December 31, 1996 for each Series (other than the Balanced and Limited Term
High Income Portfolios which had not commenced operations as of December 31,
1996) and Semi-Annual Report to Shareholders for the six-month period ended
June 30, 1997 (unaudited) for each Series are separate documents supplied
with this Statement of Additional Information, and the financial statements,
accompanying notes and, with respect to the Annual Reports to Shareholders,
reports of independent auditors appearing therein are incorporated by
reference in this Statement of Additional Information.

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31,1997 (UNAUDITED)
Common Stocks-46.2% Shares Value
------- -------
Basic Industries-2.5% Dow Chemical...................... 900 $ 79,650
<S> <C> <C> <C>
duPont (E.I.)deNemours & Co............ 3,800 236,788
Fort James............................. 3,512 147,504
International Paper.................... 900 47,475
Morton International................... 1,600 53,200
Owens-Illinois....................... (a) 1,400 48,737
Potash Corporation of Saskatchewan..... 900 66,544
Praxair................................ 1,300 69,469
Sealed Air........................... (a) 500 25,937
Westvaco............................... 600 20,325
-------
795,629
-------
Capital Spending-12.0% Altera................................ (a) 900 47,925
American Power Conversion............ (a) 1,900 49,875
Avnet....................................... 600 41,513
Caterpillar............................ 5,800 336,763
Ceridian............................. (a) 1,300 44,931
Cisco Systems........................ (a) 3,800 286,425
Cognizant.............................. 1,300 54,600
Compaq Computer...................... (a) 4,100 268,550
Cummins Engine......................... 700 53,856
Deere & Co............................. 2,600 145,600
Gateway 2000......................... (a) 2,400 93,900
General Dynamics....................... 800 63,700
General Electric....................... 4,400 275,000
HealthCare COMPARE................... (a) 1,000 55,750
Hewlett-Packard........................ 1,600 98,100
Ingersoll-Rand......................... 1,100 66,137
Intel....................................... 3,600 331,650
International Business Machines........ 1,300 131,138
Lexmark International Group, Cl.A.... (a) 1,500 52,500
Lucent Technologies.................... 2,400 186,900
Micron Technology.................... (a) 1,600 71,300
Microsoft............................ (a) 3,700 489,094
Northrop Grumman....................... 400 46,825
Oracle...................................... (a) 3,600 137,250
Parker-Hannifin........................ 2,000 128,625
3Com........................................ (a) 800 39,950
Tellabs..................................... (a) 3,600 214,875
Thiokol..................................... 500 39,812
USA Waste Service.................... (a) 900 37,800
-------
3,890,344
-------
Consumer Cyclical-5.6% Brunswick............. 1,400 42,700
Chrysler............................... 2,800 98,350
Dayton Hudson.......................... 2,200 125,400
Dillard's, Cl. A....................... 900 36,000
Federated Department Stores.......... (a) 4,000 168,000
Ford Motor............................. 3,500 150,500
Gannett................................ 400 38,975

</TABLE>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31,1997 (UNAUDITED)
Common Stocks (continued) Shares Value
------- -------
<S> <C> <C> <C>
Consumer Cyclical (continued) Gap........................ 2,200 $ 97,763
General Motors......................... 2,700 169,425
Goodyear Tire & Rubber................. 400 24,650
HFS......................................... (a) 800 44,550
King World Productions................. 1,000 39,750
Limited..................................... 3,300 75,075
MGM Grand............................ (a) 900 36,112
Magna International, Cl. A............. 500 33,125
Maytag................................. 1,200 32,925
New York Times, Cl. A.................. 2,400 113,400
News, A.D.R............................ 2,300 41,544
Payless ShoeSource................... (a) 400 25,650
Safeway.............................. (a) 2,900 147,719
Sears, Roebuck & Co.................... 1,400 79,450
TJX......................................... 3,600 99,000
Tommy Hilfiger....................... (a) 800 34,900
V.F......................................... 800 70,700
-------
1,825,663
-------
Consumer Staples-4.5% Avon Products.................... 1,400 89,688
Campbell Soup.......................... 1,700 78,837
Coca-Cola.............................. 7,000 401,187
Corning................................ 2,600 137,475
Dean Foods............................. 300 13,313
Dole Food.............................. 200 7,812
Gillette.................................... 1,300 107,656
Lauder (Estee)......................... 700 33,250
Philip Morris.......................... 5,900 257,388
Quaker Oats............................ 2,600 122,200
Ralston-Ralston Purina Group........... 1,200 108,000
Unilever, N.V. (New York Shares)....... 500 100,625
-------
1,457,431
-------
Energy-4.7% Atlantic Richfield............... 1,900 142,500
Burlington Resources................... 1,500 75,938
Chevron................................ 3,200 247,800
Coastal................................ 1,100 63,525
Diamond Offshore Drilling.............. 1,600 87,400
Exxon....................................... 4,800 293,700
NICOR.................................. 500 18,156
Phillips Petroleum..................... 2,500 118,906
Reading & Bates...................... (a) 1,900 68,994
Royal Dutch Petroleum (New York Shares) 2,300 116,725
Texaco...................................... 700 80,675
USX-Marathon Group..................... 2,800 91,175
Union Pacific Resources Group.......... 1,900 47,500
Williams............................... 1,400 65,187
-------
1,518,181
-------
</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31,1997 (UNAUDITED)
Common Stocks (continued) Shares Value
------- -------
<S> <C> <C> <C>
Health Care-4.6% Abbott Laboratories......... 3,600 $ 215,775
Amgen................................ (a) 2,600 128,863
Becton, Dickinson & Co................. 1,000 47,938
Bristol-Myers Squibb................... 2,900 220,400
Johnson & Johnson...................... 5,000 283,437
Merck & Co............................. 2,600 238,713
Oxford Health Plans.................. (a) 1,400 102,375
Schering-Plough........................ 4,600 220,800
Wellpoint Health Networks............ (a) 900 48,937
-------
1,507,238
-------
Interest Sensitive-7.6% Ahmanson (H.F.) & Co .......... 1,800 91,350
Allstate............................... 800 58,450
AMBAC.................................. 1,000 80,813
American National Insurance............ 200 19,400
AmSouth Bancorp........................ 1,800 75,713
BankAmerica............................ 4,100 269,831
Bankers Trust New York................. 1,600 166,000
Bear Stearns........................... 3,000 118,687
Chase Manhattan........................ 900 100,069
CIGNA.................................. 400 73,350
Citicorp............................... 700 89,337
Comerica............................... 1,100 77,893
Conseco................................ 2,400 103,200
EXEL........................................ 2,700 148,163
Federal National Mortgage Association.. 1,700 74,800
First Chicago.......................... 2,600 186,550
Green Tree Financial................... 1,800 79,088
MGIC Investment........................ 1,500 75,469
Norwest................................ 1,900 109,131
Republic New York...................... 500 53,531
SAFECO................................. 900 44,213
SouthTrust............................. 700 31,325
Student Loan Marketing Association..... 1,500 203,250
Travelers Group........................ 2,100 133,350
-------
2,462,963
-------
Mining & Metals-.5% Phelps Dodge.......................... 600 48,262
Reynolds Metals........................ 800 56,550
USX-U.S. Steel Group................... 1,200 42,150
-------
146,962
-------
Transportation-.7% CSX....................... 2,700 154,406
Delta Air Lines........................ 700 60,550
-------
214,956
-------
Utilities-3.5% Ameritech..................... 4,800 300,900
BellSouth.............................. 3,900 171,600
British Telecommunications, A.D.R...... 700 45,281
</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31,1997 (UNAUDITED)
Common Stocks (continued) Shares Value
------- -------
<S> <C> <C> <C>
Utilities (continued) Consolidated Edison........ 2,600 $ 79,625
DQE......................................... 1,300 41,275
Entergy................................ 3,000 74,437
PacifiCorp............................. 3,000 62,250
Pinnacle West Capital.................. 1,900 61,394
SBC Communications..................... 3,000 163,125
Southern............................... 1,600 33,700
Vodafone Group, A.D.R.................. 2,100 106,969
-------
1,140,556
-------
TOTAL COMMON STOCKS
(cost $13,236,065)................... $14,959,923
=======
Principal
Bonds and Notes-40.0% Amount
-------
U.S.Government & Agencies: U.S. Treasury Notes:
5.875%, 8/15/1998.................... $ 350,000 $ 350,219
5.125%, 12/31/1998................... 600,000 594,656
6.25%, 3/31/1999..................... 620,000 623,294
6.375%, 5/15/1999.................... 1,575,000 1,585,582
6%, 6/30/1999........................ 975,000 976,066
7.875%, 11/15/1999................... 600,000 622,781
8.875%, 5/15/2000.................... 600,000 642,000
6.25%, 8/31/2000..................... 975,000 978,961
8%, 5/15/2001........................ 700,000 741,891
6.125%, 12/31/2001................... 1,125,000 1,121,484
7.5%, 5/15/2002...................... 600,000 630,938
6.25%, 6/30/2002..................... 975,000 975,457
6.25%, 2/15/2003..................... 700,000 700,000
7.25%, 5/15/2004..................... 600,000 630,375
6.5%, 8/15/2005...................... 820,000 826,278
7%, 7/15/2006........................ 350,000 363,781
6.5%, 10/15/2006..................... 600,000 603,844
-------
TOTAL BONDS & NOTES
(cost $12,908,314)................... $12,967,607
=======
Short-Term Investments-12.4%
Agency Discount Notes-11.8% Federal Home Loan Banks;
5.48%, 9/2/1997...................... $ 3,800,000 $ 3,799,422
-------
U.S.Treasury Bills-.6%...... 5.12%, 11/6/1997..................... (b) 200,000 198,086
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,997,544).................... $ 3,997,508
=======
TOTAL INVESTMENTS (cost $30,141,923)........................................ 98.6% $31,925,038
==== =======
CASH AND RECEIVABLES (NET).................................................. 1.4% $ 468,850
==== =======
NET ASSETS.................................................................. 100.0% $32,393,888
==== =======

</TABLE>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO

Notes to Statement of Investments:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open Financial Futures positions.
<TABLE>
<CAPTION>

STATEMENT OF FINANCIAL FUTURES AUGUST 31, 1997 (UNAUDITED)
Market Value Unrealized
Covered Appreciation
Financial Futures Purchased Contracts by Contracts Expiration at 8/31/97
- ---------------------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
5 Year U.S.Treasury Notes.................... 27 $2,873,813 December '97 $2,531
Financial Futures Sold
- ----------------------
Standard & Poor's 500........................ 2 (912,800) December '97 6,900
----
$9,431
====
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED)
Cost Value
------- -------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $30,141,923 $31,925,038
Cash....................................... 257,981
Dividends and interest receivable.......... 241,716
Receivable for investment securities sold.. 17,854
-------
32,442,589
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 24,412
Payable for futures variation margin....... 7,990
Accrued expenses........................... 16,299
-------
48,701
-------
NET ASSETS.................................................................. $32,393,888
=======
REPRESENTED BY: Paid-in capital............................ $29,318,684
Accumulated undistributed investment income-net146,083
Accumulated net realized gain (loss) on investments 1,136,575
Accumulated net unrealized appreciation (depreciation)
on investments [including $9,431 net unrealized
appreciation on financial futures]-Note 5(b) 1,792,546
-------
NET ASSETS.................................................................. $32,393,888
=======
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 2,312,790
NET ASSET VALUE, offering and redemption price per share.................... $14.01
=======
SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF OPERATIONS
FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME: Interest................................... $ 244,509
Cash dividends (net of $1,272 foreign taxes
withheld at source).................... 103,313
------
Total Income......................... $ 347,822
EXPENSES: Management fee-Note 4(a)................... 73,222
Registration fees.......................... 8,885
Custodian fees-Note 4(a)................... 6,157
Professional fees.......................... 4,758
Shareholders' reports...................... 1,585
Trustees' fees and expenses-Note 4(b)...... 230
Shareholder servicing costs................ 21
Miscellaneous.............................. 939
------
Total Expenses....................... 95,797
------
INVESTMENT INCOME-NET....................................................... 252,025
------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 5:
Net realized gain (loss) on investments.... $ 934,377
Net realized gain (loss) on financial
futures:
Long transactions...................... 223,328
Short transactions..................... (21,130)
------
Net Realized Gain (Loss)............. 1,136,575
Net unrealized appreciation (depreciation) on investments
[including $9,431 net unrealized appreciation
on financial futures].................. 1,792,546
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 2,929,121
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $3,181,146
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1997 (UNAUDITED)
OPERATIONS:
<S> <C>
Investment income-net....................................................................... $ 252,025
Net realized gain (loss) on investments..................................................... 1,136,575
Net unrealized appreciation (depreciation) on investments................................... 1,792,546
-------
Net Increase (Decrease) in Net Assets Resulting from Operations........................... 3,181,146
-------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net....................................................................... (105,942)
-------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold............................................................... 29,225,578
Dividends reinvested........................................................................ 105,942
Cost of shares redeemed..................................................................... (12,836)
-------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions................... 29,318,684
-------
Total Increase (Decrease) in Net Assets................................................. 32,393,888
NET ASSETS:
Beginning of Period......................................................................... ----
-------
End of Period............................................................................... $32,393,888
=======
Undistributed investment income-net........................................................... $ 146,083
-------
Shares
-------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................................. 2,305,898
Shares issued for dividends reinvested...................................................... 7,801
Shares redeemed............................................................................. (909)
-------
Net Increase (Decrease) in Shares Outstanding............................................. 2,312,790
</TABLE>
=======

SEE NOTES TO FINANCIAL STATEMENTS.

Dreyfus Variable Investment Fund, Balanced Portfolio

Financial Highlights (unaudited)

Reference is made to page 3 of the Series's Prospectus dated October 1, 1997

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-General:
Dreyfus Variable Investment Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as an open-end management investment
company, operating as a series company currently offering thirteen series,
including the Balanced 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 investment results that are greater than the total return performance
of common stocks and bonds in the aggregate, as represented by a hybrid
index, 60% of which is composed of the common stocks in the Standard & Poor's
500 Composite Stock Price Index and 40% of which is composed of the bonds in
the Lehman Brothers Intermediate Government/Corporate Bond Index. The Dreyfus
Corporation ("Dreyfus") serves as the Series' investment adviser. Dreyfus is
a direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned
subsidiary of Mellon Bank Corporation. Premier Mutual Fund Services, Inc.
(the "Distributor") is the distributor of the Fund's shares, which are sold
without a sales charge.
As of August 31, 1997, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 2,007,364 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
NOTE 2-Significant Accounting Policies:
(a) Portfolio valuation: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange. Forward currency exchange contracts are
valued at the forward rate.
(b) 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.
(c) Dividends to shareholders: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid quarterly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that the net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(d) Federal income taxes: It is the policy of the Series to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes.

DREYFUS VARIABLE INVESTMENT FUND, BALANCED PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE 3-Bank Line of Credit:
The Fund 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 Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended August
31, 1997, the Fund did not borrow under the Facility.
NOTE 4-Investment Advisory Fee and Other Transactions With Affiliates:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the
investment advisory fee is computed at the annual rate of .75 of 1% of the
value of the Series' average daily net assets and is payable monthly. Dreyfus
had undertaken from May 1, 1997 (commencement of operations) through August
31, 1997 to reduce the management fee paid by the Series, exclusive of taxes,
brokerage, interest on borrowings, commitment fees and extraordinary expenses
to the extent that such expenses exceed an annual rate of 1.25% of the value
of the Series' average daily net assets. No expense reimbursement was
required for the period ended August 31, 1997.
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.
The Series compensates Mellon under a custody agreement to provide
custodial services for the Series. During the period ended August 31, 1997
$6,157 was charged by Mellon pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 5-Securities Transactions:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and financial futures, during the period
ended August 31, 1997, amounted to $33,176,906 and $7,970,210, respectively.
The Fund may invest in financial futures contracts in order to gain
exposure to or protect against changes in the market. The Fund is exposed to
market risk as a result of changes in the value of the underlying financial
instruments (see Statement of Financial Futures). Investments in financial
futures require the Fund to "mark to market" on a daily basis, which reflects
the change in the market value of the contracts at the close of each day's
trading. Typically, variation margin payments are received or made to reflect
daily unrealized gains or losses. When the contracts are closed, the Fund
recognizes a realized gain or loss. These investments require initial margin
deposits with a custodian, which consist of cash or cash equivalents, up to
approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded
and is subject to change. Contracts open at August 31, 1997, and their
related unrealized appreciation are set forth in the Statement of Financial
Futures.
(b) At August 31, 1997, accumulated net unrealized appreciation on
investments and financial futures was $1,792,546, consisting of $1,957,086
gross unrealized appreciation and $164,540 gross unrealized depreciation.
At August 31, 1997, 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).
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
Principal
Bonds and Notes-87.2% Amount Value
------- -------
Aerospace-4.3% Alliant Techsystems,
<S> <C> <C>
Sr. Sub. Notes, 11 3\4%, 2003................ $ 100,000 $ 111,000
Rocal, Ltd.,
Collateralized Global Medium Term Notes
(Gtd. by Embraer-Empresa Brasileira de
Aeronautica S.A.), 10 1\4%, 1998.............. 720,000 (a) 729,000
-------
840,000
-------
Broadcasting-2.8% Paxson Communications,
Sr. Sub. Notes, 11 5\8%, 2002......... 500,000 545,000
-------
Building Materials-5.7% Associated Materials,
Sr. Sub. Notes, 11 1\2%, 2003......... 500,000 533,750
Emcor Group,
Notes, Ser. C, 11%, 2001............. 560,657 591,493
-------
1,125,243
-------
Cable Television-3.4% CCA Holdings,
Sr. Sub. Notes, Zero Coupon, 1999.............. 932,840 (a) 660,000
-------
Consumer-19.7% Coleman Escrow,
Secured First Priority Discount Notes,
Zero Coupon, 2001.................... 1,500,000 (a) 990,000
Discovery Zone,
Sr. Notes, 13 1\2%, 2002 (Units)......... . 250,000 (a,b) 258,750
Revlon Worldwide,
Sr. Secured Discount Notes, Zero Coupon, 2001 2,250,000 1,603,125
Royal Crown,
Sr. Secured Notes, 9 3\4% 2000........ 1,000,000 1,017,500
-------
3,869,375
-------
Energy-4.4% Clark R & M Holdings,
Sr. Secured Notes, Ser. A, Zero Coupon, 2000 500,000 390,000
DeepTech International,
Sr. Secured Notes, 12%, 2000......... 450,000 479,250
-------
869,250
-------
Entertainment-1.9% Six Flags Theme Parks,
Sr. Sub. Notes, Zero Coupon, 1998........... 360,000 (c) 372,150
-------
Foreign-5.0%........... Call-Net Enterprises,
Sr. Discount Notes, Zero Coupon, 1999.... 500,000 (d) 445,625
Central Transport Rental Finance,
Secured Notes, 9 1\2%, 2003........... 500,000 525,000
-------
970,625
-------
Forest Products-5.5% Maxxam Group Holdings,
Sr. Secured Notes, Ser. B, 12%, 2003. 1,000,000 1,075,000
-------
Gaming-2.3% Coast Hotels and Casinos,
First Mortgage Notes, 13%, 2002...... 400,000 449,000
-------

</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
------- -------

Home Building-5.0% KHE Finance,
Sub. Notes (Gtd. by Hovnanian Enterprises),
<S> <C> <C> <C>
11 1\4%, 2002......................... $ 500,000 $ 521,250
Oriole Homes,
Sr. Notes, 12 1\2%, 2003.............. 500,000 462,500
-------
983,750
-------
Paper & Paper Related-2.1% Stone Container,
Sr. Notes, 11 7\8%, 1998.............. 400,000 417,000
-------
Retail-2.0% Duane Reade Holding,
Sub. Notes, Zero Coupon, 1999........ 500,000 (e) 398,750
-------
Steel-7.5% Earle M. Jorgensen,
Sr. Notes, 10 3\4%, 2000.............. 500,000 513,125
Republic Engineered Steels,
First Mortgage Notes, 9 7\8%, 2001.... 1,000,000 960,000
-------
1,473,125
-------
Supermarkets-2.9% TLC Beatrice International Holdings,
Sr. Secured Notes, 11 1\2%, 2005...... 500,000 565,000
-------
Textiles-5.3% Sassco Fashion,
Notes, 12 3\4%, 2004.................. 500,000 533,906
Willcox & Gibbs,
Sr. Notes, Ser. B, 12 1\4%, 2003...... 500,000 503,750
-------
1,037,656
-------
Transportation-7.4% TRISM,
Sr. Sub. Notes, 10 3\4%, 2000......... 500,000 500,000
ValuJet,
Sr. Notes, 10 1\4%, 2001.............. 1,000,000 940,000
-------
1,440,000
-------
TOTAL BONDS AND NOTES
(cost $16,794,017)................... $17,090,924
=======
Equity-Related Securities-14.7%
Convertible Bonds and Notes-9.4%
Broadcasting-2.6% Scandinavian Broadcasting,
Sub. Deb., 7 1\4%, 2005............... $ 500,000 $ 520,000
-------
Energy-3.6%................ Kelley Oil & Gas:
Deb., 8 1\2%, 2000.................... 450,000 446,625
Sub. Notes, 7 7\8%, 1999.............. 260,000 250,575
-------
697,200
-------
Restaurants-3.2% Boston Chicken,
Liquid Yield Option Notes, Zero Coupon, 2015 3,000,000 (f) 626,250
-------
TOTAL CONVERTIBLE BONDS AND NOTES...... 1,843,450
-------
</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Equity-Related Securities (continued) Shares Value
------- -------
Preferred Stocks-5.3%

Cable Television-2.4% Time Warner,
<S> <C> <C> <C>
Cum., Ser. K, $102.50................ 410 $ 467,913
-------
Gaming-2.9% Alliance Gaming, Ser. B,
Cum., $15.00......................... 5,706 580,585
-------
TOTAL PREFERRED STOCKS................. 1,048,498
-------
TOTAL EQUITY-RELATED SECURITIES
(cost $2,894,265).................... $ 2,891,948
=======
TOTAL INVESTMENTS (cost $19,688,282)........................................ 101.9% $19,982,872
==== =======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.9%) $ (382,191)
==== =======
NET ASSETS.................................................................. 100.0% $19,600,681
</TABLE>
==== =======

Notes to Statement of Investments:
(a) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualifed institutional buyers. At
August 31, 1997, these securities amounted to $2,637,750 or 13.5% of net
assets.
(b) With warrants to purchase Common Stock.
(c) Zero coupon until 6/15/1998, date on which a stated coupon rate of
121\4% becomes effective; the stated maturity is 6/15/2005.
(d) Zero coupon until 12/1/1999, date on which a stated coupon rate of
131\4% becomes effective; the stated maturity is 12/1/2004.
(e) Zero coupon until 9/15/1999, date on which a stated coupon rate of
15% becomes effective; the stated maturity is 9/15/2004.
(f) Security can be put at holder's option on various dates.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED)
Cost Value
------- -----
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $19,688,282 $19,982,872
Cash....................................... 206,230
Interest receivable........................ 329,169
Other assets............................... 196
-------
20,518,467
-------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 11,542
Bank loan payable-Note 3................... 885,000
Interest payable-Note 3.................... 2,063
Accrued expenses........................... 19,181
-------
917,786
-------
NET ASSETS.................................................................. $19,600,681
=======
REPRESENTED BY: Paid-in capital............................ $18,953,186
Accumulated undistributed investment income-net 321,718
Accumulated net realized gain (loss) on investments 31,187
Accumulated net unrealized appreciation (depreciation)
on investments-Note 5 ..................... 294,590
-------
NET ASSETS.................................................................. $19,600,681
=======
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 1,488,249
NET ASSET VALUE, offering and redemption price per share.................... $13.17
=======
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1997
(UNAUDITED)

INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest................................... $508,305
Cash dividends............................. 31,944
-----
Total Income......................... $540,249
EXPENSES: Investment advisory fee-Note 4(a).......... 30,773
Auditing fees.............................. 6,250
Registration fees.......................... 5,743
Prospectus and shareholders' reports....... 4,750
Custodian fees-Note 4(a)................... 2,151
Interest expense-Note 3.................... 2,063
Legal fees................................. 1,026
Shareholder servicing costs................ 156
Trustees' fees and expenses-Note 4(b)...... 82
Miscellaneous.............................. 1,188
-----
Total Expenses....................... 54,182
Less-reduction in investment advisory fee due to
undertaking-Note 4(a).................. (5,964)
-----
Net Expenses......................... 48,218
-----
INVESTMENT INCOME-NET....................................................... 492,031
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 5:
Net realized gain (loss) on investments.... $ 31,187
Net unrealized appreciation (depreciation)
on investments......................... 294,590
-----
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 325,777
-----
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $817,808
=====
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM APRIL 30, 1997 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1997
(UNAUDITED)
OPERATIONS:
<S> <C>
Investment income-net.................................................................... $ 492,031
Net realized gain (loss) on investments.................................................. 31,187
Net unrealized appreciation (depreciation) on investments................................ 294,590
-------
Net Increase (Decrease) in Net Assets Resulting from Operations........................ 817,808
-------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................................... (170,313)
-------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold............................................................ 18,923,068
Dividends reinvested..................................................................... 170,313
Cost of shares redeemed.................................................................. (140,195)
-------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions................ 18,953,186
-------
Total Increase (Decrease) in Net Assets.............................................. 19,600,681
NET ASSETS:
Beginning of Period...................................................................... ----
-------
End of Period............................................................................ $19,600,681
=======
Undistributed investment income-net.......................................................... $ 321,718
-------
Shares
-------
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................................................................. 1,485,764
Shares issued for dividends reinvested................................................... 13,244
Shares redeemed.......................................................................... (10,759)
-------
Net Increase (Decrease) in Shares Outstanding.......................................... 1,488,249
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>

Dreyfus Variable Investment Fund, Limited Term High Income Portfolio

Financial Highlights (unaudited)

Reference is made to page 3 of the Series' Prospectus dated October 1, 1997.

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-GENERAL:
Dreyfus Variable Investment Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as an open-end management investment
company, operating as a series company, currently offering thirteen series,
including the Limited Term High Income 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 maximize total return, consisting of capital
appreciation and current income. The Dreyfus Corporation ("Dreyfus") serves
as the Series' investment adviser. Dreyfus is a direct subsidiary of Mellon
Bank, N.A. ("Mellon") which is a wholly-owned subsidiary of Mellon Bank
Corporation. Premier Mutual Fund Services, Inc. is the distributor of the
Series' shares, which are sold without a sales charge.
As of August 31, 1997, MBIC Investment Corp., an indirect subsidiary of
Mellon Bank Corporation, held 849,967 shares of the Series.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES:
(a) Portfolio valuation: Investments in securities (excluding short-term
investments and U.S. Government obligations) are valued each business day by
an independent pricing service ("Service") approved by the Board of Trustees.
Investments for which quoted bid prices are readily available and are
representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the
Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. 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 in U.S. Government
obligations, including U.S. Treasury Bills, are valued at the mean between
quoted bid and asked prices. Short-term investments, excluding U.S. Treasury
Bills, are carried at amortized cost, which approximates value. Investments
denominated in foreign currencies are translated into U.S. dollars at the
prevailing rates of exchange.
(b) 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.
(c) Dividends to shareholders: It is the policy of the Series to declare
and pay dividends quarterly from investment income-net. Dividends from net
realized capital gain are normally declared and paid annually, but the Fund
may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code. To the extent that
net realized capital gain can be offset by capital loss carryovers, if any,
it is the policy of the Series not to distribute such gain.

DREYFUS VARIABLE INVESTMENT FUND, LIMITED TERM HIGH INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

(d) Federal income taxes: It is the policy of the Series to qualify as a
regulated investment company, if such qualification
is in the best interests of its shareholders, by complying with the
applicable provisions of the Internal Revenue Code, and to make distributions
of taxable income sufficient to relieve it from substantially all Federal
income and excise taxes.
NOTE 3-BANK LINE OF CREDIT:
The Series may borrow up to $10 million for leveraging purposes under a
short-term unsecured line of credit and participates with other
Dreyfus-managed funds in a $100 million unsecured line of credit primarily to
be utilized for temporary or emergency purposes, including the financing of
redemptions. Interest is charged to the Series at rates which are related to
the Federal Funds rate in effect at the time of borrowings. Outstanding
borrowings on August 31, 1997 amounted to $885,000.
The average daily amount of borrowings outstanding during the period
ended August 31, 1997 was approximately $115,000, with a related weighted
average annualized interest rate of 5.30%. The maximum amount borrowed at any
time during the period ended August 31, 1997 was $1.5 million.
NOTE 4-INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to an Investment Advisory Agreement with Dreyfus, the
investment advisory fee is computed at the annual rate of .65 of 1% of the
value of the Series' average daily net assets and is payable monthly. Dreyfus
had undertaken from April 30, 1997 (commencement of operations) through June
30, 1997, to reduce the management fee paid by the Series, exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses, to the
extent that such expenses exceed an annual rate of 1% of the value of the
Series' average daily net assets. The reduction in investment advisory fee,
pursuant to the undertaking, amounted to $5,964 during the period August 31,
1997.
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.
The Series compensates Mellon under a custody agreement to provide
custodial services for the Series. During the period ended August 31, 1997,
$2,151 was charged by Mellon pursuant to the custody agreement.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 5-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended August 31, 1997,
amounted to $21,435,587 and $2,156,865, respectively.
At August 31, 1997, accumulated net unrealized appreciation on
investments was $294,590, consisting of $421,573 gross unrealized
appreciation and $126,983 gross unrealized depreciation.
At August 31, 1997, 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

PART C. OTHER INFORMATION
_________________________

Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________

(a) Financial Statements:

Included in Part A of the Registration Statement

Condensed Financial Information--for the period May
1, 1997 (commencement of operations) to August 31, 1997
(Unaudited). Balanced Portfolio.

Condensed Financial Information--for the period
from April 30, 1997 (commencement of operations) to August
31, 1997 (Unaudited). Limited Term High Income Portfolio.

Condensed Financial Information--for the period
from April 30, 1996 (commencement of operations) to December
31, 1996; and for the six-month period ended June 30, 1997
(Unaudited). Disciplined Stock, Small Company Stock and
International Value Portfolios.

Condensed Financial Information--for the period
from April 5, 1993 (commencement of operations) to December
31, 1993; for each of the three years in the period ended
December 31, 1996; and for the six-month period ended June
30, 1997 (Unaudited). Capital Appreciation Portfolio.

Condensed Financial Information--for the period
from May 2, 1994 (commencement of operations) to December 31,
1994; for each of the two years in the period ended December
31, 1996; and for the six-month period ended June 30, 1997
(Unaudited). Growth and Income and International Equity
Portfolios.

Condensed Financial Information--for the period
from August 31, 1990 (commencement of operations) to December
31, 1990; for each of the six years in the period ended
December 31, 1996; and for the six-month period ended June
30, 1997 (Unaudited). All Series except Balanced, Limited
Term High Income, Capital Appreciation, Growth and Income,
Disciplined Stock, Small Company Stock, International Equity
and International Value Portfolios.

Included in Part B of the Registration Statement

Statement of Investments--August 31, 1997 (Unaudited).
Balanced and Limited Term High Income Portfolios.

Statement of Assets and Liabilities--August 31, 1997
(Unaudited). Balanced and Limited Term High Income
Portfolios.

Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________

Statement of Operations--for the period from May 1, 1997 to
August 31, 1997 (Unaudited). Balanced Portfolio.

Statement of Operations--for the period from April 30, 1997
to August 31, 1997 (Unaudited). Limited Term High Income
Portfolio.
Statement of Changes in Net Assets--for the period from May
1, 1997 to August 31, 1997 (Unaudited). Balanced Portfolio.

Statement of Changes in Net Assets--for the period from April
30, 1997 to August 31, 1997 (Unaudited). Limited Term High
Income Portfolio.

Notes to Financial Statements--for the period from May 1,
1997 to August 31, 1997 (Unaudited). Balanced Portfolio.

Notes to Financial Statements--for the period from April 30,
1997 to August 31, 1997 (Unaudited). Limited Term High
Income Portfolio.

The following are incorporated by reference to the each of
the Series' Annual Report and Semi-Annual Report to
shareholders:

Statement of Investments--June 30, 1997 (Unaudited). All
Series.

Statement of Investments--December 31, 1996 (Unaudited). All
Series except Balanced and Limited Term High Income
Portfolios.

Statement of Assets and Liabilities--June 30, 1997
(Unaudited). All Series.

Statement of Assets and Liabilities--December 31, 1996. All
Series except Balanced and Limited Term High Income
Portfolios.

Statement of Operations--for the period May 1, 1997
(commencement of operations) to June 30, 1997 (Unaudited).
Balanced Portfolio.

Statement of Operations--for the period April 30, 1997
(commencement of operations) to June 30, 1997 (Unaudited).
Limited Term High Income Portfolio.

Statement of Operations--for the period from April 30, 1996
(commencement of operations) to December 31, 1996; and the
six-month period ended June 30, 1997 (Unaudited).
Disciplined Stock, International Value and Small Company
Stock Portfolios.

Statement of Operations--December 31, 1996; and the six-month
period ended June 30, 1997 (Unaudited). All Series except
Balanced, Limited Term High Income, Disciplined Stock,
International Value and Small Company Stock Portfolios.

Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________

Statement of Changes in Net Assets--for the period May 1,
1997 (commencement of operations) to June 30, 1997
(Unaudited). Balanced Portfolio.

Statement of Changes in Net Assets--for the period from April
30, 1997 (commencement of operations) to June 30, 1997
Unaudited). Limited Term High Income Portfolio.

Statement of Changes in Net Assets--for the period April 30,
1996 (commencement of operations) to December 31, 1996; and
the six-month period June 30, 1997 (Unaudited). Disciplined
Stock, Small Company Stock and International Value
Portfolios.

Statement of Changes in Net Assets--for each of the two years
in the period ended December 31, 1996 and the six-month
period June 30, 1997 (Unaudited). All Series except
Balanced, Limited Term High Income, Disciplined Stock, Small
Company Stock and International Value Portfolios.

Notes to Financial Statements--for the period from May 1,
1997 (commencement of operations) to June 30, 1997
(Unaudited). Balanced Portfolio.

Notes to Financial Statements--for the period from April 30,
1997 (commencement of operations) to June 30, 1997
(Unaudited). Limited Term High Income Portfolio.

Notes to Financial Statements--for the period April 30, 1996
(commencement of operations) to December 31 1996; and the six-
month period ended June 30, 1997 (Unaudited). Disciplined
Stock, Small Company Stock and International Value
Portfolios.

Notes to Financial Statements--December 31, 1996 and the six-
month period ended June 30, 1997 (Unaudited). All Series
except Balanced, Limited Term High Income, Disciplined Stock,
Small Company Stock and International Value Portfolios.

Schedule III - Investment in Affiliates--December 31, 1996.
Small Cap Portfolio.

Reports of Ernst & Young LLP, Independent Auditors, dated
January 29 and January 31, 1997. All Series except Balanced
and Limited Term High Income Portfolios.

All other Schedules and financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.

Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________

(b) Exhibits:

(1) Registrant's Agreement and Declaration of Trust and Articles
of Amendment thereto are incorporated by reference to Exhibit (1)
of Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A, filed on April 19, 1995.

(2) Registrant's By-Laws, as amended.

(5)(a) Investment Advisory Agreement is incorporated by
reference to Exhibit (5)(a) of Post-Effective Amendment No. 18 to
the Registration Statement on From N-1A, filed on April 17, 1997.

(5)(b) Sub-Investment Advisory Agreement between the Registrant
and Fayez Sarofim and Co. is incorporated by reference to Exhibit
(5)(c) of Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A, filed on April 19, 1995.

(6) Distribution Agreement, as Revised, is incorporated by
reference to Exhibit (6) of Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A, filed on April 17, 1997.

(8)(a) Custody Agreement between the Fund and The Bank of New
York is incorporated by reference to Exhibit (8)(a) of Post-
Effective Amendment No. 13 to the Registration Statement on Form N-
1A, filed on April 19, 1995.

(8)(b) Custody Agreement between the Fund and Mellon Bank, N.A.
is incorporated by reference to Post-Effective Amendment No. 16 to
the Registration Statement on Form N-1A, filed on October 25,
1996.

(10) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A, filed on April 19, 1995.

(11) Consent of Independent Auditors.

(12) Financial Data Schedule.

(16) Schedules of Computation of Performance Data are incorporated
by reference to the Exhibit (16) of Post-Effective Amendment No.
11 to the Registration Statement on Form N-1A, filed on April 28,
1994.

Other Exhibits
______________

(a) Powers of Attorney and Certificates of
Secretary are incorporated by reference to Other
Exhibits of Post-Effective Amendment Nos. 12, 15 and 18
to the Registration Statement on Form N-1A, filed on
September 16, 1994, April 16, 1996, and April 17, 1997,
respectively.

Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________

Not Applicable

Item 26. Number of Holders of Securities.
_______ ________________________________

(1)
Title of Class
______________

Shares of Beneficial Interest
(Par value $.001)

(2)
Number of Record Holders
as of September 2, 1997
________________________

Balanced Portfolio 3
Capital Appreciation Portfolio 12
Disciplined Stock Portfolio 3
Growth and Income Portfolio 14
International Equity Portfolio 2
International Value Portfolio 3
Limited Term High Income Portfolio 3
Money Market Portfolio 3
Quality Bond Portfolio 6
Small Cap Portfolio 14
Small Company Stock Portfolio 3
Special Value Portfolio 4
Zero Coupon 2000 Portfolio 9

Item 27. Indemnification
_______ _______________

The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of Part II of
Pre-Effective Amendment No. 7 to the Registration Statement on Form
N-1A, filed on July 10, 1990.

Reference is also made to the Distribution Agreement previously
filed as Exhibit (6).

Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________

The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-
investment adviser or administrator. Dreyfus Management, Inc.,
another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.

SIGNATURES
---------------

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 25th day of September, 1997.

DREYFUS VARIABLE INVESTMENT FUND

BY: /s/Marie E. Connolly*
____________________________
MARIE E. CONNOLLY, PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.

Signatures Title Date
_______________________ ______________________________ ___________

/s/Marie E. Connolly* President and Treasurer (Principal 9/25/97
______________________________ Executive and Financial Officer)
Marie E. Connolly

/s/Joseph F. Tower* Assistant Treasurer (Principal 9/25/97
______________________________ Accounting Officer)
Joseph F. Tower

/s/Joseph S. DiMartino* Trustee 9/25/97
______________________________
Joseph S. DiMartino

/s/David P. Feldman* Trustee 9/25/97
______________________________
David P. Feldman

/s/John M. Fraser, Jr.* Trustee 9/25/97
______________________________
John M. Fraser, Jr.

/s/Robert R. Glauber* Trustee 9/25/97
______________________________
Robert R. Glauber

/s/James F. Henry* Trustee 9/25/97
______________________________
James F. Henry

/s/Rosalind Gersten Jacobs* Trustee 9/25/97
______________________________
Rosalind Gersten Jacobs

/s/Irving Kristol* Trustee 9/25/97
______________________________
Irving Kristol

/s/Dr. Paul A. Marks* Trustee 9/25/97
______________________________
Dr. Paul A. Marks

/s/Dr. Martin Peretz* Trustee 9/25/97
______________________________
Dr. Martin Peretz

/s/Bert W. Wasserman* Trustee 9/25/97
______________________________
Bert W. Wasserman

*BY: Elizabeth A. Keeley
__________________________
Elizabeth A. Keeley,
Attorney-in-Fact

BY-LAWS
OF
DREYFUS VARIABLE INVESTMENT FUND

ARTICLE 1
Agreement and Declaration of Trust and Principal Office

1.1. Agreement and Declaration of Trust. These By-Laws shall
be subject to the Agreement and Declaration of Trust, as from time
to time in effect (the "Declaration of Trust"), of the above-
captioned Massachusetts business trust established by the
Declaration of Trust (the "Trust").

1.2. Principal Office of the Trust. The principal office of
the Trust shall be located in New York, New York. Its resident
agent in Massachusetts shall be CT Corporation System, 2 Oliver
Street, Boston, Massachusetts, or such other person as the
Trustees from time to time may select.

ARTICLE 2
Meetings of Trustees

2.1. Regular Meetings. Regular meetings of the Trustees
may be held without call or notice at such places and at such
times as the Trustees from time to time may determine, provided
that notice of the first regular meeting following any such
determination shall be given to absent Trustees.

2.2. Special Meetings. Special meetings of the Trustees
may be held at any time and at any place designated in the call of
the meeting when called by the President or the Treasurer or by
two or more Trustees, sufficient notice thereof being given to
each Trustee by the Secretary or an Assistant Secretary or by the
officer or the Trustees calling the meeting.

2.3. Notice of Special Meetings. It shall be sufficient
notice to a Trustee of a special meeting to send notice by mail at
least forty-eight hours or by telegram at least twenty-four hours
before the meeting addressed to the Trustee at his or her usual or
last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to
any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her.
Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.

2.4. Notice of Certain Actions by Consent. If in
accordance with the provisions of the Declaration of Trust any
action is taken by the Trustees by a written consent of less than
all of the Trustees, then prompt notice of any such action shall
be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.

ARTICLE 3
Officers

3.1. Enumeration; Qualification. The officers of the
Trust shall be a President, a Treasurer, a Secretary, and such
other officers, if any, as the Trustees from time to time may in
their discretion elect. The Trust also may have such agents as
the Trustees from time to time may in their discretion appoint.
An officer may be but need not be a Trustee or shareholder. Any
two or more offices may be held by the same person.

3.2. Election. The President, the Treasurer and the
Secretary shall be elected by the Trustees upon the occurrence of
any vacancy in any such office. Other officers, if any, may be
elected or appointed by the Trustees at any time. Vacancies in
any such other office may be filled at any time.

3.3. Tenure. The President, Treasurer and Secretary
shall hold office in each case until he or she sooner dies,
resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the
pleasure of the Trustees.

3.4. Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as commonly are incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation or such other duties and powers as the
Trustees may from time to time designate.

3.5. President. Unless the Trustees otherwise provide,
the President shall preside at all meetings of the shareholders
and of the Trustees. Unless the Trustees otherwise provide, the
President shall be the chief executive officer.

3.6. Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and, subject to the
provisions of the Declaration of Trust and to any arrangement made
by the Trustees with a custodian, investment adviser or manager,
or transfer, shareholder servicing or similar agent, shall be in
charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.

3.7. Secretary. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be
kept therefor, which books or a copy thereof shall be kept at the
principal office of the Trust. In the absence of the Secretary
from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a
temporary Secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books.

3.8. Resignations and Removals. Any Trustee or officer
may resign at any time by written instrument signed by him or her
and delivered to the President or Secretary or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless
specified to be effective at some other time. The Trustees may
remove any officer elected by them with or without cause. Except
to the extent expressly provided in a written agreement with the
Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following
his or her resignation or removal, or any right to damages on
account of such removal.

ARTICLE 4
Committees

4.1. Appointment. The Trustees may appoint from their
number an executive committee and other committees. Except as the
Trustees otherwise may determine, any such committee may make
rules for conduct of its business.

4.2. Quorum; Voting. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may be
taken at a meeting by a vote of a majority of the members present
(a quorum being present).

ARTICLE 5
Reports

The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any
applicable law. Officers and Committees shall render such
additional reports as they may deem desirable or as may from time
to time be required by the Trustees.

ARTICLE 6
Fiscal Year

The fiscal year of the Trust shall be fixed, and shall
be subject to change, by the Board of Trustees.

ARTICLE 7
Seal

The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts," together with the name of the Trust
and the year of its organization cut or engraved thereon but,
unless otherwise required by the Trustees, the seal shall not be
necessary to be placed on, and in its absence shall not impair the
validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.

ARTICLE 8
Execution of Papers

Except as the Trustees generally or in particular cases
may authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the
Trustees shall be signed by the President, any Vice President, or
by the Treasurer and need not bear the seal of the Trust.

ARTICLE 9
Issuance of Share Certificates

9.1. Sale of Shares. Except as otherwise determined by
the Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
By-Laws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with the
provisions for determining value of assets of the Trust as stated
in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may
be necessary or desirable to carry out this Section 9.1.

9.2. Share Certificates. In lieu of issuing
certificates for shares, the Trustees or the transfer agent either
may issue receipts therefor or may keep accounts upon the books of
the Trust for the record holders of such shares, who shall in
either case, for all purposes hereunder, be deemed to be the
holders of certificates for such shares as if they had accepted
such certificates and shall be held to have expressly assented and
agreed to the terms hereof.

The Trustees at any time may authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by
him, in such form as shall be prescribed from time to time by the
Trustees. Such certificate shall be signed by the President or
Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued,
it may be issued by the Trust with the same effect as if he or she
were such officer at the time of its issue.

9.3. Loss of Certificates. The Trust, or if any
transfer agent is appointed for the Trust, the transfer agent with
the approval of any two officers of the Trust, is authorized to
issue and countersign replacement certificates for the shares of
the Trust which have been lost, stolen or destroyed subject to the
deposit of a bond or other indemnity in such form and with such
security, if any, as the Trustees may require.

9.4. Discontinuance of Issuance of Certificates. The
Trustees at any time may discontinue the issuance of share
certificates and by written notice to each shareholder, may
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.

ARTICLE 10
Indemnification

10.1. Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including persons who
serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including
but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil
or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such person may be
or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, except
with respect to any matter as to which such Covered Person shall
have been finally adjudicated in a decision on the merits in any
such action, suit or other proceeding not to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and except that no Covered
Person shall be indemnified against any liability to the Trust or
its Shareholders to which such Covered Person would otherwise be
subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including
counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust in
advance of the final disposition or any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article, provided that (a) such Covered
Person shall provide security for his undertaking, (b) the Trust
shall be insured against losses arising by reason of such Covered
Person's failure to fulfill his undertaking, or (c) a majority of
the Trustees who are disinterested persons and who are not
Interested Persons (as that term is defined in the Investment
Company Act of 1940) (provided that a majority of such Trustees
then in office act on the matter), or independent legal counsel in
a written opinion, shall determine, based on a review of readily
available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled
to indemnification.

10.2. Compromise Payment. As to any matter disposed
of (whether by a compromise payment, pursuant to a consent decree
or otherwise) without an adjudication in a decision on the merits
by a court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust or (b) is liable to the
Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best
interest of the Trust, after notice that it involves such
indemnification, by at least a majority of the Trustees who are
disinterested persons and are not Interested Persons (provided
that a majority of such Trustees then in office act on the
matter), upon a determination, based upon a review of readily
available facts (but not a full trial-type inquiry) that such
Covered Person acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust and is not liable to the Trust or its Shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of
readily available facts (but not a full trial-type inquiry) to the
effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and that such
indemnification would not protect such Covered Person against any
liability to the Trust to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. Any approval pursuant to this Section
shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with this Section
as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's
action was in the best interests of the Trust or to have been
liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.

10.3. Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which any such Covered Person may be
entitled. As used in this Article 10, the term "Covered Person"
shall include such person's heirs, executors and administrators,
and a "disinterested person" is a person against whom none of the
actions, suits or other proceedings in question or another action,
suit, or other proceeding on the same or similar grounds is then
or has been pending. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
such person.

10.4. Limitation. Notwithstanding any provisions in
the Declaration of Trust and these By-Laws pertaining to
indemnification, all such provisions are limited by the following
undertaking set forth in the rules promulgated by the Securities
and Exchange Commission:

In the event that a claim for
indemnification is asserted by a
Trustee, officer or controlling person
of the Trust in connection with the
registered securities of the Trust, the
Trust will not make such indemnification
unless (i) the Trust has submitted,
before a court or other body, the
question of whether the person to be
indemnified was liable by reason of
wilful misfeasance, bad faith, gross
negligence, or reckless disregard of
duties, and has obtained a final
decision on the merits that such person
was not liable by reason of such conduct
or (ii) in the absence of such decision,
the Trust shall have obtained a
reasonable determination, based upon a
review of the facts, that such person
was not liable by virtue of such
conduct, by (a) the vote of a majority
of Trustees who are neither interested
persons as such term is defined in the
Investment Company Act of 1940, nor
parties to the proceeding or (b) an
independent legal counsel in a written
opinion.

The Trust will not advance
attorneys' fees or other expenses
incurred by the person to be indemnified
unless the Trust shall have (i) received
an undertaking by or on behalf of such
person to repay the advance unless it is
ultimately determined that such person
is entitled to indemnification and one
of the following conditions shall have
occurred: (x) such person shall provide
security for his undertaking, (y) the
Trust shall be insured against losses
arising by reason of any lawful advances
or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an
independent legal counsel in a written
opinion, shall have determined that
based on a review of readily available
facts there is reason to believe that
such person ultimately will be found
entitled to indemnification.

ARTICLE 11
Shareholders

11.1. Meetings. A meeting of the shareholders shall
be called by the Secretary whenever ordered by the Trustees, or
requested in writing by the holder or holders of at least 10% of
the outstanding shares entitled to vote at such meeting. If the
meeting is a meeting of the shareholders of one or more series or
class of shares, but not a meeting of all shareholders of the
Trust, then only the shareholders of such one or more series or
classes shall be entitled to notice of and to vote at the meeting.
If the Secretary, when so ordered or requested, refuses or
neglects for more than five days to call such meeting, the
Trustees, or the shareholders so requesting may, in the name of
the Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary.

11.2. Access to Shareholder List. Shareholders of
record may apply to the Trustees for assistance in communicating
with other shareholders for the purpose of calling a meeting in
order to vote upon the question of removal of a Trustee. When ten
or more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 or
at least 1% of the outstanding shares, whichever is less, so
apply, the Trustees shall within five business days either:

(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on the books
of the Trust; or

(ii) inform such applicants of the approximate
number of shareholders of record and the approximate cost of
mailing material to them and, within a reasonable time thereafter,
mail, materials submitted by the applicants, to all such
shareholders of record. The Trustees shall not be obligated to
mail materials which they believe to be misleading or in violation
of applicable law.

11.3. Record Dates. For the purpose of determining
the shareholders of any series or class who are entitled to vote
or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other
distribution, the Trustees from time to time may fix a time, which
shall be not more than 90 days before the date of any meeting of
shareholders or the date of payment of any dividend or of any
other distribution, as the record date for determining the
shareholders of such series or class having the right to notice of
and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution, and in such case
only shareholders of record on such record date shall have such
right notwithstanding any transfer of shares on the books of the
Trust after the record date; or without fixing such record date
the Trustees may for any such purposes close the register or
transfer books for all or part of such period.

11.4. Place of Meetings. All meetings of the
shareholders shall be held at the principal office of the Trust or
at such other place within the United States as shall be
designated by the Trustees or the President of the Trust.

11.5. Notice of Meetings. A written notice of each
meeting of shareholders, stating the place, date and hour and the
purposes of the meeting, shall be given at least ten days before
the meeting to each shareholder entitled to vote thereat by
leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the
Trust. Such notice shall be given by the Secretary or an
Assistant Secretary or by an officer designated by the Trustees.
No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or
after the meeting by such shareholder or his attorney thereunto
duly authorized, is filed with the records of the meeting.

11.6. Ballots. No ballot shall be required for any
election unless requested by a shareholder present or represented
at the meeting and entitled to vote in the election.

11.7. Proxies. Shareholders entitled to vote may
vote either in person or by proxy in writing dated not more than
six months before the meeting named therein, which proxies shall
be filed with the Secretary or other person responsible to record
the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment of such
meeting but shall not be valid after the final adjournment of such
meeting. The placing of a shareholder's name on a proxy pursuant
to telephonic or electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify that such
instructions have been authorized by such shareholder shall
constitute execution of such proxy by or on behalf of such
shareholder.

11.8. Limitation on the Sale of Shares. Shares of
the Trust shall not be sold to individuals and entities other than
Participating Insurance Companies, as defined by the Trustees,
pursuant to variable annuity and variable life insurance
contracts, and Eligible Plans, as defined by the Trustees. Sales
of shares of the Trust to individuals or entities other than
Participating Insurance Companies or Eligible Plans are
unauthorized and shall be deemed invalid and void ab ibnitio.

ARTICLE 12
Amendments to the By-Laws

These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting
of the Trustees, or by one or more writings signed by such a
majority.

Dated: April 23, 1987
Amended: June 9, 1997

(..continued)

- -12-

0507691.01

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our reports
dated January 29, 1997 and January 31, 1997, which are incorporated by
reference,in this Registration Statement (Form N-1A No. 33-13690) of
Dreyfus Variable Investment Fund.

ERNST & YOUNG LLP

New York, New York
September 23, 1997

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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NAME> MANAGED ASSETS PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NUMBER> 07
<NAME> ZERO COUPON 2000 PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NAME> SMALL CAP PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NAME> DISCIPLINED STOCK PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
<SERIES>
<NUMBER> 11
<NAME> SMALL COMPANY STOCK PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NAME> INTERNATIONAL VALUE PORTFOLIO
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<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000813383
<NAME> DREYFUS VARIABLE INVESTMENT FUND
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<NAME> LIMITED TERM HIGH INCOME PORTFOLIO
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</TABLE>