DREYFUS LIFETIME PORTFOLIOS, INC.
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
GROWTH PORTFOLIO
INVESTOR CLASS AND CLASS R
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
OCTOBER 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus LifeTime Portfolios, Inc. (the "Fund"), dated October 1, 1995,
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 the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as each Portfolio's
investment adviser. Dreyfus has engaged Mellon Equity Associates ("Mellon
Equity") to serve as each Portfolio's sub-investment adviser and to provide
day-to-day management of each Portfolio's investments, subject to the
supervision of Dreyfus. Dreyfus and Mellon Equity are referred to
collectively as the "Advisers."
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . .B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . .B-13
Management Arrangements . . . . . . . . . . . . . . . . . . . . .B-17
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . .B-19
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . .B-20
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . .B-21
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . .B-23
Determination of Net Asset Value. . . . . . . . . . . . . . . . .B-26
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . .B-27
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . .B-28
Performance Information . . . . . . . . . . . . . . . . . . . . .B-29
Information About the Fund. . . . . . . . . . . . . . . . . . . .B-30
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . .B-31
Financial Statements. . . . . . . . . . . . . . . . . . . . . . .B-32
Report of Independent Auditors. . . . . . . . . . . . . . . . . .B-33
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Investment Approach
I. Asset Allocation Baseline. For each Portfolio, Mellon Equity will
establish an asset allocation baseline (the "Portfolio Baseline"). The
Portfolio Baseline describes target levels or relative weights for the
Portfolio's asset classes: Level One describes the relative weighing of
total assets between international assets, domestic assets, and money
market instruments; Level Two describes the relative weighing of
international and domestic assets between common stock and fixed-income
assets; and Level Three describes the relative weighing of domestic common
stock assets between large and small capitalization stocks. The following
table illustrates this hierarchy:
<TABLE>
<CAPTION>
Level One Level Two Level Three
Total Assets International Domestic Assets Domestic Equity
Assets
Money
Market Fixed Fixed
Portfolio Int'l Domestic Instruments Equity Income Equity Income Large Cap Small Cap
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME N/A 90% 10% N/A N/A 25% 75% 100% N/A
GROWTH
AND
INCOME 10% 90% * 50% 50% 50% 50% 80% 20%
GROWTH 15% 85% * 80% 20% 80% 20% 80% 20%
__________
* Not held as an asset class. Money market instruments held for transactional and liquidity purposes only.
</TABLE>
Mellon Equity will attempt to maintain relative asset class weights
consistent with the Portfolio Baseline as adjusted by the Active Allocation
Overlay described below. At any given time, however, actual weights will
not equal the Portfolio Baseline because of fluctuations in market values,
money market instruments held for transactional and liquidity purposes, and
Mellon Equity's active allocation overlay decisions as described below.
II. Active Allocation Overlay. For each of the Growth Portfolio and
the Growth and Income Portfolio, Mellon Equity will establish two active
allocation ranges ("Portfolio Overlay One") and ("Portfolio Overlay Two").
Portfolio Overlay One describes the amount of over/under weighing to the
Portfolio Baseline for the relative weighing between international and
domestic assets. Portfolio Overlay Two describes the amount of over/under
weighing to the Portfolio Baseline for the relative weighing of domestic
assets between common stock and fixed-income assets. The following table
illustrates these ranges:
<TABLE>
<CAPTION>
Portfolio Portfolio Overlay One Portfolio Overlay Two
<S> <C> <C>
Range for Relative Weighing of Range for Relative Weighing of
International and Domestic Assets Domestic Assets Between Equity
Assets and Fixed-Income Assets
GROWTH AND INCOME +/- 5% of Portfolio Baseline +/- 15% of Portfolio Baseline
GROWTH +/- 10% of Portfolio Baseline +20%/-15% of Portfolio Baseline
</TABLE>
The following examples illustrate Mellon Equity's allocation overlay
process:
Example 1: Given the Level One Portfolio Baseline for the Growth and
Income Portfolio of 10% of total assets in international securities and 90%
of total assets in domestic securities, under Portfolio Overlay One, Mellon
Equity could invest as much as 15% of the Growth and Income Portfolio's
total assets in international securities and 85% of its total assets in
domestic securities or as little as 5% of its total assets in international
securities and 95% of its total assets in domestic securities.
Example 2: Given the Level Two Portfolio Baseline for the Growth and
Income Portfolio of 50% of domestic assets in equity securities and 50% of
domestic assets in fixed-income securities, under Portfolio Overlay Two,
Mellon Equity could invest as much as 65% of the Growth and Income
Portfolio's assets invested in domestic assets in equity securities and 35%
of such domestic assets in fixed-income securities or as little as 35% of
the Portfolio's assets invested in domestic assets in equity securities and
65% of such domestic assets in fixed-income securities.
Under normal market circumstances, Mellon Equity expects to maintain
relative asset class weights consistent with the Portfolio Baseline
adjusted by Portfolio Overlay One and Portfolio Overlay Two as described
above. At any given time, however, actual weights may not fall within the
ranges suggested by the Portfolio Baseline adjusted by Portfolio Overlay
One and Portfolio Overlay Two because of fluctuations in market values,
cash and cash-equivalents held for transactional and liquidity purposes,
and Portfolio rebalancing.
Mellon Equity reserves the right to vary the relative asset class
weights and the percentage of assets invested in any asset class from the
Portfolio Baseline adjusted by Portfolio Overlay One and Portfolio Overlay
Two described above as the risk and return characteristics of either asset
classes or markets, as assessed by Mellon Equity, vary over time. None of
the Portfolios will be managed as a balanced portfolio, which would require
that at least 25% of the Portfolio's total assets be invested in fixed-
income securities.
III. Implementing the Active Allocation Overlay. To implement
Portfolio Overlay One, Mellon Equity will employ a proprietary country
asset allocation model (the "Country Model"). The Country Model evaluates
the return and risk characteristics of individual capital markets and their
correlation across countries, incorporates expected movements in currency
markets to determine expected U.S. dollar returns, and then employs an
international correlation model to recommend appropriate relative
weightings.
To implement Portfolio Overlay Two, Mellon Equity will employ a
proprietary domestic asset allocation model (the "Domestic Model"). The
Domestic Model evaluates the return and risk characteristics of the
domestic equity and fixed-income markets by comparing the valuation of
equity and fixed-income assets relative to their current market prices and
long-term values in the context of the current economic environment. Once
this analysis is completed, the Domestic Model recommends appropriate
relative weightings.
With respect to the Growth Portfolio and the Growth and Income
Portfolio, Mellon Equity will compare each such Portfolio's relative asset
class weights from time to time to that suggested by the Country Model and
the Domestic Model. Recommended changes will be implemented subject to
Mellon Equity's assessment of current economic conditions and investment
opportunities. From time to time, Mellon Equity may change the criteria
and methods used to implement the recommendations of the asset allocation
models.
IV. Asset Class Benchmarks. For each asset class, other than money
market instruments, a market-based index is designated as a benchmark or
reference for the respective asset class (the "Asset Class Benchmark").
The Asset Class Benchmarks are used in the investment management process as
described in the following section. The Asset Class Benchmarks are listed
in the following table:
<TABLE>
<CAPTION>
Asset Class Portfolios Asset Class Benchmark
<S> <C> <C>
Domestic Large Cap Equity Income, Growth and Income and Growth Standard & Poor's 500 Index
Domestic Small Cap Equity Growth and Income and Growth Russell 2000 Index
International Equity Growth and Income and Growth Morgan Stanley Capital International Europe,
Australia, Far East (Free) Index*
Domestic Fixed-Income Income, Growth and Income and Growth Lehman Brothers Government/Corporate
Intermediate Bond Index
International Fixed-Income Growth and Income and Growth J.P. Morgan Non-US Government Bond Index -
Hedged
____________________________
* In U.S. dollars
</TABLE>
Under normal market circumstances, Mellon Equity expects to use the
Asset Class Benchmarks as described below. Mellon Equity, however,
reserves the right to substitute another suitable Asset Class Benchmark if
the then-existing Asset Class Benchmark is no longer calculated, suffers a
material change in formula or content, fails to adequately reflect the
return characteristics of the asset class, or for any other reason, in the
judgment of Mellon Equity, is inappropriate.
V. Asset Class Investment Management. When constructing portfolios
for each asset class, Mellon Equity seeks to select securities which, in
the aggregate, have approximately the same investment characteristics as
those of the Asset Class Benchmark with expected returns equal to or better
than that of the Asset Class Benchmark. Some of the asset classes will be
managed on an indexed basis and Mellon Equity reserves the right, in its
judgment, to manage asset classes either actively or on an indexed basis
consistent with the Portfolio's investment objective.
For asset classes managed on an indexed basis, a statistically based
"sampling" technique will be used to construct portfolios. The sampling
technique is expected to be an effective means of substantially duplicating
the investment performance of the Asset Class Benchmark. It will not,
however, provide investment performance relative to the Asset Class
Benchmark with the same degree of accuracy that complete or full
replication would provide.
If possible, Mellon Equity will seek to fully replicate the holdings
of an Asset Class Benchmark when managing an indexed portfolio. Such a
strategy is limited by the number of securities in the Asset Class
Benchmark and will not provide investment performance equal to that of the
Asset Class Benchmark owing to certain factors, including Asset Class
Benchmark changes, calculation rules which assume dividends are reinvested
into the Asset Class Benchmark on ex-dividend dates and transaction costs
of rebalancing.
For asset classes that are actively managed, Mellon Equity will employ
proprietary valuation models to assist in the selection of stocks and in
the construction of portfolios that maintain the investment characteristics
of the Asset Class Benchmark consistent with the Portfolio's investment
objective. In its active investment process, Mellon Equity concentrates on
fundamental factors such as relative price/earnings ratios, relative book
to price ratios, earnings growth rates and momentum, and consensus earnings
expectations and changes in that consensus to value and rank stocks based
on expected relative performance to the Asset Class Benchmark.
Mellon Equity will seek to manage each asset class consistent with the
descriptions above and with each Portfolio's investment objective. Across
the Portfolios, it is not anticipated that each asset class will be managed
identically with respect to being an indexed portfolio or actively managed.
For example, the domestic equity, large cap asset class could be managed as
an index portfolio in the Income Portfolio while being actively managed in
the other Portfolios.
Mellon Equity may choose to combine Asset Class Benchmarks
proportionately if the amount of investable assets in a Portfolio is deemed
low in the judgment of Mellon Equity. For example, the domestic equity
large cap and small cap Asset Class Benchmarks could be combined
proportionately according to the Portfolio Baseline in order to create more
efficient portfolio management as deemed appropriate by Mellon Equity.
Mellon Equity would continue to provide investment management services as
described above, but would manage to the combined Asset Class Benchmark.
Portfolio Securities
Bank Obligations. Domestic commercial banks organized under Federal
law are supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose certificates of
deposit ("CDs") may be purchased by the Portfolio are insured by the FDIC
(although such insurance may not be of material benefit to the Portfolio,
depending on the principal amount of the CDs of each bank held by the
Portfolio) and are subject to Federal examination and to a substantial body
of Federal law and regulation. As a result of Federal or state laws and
regulations, domestic branches of domestic banks whose CDs may be purchased
by the Portfolio generally are required, among other things, to maintain
specified levels of reserves, are limited in the amounts which they can
loan to a single borrower and are subject to other regulation designed to
promote financial soundness. However, not all of such laws and regulations
apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks, such as CDs and time deposits ("TDs"), may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by
the terms of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of domestic
banks. These risks include foreign economic and political developments,
foreign governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign exchange controls and
foreign withholding and other taxes on interest income. These foreign
branches and subsidiaries are not necessarily subject to the same or
similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing
and financial record keeping requirements. In addition, less information
may be publicly available about a foreign branch of a domestic bank or
about a foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch
is located if the branch is licensed in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank
payable at or through all of its agencies or branches within the state.
The deposits of Federal and State Branches generally must be insured by the
FDIC if such branches take deposits of less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign
subsidiaries of domestic banks, by foreign branches of foreign banks or by
domestic branches of foreign banks, the Advisers carefully evaluate such
investments on a case-by-case basis.
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities acquired
by a Portfolio under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Portfolio that enters into them. In an attempt to reduce the
risk of incurring a loss on a repurchase agreement, each Portfolio will
enter into repurchase agreements only with domestic banks with total assets
in excess of one billion dollars, or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which the Portfolio 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. The Advisers
will monitor on an ongoing basis the value of the collateral to assure that
it always equals or exceeds the repurchase price. The Fund will consider
on an ongoing basis the creditworthiness of the institutions with which
each Portfolio enters into repurchase agreements.
Commercial Paper and Other Short-Term Corporate Obligations. Variable
rate demand notes include variable amount master demand notes, which are
obligations that permit the Portfolio to invest fluctuating amounts at
varying rates of interest pursuant to direct arrangements between the
Portfolio, as lender, and the borrower. These notes permit daily changes
in the amounts borrowed. As mutually agreed between the parties, the Fund
may increase the amount under the notes at any time up to the full amount
provided by the note agreement, or decrease the amount, and the borrower
may repay up to the full amount of the note without penalty. 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
Fund's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. In connection with floating and variable
rate demand obligations, the Advisers will consider, on an ongoing basis,
earning power, cash flow and other liquidity ratios of the borrower, and
the borrower's ability to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies, and the
Portfolio 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.
American, European and Continental Depositary Receipts. Each of the
Growth and Income Portfolio and Growth Portfolio may invest in the
securities of foreign issuers in the form of American Depositary Receipts,
European Depositary Receipts and Continental Depositary Receipts 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.
Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will be a
lapse of time between the Fund's 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,
if a substantial market of qualified institutional buyers develops pursuant
to Rule 144A under the Securities Act of 1933, as amended, for certain
unregistered securities held by a Portfolio, the Fund intends to treat such
securities as liquid securities in accordance with procedures approved by
the Fund's Board of Directors. Because it is not possible to predict with
assurance how the market for restricted securities pursuant to Rule 144A
will develop, the Fund's Board of Directors has directed the Advisers to
monitor carefully each Portfolio's 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 Portfolio's investing in such
securities may have the effect of increasing the level of illiquidity in
its investment portfolio during such period.
Management Policies
Each Portfolio engages to the extent described below in the following
practices in furtherance of its objective.
Options Transactions. The Portfolio may engage in options
transactions, such as purchasing or writing covered call or put options.
In return for a premium, the writer of a covered call option forfeits the
right to any appreciation in the value of the underlying security above the
strike price for the life of the option (or until a closing purchase
transaction can be effected). Nevertheless, the call writer retains the
risk of a decline in the price of the underlying security. The writer of a
covered put option accepts the risk of a decline in the price of the
underlying security. The size of the premiums that the Portfolio may
receive may be adversely affected as new or existing institutions,
including other investment companies, engage in or increase their option-
writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities
at the time the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and "out-
of-the-money," respectively. The Portfolio may write (a) in-the-money call
options when the Advisers expect that the price of the underlying security
will remain stable or decline moderately during the option period, (b) at-
the-money call options when the Advisers expect that the price of the
underlying security will remain stable or advance moderately during the
option period and (c) out-of-the-money call options when the Advisers
expect that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price,
the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put
options (the reverse of call options as to the relation of exercise price
to market price) may be utilized in the same market environments that such
call options are used in equivalent transactions.
So long as the Portfolio's obligation as the writer of an option
continues, the Portfolio may be assigned an exercise notice by the broker-
dealer through which the option was sold, requiring the Portfolio to
deliver, in the case of a call, or take delivery of, in the case of a put,
the underlying security against payment of the exercise price. This
obligation terminates when the option expires or the Portfolio effects a
closing purchase transaction. The Portfolio can no longer effect a closing
purchase transaction with respect to an option once it has been assigned an
exercise notice.
While it may choose to do otherwise, each Portfolio generally will
purchase or write only those options for which the Advisers believe there
is an active secondary market so as to facilitate closing transactions.
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 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 otherwise may 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 Portfolio 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.
Stock Index Options. Each Portfolio may purchase and write put and
call options on stock indices, to the extent consistent with the
Portfolio's management policies. A stock index fluctuates with changes in
the market values of the stocks included in the index.
Options on stock indices are similar to options on stock except that
(a) the expiration cycles of stock index options are generally monthly,
while those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of a stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied
by (ii) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of the stock index upon which the option is
based being greater than, in the case of a call, or less than, in the case
of a put, the exercise price of the option. The amount of cash received
will be equal to such difference between the closing price of the index and
the exercise price of the option expressed in dollars times a specified
multiple. The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a
closing transaction on an exchange or it may let the option expire
unexercised.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option, the writer of the option will deliver to the holder of the
option the futures position and the accumulated balance in the writer's
futures margin account, which represents the amount by which the market
price of the futures contract exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on the futures
contract. The potential loss related to the purchase of options on futures
contracts is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the time of sale,
there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily and
that change would be reflected in the net asset value of the Portfolio.
Foreign Currency Transactions. If the Growth and Income Portfolio or
Growth Portfolio enters into a currency transaction, it will deposit, if so
required by applicable regulations, with the Fund's custodian cash or
readily marketable securities in a segregated account of the Portfolio in
an amount at least equal to the value of the Portfolio's total assets
committed to the consummation of the forward contract. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account so that the value of the account
will equal the amount of the Portfolio's commitment with respect to the
contract.
At or before the maturity of a forward contract, the Portfolio either
may sell a security and make delivery of the currency, or retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Portfolio will obtain,
on the same maturity date, the same amount of the currency which it is
obligated to deliver. If the Portfolio retains the portfolio security and
engages in an offsetting transaction, the Portfolio, at the time of
execution of the offsetting transaction, will insure a gain or loss to the
extent movement has occurred in forward contract prices. Should forward
prices decline during the period between the Portfolio's entering into a
forward contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Portfolio will
realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Portfolio will suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The cost to the Portfolio of engaging in currency transactions varies
with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because transactions in
currency exchange usually are conducted on a principal basis, no fees or
commissions are involved. The use of forward currency exchange contracts
does not eliminate fluctuations in the underlying prices of the securities,
but it does establish a rate of exchange that can be achieved in the
future. If a devaluation generally is anticipated, the Portfolio may not
be able to contract to sell the currency at a price above the devaluation
level it anticipates. The requirements for qualification as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), may cause each of these Portfolios to restrict the degree to which
it engages in currency transactions. See "Dividends, Distributions and
Taxes."
Lending Portfolio Securities. To a limited extent, each Portfolio may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the
Portfolio can increase its income through the investment of the cash
collateral. For purposes of this policy, the Fund considers collateral
consisting of short-term U.S. Government securities or irrevocable letters
of credit issued by banks whose securities meet the standards for
investment by the Portfolio to be the equivalent of cash. From time to
time, the Portfolio may return to the borrower or a third party which is
unaffiliated with the Fund, 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 Portfolio 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 Portfolio must be able to terminate the loan at any time; (4) the
Portfolio 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 Portfolio 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 of Directors must terminate the loan and regain the right to vote the
securities if a material event adversely affecting the investment occurs.
These conditions may be subject to future modification.
Investment Restrictions
Each Portfolio has adopted investment restrictions numbered 1 through
10 as fundamental policies, which cannot be changed, as to a Portfolio,
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "Act")) of such Portfolio's
outstanding voting shares. Investment restrictions numbered 11 through 16
are not fundamental policies and may be changed by vote of a majority of
the Fund's Directors at any time. No Portfolio may:
1. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Portfolio's 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.
2. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to
75% of the Portfolio's total assets.
3. Invest in commodities, except that the Portfolio may purchase and
sell options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
4. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Portfolio
may purchase and sell securities that are secured by real estate or issued
by companies that invest or deal in real estate.
5. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33-1/3% of the Portfolio's 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.
6. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the
Portfolio 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 of Directors.
7. Act as an underwriter of securities of other issuers, except to
the extent the Portfolio may be deemed an underwriter under the Securities
Act of 1933, as amended, by virtue of disposing of portfolio securities.
8. Invest more than 25% of the value of its 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.
9. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 3, 5, 12 and 13 may be deemed to give rise to a
senior security.
10. Purchase securities on margin, but the Portfolio 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.
11. Invest in the securities of a company for the purpose of
exercising management or control, but the Portfolio will vote the
securities it owns in its portfolio as a shareholder in accordance with its
views.
12. 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.
13. Purchase, sell or write puts, calls or combinations thereof,
except as may be described in the Fund's Prospectus and this Statement of
Additional Information.
14. 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 the Portfolio's investments in all such
companies to exceed 5% of the value of its total assets.
15. 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 the Portfolio's net assets
would be so invested.
16. Purchase securities of other investment companies, except to the
extent permitted under the Act.
Each Portfolio may invest, notwithstanding any other investment
restriction (whether or not fundamental), all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies and
restrictions as the Portfolio.
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 Portfolio shares in certain
states. Should the Fund determine that a commitment is no longer in the
best interest of the Portfolio and its shareholders, the Fund reserves the
right to revoke the commitment by terminating the sale of such Portfolio's
shares in the state involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
LUCY WILSON BENSON, Director. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation, General RE Corporation and
Logistics Management Institute. She is also a Trustee of the Alfred
P. Sloan Foundation, Vice Chairman of the Board of Trustees of
Lafayette College, Vice Chairman of the Citizens Network for Foreign
Affairs and a member of the Council on Foreign Relations. From 1980
to 1994, Mrs. Benson was a director of the Grumman Corporation.
Mrs. Benson served as a consultant to the U.S. Department of State and
to SRI International from 1980 to 1981. From 1977 to 1980, she was
Under Secretary of State for Security Assistance, Science and
Technology. Mrs. Benson is 67 years old and her address is 46 Sunset
Avenue, Amherst, Massachusetts 01002.
* DAVID W. BURKE, Director. Since August 1994, Consultant to Dreyfus.
From October 1990 to August 1994, Vice President and Chief
Administrative Officer of Dreyfus. From 1977 to 1990, Mr. Burke was
involved in the management of national television news, as Vice
President and Executive Vice President of ABC News, and subsequently
as President of CBS News. Mr. Burke is 59 years old and his address
is 200 Park Avenue, New York, New York 10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board for various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, 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 to December
31, 1994, he was a director of Mellon Bank Corporation. He is
Chairman of the Board of the Noel Group, Inc., a venture capital
company; a trustee of Bucknell University; and a director of the
Muscular Dystrophy Association, HealthPlan Services Corporation,
Belding Heminway, Inc., a manufacturer and marketer of industrial
threads, specialty yarns, home furnishings and fabrics, Curtis
Industries, a national distributor of security products, chemicals and
automotive and other hardware, Simmons Outdoor Corporation, and
Staffing Resources, Inc. He is 51 years old and his address is 200
Park Avenue, New York, New York 10166.
MARTIN D. FIFE, Director. Chairman of the Board of Magar, Inc., a company
specializing in financial products and developing early stage
companies. In addition, Mr. Fife is Chairman of the Board and Chief
Executive Officer of Skysat Communications Network Corporation, a
company developing telecommunications systems. Mr. Fife also serves
on the boards of various other companies. Mr. Fife is 68 years old
and his address is 405 Lexington Avenue, New York, New York 10174.
WHITNEY I. GERARD, Director. Partner of the New York City law firm of
Chadbourne & Parke. Mr. Gerard is 59 years old and his address is 30
Rockefeller Plaza, New York, New York 10112.
ROBERT R. GLAUBER, Director. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University, since January 1992. Mr. Glauber 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 and, from 1985 to 1989, Chairman of its Advanced
Management Program. Mr. Glauber is 56 years old and his address is 79
John F. Kennedy Street, Cambridge, Massachusetts 02138.
ARTHUR A. HARTMAN, Director. Senior consultant with APCO Associates Inc.
From 1981 to 1987, he was United States Ambassador to the former
Soviet Union. He is a director of the ITT Hartford Insurance Group,
Ford Meter Box Corporation, Lawter International and a member of the
advisory councils of several other companies, research institutes and
foundations. Ambassador Hartman is Chairman of First NIS Regional
Fund (ING/Barings Management). He is a former President of the
Harvard Board of Overseers. Mr. Hartman is 69 years old and his
address is 2738 McKinley Street, N.W., Washington, D.C. 20015.
GEORGE L. PERRY, Director. An economist and Senior Fellow at the Brookings
Institution since 1969. He is co-director of the Brookings Panel on
Economic Activity and editor of its journal, The Brookings Papers. He
is also a director of the State Farm Mutual Automobile Association,
State Farm Life Insurance Company and Federal Realty Investment Trust.
Mr. Perry is 60 years old and his address is 1775 Massachusetts
Avenue, N.W., Washington, D.C. 20015.
PAUL WOLFOWITZ, Director. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to 1993,
Under Secretary of Defense for Policy. From 1986 to 1989, he was the
U.S. Ambassador to the Republic of Indonesia. From 1982 to 1986, he
was Assistant Secretary of State for East Asian and Pacific Affairs,
Department of State. He is a director of Hasbro, Inc. Mr. Wolfowitz
is 50 years old and his address is 1740 Massachusetts Avenue, N.W.,
Washington, D.C. 20036.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.
The Fund typically pays its Directors 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 estimated amount of
compensation payable by the Fund to each Director for the fiscal year
ending April 30, 1996, and the aggregate amount of compensation paid to
each Director 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, 1994, is as follows:
<TABLE>
<CAPTION>
(3) (5)
(2) Pension or (4) Total Compensation
(1) Aggregate Retirement Benefits Estimated Annual from Fund and
Name of Board Compensation from Accrued as Part of Benefits Upon Fund Complex Paid
Member Fund* Fund's Expenses Retirement to Board Member
<S> <C> <C> <C> <C>
Lucy Wilson Benson $2,000 none none $ 64,459 (13)
David W. Burke $2,000 none none $ 27,878 (51)
Joseph S. DiMartino $2,500 none none $445,000** (93)
Martin D. Fife $2,000 none none $ 51,750 (11)
Whitney I. Gerard $2,000 none none $ 52,000 (11)
Robert R. Glauber $2,000 none none $ 79,696 (20)
Arthur A. Hartman $2,000 none none $ 52,000 (11)
George L. Perry $2,000 none none $ 52,000 (11)
Paul Wolfowitz $2,000 none none $ 32,631 (10)
______________________________
* Amount does not include reimbursed expenses for attending Board meetings, which are estimated to be approximately $708
for all Directors as a group.
** Estimated amount for the year ending December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From December 1991 to
July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate
at Ropes & Gray. He is 30 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From September 1992 to
August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From 1988 to
August 1994, he was manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by
Dreyfus. 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 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From 1984 to July 1994, he was Assistant
Vice President in the Mutual Fund Accounting Department of Dreyfus.
He is 59 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers, as a group, owned less than 1% of the shares
of Common Stock of each Portfolio outstanding on September 14, 1995.
The following persons are known by the Fund to own 5% or more of the
outstanding voting securities of the indicated Portfolio on September 14,
1995: Growth and Income Portfolio, Investor Class -- Allomon Corporation,
C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank Center 151-657,
Pittsburgh, Pa. 15258 - 99.6765%; Growth and Income Portfolio, Class R --
Allomon Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank
Center 151-657, Pittsburgh, Pa. 15258 - 92.7612%; Income Portfolio,
Investor Class -- Allomon Corporation, C/O Mellon Bank, ATTN: John Gaylord,
1 Mellon Bank Center 151-657, Pittsburgh, Pa. 15258 - 99.6359%; Income
Portfolio, Class R - Allomon Corporation, C/O Mellon Bank, ATTN: John
Gaylord, 1 Mellon Bank Center 151-657, Pittsburgh, Pa. 15258 - 99.7625%;
Growth Portfolio, Investor Class -- Allomon Corporation, C/O Mellon Bank,
ATTN: John Gaylord, 1 Mellon Bank Center 151-657, Pittsburgh, Pa. 15258 -
99.6359%; Growth and Income Portfolio, Class R -- Allomon Corporation, C/O
Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank Center 151-657, Pittsburgh,
Pa. 15258 - 99.7819%.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
Management Agreement. Dreyfus supervises investment management of
each Portfolio pursuant to the Management Agreement (the "Management
Agreement") dated August 24, 1994, as amended February 2, 1995, between
Dreyfus and the Fund. As to each Portfolio, the Management Agreement is
subject to annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Portfolio, provided that in either event the continuance
also is approved by a majority of such Directors who are not "interested
persons" (as defined in the Act) of the Fund or Dreyfus, by vote cast in
person at a meeting called for the purpose of voting on such approval. As
to each Portfolio, the Management Agreement is terminable without penalty,
on 60 days' notice, by the Fund's Board of Directors or by vote of the
holders of a majority of such Portfolio's shares, or, upon not less than 90
days' notice, by Dreyfus. The Management Agreement will terminate
automatically, as to the relevant Portfolio in the event of its assignment
(as defined in the Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, 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; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; Barbara E. Casey, Vice President-Dreyfus
Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Henry D.
Gottmann, Vice President-Retail Sales and Service; Mark N. Jacobs, Vice
President-Legal and Secretary; Daniel C. Maclean, Vice President and
General Counsel; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting;
Andrew S. Wasser, Vice President-Information Services; Katherine C.
Wickham, Vice President-Human Resources; Maurice Bendrihem, Controller;
Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V.
Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M. Smerling and
David B. Truman, directors.
Dreyfus 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. Dreyfus also may make such advertising and
promotional expenditures using its own resources, as it from time to time
deems appropriate.
Sub-Investment Advisory Agreements. Mellon Equity provides investment
advisory assistance and day-to-day management of each Portfolio's
investments pursuant to the Sub-Investment Advisory Agreement (the "Sub-
Advisory Agreement") dated February 2, 1995 between Mellon Equity and
Dreyfus. As to each Portfolio, the Sub-Advisory Agreement is subject to
annual approval by (i) the Fund's Board of Directors or (ii) vote of a
majority (as defined in the Act) of such Portfolio's outstanding voting
securities, provided that in either event the continuance also is approved
by a majority of the Directors who are not "interested persons" (as defined
in the Act) of the Fund or the Advisers, by vote cast in person at a
meeting called for the purpose of voting on such approval. As to each
Portfolio, the Sub-Advisory Agreement is terminable without penalty, (i) by
Dreyfus on 60 days' notice, (ii) by the Fund's Board of Directors or by
vote of the holders of a majority of such Portfolio's outstanding voting
securities on 60 days' notice, or (iii) upon not less than 90 days' notice,
by Mellon Equity. The Sub-Advisory Agreement will terminate automatically,
as to the relevant Portfolio, in the event of its assignment (as defined in
the Act).
The following persons are officers and/or directors of Mellon Equity:
Phillip R. Roberts, Chairman of the Board; and William P. Rydell, President
and Chief Executive Officer.
Mellon Equity provides day-to-day management of each Portfolio's
investments, subject to the supervision of Dreyfus and the approval of the
Board of Directors. The Advisers provide the Fund with portfolio managers
who are authorized by the Board of Directors to execute purchases and sales
of securities for each Portfolio. The Fund's portfolio manager is Steven
A. Falci. The Advisers maintain research departments with professional
portfolio managers and securities analysts who provide research services
for the Fund as well as for other funds advised by Dreyfus and Mellon
Equity.
Expenses. All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by Dreyfus.
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 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 maintaining
the Fund's existence, costs of independent pricing services, 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. In addition, the Investor Class
shares are subject to an annual service fee for ongoing personal services
relating to shareholder accounts and services related to the maintenance of
shareholder accounts. See "Shareholder Services Plan." Expenses
attributable to a particular Portfolio are charged against the assets of
that Portfolio; other expenses of the Fund are allocated among the
Portfolios on the basis determined by the Board of Directors, including,
but not limited to, proportionately in relation to the net assets of the
Portfolios.
As compensation for its services, the Fund has agreed to pay Dreyfus a
monthly management fee at the annual rate of .60 of 1% of the value of the
Income Portfolio's average daily net asset and at the annual rate of .75 of
1% of the value of each of the Growth Portfolio's and the Growth and Income
Portfolio's average daily net assets. For the period March 31, 1995
(commencement of operations) through July 31, 1995, management fees of
$31,497, $48,581 and $39,973 were paid with respect to the Income
Portfolio, the Growth Portfolio, and the Growth and Income Portfolio,
respectively. The management fees of the Income Portfolio and the Growth
and Income Portfolio were waived pursuant to an undertaking by Dreyfus,
resulting in no fee being paid. The management fee of the Growth Portfolio
was reduced by $48,581 pursuant to an undertaking by Dreyfus resulting in a
fee paid by the Portfolio of $5,184.
Dreyfus has agreed that if in any fiscal year the aggregate expenses
of a Portfolio, exclusive of taxes, brokerage, interest on borrowings and
(with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the expense limitation of any state having jurisdiction over that
Portfolio, the Fund may deduct from the payment to be made to Dreyfus under
the Management Agreement, or Dreyfus 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 Dreyfus is not subject to
reduction as the value of the Portfolios' net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
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. In some states, banks or other
financial institutions effecting transactions in Portfolio shares may be
required to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege--Investor Class. Dreyfus TeleTransfer
purchase orders may be made between the hours of 8:00 a.m. and 4:00 p.m.,
New York time, on any business day that The Shareholder Services Group,
Inc., the Fund's transfer and dividend disbursing agent (the "Transfer
Agent"), and the New York Stock Exchange are open. Such purchases will be
credited to the shareholder's Portfolio account on the next bank business
day. To qualify to use the Dreyfus TeleTransfer Privilege, the initial
payment for purchase of Investor Class shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Fund Shares--Dreyfus TeleTransfer Privilege--Investor
Class."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
SHAREHOLDER SERVICES PLAN
(INVESTOR CLASS ONLY)
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan, pursuant to which
the Fund pays the Distributor for the provision of certain services to each
Portfolio's shareholders. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information,
and services related to the maintenance of shareholder accounts. Under the
Shareholder Services Plan, the Distributor may make payments to certain
financial institutions, securities dealers and other financial industry
professionals (collectively, "Service Agents") in respect to these
services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Directors for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Directors, and by the Directors who are not "interested
persons" (as defined in the Act) of the Fund and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote of the Directors cast in person at a meeting
called for the purpose of voting on the Shareholder Services Plan. The
Shareholder Services Plan was so approved by the Directors at a meeting
held on August 24, 1995. The Shareholder Services Plan is terminable at
any time with respect to each Portfolio by vote of a majority of the
Directors who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan.
Prior Distribution Plan. As of August 24, 1995, the Fund terminated
its then-existing Distribution Plan that had been in effect from August 24,
1994. That Distribution Plan, adopted pursuant to Rule 12b-1 under the
Act, provided that the Fund (a) reimburse the Distributor for payments to
certain Service Agents for distributing the Fund's shares and (b) pay
Dreyfus, Dreyfus Service Corporation and any affiliate of either of them
for advertising and marketing relating to the Fund, at an aggregate annual
rate of .50 of 1% of the value of each Portfolio's average daily net
assets. For the period March 31, 1995 (commencement of operations) through
July 31, 1995, the Fund was charged $6,560, $6,661 and $8,958, for each of
the Income Portfolio, the Growth and Income Portfolio and the Growth
Portfolio, respectively for advertising, marketing and distributing shares
of each Portfolio's Investor Class Shares. The Fund was not charged for
printing prospectuses and statements of additional information.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt if the Transfer Agent receives the
redemption request in proper form. Redemption proceeds will be transferred
by Federal Reserve wire only to the commercial bank account specified by
the investor on the Account Application or Shareholder Services Form.
Redemption proceeds, if wired, must be in the amount of $1,000 or more and
will be wired to the investor's account at the bank of record designated in
the investor's file at the Transfer Agent, if the investor's bank is a
member of the Federal Reserve System, or to a correspondent bank if the
investor's bank is not a member. Fees ordinarily are imposed by such bank
and usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Stock Certificates; Signatures. Any certificates representing
Portfolio shares to be redeemed must be submitted with the redemption
request. Written redemption requests must be signed by each shareholder,
including each holder of a joint account, and each signature must be
guaranteed. Signatures on endorsed certificates submitted for redemption
also must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Dreyfus TeleTransfer Privilege--Investor Class. Investors should be
aware that if they have selected the Dreyfus TeleTransfer Privilege, any
request for a wire redemption will be effected as a Dreyfus TeleTransfer
transaction through the Automated Clearing House ("ACH") system unless more
prompt transmittal specifically is requested. Redemption proceeds will be
on deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege--Investor Class."
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Portfolio,
limited in amount during any 90-day period to the lesser of $250,000 or 1%
of the value of the Portfolio's 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 Board of Directors reserves the right to make payments
in whole or in part in securities or other assets in case of an emergency
or any time a cash distribution would impair the liquidity of the Portfolio
to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the Portfolio's
investments are valued. If the recipient sold such securities, brokerage
charges would 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 Portfolio 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 Portfolio's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares purchased by exchange will be purchased on the
basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of telephone
exchanges permitted. Shares issued in certificate form are not eligible
for telephone exchange.
Exchanges of Class R shares held by a Retirement Plan may be made only
between the investor's Retirement Plan account in one fund and such
investor's Retirement Plan account in another fund.
To establish a retirement plan by exchange, shares of the fund being
exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. For Dreyfus-
sponsored Keogh Plans, IRAs and SEP-IRAs with only one participant, the
minimum initial investment is $750. To exchange shares held in corporate
plans, 403(b)(7) Plans and IRAs set up under a Simplified Employee Pension
Plan ("SEP-IRAs") with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among the funds
in the Dreyfus Family of Funds. To exchange shares held in a Retirement
Plan account, the shares exchanged must have a current value of at least
$100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Portfolio,
shares of the same Class of another Portfolio or shares of another fund in
the Dreyfus Family of Funds. This Privilege is available only for existing
accounts. With respect to Class R shares held by a Retirement Plan,
exchanges may be made only between the investor's Retirement Plan account
in one fund and such investor's Retirement Plan account in another fund.
Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if the
investor's account falls below the amount designated to be exchanged under
this Privilege. In this case, an investor's account will fall to zero
unless additional investments are made in excess of the designated amount
prior to the next Auto-Exchange transaction. Shares held under IRA and
other retirement plans are eligible for this Privilege. Exchanges of IRA
shares may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and The Dreyfus Auto-Exchange are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Portfolio reserves the right to
reject any exchange request in whole or in part. The Fund Exchanges
service or The Dreyfus Auto-Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Portfolio shares, not
the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from a Portfolio in shares of the same class of
another Portfolio or shares of another fund in the Dreyfus Family of Funds
of which the investor is a shareholder. Shares of the same class of other
funds purchased pursuant to this privilege will be purchased on the basis
of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Corporate Pension/Profit-Sharing and Retirement Plans. The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan. In addition, the Fund
makes available Keogh Plans, IRAs, including SEP-IRAs and IRA "Rollover
Accounts," and 403(b)(7) Plans. Plan support services also are available.
Investors who wish to purchase Portfolio shares in conjunction with a
Keogh Plan, a 403(b)(7) Plan or an IRA, including an SEP-IRA, may request
from the Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian. Purchases for these plans
may not be made in advance of receipt of funds.
The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500 with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a non-
working spousal IRA with a minimum investment of $250.
The investor should read the prototype retirement plan and the
appropriate form of custodial agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.
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
Fund Shares."
Valuation of Portfolio Securities. The Portfolio's securities,
including covered call options written by the Portfolio, are valued at the
last sale price on the securities exchange or national securities market on
which such securities primarily are traded. Short-term investments are
carried at amortized cost, which approximates value. 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. Bid price is used when no asked price is available. Any
assets or liabilities initially expressed in terms of foreign currency will
be translated into dollars at the midpoint of the New York interbank market
spot exchange rate as quoted on the day of such translation by the Federal
Reserve Bank of New York or if no such rate is quoted on such date, at the
exchange rate previously quoted by the Federal Reserve Bank of New York or
at such other quoted market exchange rate as may be determined to be
appropriate by the Manager. Forward currency contracts will be valued at
the current cost of offsetting the contract. 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 does not take place
contemporaneously with the determination of prices of certain portfolio
securities. 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 of Directors. Expenses and fees of each
Portfolio, including the management fee paid by the Portfolio and, with
respect to an Investor Class, fees pursuant to the Fund's Shareholder
Services Plan, are accrued daily and taken into account for the purpose of
determining the net asset value of Portfolio 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 Board of Directors, are valued at fair value as
determined in good faith by the Board of Directors. The Board of Directors
will review the method of valuation on a current basis. In making their
good faith valuation of restricted securities, the Directors generally will
take the following factors into consideration: restricted securities which
are 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 Board of Directors if the Directors 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 Board of Directors.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's 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."
It is expected that each Portfolio will qualify as a "regulated
investment company" under the Code, as long as such qualification is in the
best interests of its shareholders. Qualification as a regulated
investment company relieves the Portfolio from any liability for Federal
income taxes to the extent its earnings are distributed in accordance with
the applicable provisions of the Code. 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 his investment. Such a dividend or distribution would be a return
on investment in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares of the Fund
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 a 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 gain and loss. However, a portion of the gain or
loss from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial forward futures and option
contracts and certain preferred stock) may be treated as ordinary income or
loss under Section 988 of the Code. In addition, all or a portion of any
gain realized from the sale or other 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, any gain or loss realized by the
Portfolio from certain futures and forward contracts and options
transactions 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 exercise or
lapse of such contracts and options as well as from closing transactions.
In addition, any such contracts or options remaining unexercised at the end
of the Portfolio's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to the Portfolio
characterized in the manner described above.
Offsetting positions held by the Portfolio involving certain contracts
or 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
Section 1256 of the Code. As such, all or a portion of any short-term or
long-term capital gain from certain "straddle" transactions may be
recharacterized to ordinary income. If the Portfolio were treated as
entering into "straddles" by reason of its engaging in certain forward
contracts or options transactions, such "straddles" would be characterized
as "mixed straddles" if the forward contracts or options transactions
comprising a part of such "straddles" were governed by Section 1256 of the
Code. The Portfolio may make one or more elections with respect to "mixed
straddles." Depending on which election is made, if any, the results to
the Portfolio may differ. If no election is made to the extent the
"straddle" and conversion transactions rules apply to positions established
by the Portfolio, losses realized by the Portfolio will be deferred to the
extent of unrealized gain in the offsetting position. Moreover, as a
result of the "straddle" rules, short-term capital loss on "straddle"
positions may be recharacterized as long-term capital loss, and long-term
capital gains may be treated as short-term capital gains or ordinary
income.
Investment by the Portfolio in securities issued or acquired 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
the Portfolio to recognize income prior to the receipt of cash payments.
For example, the Portfolio could be required to accrue a portion of the
discount (or deemed discount) at which the securities were issued and to
distribute such income in order to maintain its qualification as a
regulated investment company. In such case, the Portfolio may have to
dispose of securities which it might otherwise have continued to hold in
order to generate cash to satisfy these distribution requirements.
If the Growth and Income Portfolio or Growth Portfolio invests in an
entity that is classified as a "passive foreign investment company"
("PFIC") for Federal Income Tax purposes, the operation of certain
provisions of the Code applying to PFICs could result in the imposition of
certain Federal income taxes on the Portfolio. In addition, gain realized
from the sale or other disposition of PFIC securities may be treated as
ordinary income under Section 1291 of the Code.
PORTFOLIO TRANSACTIONS
The Advisers assume general supervision over placing orders on behalf
of the Portfolio for the purchase or sale of investment securities.
Allocation of brokerage transactions, including their frequency, is made in
the Advisers' best judgment and in a manner deemed fair and reasonable to
shareholders. The primary consideration is prompt execution of orders at
the most favorable net price. Subject to this consideration, the brokers
selected will include those that supplement the Advisers' research
facilities with statistical data, investment information, economic facts
and opinions. Information so received is in addition to and not in lieu of
services required to be performed by the Advisers and the Advisers' fees
are not reduced as a consequence of the receipt of such supplemental
information.
For the period March 31, 1995 (commencement of operations) through
July 31, 1995, the Fund paid total brokerage commissions of $150, $13,357
and $27,177 with respect to the Income Portfolio, the Growth and Income
Portfolio and the Growth Portfolio, respectively, none of which was paid to
the Distributor. The Fund paid no concessions or gross spreads on
principal transactions during such periods.
Such information may be useful to Dreyfus in serving both the Fund and
other funds which it advises and to Mellon Equity in serving both the Fund
and the other funds or accounts it advises, and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to the Advisers in carrying out their obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad distribu-
tions, provided the primary consideration is met. Large block trades may,
in certain cases, result from two or more funds advised or administered by
Dreyfus being engaged simultaneously in the purchase or sale of the same
security. Certain of the Fund's transactions in securities of foreign
issuers may not benefit from the negotiated commission rates available to
the Fund for transactions in securities of domestic issuers. When
transactions are executed in the over-the-counter market, the Fund will
deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable. Foreign exchange transactions are made
with banks or institutions in the interbank market at prices reflecting a
mark-up or mark-down and/or commission.
Portfolio turnover may vary from year to year as well as within a
year. In periods in which extraordinary market conditions prevail, the
Advisers will not be deterred from changing investment strategy as rapidly
as needed, in which case higher turnover rates can be anticipated which
would result in greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated by Dreyfus based upon its knowledge
of available information as to the general level of commissions paid by
other institutional investors for comparable services.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
Average annual total returns are calculated by determining the ending
redeemable value of an investment purchased at net asset value per share
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.
The Growth and Income Portfolio's total return for the period March
31, 1995 (commencement of operations) through July 31, 1995 was 10.72% and
10.80% for its Investor Class shares and Class R shares, respectively. The
Growth Portfolio's total return for the period March 31, 1995 (commencement
of operation) through July 31, 1995 was 13.84% and 13.92% for its Investor
Class shares and Class R shares, respectively. The Income Portfolio's
total return for the period March 31, 1995 (commencement of operations)
through July 31, 1995 was 6.00% and 6.08% for its Investor Class shares and
Class R shares, respectively. Total return is calculated by subtracting
the amount of each Portfolio's 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.
Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc., Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average, Money Magazine, Wilshire 5000 Index and other
industry publications. From time to time, the Fund may compare its
performance against inflation with the performance of other instruments
against inflation, such as short-term Treasury Bills (which are direct
obligations of the U.S. Government) and FDIC-insured bank money market
accounts. In addition, advertising for the Fund may indicate that
investors may consider diversifying their investment portfolios in order to
seek protection of the value of their assets against inflation. 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, the Fund may compare its performance with the
performance of other instruments, such as certificates of deposit and bank
money market accounts which are FDIC-insured. From time to time,
advertising materials for the Fund may refer to Morningstar ratings and
related analyses supporting such ratings.
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 Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Portfolio shares have no preemptive, subscription or
conversion rights and are freely transferable.
To date, the Fund's Board has authorized the creation of three
portfolios of shares. All consideration received by the Fund for shares of
one of the Portfolios and all assets in which such consideration is
invested will belong to that Portfolio (subject only to the rights of
creditors of the Fund) and will be subject to the liabilities related
thereto. The assets attributable to, and the expenses of, one Portfolio
(and as to classes within a Portfolio) are treated separately from those of
the other Portfolios (and classes). The Fund has the ability to create,
from time to time, new portfolios of shares without shareholder approval.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
common stock 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.
DREYFUS RETIREMENT PORTFOLIOS, INC.
(Currently Dreyfus LifeTime Portfolios, Inc.)
Statement of Assets and Liabilities
March 28, 1995
<TABLE>
<CAPTION>
Growth
Income and Income Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,000 $34,000 $33,000
Deferred organization and initial offering expenses. . . . . . . . . . . . 65,500 65,500 65,500
------- -------- --------
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,500 99,500 98,500
LIABILITIES
Accrued organization and initial offering expenses . . . . . . . . . . . . 65,500 65,500 65,500
NET ASSETS applicable to 1,320, 1,360 and 1,320
Investor Class shares of common stock and
1,320, 1,360 and 1,320 Class R shares of common
stock ($.001 par value) of the Income Portfolio,
Growth and Income Portfolio and Growth Portfolio,
respectively, issued and outstanding (50 million
shares of each Class of each Portfolio authorized). . . . . . . . . . . $33,000 $34,000 $33,000
Investor Class Shares
NET ASSET VALUE and redemption price per share
($16,500/1,320, $17,000/1,360 and $16,500/1,320
shares of common stock of the Income Portfolio,
Growth and Income Portfolio and Growth Portfolio,
respectively, issued and outstanding) . . . . . . . . . . . . . . . . $12.50 $12.50 $12.50
====== ====== ======
Class R Shares
NET ASSET VALUE and redemption price per share
($16,500/1,320, $17,000/1,360 and $16,500/1,320
shares of common stock of the Income Portfolio,
Growth and Income Portfolio and Growth Portfolio,
respectively, issued and outstanding) . . . . . . . . . . . . . . . . $12.50 $12.50 $12.50
====== ====== ======
NOTE 1 - Dreyfus LifeTime Portfolios, Inc. (the "Fund") was incorporated under the laws of the State of Maryland on July 15, 1993
and has had no operations since that date other than matters relating to its organization and registration as an open-end investment
company under the Investment Company Act of 1940 and the Securities Act of 1933 and the sale and issuance of 1,320, 1,360 and
1,320 Investor Class shares and 1,320, 1,360 and 1,320 Class R shares of common stock of the Income Portfolio, Growth and Income
Portfolio and Growth Portfolio, respectively, to MBC Investments Corporation ("Initial Shares"). Any organization expenses and
initial offering expenses payable by the Fund have been deferred and will be amortized from the date operations commence over a
period which it is expected that a benefit will be realized, not to exceed five years. If any of the Initial Shares are redeemed
during the amortization period by any holder thereof, the redemption proceeds will be reduced by any unamortized organization
expenses in the same proportion as the number of Initial Shares being redeemed bears to the number of Initial Shares outstanding
at the time of the redemption.
NOTE 2 - Subsequent event (unaudited) - On April 28, 1995, the Fund amended its Articles of Incorporation to change its name from
Dreyfus Retirement Portfolios, Inc. to Dreyfus Lifetime Portfolios, Inc.
</TABLE>
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Directors
Dreyfus Retirement Portfolios, Inc.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Retirement Portfolios, Inc. as of March 28, 1995. This statement
of assets and liabilities is the responsibility of the Fund's management.
Our responsibility is to express an opinion on this statement of assets and
liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether this statement of assets and
liabilities is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
statement of assets and liabilities. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall statement of assets and liabilities
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of
Dreyfus Retirement Portfolios, Inc. at March 28, 1995, in conformity with
generally accepted accounting principles.
New York, New York
March 29, 1995
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc., Income Portfolio
Statement of Investments July 31, 1995 (Unaudited)
Principal
Bonds and Notes-- 67.6% Amount Value
__________ __________
<S> <C> <C> <C>
U.S. Government Securities: U.S. Treasury Bonds;
11 5/8%, 11/15/2004........................... $ 600,000 $ 812,718
U.S. Treasury Notes: ___________
7 1/2%, 1/31/97............................... 2,945,000 3,015,403
5 5/8%, 1/31/98............................... 3,000,000 2,975,625
5 1/8%, 11/30/98.............................. 250,000 242,891
7 1/8%, 9/30/99............................... 1,000,000 1,034,844
8 3/4%, 8/15/2000............................. 700,000 776,672
8%, 5/15/2001................................. 1,000,000 1,085,000
7 1/2%, 11/15/2001............................ 180,000 191,166
7 1/2%, 2/15/2005............................. 600,000 643,875
___________
9,965,476
___________
TOTAL BONDS AND NOTES
(cost $10,571,852)............................. $10,778,194
===========
Short-Term Investments-- 31.7%
U.S. Treasury Bills: 5.58%, 8/3/95................................... $ 47,000 $ 46,986
5.34%, 8/17/95.................................. 2,257,000 2,251,538
5.36%, 8/24/95.................................. 188,000 187,350
5.30%, 9/7/95................................... 51,000 50,717
5.83%, 9/28/95.................................. 2,420,000 2,399,043
5.38%, 10/5/95.................................. 41,000 40,598
5.42%, 10/19/95................................. 70,000 69,166
___________
TOTAL SHORT-TERM INVESTMENTS
(cost $5,043,726)............................... $ 5,045,398
===========
TOTAL INVESTMENTS (cost $15,615,578).............................................................. 99.3% $15,823,592
========= ===========
CASH AND RECEIVABLES (NET)........................................................................ .7% $ 112,777
========= ===========
NET ASSETS........................................................................................ 100.0% $15,936,369
========= ===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Financial Futures July 31, 1995 (Unaudited)
Financial Futures Purchased;
- ---------------------------- Number of Market Value Unrealized
Contracts Covered Expiration Appreciation
by Contracts at 7/31/95
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Standard & Poor's 500................... 13 $ 3,660,475 September'95 $353,470
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc., Growth and Income Portfolio
Statement of Investments July 31, 1995 (Unaudited)
Common Stocks--47.1%
Shares Value
_____________ _____________
<S> <C> <C> <C>
Basic Industries-- 2.7%Cabot........................................... 600 $ 33,825
Champion International.......................... 1,200 67,650
Dow Chemical.................................... 700 51,888
duPont (E.I.) de Nemours........................ 300 20,100
Eastman Chemical................................ 1,400 89,600
Federal Paper Board............................. 400 14,950
International Paper............................. 600 50,700
PPG Industries.................................. 500 22,875
Temple-Inland................................... 300 15,525
Union Carbide................................... 1,100 38,225
Wellman......................................... 700 18,812
Weyerhaeuser.................................... 600 28,050
____________
452,200
____________
Capital Spending-- 10.4%Applied Materials............................... 200 20,700
Arrow Electronics............................... 400 22,600
Avnet........................................... 700 36,400
Cabletron Systems............................... 800 41,600
Caterpillar..................................... 1,000 70,375
Ceridian........................................ 1,300 53,787
cisco Systems................................... 900 50,175
Computer Associates International............... 1,500 110,063
Cummins Engine.................................. 700 29,400
Deere & Co...................................... 800 71,900
Eaton........................................... 1,400 78,225
General Electric................................ 2,400 141,600
HBO & Co........................................ 800 44,200
HealthCare COMPARE.............................. 1,300 44,200
Hewlett-Packard................................. 400 31,150
Illinois Tool Works............................. 400 23,600
Intel........................................... 1,200 78,000
International Business Machines................. 1,500 163,313
Lockheed Martin................................. 1,200 75,450
Manpower........................................ 1,800 50,625
McDonnell Douglas............................... 300 24,788
Oracle.......................................... 1,100 46,063
Premark International........................... 700 37,013
Raytheon........................................ 900 74,362
Rockwell International.......................... 1,100 50,187
Sun Microsystems................................ 800 38,500
TRW............................................. 800 59,700
Teradyne........................................ 300 24,562
Texas Instruments............................... 700 109,375
3COM............................................ 300 22,218
____________
1,724,131
____________
Consumer Cyclical-- 6.3%American Greetings, Cl. A....................... 900 27,225
Capital Cities/ABC.............................. 500 58,375
Chrysler........................................ 1,300 63,375
Circuit City Stores............................. 2,300 85,388
Disney (Walt)................................... 1,000 58,625
Eckerd.......................................... 500 16,563
Ford Motor...................................... 2,200 63,525
General Motors.................................. 400 19,500
Goodyear Tire & Rubber.......................... 600 26,025
Harley-Davidson................................. 500 13,937
King World Productions.......................... 900 37,687
Magna International, Cl. A...................... 400 18,400
Mattel.......................................... 800 22,600
McDonald's...................................... 1,600 61,800
Mirage Resorts.................................. 1,200 37,350
NIKE, Cl. B..................................... 400 36,150
New York Times, Cl. A........................... 800 20,400
Philips Electronics, N.V........................ 600 29,550
Reynolds & Reynolds, Cl. A...................... 900 28,462
Rite Aid........................................ 1,600 45,400
Safeway......................................... 1,600 61,200
Sears, Roebuck & Co............................. 2,200 71,775
Tandy........................................... 1,400 83,125
V.F............................................. 600 33,150
Walgreen........................................ 600 31,050
____________
1,050,637
____________
Consumer Staples-- 6.2%Anheuser-Busch Cos.............................. 500 27,813
Archer Daniels Midland.......................... 2,200 36,300
Coca-Cola....................................... 2,700 177,863
Colgate-Palmolive............................... 300 21,000
ConAgra......................................... 1,500 56,625
Dial............................................ 1,600 37,600
Eastman Kodak................................... 700 40,338
Gillette........................................ 1,700 74,375
Heinz (H.J.).................................... 600 26,025
Hormel Foods.................................... 500 12,312
IBP............................................. 700 32,725
Johnson & Johnson............................... 2,300 165,025
Newell.......................................... 900 22,837
PepsiCo......................................... 1,400 65,625
Philip Morris Cos............................... 1,800 128,925
Unilever, N.V. (New York Shares)................ 600 79,050
Whitman......................................... 1,400 27,300
____________
1,031,738
____________
Energy-- 4.7%Amoco........................................... 1,300 87,425
Atlantic Richfield.............................. 400 46,100
Coastal......................................... 500 15,562
Exxon........................................... 2,400 174,000
Mobil........................................... 1,200 117,300
Panhandle Eastern............................... 1,500 36,563
Phillips Petroleum.............................. 800 28,300
Royal Dutch Petroleum (New York Shares)......... 1,400 177,800
Smith International............................. 1,000 17,000
Tidewater....................................... 1,000 25,250
Williams Cos.................................... 1,500 55,500
____________
780,800
____________
Health Care-- 3.9%Abbott Laboratories............................. 1,400 56,000
Amgen........................................... 600 51,075
Baxter International............................ 1,700 63,325
Becton, Dickinson & Co.......................... 800 47,100
Bristol-Myers Squibb............................ 600 41,550
Columbia/HCA Healthcare......................... 800 39,200
Medtronic....................................... 200 16,400
Merck & Co...................................... 2,700 139,388
Pfizer.......................................... 1,500 75,750
Schering-Plough................................. 2,600 120,900
____________
650,688
____________
Interest Sensitive-- 5.9%AMBAC........................................... 300 11,963
Allstate........................................ 2,839 88,719
American National Insurance..................... 300 17,325
Bank of New York................................ 1,000 40,125
BankAmerica..................................... 1,400 75,600
Bear Stearns Cos................................ 700 15,488
CIGNA........................................... 1,200 96,750
Chemical Banking................................ 1,500 77,437
Citicorp........................................ 2,000 124,750
Dean Witter, Discover & Co...................... 1,200 60,600
EXEL Limited.................................... 1,100 57,612
First Chicago................................... 900 54,675
First Interstate Bancorp........................ 500 43,062
First USA....................................... 1,100 50,188
Green Tree Financial............................ 400 21,650
NationsBank..................................... 1,800 101,025
Travelers Group................................. 600 28,425
USLIFE.......................................... 600 25,050
____________
990,444
____________
Mining & Metals-- .8%ASARCO.......................................... 1,100 34,925
Alcan Aluminium................................. 700 23,712
Inland Steel Industries......................... 1,000 28,750
Phelps Dodge.................................... 500 32,125
Reynolds Metals................................. 300 18,750
____________
138,262
____________
Transportation-- .7%AMR............................................. 300 22,500
Conrail......................................... 500 30,875
Federal Express................................. 600 40,500
Illinois Central, Ser. A........................ 700 27,650
____________
121,525
____________
Utilities-- 5.5%ALLTEL.......................................... 700 18,463
Ameritech....................................... 3,800 183,825
BellSouth....................................... 2,500 169,375
Consolidated Edison............................. 2,200 63,800
DQE............................................. 1,050 25,200
General Public Utilities........................ 2,000 57,750
MCI Communications.............................. 4,100 98,400
NYNEX........................................... 1,100 45,375
PECO Energy..................................... 2,100 60,112
Public Service Enterprise Group................. 2,400 66,600
SBC Communications.............................. 1,500 72,187
Sprint.......................................... 1,500 51,375
____________
912,462
____________
TOTAL COMMON STOCKS
(cost $6,977,358)............................. $ 7,852,887
============
Principal
Bonds and Notes--32.4% Amount
----------
U.S. Government Securities: U.S. Treasury Bonds;
11.63%, 11/15/2004............................. $ 500,000 $ 677,265
__________
U.S. Treasury Notes:
7.50%, 1/31/97.................................. 1,715,000 1,755,999
5.63%, 1/31/98.................................. 1,350,000 1,339,031
5.13%, 11/30/98................................. 350,000 340,047
7.13%, 9/30/99.................................. 500,000 517,422
8.75%, 8/15/2000................................ 300,000 332,860
8%, 5/15/2001................................... 300,000 325,500
7.50%, 11/15/2001............................... 100,000 106,203
____________
4,717,062
____________
TOTAL BONDS AND NOTES
(cost $5,286,831)............................. $ 5,394,327
============
Short-Term Investments--19.7%
U.S. Treasury Bills:5.67% 8/3/95.................................... $ 1,609,000 $ 1,608,518
5.34% 8/17/95................................... 474,000 472,853
5.84% 9/28/95................................... 1,133,000 1,123,188
5.34% 10/5/95................................... 71,000 70,304
__________
TOTAL SHORT-TERM INVESTMENTS
(cost $3,274,024)............................. $ 3,274,863
============
TOTAL INVESTMENTS (cost $15,538,213)................................................................ 99.2% $ 16,522,077
===== ============
CASH AND RECEIVABLES (NET).......................................................................... .8% $ 128,674
===== ============
NET ASSETS.......................................................................................... 100.0% $ 16,650,751
===== ============
</TABLE>
<TABLE>
<CAPTION>
Statement of Financial Futures July 31, 1995 (Unaudited)
Market Value Unrealized
Number of Covered Appreciation
Financial Futures Purchased: Contracts by Contracts Expiration at 7/31/95
- ---------------------------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Deutsche Aktienindex 1 $ 162,194 September '95 $ 17,053
Financial Times 100 2 278,549 September '95 18,782
Hang Seng 1 61,170 September '95 5,150
Nikkei 300 13 375,339 September '95 18,992
Russell 2000 13 1,959,750 September '95 230,395
Standard & Poor's 500 1 283,725 December '95 4,815
-----------
$ 295,187
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc., Growth Portfolio
Statement of Investments July 31, 1995 (Unaudited)
Common Stocks-71.8%
Shares Value
------------ -------------
<S> <C> <C> <C>
Basic Industries-- 4.4% Cabot........................................... 800 $ 45,100
Champion International.......................... 2,600 146,575
Dow Chemical.................................... 1,400 103,775
duPont (E.I.) de Nemours........................ 2,000 134,000
Eastman Chemical................................ 3,000 192,000
Federal Paper Board............................. 800 29,900
International Paper............................. 1,300 109,850
PPG Industries.................................. 1,000 45,750
Temple-Inland................................... 600 31,050
Union Carbide................................... 2,100 72,975
Wellman......................................... 1,100 29,562
Weyerhaeuser.................................... 1,200 56,100
-------------
996,637
-------------
Capital Spending-- 15.7% Apple Computer.................................. 300 13,500
Applied Materials............................... 600 62,100
Arrow Electronics............................... 800 45,200
Avnet........................................... 1,400 72,800
Cabletron Systems............................... 1,700 88,400
Caterpillar..................................... 2,000 140,750
Ceridian........................................ 2,600 107,575
cisco Systems................................... 1,800 100,350
Computer Associates International............... 3,100 227,462
Cummins Engine.................................. 1,300 54,600
Deere & Co...................................... 1,600 143,800
Eaton........................................... 2,500 139,688
General Electric................................ 4,600 271,400
HBO & Co........................................ 1,700 93,925
HealthCare COMPARE.............................. 2,600 88,400
Hewlett-Packard................................. 800 62,300
Illinois Tool Works............................. 700 41,300
Intel........................................... 2,700 175,500
International Business Machines................. 3,200 348,400
Lockheed Martin................................. 2,500 157,187
Manpower........................................ 3,700 104,063
McDonnell Douglas............................... 500 41,312
Oracle ......................................... 3,300 138,188
Pittston Services Group......................... 100 2,500
Premark International........................... 1,500 79,312
Raytheon........................................ 1,800 148,725
Rockwell International.......................... 2,300 104,938
Sun Microsystems................................ 1,800 86,625
TRW............................................. 1,600 119,400
Teradyne........................................ 500 40,937
Texas Instruments............................... 1,500 234,375
3Com............................................ 700 51,844
-------------
3,586,856
-------------
Consumer Cyclical-- 9.7% American Greetings, Cl. A....................... 1,900 57,475
Capital Cities/ABC.............................. 1,200 140,100
Chrysler........................................ 2,500 121,875
Circuit City Stores............................. 4,800 178,200
Disney (Walt)................................... 2,000 117,250
Eckerd.......................................... 900 29,812
Ford Motor...................................... 4,500 129,938
General Motors.................................. 800 39,000
Goodyear Tire & Rubber.......................... 1,300 56,387
Harley-Davidson................................. 1,700 47,388
King World Productions.......................... 1,900 79,562
Magna International, Cl. A...................... 900 41,400
Mattel.......................................... 1,700 48,025
McDonald's...................................... 3,400 131,325
Mirage Resorts.................................. 2,400 74,700
NIKE, Cl. B..................................... 800 72,300
New York Times, Cl.A............................ 1,700 43,350
Philips Electronics, N.V........................ 1,100 54,175
Reynolds & Reynolds, Cl.A....................... 1,900 60,088
Rite Aid........................................ 3,200 90,800
Safeway......................................... 3,200 122,400
Sears, Roebuck & Co............................. 4,600 150,075
Tandy........................................... 3,000 178,125
V.F............................................. 1,300 71,825
Walgreen........................................ 1,300 67,275
-------------
2,202,850
-------------
Consumer Staples-- 9.3% Anheuser-Busch Cos.............................. 1,000 55,625
Archer Daniels Midland.......................... 4,600 75,900
Coca-Cola....................................... 5,500 362,312
Colgate-Palmolive............................... 600 42,000
ConAgra......................................... 3,000 113,250
Dial............................................ 3,300 77,550
Eastman Kodak................................... 1,400 80,675
Gillette........................................ 3,600 157,500
Heinz (H.J.).................................... 1,300 56,388
Hormel Foods.................................... 1,000 24,625
IBP............................................. 1,500 70,125
Johnson & Johnson............................... 4,800 344,400
Newell.......................................... 2,000 50,750
PepsiCo......................................... 2,600 121,875
Philip Morris Cos............................... 3,800 272,175
Unilever, N.V. (New York Shares)................ 1,200 158,100
Whitman......................................... 2,900 56,550
-------------
2,119,800
-------------
Energy-- 7.1% Amoco........................................... 2,800 188,300
Atlantic Richfield.............................. 900 103,725
Coastal......................................... 800 24,900
Exxon........................................... 5,400 391,500
Mobil........................................... 2,500 244,375
Panhandle Eastern............................... 3,100 75,562
Phillips Petroleum.............................. 1,700 60,138
Royal Dutch Petroleum (New York Shares)......... 2,700 342,900
Smith International............................. 2,100 35,700
Tidewater....................................... 2,100 53,025
Williams Cos.................................... 3,000 111,000
-------------
1,631,125
-------------
Health Care-- 6.0% Abbott Laboratories............................. 3,600 144,000
Amgen........................................... 1,300 110,662
Baxter International............................ 3,400 126,650
Becton, Dickinson & Co.......................... 1,800 105,975
Bristol-Myers Squibb............................ 1,200 83,100
Columbia/HCA Healthcare......................... 1,700 83,300
Medtronic....................................... 500 41,000
Merck & Co...................................... 5,600 289,100
Pfizer.......................................... 3,100 156,550
Schering-Plough................................. 4,700 218,550
-------------
1,358,887
-------------
Interest Sensitive-- 9.1% AMBAC........................................... 700 27,912
Allstate........................................ 5,964 186,375
American National Insurance..................... 700 40,425
Bank of New York................................ 2,100 84,263
BankAmerica..................................... 2,900 156,600
Bear Stearns Cos................................ 1,400 30,975
CIGNA........................................... 2,500 201,562
Chemical Banking................................ 3,200 165,200
Citicorp........................................ 4,200 261,975
Dean Witter, Discover & Co...................... 2,400 121,200
EXEL Limited.................................... 2,300 120,463
First Chicago................................... 1,900 115,425
First Interstate Bancorp........................ 1,100 94,737
First USA....................................... 2,300 104,938
Green Tree Financial............................ 500 27,062
MBNA............................................ 100 3,588
NationsBank..................................... 3,800 213,275
Travelers Group................................. 1,300 61,588
USLIFE.......................................... 1,300 54,275
-------------
2,071,838
-------------
Mining & Metals-- 1.2% ASARCO.......................................... 2,300 73,025
Alcan Aluminium................................. 1,400 47,425
Inland Steel Industries......................... 2,200 63,250
Phelps Dodge.................................... 1,000 64,250
Reynolds Metals................................. 600 37,500
-------------
285,450
-------------
Transportation-- 1.0% AMR............................................. 600 45,000
Conrail......................................... 1,000 61,750
Federal Express................................. 1,100 74,250
Illinois Central, Ser. A........................ 1,400 55,300
-------------
236,300
-------------
Utilities-- 8.3% ALLTEL.......................................... 1,300 34,287
Ameritech....................................... 7,900 382,163
BellSouth....................................... 5,300 359,075
Consolidated Edison............................. 4,600 133,400
DQE............................................. 2,250 54,000
General Public Utilities........................ 4,100 118,388
MCI Communications.............................. 8,400 201,600
NYNEX........................................... 2,400 99,000
PECO Energy..................................... 4,400 125,950
Public Service Enterprise Group................. 4,900 135,975
SBC Communications.............................. 3,200 154,000
Sprint.......................................... 3,000 102,750
-------------
1,900,588
-------------
TOTAL COMMON STOCKS
(cost $14,636,812)............................ $ 16,390,331
=============
Principal
Short-Term Investments--27.7% Amount
------------
U.S. Treasury Bills: 5.67%, 8/3/95................................... $ 944,000 $ 943,717
5.30%, 8/17/95.................................. 1,885,000 1,880,438
5.45%, 8/24/95.................................. 832,000 829,121
5.82%, 9/28/95.................................. 2,388,000 2,367,320
5.34%, 10/5/95.................................. 191,000 189,128
5.40%, 10/26/95................................. 105,000 103,642
TOTAL SHORT-TERM INVESTMENTS -------------
(cost $6,311,788)............................. $ 6,313,366
=============
TOTAL INVESTMENTS (cost $20,948,600)............................................................ 99.5% $ 22,703,697
===== =============
CASH AND RECEIVABLES (NET)...................................................................... .5% $ 114,441
===== =============
NET ASSETS...................................................................................... 100.0% $ 22,818,138
====== =============
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc., Growth Portfolio
Statement of Financial Futures July 31, 1995 (Unaudited)
Market Value Unrealized
Number of Covered Appreciation
Financial Futures Purchased: Contracts by Contracts Expiration at 7/31/95
- ---------------------------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Deutsche Aktienindex 2 $ 324,388 September '95 $ 34,105
Financial Times 100 3 417,824 September '95 28,173
Hang Seng 2 122,341 September '95 10,300
Nikkei 300 26 750,678 September '95 37,984
Russell 2000 27 4,070,250 September '95 467,905
Standard & Poor's 500 1 283,725 December '95 4,815
---------
$ 583,282
=========
See note to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc.
Statement of Assets and Liabilities July 31, 1995 (Unaudited)
Income Growth and Income Growth
Portfolio Portfolio Portfolio
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
[cost--Note 4(b)]--see statement........................................ $ 15,823,592 $ 16,522,077 $ 22,703,697
Cash...................................................................... 202,724 128,094 9,998
Dividends and interest receivable......................................... 110,975 56,236 20,477
Receivable for futures variation margin................................... -- 80,402 126,187
Receivable for investment securities sold................................. -- 8,625 24,810
Prepaid expenses--Note 2(g)............................................... 60,042 60,261 60,376
Due from The Dreyfus Corporation.......................................... 12,410 11,162 10,092
------------ ------------ ------------
16,209,743 16,866,857 22,955,637
------------ ------------ ------------
LIABILITIES:
Due to Distributor........................................................ 1,689 1,746 2,377
Payable for investment securities purchased............................... 193,633 126,960 47,122
Payable for futures variation margin...................................... 7,475 -- --
Accrued expenses and other liabilities.................................... 70,577 87,400 88,000
------------ ------------ ------------
273,374 216,106 137,499
------------ ------------ ------------
NET ASSETS................................................................... $ 15,936,369 $ 16,650,751 $ 22,818,138
============ ============ ============
REPRESENTED BY:
Paid-in capital........................................................... $ 15,033,000 $ 15,034,000 $ 20,033,000
Accumulated undistributed investment income-net........................... 314,431 221,656 217,099
Accumulated undistributed net realized gain on investments................ 27,454 116,044 229,660
Accumulated net unrealized appreciation on investments and foreign
currency transactions [including $353,470, $295,187 and $583,282
net unrealized appreciation on financial futures for the Income
Portfolio, Growth and Income Portfolio and Growth Portfolio,
respectively]--Note 4(b)................................................ 561,484 1,279,051 2,338,379
------------ ------------ ------------
NET ASSETS at value.......................................................... $ 15,936,369 $ 16,650,751 $ 22,818,138
============ ============ ============
Shares of Common Stock outstanding:
Class R Shares
(50 million shares of $.001 par value shares authorized)................ 601,320 601,360 801,320
============ ============ ============
Investor Class Shares
(50 million shares of $.001 par value shares authorized)................ 601,320 601,360 801,320
============ ============ ============
NET ASSET VALUE per share:
Class R Shares
($7,971,539 / 601,320 shares)........................................... $13.26
======
($8,328,880 / 601,360 shares)........................................... $13.85
======
($11,413,871 / 801,320 shares).......................................... $14.24
======
Investor Class Shares
($7,964,830 / 601,320 shares)........................................... $13.25
======
($8,321,871 / 601,360 shares)........................................... $13.84
======
($11,404,267 / 801,320 shares).......................................... $14.23
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc.
Statement of Operations from March 31, 1995 (commencement of operations) to July 31, 1995 (Unaudited)
Income Growth and Income Growth
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest....................................................... $ 353,254 $ 213,788 $ 170,013
Cash dividends (net of $1,046 and $1,982 foreign taxes
withheld at source for the Growth and Income Portfolio
and the Growth Portfolio, respectively)...................... -- 55,234 110,543
------------- ------------- -------------
Total Income............................................... 353,254 269,022 280,556
------------- ------------- -------------
Expenses:
Management fee--Note 3(a)...................................... $ 31,497 $ 39,973 $ 53,765
Legal fees..................................................... 16,341 16,399 19,125
Distribution fees (Investor Class shares)--Note 3(b)........... 6,560 6,661 8,959
Organization expenses--Note 2(g)............................... 5,458 5,458 5,458
Registration fees.............................................. 5,184 5,294 7,019
Auditing fees.................................................. 3,131 3,131 3,381
Director's fees and expenses--Note 3(c)........................ 2,462 2,497 2,746
Shareholder servicing costs.................................... 2,356 2,807 2,135
Shareholders' reports.......................................... 1,905 1,905 1,905
Custodian fees................................................. 1,008 5,651 6,729
Miscellaneous.................................................. 816 816 816
------------ ------------ ------------
76,718 90,592 112,038
Less--expense reimbursement from Manager due to
undertakings--Note 3(a)...................................... 37,895 43,226 48,581
------------ ------------ ------------
Total Expenses............................................ 38,823 47,366 63,457
------------ ------------ ------------
INVESTMENT INCOME--NET.................................... 314,431 221,656 217,099
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 4(a)...................... $ 4,999 $ 116,044 $ 229,660
Net realized gain on financial futures--Note 4(a);
Long Transactions.............................................. 22,455 -- --
------------ ------------ ------------
Net Realized Gain.............................................. 27,454 116,044 229,660
------------ ------------ ------------
Net unrealized appreciation on investments (including $353,470,
$295,187 and $583,282 net unrealized appreciation for financial
futures for the Income Portfolio, the Growth and Income
Portfolio and the Growth Portfolio, respectively).............. 561,484 1,279,051 2,338,379
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........... 588,938 1,395,095 2,568,039
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 903,369 $ 1,616,751 $ 2,785,138
============ ============ ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc.
Statement of Changes in Net Assets from March 31, 1995 (commencement of operations) to July 31, 1995 (Unaudited)
Income
Portfolio
-----------
<S> <C> <C>
OPERATIONS:
Investment income--net....................................................... $ 314,431
Net realized gain on investments............................................. 27,454
Net unrealized appreciation on investments for the period.................... 561,484
-----------
Net Increase In Net Assets Resulting From Operations................... 903,369
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares........................................................... 7,500,000
Investor Class shares.................................................... 7,500,000
-----------
Increase In Net Assets From Capital Stock Transactions................. 15,000,000
-----------
Total Increase In Net Assets........................................ 15,903,369
NET ASSETS:
Beginning of period--Note 1.................................................. 33,000
-----------
End of period (including undistributed investment income-net of
$314,431 on July 31, 1995)................................................ $15,936,369
===========
Shares
----------------------------
Class R Investor Class
------- --------------
CAPITAL SHARE TRANSACTIONS;
Shares sold.................................................................. 600,000 600,000
=========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc.
Statement of Changes in Net Assets from March 31, 1995 (commencement of operations) to July 31, 1995 (Unaudited) (continued)
Growth and Income
Portfolio
-----------
<S> <C> <C>
OPERATIONS:
Investment income--net....................................................... $ 221,656
Net realized gain on investments............................................. 116,044
Net unrealized appreciation on investments for the period.................... 1,279,051
-----------
Net Increase In Net Assets Resulting From Operations................... 1,616,751
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares........................................................... 7,500,000
Investor Class shares.................................................... 7,500,000
-----------
Increase In Net Assets From Capital Stock Transactions................. 15,000,000
-----------
Total Increase In Net Assets........................................ 16,616,751
NET ASSETS:
Beginning of period--Note 1.................................................. 34,000
-----------
End of period (including undistributed investment income-net of
$221,656 on July 31, 1995)............................................... $16,650,751
===========
Shares
----------------------------
Class R Investor Class
------- --------------
CAPITAL SHARE TRANSACTIONS;
Shares sold.................................................................. 600,000 600,000
=========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus LifeTime Portfolios, Inc.
Statement of Changes in Net Assets from March 31, 1995 (commencement of operations) to July 31, 1995 (Unaudited) (continued)
Growth
Portfolio
----------
<S> <C> <C>
OPERATIONS:
Investment income--net....................................................... $ 217,099
Net realized gain on investments............................................. 229,660
Net unrealized appreciation on investments for the period.................... 2,338,379
-----------
Net Increase In Net Assets Resulting From Operations................... 2,785,138
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares........................................................... 10,000,000
Investor Class shares.................................................... 10,000,000
-----------
Increase In Net Assets From Capital Stock Transactions................. 20,000,000
-----------
Total Increase In Net Assets........................................ 22,785,138
NET ASSETS:
Beginning of period--Note 1.................................................. 33,000
-----------
End of period (including undistributed investment income-net of
$217,099 on July 31, 1995)................................................ $22,818,138
===========
Shares
----------------------------
Class R Investor Class
------- --------------
CAPITAL SHARE TRANSACTIONS;
Shares sold.................................................................. 800,000 800,000
=========== ==========
See notes to financial statements.
</TABLE>
Dreyfus LifeTime Portfolios, Inc.
Financial Highlights (Unaudited)
Reference is made to Page 5 of the Fund's Prospectus dated October 1, 1995.
Dreyfus LifeTime Portfolios, Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--General:
Dreyfus LifeTime Portfolios, Inc. (the "Fund") formerly Dreyfus Retirement
Portfolios, Inc. was incorporated on July 15, 1993 and operates as a series
company currently offering three portfolios: the Income Portfolio, the Growth
and Income Portfolio and the Growth Portfolio. The Fund accounts separately
for the assets, liabilities and operations of each series. The Fund had no
operations until March 31, 1995 (when operations commenced for all series')
other than matters relating to its organization and registration as a diversi-
fied open-end management investment company under the Investment Company act
of 1940 ("Act") and the Securities Act of 1933 and the sale and issuance of
2,640 shares of Common Stock ("Initial Shares") of the Income Portfolio and
the Growth Portfolio, and 2,720 shares of Common Stock of the Growth and Income
Portfolio to MBC Investments Corporation. The Dreyfus Corporation ("Manager")
serves as each Portfolio's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. Mellon Equity Associates ("Mellon Equity")
serves as each Portfolio's sub-investment adviser. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. The Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc., a pro-
vider of mutual fund administration services, which in turn is a wholly-owned
subsidiary of FDI Holdings, Inc., the parent company of which is Boston
Institutional Group, Inc.
As of July 31, 1995, Allomon Corporation, a subsidiary of Mellon Bank
Investments Corporation, which in turn is a subsidiary of Mellon Bank, held
the following shares:
Income Portfolio 1,200,000 Growth Portfolio 1,600,000
Growth and Income Portfolio 1,200,000
Each Portfolio offers both Investor Class shares and Class R shares.
Investor Class shares are offered to any investor and Class R shares are
offered only to institutional investors. Other differences between the two
classes include the services offered to and the expenses borne by each class.
NOTE 2--Significant Accounting Policies:
(a) Portfolio valuation: Each series' 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. Bid price is used when no asked price is available. Invest-
ments denominated in foreign currencies are translated to U.S. dollars at the
prevailing rates of exchange.
Most debt securities (excluding short-term investments) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Debt securities 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 debt 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.
(b) Foreign currency transactions: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and un-
realized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates.
(c) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(d) Expenses: Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are al-
located among them on a pro rata basis.
(e) Dividends to shareholders: Dividends payable to shareholders are
recorded by each series on the ex-dividend date. Dividends from investment
income-net and dividends from net realized capital gain, with respect to each
series, are normally declared and paid annually, but each series may make
distributions on a more frequent basis to comply with the distribution re-
quirements of the Internal Revenue Code. To the extent that a net realized
capital gain of a series can be offset by a capital loss carryover, if any,
of that series, such gain will not be distributed.
(f) Federal income taxes: It is the policy of the Fund 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.
For Federal income tax purposes, each series is treated as a single entity
for the purpose of determining such qualification.
(g) Other: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from the date operations
commenced over the period during which it is expected that a benefit will be
realized, not to exceed five years. At July 31, 1995, the unamortized
balance of such expenses of each of the respective series amounted to
the following:
Income Portfolio $60,042 Growth Portfolio $60,042
Growth and Income Portfolio 60,042
NOTE 3--Management Fee, Sub-Investment Advisory Fee and Other Transactions
With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed on the average daily value of each series' net
assets at the following rates: .60 of 1% of the Income Portfolio, and .75 of
1% of the Growth and Income Portfolio and the Growth Portfolio. The Agreement
provides that if in any full fiscal year the aggregate expenses of any series,
exclusive of taxes, brokerage, interest on borrowings (which, in the view of
Stroock & Stroock & Lavan, counsel to the Series, also contemplates dividends
accrued on securities sold short) and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the Series, that
series may deduct from payments to be made to the Manager, or the Manager will
bear the amount of such excess to the extent required by state law. The most
stringent state expense limitation applicable to each Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of distribution expenses and certain expenses as described above)
exceed 2 1/2% of the first $30 million, 2% of the next $70 million and 1 1/2%
of the excess over $100 million of the average value of that series' net assets
in accordance with California "blue sky" regulations. The Manager has
undertaken with respect to the Income Portfolio from March 31, 1995 through
December 31, 1995, or until such time as the net assets of the Fund exceed $500
million, regardless of whether they remain at that level, to reduce to the
management fee paid by, or reimburse such excess expenses of the series, to the
extent that the series' aggregate annual expenses (excluding 12b-1 Service Plan
and certain expenses as described above) exceed an annual rate of .60 of 1% of
the average daily value of the series' net assets. With respect to the Growth
and Income Portfolio and the Growth Portfolio,the Manager has undertaken from
March 31, 1995 through December 31, 1995, or until such time as the net assets
of the series exceed $500 million, regardless of whether they remain at that
level, to reduce the management fee paid by, or reimburse such excess expenses
of the series, to the extent that the series' aggregate annual expenses
(excluding 12b-1 Service Plan and certain expenses as described above) exceed
an annual rate of .75 of 1% of the average daily value of the series' net
assets.
The expense reimbursements, pursuant to the undertakings amounted to the
following for the period ended July 31, 1995:
Income Portfolio $37,895 Growth Portfolio $48,581
Growth and Income Portfolio 43,226
The undertakings may be modified by the Manager from time to time, pro-
vided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
Pursuant to a Sub-Investment Advisory Agreement between the Manager and
Mellon Equity, the Manager has agreed to pay Mellon Equity a monthly sub-
advisory fee for each Portfolio, computed at the following annual rates:
Annual Fee as a Percentage of
Average Daily Net Assets of each
Total Fund Net Assets Portfolio
- --------------------- -----------------------------
0 to $600 million........................ .35 of 1%
$600 up to $1.2 billion.................. .25 of 1%
$1.2 up to $1.8 billion.................. .20 of 1%
In excess of $1.8 billion................ .15 of 1%
(b) Under the Service Plan (the "Plan") with respect to the Investor Class
shares only, adopted pursuant to Rule 12b-1 under the Act the Fund (a)
reimburses the Distributor for payments to certain Service Agents for distri-
buting each Series' shares and (b) pays the Manager, Dreyfus Service Corpora-
tion, a wholly-owned subsidiary of the Manager, and any affiliate of either of
them (collectively, "Dreyfus") for advertising and marketing relating to each
Series' Investor Class shares, and for servicing Investor Class shareholder
accounts at an aggregate annual rate of .25 of 1% of the value of each Series'
average daily net assets of Investor Class shares. Each of the Distributor
and Dreyfus may pay one or more Service Agents a fee in respect of Investor
Class shares owned by shareholders with whom the Service Agent has a servicing
Investor Class shareholder accounts relationship or for whom the Service Agent
is the dealer or holder of record. Each of the Distributor and Dreyfus
determines the amounts, if any, to be paid to Service Agents under the Plan
and the basis on which such payments are made. The fees payable under the Plan
are payable without regard to actual expenses incurred. The Plan also
separately provides for the Series to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan, not
to exceed the greater of $100,000 or .005 of 1% of each Series' average daily
net assets of Investor Class shares for any full fiscal year.
During the period ended July 31, 1995, the following was charged to each
series pursuant to the Plan:
Income Portfolio $6,560 Growth Portfolio $8,958
Growth and Income Portfolio 6,661
(c) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4--Securities Transactions:
(a) The following summarizes the aggregate amount of purchases and sales of
investment securities, excluding short-term securities, for the period ended
July 31, 1995:
Purchases Sales
---------- ----------
Income Portfolio........................ $11,067,283 $ 511,484
Growth and Income Portfolio............. 15,095,309 2,946,928
Growth Portfolio........................ 19,913,931 5,507,559
The Fund is engaged in trading financial futures contracts. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments (see the Statements 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 contract at the close of
each day's trading. Typically, variation margin payments are made or received
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 July 31, 1995 and their related
unrealized market appreciation are set forth in the Statements of Financial
Futures.
(b) The following summarizes accumulated net unrealized appreciation on
investments for each series at July 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Appreciation (Depreciation) Net
------------ -------------- ----------
<S> <C> <C> <C>
Income Portfolio...................... $ 572,539 $ (11,055) $ 561,484
Growth and Income Portfolio........... 1,305,108 (26,057) 1,279,051
Growth Portfolio...................... 2,392,757 (54,378) 2,338,379
</TABLE>
At July 31, 1995, the cost of investments of each series for Federal income
tax purposes was substantially the same as the cost for financial reporting
purposes. The cost of investments for each series for financial reporting
purposes as of July 31, 1995 was as follows:
Income Portfolio $15,615,578 Growth Portfolio $20,948,600
Growth and Income Portfolio 15,538,213
