DREYFUS LIFETIME PORTFOLIOS INC, 497, 1996-04-12

DREYFUS LIFETIME PORTFOLIOS INC
497, 1996-04-12

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Rule 497(b)
Registration No. 333-01213

DREYFUS ASSET ALLOCATION FUND, INC.
c/o The Dreyfus Corporation

<PAGE>

200 Park Avenue
New York, New York 10166

Dear Shareholder:

As a shareholder of the Growth Series (the "Growth Series") or the Income
Series (the "Income Series" and, together with the Growth Series, the "Series")
of Dreyfus Asset Allocation Fund, Inc. ("DAAF"), you are entitled to vote on the
proposal described below and in the enclosed materials.

Because each Series has been unable to attract sufficient assets under
management to operate efficiently as a separate series of DAAF without
significant expense subsidization, management of DAAF has determined that
certain operational efficiencies might be achievable if each of the Growth
Series and the Income Series were to exchange its assets (subject to
liabilities) for shares of funds in the Dreyfus Family that have the same
investment objective(s) and substantially similar policies; namely, the Growth
Portfolio (the "Growth Portfolio") and the Income Portfolio (the "Income
Portfolio" and, together with the Growth Portfolio, the "Portfolios"),
respectively, of Dreyfus LifeTime Portfolios, Inc. ("DLPI").

The proposal provides that each Series exchange (the "Exchange") all of its
assets, subject to liabilities, for Investor Class shares (the "Portfolio
Shares") of the corresponding Portfolio, namely the Growth Portfolio, with
respect to the Growth Series, and the Income Portfolio, with respect to the
Income Series. Promptly thereafter, each Series will distribute pro rata the
Portfolio Shares received in the Exchange to its shareholders in complete
liquidation of the Series. Thus, each shareholder will receive for his or her
Series shares a number of Portfolio Shares equal to the value of such Series
shares as of the date of the Exchange. The Exchange will not result in the
imposition of Federal income tax on you.

The investment objective of each of the Series is the same as that of its
corresponding Portfolio. The Series and the Portfolios differ in certain
respects which are described in the enclosed Combined Prospectus/Proxy
Statement.

Further information about the transaction is contained in the enclosed
materials, which you should review carefully. You are entitled to vote on the
proposed transaction with respect to each Series in which you are a Shareholder.

Please take the time to consider the enclosed materials and then vote by
completing, dating and signing the enclosed proxy card(s). A self-addressed,
postage-paid envelope has been enclosed for your convenience.

An affiliate of The Dreyfus Corporation, each Series' and Portfolio's
investment adviser, owns over 50% of each Series' outstanding shares and intends
to vote in favor of the proposed transactions.

DAAF'S BOARD MEMBERS RECOMMEND THAT EACH SERIES' SHAREHOLDERS VOTE IN FAVOR
OF THE PROPOSED TRANSACTION WITH RESPECT TO THEIR SERIES.

If you have any questions after considering the enclosed materials, please
feel free to call 1-800-645-6561 between the hours of 9:00 a.m. and 5:30 p.m.
(New York time), Monday through Friday. Sincerely,

Marie E. Connolly,
President

May 10, 1996

<PAGE>

DREYFUS ASSET ALLOCATION FUND, INC.
(GROWTH SERIES)
(INCOME SERIES)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders:

A Special Meeting of Shareholders of each of the Growth Series (the "Growth
Series") and the Income Series (the "Income Series" and, together with the
Growth Series, the "Series") of Dreyfus Asset Allocation Fund, Inc. ("DAAF")
will be held at the offices of The Dreyfus Corporation, 200 Park Avenue, 7th
Floor, New York, New York 10166, on Thursday, May 30, 1996 at 10:00 a.m. for the
following purposes:

1. To consider an Agreement and Plan of Reorganization (each,
a "Plan" and, collectively, the "Plans") for each Series providing for
the transfer of all or substantially all of its assets, subject to
liabilities, to the corresponding portfolio, namely the Growth
Portfolio, with respect to the Growth Series, and the Income Portfolio,
with respect to the Income Series (each, a "Portfolio" and,
collectively, the "Portfolios"), of Dreyfus LifeTime Portfolios, Inc.
("DLPI"), in exchange (the "Exchange") for the Portfolio's Investor
Class shares and the assumption by the Portfolio of stated liabilities.
Portfolio shares received in the Exchange will be distributed by each
Series to its shareholders in liquidation of the Series, after
which the Series will be terminated as a series of DAAF and
its shares cancelled; and
2. To transact such other business as may properly
come before the meeting, or any adjournment or adjournments
thereof.

Shareholders of record at the close of business on March 26, 1996, will be
entitled to receive notice of and to vote at the meeting.

By Order of the Board of Directors

John E. Pelletier,
Secretary

New York, New York
May 10, 1996

===========================================================================
WE NEED YOUR PROXY VOTE IMMEDIATELY

A SHAREHOLDER MAY THINK HIS VOTE IS NOT IMPORTANT, BUT
IT IS VITAL. BY LAW, THE MEETING OF SHAREHOLDERS OF A
SERIES WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY
BUSINESS IF LESS THAN A QUORUM OF ITS SHARES ELIGIBLE
TO VOTE IS REPRESENTED. IN THAT EVENT, SUCH SERIES, AT
ITS SHAREHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT
VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR
VOTE COULD BE CRITICAL TO ENABLE YOUR SERIES TO HOLD
THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY
CARD IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL
BENEFIT FROM YOUR COOPERATION.
===========================================================================
<PAGE>

MAY 10, 1996

COMBINED PROSPECTUS/PROXY STATEMENT FOR THE
DREYFUS ASSET ALLOCATION FUND, INC.
(GROWTH SERIES)
(INCOME SERIES)

Special Meeting of Shareholders
to be held on May 30, 1996

This Combined Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Dreyfus Asset Allocation Fund, Inc.
("DAAF"), on behalf of its Growth Series (the "Growth Series") and Income Series
(the "Income Series" and, together with the Growth Series, the "Series"), to be
used at the Special Meeting of Shareholders (the "Meeting") of the Series to be
held on Thursday, May 30, 1996 at 10:00 a.m., at the offices of The Dreyfus
Corporation, 200 Park Avenue, 7th Floor, New York, New York 10166, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. Shareholders of record at the close of business on March 26, 1996
(each, a "Shareholder" and, collectively, the "Shareholders") are entitled to
receive notice of and to vote at the Meeting. Shareholders are entitled to one
vote for each share of common stock of a Series, par value $.001 per share
("Series Share"), held and fractional votes for each fractional Series Share
held. Series Shares represented by executed and unrevoked proxies will be voted
in accordance with the specifications made thereon. If the enclosed form of
proxy is executed and returned, it nevertheless may be revoked by giving another
proxy or by letter or telegram directed to the relevant Series, which must
indicate the Shareholder's name and account number. To be effective, such
revocation must be received before the Meeting. In addition, any Shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given. As of February 2, 1996, the following
numbers of Series Shares were issued and outstanding:

NAME OF SERIES SHARES OUTSTANDING

Growth Series 142,940.572
Income Series 156,728.215

Proxy materials will be mailed to shareholders of record on or about May
10, 1996. DAAF's principal executive offices are located at 200 Park Avenue, New
York, New York 10166.

This Combined Prospectus/Proxy Statement is being used in order to reduce
the preparation, printing, handling and postage expenses that would result from
the use of a separate prospectus/proxy statement for each Series. Shareholders
of each Series will vote separately on the Proposal. Thus, if the Proposal is
approved by one Series, and disapproved by the other Series, the Proposal will
be implemented only for the Series that approved the Proposal. Therefore, it is
essential that Shareholders who own Series Shares in both Series complete, date,
sign and return EACH proxy card they receive.

It is proposed that each of the Growth Series and the Income Series
transfer all or substantially all of its respective assets, subject to
liabilities, to the Growth Portfolio (the "Growth Portfolio") and the Income
Portfolio (the "Income Portfolio" and, together with the Growth Portfolio, the
"Portfolios"), respectively, of Dreyfus LifeTime Portfolios, Inc. ("DLPI") in
exchange (the "Exchange") for Investor Class shares of the corresponding
Portfolio ("Portfolio Shares"), all as more fully described herein. Upon
consummation of the Exchange, Portfolio Shares received by a Series will be
distributed to its Shareholders, with each Shareholder receiving a pro rata
distribution of Portfolio Shares (or fractions thereof) for Series Shares held
prior to the Exchange. Thus, it is contemplated that each Shareholder will
receive for the Shareholder's Series Shares a number of Portfolio Shares (or
fractions thereof) equal in value to the aggregate net asset value of such
Series Shares as of the date of the Exchange.

DLPI is an open-end, management investment company comprised of three
diversified portfolios. Each Portfolio and its corresponding Series has the same
investment adviser, distributor and investment objective, substantially similar
management policies, and differs substantively only to the extent set forth
herein. Mellon Equity Associates ("Mellon Equity") serves as each Portfolio's
sub-investment adviser as described herein. The Portfolios and Series have
different Portfolio managers who are described herein.

This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about the Portfolios that
Shareholders should know before voting on the Proposal or investing in the
Portfolios. DLPI's prospectus dated January 15, 1996 (the "DLPI Prospectus"),
DLPI's Annual Report for the fiscal year ended September 30, 1995 and DAAF's
prospectus dated September 1, 1995 (the "DAAF Prospectus"), each accompany this
Combined Prospectus/Proxy Statement and are incorporated herein by reference.

Additional information, contained in a Statement of Additional Information
dated May 10, 1996 forming a part of DLPI's Registration Statement on Form N-14
(File No. 333-01213), has been filed with the Securities and Exchange Commission
and is available without charge by calling 1-800-645-6561 or writing to DLPI at
its principal executive offices located at 200 Park Avenue, New York, New York
10166. The Statement of Additional Information is incorporated herein by
reference in its entirety.

- ----------------------------------------------------------------

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

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR BY ANY OTHER AGENCY. ALL MUTUAL FUND
SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.

TABLE OF CONTENTS
PAGE

Summary....................................................
Reasons for the Exchange...................................
Information about the Exchange.............................
Additional Information about the Portfolios and Series.....
Voting Information.........................................
Financial Statements and Experts...........................
Other Matters..............................................
Notice to Banks, Broker/Dealers and
Voting Trustees and Their Nominees.......................

<PAGE>

APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION
PROVIDING FOR THE TRANSFER OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF EACH SERIES TO THE CORRESPONDING
PORTFOLIO OF DREYFUS LIFETIME PORTFOLIOS, INC.
SUMMARY

This Summary is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the DLPI
Prospectus, the DAAF Prospectus and the form of Agreement and Plan of
Reorganization attached to this Combined Prospectus/Proxy Statement as Exhibit
A.

PROPOSED TRANSACTION. DAAF's Board, including the Board members who are not
"interested persons" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")), has unanimously approved an Agreement and Plan of
Reorganization (each a "Plan" and, collectively, the "Plans"), with respect to
each Series. The Plans are identical except for the name of the parties. Each
Plan provides that, subject to the requisite approval of its Shareholders, on
the date of the Exchange each Series shall assign, transfer and convey to the
corresponding Portfolio, namely the Growth Portfolio, with respect to the Growth
Series, and the Income Portfolio, with respect to the Income Series, all of the
assets (subject to liabilities) of the Series, including all securities and
cash, in exchange for Portfolio Shares having an aggregate net asset value equal
to the value of the net assets of the Series' acquired. Each Series will
distribute all Portfolio Shares received by it among its Shareholders so that
each Shareholder will receive a pro rata distribution of Portfolio Shares (or
fractions thereof), having an aggregate net asset value equal to the aggregate
net asset value of the Shareholder's Series Shares as of the date of the
Exchange. Thereafter, the Series will be terminated as a series of DAAF and its
shares cancelled.

As a result of the Exchange, each Shareholder will cease to be a
shareholder of the relevant Series and will become a shareholder of the
corresponding Portfolio as of the close of business on the closing date of the
Exchange.

DAAF's Board has concluded unanimously that the Exchange would be in the
best interests of Shareholders of each Series and the interests of existing
Shareholders of each Series would not be diluted as a result of the transactions
contemplated thereby. See "Reasons for the Exchange."

TAX CONSEQUENCES. As a condition to the closing of the Exchange, DAAF and
DLPI will receive an opinion of counsel to the effect that, for Federal income
tax purposes, (a) no gain or loss will be recognized by Series Shareholders for
Federal income tax purposes as a result of the Exchange, (b) the holding period
and aggregate tax basis of Portfolio Shares received by a Series Shareholder
will be the same as the holding period and aggregate tax basis of the
Shareholder's Series Shares, and (c) the holding period and tax basis of the
Series' assets transferred to the Portfolio as a result of the Exchange will be
the same as the holding period and tax basis of such assets held by the Series
immediately prior to the Exchange. See "Information about the Exchange--Federal
Income Tax Consequences."

COMPARISON OF THE SERIES AND PORTFOLIOS. The following discussion is a
summary of certain parts of the DAAF Prospectus and the DLPI Prospectus.
Information contained herein is qualified by the more complete information set
forth in the DAAF Prospectus and the DLPI Prospectus, which are incorporated
herein by reference.

GENERAL. Each Series and Portfolio is an open-end, management investment
company advised by The Dreyfus Corporation ("Dreyfus"). Mellon Equity, an
affiliate of Dreyfus, serves as each Portfolio's sub-investment adviser. The
investment objective of the Growth Portfolio--capital appreciation--is identical
to that of the Growth Series, and the investment objectives of the Income
Portfolio--to maximize current income with a secondary objective of capital
appreciation--are identical to that of the Income Series.

The management policies of each Series and its corresponding Portfolio are
substantially similar. Each Series and Portfolio seeks to achieve its investment
objective by following an asset allocation strategy that contemplates shifts
among common stocks, fixed-income securities and, except with respect to the
Growth Portfolio, short-term money market instruments. With respect to each of
the Growth Series, the Income Series and the Growth Portfolio, a target
allocation percentage is set for each permitted asset class and then adjusted
within defined ranges based upon Dreyfus' (in the case of the Growth Series and
the Income Series) or Mellon Equity's (in the case of the Growth Portfolio)
assessment of the risk/return characteristics of the particular class. With
respect to the Income Portfolio, Mellon Equity sets a target allocation
percentage for the Portfolio's investments, but does not actively manage the
Portfolio's assets.

The Growth Series may invest between 65% and 95% of its assets (with a
target allocation of 80%) in those common stocks included in the Wilshire 5000
Index, which is composed of all publicly-traded common stocks in the United
States, and between 5% and 35% of its assets (with a target allocation of 20%)
in U.S. Treasury Notes and Bonds and short-term money market instruments. The
Growth Portfolio may invest between 65% and 100% of its assets (with a target
allocation of 80%) in common stocks, and up to 35% of its assets (with a target
allocation of 20%) in fixed-income securities. The Growth Portfolio, except for
temporary defensive purposes, may not invest in short-term money market
instruments. The Growth Portfolio's equity investments are further divided into
80% large capitalization stocks (typically with market capitalizations of
greater than $1.4 billion) and 20% small capitalization stocks (typically with
market capitalizations of less than $1.4 billion). In addition, the Growth
Portfolio may invest up to 25% of its assets in foreign securities. The Growth
Series may not invest in foreign securities except to the extent the common
stocks of some foreign issuers are included in the Wilshire 5000 Index.

The Income Series may invest between 25% and 45% of its assets (with a
target allocation of 35%) in common stocks included in the Standard & Poor's 500
Stock Index (the "S&P 500 Index"), which is composed of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, between 45% and
70% of its assets (with a target allocation of 55%) in U.S. Treasury Notes and
Bonds, and up to 15% of its assets (with a target allocation of 10%) in
short-term money market instruments. The Income Portfolio may invest in domestic
large capitalization common stocks (with a target allocation of 25%), domestic
fixed-income securities (with a target allocation of 75%), and short-term money
market instruments up to 10% of its assets. The Income Portfolio may invest in
foreign securities. The Income Series may not invest in foreign securities
except to the extent the common stocks of some foreign issuers are included in
the S&P 500 Index.

Each Portfolio and Series may engage in various investment and hedging
techniques, such as leveraging, options and futures transactions and lending
portfolios securities. In addition, each Series may engage--and Portfolios may
not engage-- in short-selling. Each Portfolio may engage--and the Series may not
engage--in foreign currency transactions. In all other material respects, the
management policies of each Series and its corresponding Portfolio are
substantially the same. For a more complete discussion of each Series' and
Portfolio's management policies, see "Description of the Fund" in the DAAF
Prospectus and the DLPI Prospectus.

Both DAAF and DLPI are corporations organized under the laws of the State
of Maryland and have substantially identical charter documents.

FUNDAMENTAL POLICIES. Each Portfolio is a DIVERSIFIED investment company
that may not invest more than 5% of the value of its total assets in the
obligations of a 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. Each Series is a NON- DIVERSIFIED
investment company, meaning that the proportion of each Series' assets that may
be invested in the securities of a single issuer is not limited by the 1940 Act.

In all other respects, the fundamental policies and investment restrictions
of each Series and Portfolio are identical.

FEES AND EXPENSES. The following information concerning fees and expenses
is derived from information set forth under the caption "Annual Fund Operating
Expenses" in each of the DLPI Prospectus and the DAAF Prospectus.

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets):
<TABLE>
<CAPTION>

Pro Forma
After
Exchange
DLPI DLPI
INVESTOR Investor
CLASS DAAF Class
GROWTH Growth Growth
PORTFOLIO SERIES PORTFOLIO
<S> <C> <C> <C>

Management Fees
(after fee waiver) .33% .00% .33%
12b-1 Fees NONE None None
Other Expenses .67% 1.25% .67%

Total Fund
Operating Expenses
(after expense
reimbursement) 1.00% 1.25% 1.00%

Pro Forma
After
Exchange
DLPI DLPI
Investor Investor
Class DAAF Class
Income Income Income
PORTFOLIO SERIES PORTFOLIO
Management Fees
(after fee waiver) .27% .00% .27%
12b-1 Fees NONE None None
Other Expenses
(after expense
reimbursement) .58% 1.25% .58%
Total Fund
Operating Expenses
(after expense
reimbursement) .85% 1.25% .85%

Example

An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
</TABLE>

Pro Forma
After
Exchange
DLPI DLPI
INVESTOR Investor
CLASS DAAF Class
GROWTH Growth Growth
PORTFOLIO SERIES PORTFOLIO
<S> <C> <C> <C>

1 Year $ 10 $ 13 $ 10
3 Years $ 32 $ 40 $ 32
5 Years $ 55 $ 69 $ 55
10 Years $122 $151 $122

Pro Forma
After
Exchange
DLPI DLPI
INVESTOR Investor
CLASS DAAF Class
INCOME Income Income
PORTFOLIO SERIES PORTFOLIO
1 Year $ 9 $ 13 $ 9
3 Years $ 27 $ 40 $ 27
5 Years $ 47 $ 69 $ 47
10 Years $105 $151 $105
</TABLE>

Annual Fund Operating Expenses noted above have been restated to reflect
undertakings by Dreyfus with respect to the Investor Class of the Growth
Portfolio and Income Portfolio to limit the aggregate expenses of each Portfolio
(exclusive of the Shareholder Services Plan fee, taxes, brokerage, interest on
borrowings and extraordinary expenses) to an annual rate of .75% and .60%,
respectively, until the net assets of the applicable Portfolio exceed
$500,000,000 (irrespective of whether the net assets remain at that level) or
September 30, 1996, whichever occurs sooner. The expenses noted above, without
reimbursement, with respect to the Investor Class of the Growth Portfolio would
have been: Management Fees - .75% and Total Fund Operating Expenses - 1.42%; and
the amount of expenses that an investor would pay, assuming redemption after
one, three, five and ten years, would be $14, $45, $78 and $170, respectively.
The expenses noted above, without reimbursement, with respect to the Investor
Class of the Income Portfolio would have been: Management Fees - .60% and Total
Fund Operating Expenses - 1.18%; and the amount of expenses that an investor
would pay, assuming redemption after one, three, five and ten years, would be
$12, $37, $65 and $143, respectively. Annual Fund Operating Expenses noted above
have been restated to reflect undertakings by Dreyfus with respect to the Growth
Series and Income Series to limit the aggregate expenses of each Series
(exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses) to an annual rate of 1.25% until June 30, 1996. The expenses noted
above, without reimbursement, with respect to each of the Growth Series and
Income Series would have been: Management Fees - .75%, Other Expenses - 1.75%
and Total Fund Operating Expenses - 2.50% (Total Fund Operating Expenses are
limited to the expense limitation provisions of the Management Agreement); and
the amount of expenses that an investor would pay, assuming redemption after
one, three, five and ten years, would be $25, $78, $133 and $284, respectively.

Assuming the approval of the Exchange, Dreyfus, based on
internally-developed estimates dated as of December 31, 1995, believes that the
Investor Class of the Growth Portfolio and Income Portfolio initially will have
annual Total Fund Operating Expenses (after fee waivers and expense
reimbursement arrangements) of approximately 1.00% and .85%, respectively, of
average net assets.

SHAREHOLDER SERVICES PLAN. Portfolio Shares are subject to a Shareholder
Services Plan which is identical to that adopted by DAAF for each Series'
shares. See "Shareholder Services Plan" in the relevant Prospectus for a
complete discussion of the Shareholder Services Plan.

INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER. Dreyfus serves as each
Series' and Portfolio's investment adviser. Dreyfus has engaged Mellon Equity to
serve as each Portfolio's sub-investment adviser. Mellon Equity, a registered
investment adviser formed in 1987, is an indirect wholly-owned subsidiary of
Mellon Bank Corporation and, thus, an affiliate of Dreyfus. As of September 30,
1995, Mellon Equity managed approximately $7.6 billion in assets and served as
the investment adviser for 13 other investment companies. Mellon Equity, subject
to the supervision and approval of Dreyfus, provides investment advisory
assistance and the day-to-day management of each Portfolio's investments, as
well as investment research and statistical information, under a Sub-Investment
Advisory Agreement (the "Sub- Advisory Agreement") with Dreyfus. In providing
its services, Mellon Equity may use the services of one or more of its
affiliates. Under the Sub-Advisory Agreement, Dreyfus pays Mellon Equity an
annual fee at the following rate: .35% of each Portfolio's average daily net
assets up to $600 million in DLPI assets; .25% of the Portfolio's average daily
net assets when DLPI's assets are between $600 million and $1.2 billion; .20% of
the Portfolio's average daily net assets when DLPI's assets are between $1.2
billion and $1.8 billion; and .15% of the Portfolio's average daily net assets
when DLPI's assets are over $1.8 billion.

Each Portfolio's primary portfolio manager is Steven A. Falci. He has held
that position since the inception of DLPI and has been employed by Mellon Equity
since April 1994. For more than five years prior thereto, he was a managing
director for pension investments at NYNEX Corporation. Each Series' primary
portfolio manager is Ernest G. Wiggins, Jr. He has held that position since May
1994 and has been employed by Dreyfus since December 1993. From 1992 to December
1993, Mr. Wiggins was President of Gabelli International and, prior thereto, he
held various positions with Fidelity Management and Research Company.

CAPITALIZATION. Each Portfolio has classified its shares into two
classes--Investor Class, which are referred to herein as Portfolio Shares, and
Class R. Each Series' shares are of one class. The following table sets forth as
of February 2, 1996 (1) the capitalization of each Series, (2) the
capitalization of each Portfolio's Investor Class, and (3) the pro forma
capitalization of each Portfolio's Investor Class, as adjusted showing the
effect of the Exchange had it occurred on such date.

Pro Forma
After
DLPI Exchange
Investor DLPI
Class DAAF Investor Class
Growth Growth Growth
PORTFOLIO SERIES PORTFOLIO
<S> <C> <C> <C>

Total net assets.................. $13,126,634.77 $2,182,702.53 $15,309,337.30

Net asset value
per share......................... $15.09 $15.27 $15.09

Shares outstanding.................. 869,889.647 142,940.572 1,014,535.275

Pro Forma
After
DLPI Exchange
Investor DLPI
Class DAAF Investor Class
Income Income Income
PORTFOLIO SERIES PORTFOLIO

Total net assets.................... $8,541,622.54 $2,123,667.31 $10,665,289.85

Net asset value
per share......................... $13.12 $13.55 $13.12

Shares outstanding.................. 651,038.303 156,728.215 812,903.190
</TABLE>

PURCHASE PROCEDURES. The purchase procedures of the Series and Portfolios
(with respect to Investor Class shares) are identical. See "How to Buy Fund
Shares" in the relevant Prospectus for a complete discussion of purchase
procedures.

REDEMPTION PROCEDURES. The redemption procedures of the Series and
Portfolios (with respect to Investor Class shares) are identical. See "How to
Redeem Fund Shares" in the relevant Prospectus for a complete discussion of
redemption procedures.

DISTRIBUTIONS. The dividend and distributions policies of the Growth Series
and the Growth Portfolio are identical. The Income Series declares and pays
dividends quarterly, while the Income Portfolio declares and pays dividends
annually. See "Dividends, Distributions and Taxes" in the relevant Prospectus
for a complete discussion of such policies.

SHAREHOLDER SERVICES. The shareholder services offered by the Series and
Portfolios (with respect to Investor Class shares) are identical. See
"Shareholder Services" in the relevant Prospectus for a complete description of
shareholder services.

RISK FACTORS. The investment risks of each Series and corresponding
Portfolio are substantially similar, except as described below.

The Growth Portfolio's equity investments are divided into 80% large
capitalization stocks and 20% small capitalization stocks. The Growth Series'
equity investments are not subject to a comparable division between large
capitalization and small capitalization stocks. The securities of the smaller
companies in which both the Growth Series and Growth Portfolio may invest may be
subject to more abrupt or erratic market movements than larger, more established
companies, because these securities typically are traded in lower volume and the
issuers typically are more subject to changes in earnings and prospects.

The Growth Portfolio may invest in foreign securities. Neither Series may
invest in foreign securities except to the extent the common stocks of some
foreign issuers are included in the S&P 500 Index and the Wilshire 5000 Index.

Securities of some foreign issuers are less liquid and more volatile than
securities of comparable U.S. issuers. Similarly, volume and liquidity in most
foreign securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States. The issuers of
some of these securities, such as foreign bank obligations, may be subject to
less stringent or different regulations than are U.S. issuers. In addition,
there may be less publicly available information about a non-U.S. issuer, and
non-U.S. issuers generally are not subject to uniform accounting and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. issuers.

The Growth Portfolio also may engage in currency exchange transactions and
may purchase and sell currency futures contracts and options thereon. Neither
Series may engage in currency exchange transactions or may purchase and sell
currency futures contracts and options thereon. Currency exchange rates may
fluctuate significantly over short periods of time, and can be affected
unpredictably by intervention by U.S. or foreign governments or central banks,
or the failure to intervene, or by currency controls or political developments
in the United States or abroad. The foreign currency market offers less
protection against defaults in the forward trading of currencies than is
available when trading in currencies occurs on an exchange. See "Description of
the Fund--Investment Considerations and Risks" in the DLPI Prospectus for a more
complete description of these investment risks.

Each Series may engage in short-selling, where the Series sells a security
it does not own in anticipation of a decline in the market value of that
security. Neither Portfolio may engage in short-selling. To complete a
short-sale transaction, the Series must borrow the security to make delivery to
the buyer. The Series then is obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The price at such
time may be more or less than the price at which the security was sold by the
Series.

Each Series and Portfolio is permitted to borrow for investment purposes up
to 33-1/3% of the value of its total assets. This borrowing, known as
leveraging, generally will be unsecured. Leveraging exaggerates the effect on
net asset value of any increase or decrease in the market value of the fund's
investment securities. Each Portfolio, however, currently intends to limit its
ability to borrow money and will do so only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of its total assets.

REASONS FOR THE EXCHANGE

The Board of Directors of DAAF and DLPI have concluded that the Exchange is
in the best interests of its respective shareholders. Each Board believes that
the Exchange will permit shareholders to pursue substantially similar investment
goals in a larger fund without diluting shareholders' interests. Each Series has
been unable to attract sufficient assets to operate efficiently without
significant expense subsidization as separate series of DAAF. As of February 2,
1996, the Growth Series and Income Series had assets under management of just
$2,182,703 and $2,123,667, respectively. The expense ratio of each Portfolio is
lower than that of its corresponding Series. Larger aggregate net assets should
enable the combined Portfolio to obtain the benefits of some economies of scale,
which may result in an even lower overall expense ratio for the combined
Portfolio (as compared to the expense ratios of each Series and Portfolio alone)
through the spreading of fixed costs of fund operations over a somewhat larger
asset base.

In determining whether to recommend approval of the Exchange, each Board
considered the following factors, among others: (1) the compatibility of the
Series' and corresponding Portfolio's investment objective(s), management
policies and investment restrictions, as well as shareholder services offered by
the Series and Portfolios; (2) the terms and conditions of the Exchange and
whether the Exchange would result in dilution of shareholder interests; (3)
expense ratios and published information regarding the fees and expenses of the
Portfolios and Series, as well as the expense ratios of similar funds and the
estimated expense ratio of the combined Portfolios; (4) the tax consequences of
the Exchange; and (5) the estimated costs incurred by the Portfolios and the
Series as a result of the Exchange. In addition, DAAF's Board considered the
Series' inability to attract sufficient assets to operate efficiently without
sufficient expense subsidization.

INFORMATION ABOUT THE EXCHANGE

PLAN OF EXCHANGE. The following summary of the Plan is qualified in its
entirety by reference to the Plan attached hereto as Exhibit A. The Plan
provides that each Portfolio will acquire all or substantially all of the assets
of its corresponding Series, in exchange for Portfolio Shares, and assume the
Series' stated liabilities on May 31, 1996 or such later date as may be agreed
upon by the parties (the "Closing Date"). The number of Portfolio Shares to be
issued to the Series will be determined on the basis of the relative net asset
values per share and aggregate net assets of the Portfolio and the Series,
generally computed as of the close of trading on the floor of the New York Stock
Exchange (currently at 4:00 p.m., New York time) (except for options and futures
contracts, if any, which will be valued 15 minutes after the close of trading)
on the Closing Date. Portfolio securities of each Series and Portfolio will be
valued in accordance with the valuation practices of DLPI, which are described
under the caption "How to Buy Fund Shares" in the DLPI Prospectus and under the
caption "Determination of Net Asset Value" in DLPI's Statement of Additional
Information dated January 15, 1996.

Prior to the Closing Date, each Series will declare a dividend or dividends
which, together with all previous such dividends, will have the effect of
distributing to Series' Shareholders all of such Series' investment company
taxable income, if any, for the taxable year ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gain realized in the taxable year ending on or prior to the
Closing Date (after reduction for any capital loss carry forward).

As conveniently as practicable after the Closing Date, each Series will
liquidate and distribute pro rata to its Shareholders of record as of the close
of business on the Closing Date the Portfolio Shares received by it in the
Exchange. Such liquidation and distribution will be accomplished by establishing
accounts on the share records of the Portfolio in the name of each Series
Shareholder, each account representing the respective pro rata number of
Portfolio Shares due to the Shareholder. After such distribution and the winding
up of its affairs, each Series will be terminated as a series of DAAF and its
shares cancelled. After the Closing Date, any outstanding certificates
representing Series Shares will represent the Portfolio Shares distributed to
the record holders of the Series. Upon presentation to the transfer agent of
DLPI, Series Share certificates will be exchanged for Portfolio Share
certificates, at the applicable exchange rate. Certificates for Portfolio Shares
will be issued only upon the investor's written request.

The Plan may be amended at any time prior to the Exchange. DAAF will
provide Series Shareholders with information describing any material amendment
to the Plan prior to Shareholder consideration. The Series' and Portfolios'
obligations under the Plan are subject to various conditions, including approval
by the requisite number of Series Shareholders and the continuing accuracy of
various representations and warranties of the Series and the Portfolios being
confirmed by the respective parties.

The total expenses of each Exchange are expected to be approximately
$30,000. Each Series and Portfolio will bear its own expenses, except for the
expenses of preparing, printing and mailing this Combined Prospectus/Proxy
Statement, the proxy cards and other related materials, which will be borne by
each party to the Exchange ratably according to its respective aggregate net
assets on the date of the Exchange.

If the Exchange is not approved by a Series' Shareholders, DAAF's Board
will consider other appropriate courses of action, including liquidating the
Series.

FEDERAL INCOME TAX CONSEQUENCES. The exchange of Series assets for
Portfolio Shares is intended to qualify for Federal income tax purposes as a
tax-free reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code"). As a condition to the closing of the Exchange,
DLPI and DAAF will receive the opinion of Stroock & Stroock & Lavan, counsel to
the Portfolios and the Series, to the effect that, on the basis of the existing
provisions of the Code, Treasury regulations issued thereunder, current
administrative regulations and pronouncements and court decisions, and certain
facts, assumptions and representations, for Federal income tax purposes: (1) the
transfer of all or substantially all of a Series' assets in exchange for
Portfolio Shares and the assumption by the Portfolio of Series liabilities will
constitute a "reorganization" within the meaning of Section 368(a)(1)(C) of the
Code; (2) no gain or loss will be recognized by the Portfolio upon the receipt
of Series assets solely in exchange for Portfolio Shares and the assumption by
the Portfolio of liabilities of the Series; (3) no gain or loss will be
recognized by a Series upon the transfer of its assets to the Portfolio in
exchange for Portfolio Shares and the assumption by the Portfolio of the Series'
liabilities or upon the distribution (whether actual or constructive) of
Portfolio Shares to Shareholders in exchange for their Series Shares; (4) no
gain or loss will be recognized by the Series Shareholders upon the exchange of
Series Shares for Portfolio Shares; (5) the aggregate tax basis for Portfolio
Shares received by each Series Shareholder pursuant to the Exchange will be the
same as the aggregate tax basis for Series Shares held by such Shareholder
immediately prior to the Exchange, and the holding period of Portfolio Shares to
be received by each Series Shareholder will include the period during which
Series Shares surrendered in exchange therefor were held by such Shareholder
(provided Series Shares were held as capital assets on the date of the
Exchange); and (6) the tax basis of Series assets acquired by the Portfolio will
be the same as the tax basis of such assets to the Series immediately prior to
the Exchange, and the holding period of Series assets in the hands of the
Portfolio will include the period during which those assets were held by the
Series.

NONE OF THE SERIES OR THE PORTFOLIOS HAS SOUGHT A TAX RULING FROM THE
INTERNAL REVENUE SERVICE ("IRS"). THE OPINION OF COUNSEL IS NOT BINDING ON THE
IRS NOR DOES IT PRECLUDE THE IRS FROM ADOPTING A CONTRARY POSITION. Series
Shareholders should consult their tax advisers regarding the effect, if any, of
the proposed Exchange in light of their individual circumstances. Because the
foregoing discussion relates only to the Federal income tax consequences of the
Exchange, Series Shareholders also should consult their tax advisers as to state
and local tax consequences, if any, of the Exchange.

REQUIRED VOTE AND BOARD'S RECOMMENDATION

DAAF's Board has approved the Plan and the Exchange and has determined that
(i) participation in the Exchange is in the respective Series' best interests
and (ii) the interests of Shareholders of such Series will not be diluted as a
result of the Exchange. Pursuant to each Series' charter documents, an
affirmative vote of a majority of the Series' outstanding shares is required to
approve the Plan and the Exchange.

THE BOARD, INCLUDING THE "NON-INTERESTED" BOARD MEMBERS, RECOMMENDS THAT
EACH SERIES' SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PLAN AND THE EXCHANGE.

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS AND SERIES

Information about the Portfolios is incorporated by reference into this
Combined Prospectus/Proxy Statement from the DLPI Prospectus forming a part of
the Registration Statement on Form N-1A (File No. 33-66088). Information about
the Series is incorporated by reference into this Combined Prospectus/Proxy
Statement from the DAAF Prospectus forming a part of the Registration Statement
on Form N-1A (File No. 33-62626).

The Series and the Portfolios are subject to the requirements of the 1940
Act, and file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Series or Portfolios may be inspected and
copied at the Public Reference Facilities of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the Northeast regional office of
the Commission at 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.

VOTING INFORMATION

In addition to the use of the mails, proxies may be solicited personally,
by telephone or by telegraph, and each Series may pay persons holding its Series
Shares in their names or those of their nominees for their expenses in sending
soliciting materials to their principals.

If a proxy is properly executed and returned accompanied by instructions to
withhold authority to vote, represents a broker "non-vote" (that is, a proxy
from a broker or nominee indicating that such person has not received
instructions from the beneficial owner or other person entitled to vote Series
Shares on a particular matter with respect to which the broker or nominee does
not have discretionary power) or is marked with an abstention (collectively,
"abstentions"), the Series Shares represented thereby will be considered to be
present at a Meeting for purposes of determining the existence of a quorum for
the transaction of business. Abstentions will not constitute a vote "for" or
"against" a matter and will be disregarded in determining the "votes cast" on an
issue. For this reason, abstentions will have the effect of a "no" vote for the
purpose of obtaining requisite approval for the Proposal.

In the event that a quorum is not present at the Meeting, or if a quorum is
present but sufficient votes to approve the Proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of the Proposal,
the percentage of votes actually cast, the percentage of negative votes actually
cast, the nature of any further solicitation and the information to be provided
to Shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
affected by the adjournment that are represented at the Meeting in person or by
proxy. If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote "FOR" the Proposal in favor of such
adjournments, and will vote those proxies required to be voted "AGAINST" the
Proposal against any adjournment. A quorum is constituted with respect to a
Series by the presence in person or by proxy of the holders of more than
one-third of the outstanding Series Shares entitled to vote at the Meeting.

The votes of the Portfolios' shareholders are not being solicited since
their approval or consent is not necessary for the Exchange.

As of February 5, 1996, the following were known by DAAF to own of record
5% or more of the outstanding voting securities of the indicated Series: Growth
Series, Major Trading Corporation, 200 Park Avenue, New York, New York 10166,
Attn: Maurice Bendrihem -- 59.01%; Income Series, Major Trading Corporation, 200
Park Avenue, New York, New York 10166, Attn: Maurice Bendrihem -- 65.12%. A
Shareholder who beneficially owns, directly or indirectly, more than 25% of a
Series' voting securities may be deemed a "control person" (as defined in the
1940 Act) of the Series.

As of February 5, 1996, the following were known by DLPI to own of record
5% or more of the outstanding voting securities of the indicated Portfolio and
Class: Growth Portfolio, Investor Class, Allomon Corporation, c/o Mellon Bank
Corporation, 1 Mellon Bank Center 151-657, Pittsburgh, Pennsylvania 15258, Attn:
John Gaylord -- 855,094.870 shares (98.30%); Growth Portfolio, Class R, Allomon
Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank Center 151-657,
Pittsburgh, Pennsylvania 15258, Attn: John Gaylord -- 856,781.448 shares
(95.43%); Income Portfolio, Investor Class, Allomon Corporation, c/o Mellon Bank
Corporation, 1 Mellon Bank Center 151-657, Pittsburgh, Pennsylvania 15258, Attn:
John Gaylord -- 648,205.928 shares (99.56%); Income Portfolio, Class R, Allomon
Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank Center 151-657,
Pittsburgh, Pennsylvania 15258, Attn: John Gaylord -- 649,103.663 shares
(94.68%).

As of February 5, 1996, Directors and officers of DLPI, as a group, owned
less than 1% of each Portfolio's outstanding shares. As of February 5, 1996,
Directors and officers of DAAF, as a group, owned less than 1% of each Series'
outstanding shares.

FINANCIAL STATEMENTS AND EXPERTS

The audited financial statements of the Series for the fiscal year ended
April 30, 1995, which are included in DAAF's Statement of Additional
Information, and the audited financial statements of the Portfolios for the
fiscal year ended September 30, 1995, which are included in DLPI's Statement of
Additional Information, have each been audited by Ernst & Young LLP, independent
auditors, whose respective reports thereon are included therein. The financial
statements of each Series audited by Ernst & Young LLP have been incorporated
herein by reference in reliance upon their reports given on their authority as
experts in accounting and auditing.

OTHER MATTERS

DAAF's Board members are not aware of any other matters which may come
before the Meeting. However, should any such matters properly come before the
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.

NOTICE TO BANKS, BROKER/DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES

Please advise DAAF, in care of Dreyfus Transfer, Inc., Attention: Dreyfus
Asset Allocation Fund, Inc., P.O. Box 9671, Providence, Rhode Island 02940-9671,
whether other persons are the beneficial owners of Series Shares for which
proxies are being solicited from you, and, if so, the number of copies of the
Combined Prospectus/Proxy Statement and other soliciting material you wish to
receive in order to supply copies to the beneficial owners of Series Shares.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN EACH PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.

Dated: May 10, 1996

EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION dated ___________, 1996 (the
"Agreement"), between DREYFUS ASSET ALLOCATION FUND, INC., a Maryland
corporation ("DAAF"), on behalf of its * (the "Series") and DREYFUS LIFETIME
PORTFOLIOS, INC., a Maryland corporation ("DLPI"), on behalf of its ** (the
"Portfolio").

- --------
* Insert GROWTH SERIES or INCOME SERIES, as appropriate.
** Insert GROWTH PORTFOLIO or INCOME PORTFOLIO, as appropriate.

This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of substantially all of the
assets of the Series in exchange solely for Investor Class shares ("Portfolio
Shares") of common stock, par value $.001 per share, of the Portfolio and the
assumption by the Portfolio of certain liabilities of the Series and the
distribution, after the Closing Date hereinafter referred to, of the Portfolio
Shares to the shareholders of the Series in liquidation of the Series as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.

WHEREAS, the Series is a registered, non-diversified, open-end management
investment company and the Portfolio is a registered, diversified, open-end
management investment company, and the Series owns securities which are assets
of the character in which the Portfolio is permitted to invest;

WHEREAS, both the Portfolio and the Series are authorized to issue their
shares of common stock;

WHEREAS, the Board of DLPI has determined that the exchange of all or
substantially all of the assets of the Series and certain liabilities of the
Series, for Portfolio Shares, and the assumption of such liabilities is in the
best interests of the Portfolio's shareholders and that the interests of the
Portfolio's existing shareholders would not be diluted as a result of this
transaction; and

WHEREAS, the Board of DAAF has determined that the exchange of all or
substantially all of the assets and certain of the liabilities of the Series,
for Portfolio Shares, and the assumption of such liabilities is in the best
interests of the Series' shareholders and that the interests of the Series'
existing shareholders would not be diluted as a result of this transaction:

NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:

1. TRANSFER OF ASSETS OF THE SERIES IN EXCHANGE FOR
PORTFOLIO SHARES AND ASSUMPTION OF SERIES LIABILITIES
AND LIQUIDATION OF THE SERIES.

1.1. Subject to the terms and conditions contained herein, the Series
agrees to assign, transfer and convey to the Portfolio all of the assets of the
Series, including all securities and cash (subject to liabilities), and the
Portfolio agrees in exchange therefor (i) to deliver to the Series the number of
Portfolio Shares, including fractional Portfolio Shares, determined as set forth
in paragraph 2.3; and (ii) to assume certain liabilities of the Series, as set
forth in paragraph 1.2. Such transactions shall take place at the closing (the
"Closing") on the closing date (the "Closing Date") provided for in paragraph
3.1. In lieu of delivering certificates for the Portfolio Shares, the Portfolio
shall credit the Portfolio Shares to the Series' account on the books of the
Portfolio and shall deliver a confirmation thereof to the Series.

1.2. The Series will endeavor to discharge all of its known liabilities and
obligations prior to the Closing Date. The Portfolio shall assume all
liabilities, expenses, costs, charges and reserves reflected on an unaudited
statement of assets and liabilities of the Series prepared by The Dreyfus
Corporation, as of the Valuation Date (as defined in paragraph 2.1), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. The Portfolio shall assume only those liabilities
of the Series reflected in that unaudited statement of assets and liabilities
and shall not assume any other liabilities, whether absolute or contingent.

1.3. Delivery of the assets of the Series to be transferred shall be made
on the Closing Date and shall be delivered to Mellon Bank, N.A., One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, DLPI's custodian (the "Custodian"), for
the account of the Portfolio, with all securities not in bearer or book-entry
form duly endorsed, or accompanied by duly executed separate assignments or
stock powers, in proper form for transfer, with signatures guaranteed, and with
all necessary stock transfer stamps, sufficient to transfer good and marketable
title thereto (including all accrued interest and dividends and rights
pertaining thereto) to the Custodian for the account of the Portfolio free and
clear of all liens, encumbrances, rights, restrictions and claims. All cash
delivered shall be in the form of immediately available funds payable to the
order of the Custodian for the account of the Portfolio.

1.4. The Series will pay or cause to be paid to the Portfolio any interest
received on or after the Closing Date with respect to assets transferred to the
Portfolio hereunder. The Series will transfer to the Portfolio any
distributions, rights or other assets received by the Series after the Closing
Date as distributions on or with respect to the securities transferred. Such
assets shall be deemed included in assets transferred to the Portfolio on the
Closing Date and shall not be separately valued.

1.5. As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Series will liquidate and distribute pro rata to the
Series' shareholders of record, determined as of the close of business on the
Closing Date (the "Series Shareholders"), Portfolio Shares received by the
Series pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the transfer of the applicable Portfolio Shares then credited to
the account of the Series on the books of the Portfolio to open accounts on the
share records of the Portfolio in the names of the Series Shareholders and
representing the respective pro rata number of the applicable Portfolio Shares
due such shareholders. All issued and outstanding shares of the Series
simultaneously will be canceled on the books of the Series.

1.6. Ownership of Portfolio Shares will be shown on the books of the
Portfolio's transfer agent. Shares of the Portfolio will be issued in the manner
described in DLPI's current prospectus and statement of additional information.

1.7. Any transfer taxes payable upon issuance of the Portfolio Shares in a
name other than the registered holder of the Portfolio Shares on the books of
the Series as of that time shall, as a condition of such issuance and transfer,
be paid by the person to whom such Portfolio Shares are to be issued and
transferred.

1.8. Any reporting responsibility of the Series is and shall remain the
responsibility of the Series up to and including the Closing Date and such later
date on which the Series' existence is terminated.

2. VALUATION.

2.1. The value of the Series' assets to be acquired by the Portfolio
hereunder shall be the value of such assets computed as of the close of trading
on the floor of the New York Stock Exchange (currently, 4:00 p.m., New York
time), except that options and futures contracts will be valued 15 minutes after
the close of trading on the floor of the New York Stock Exchange, on the Closing
Date (such time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in DLPI's Articles of Incorporation and
then-current prospectus or statement of additional information.

2.2. The net asset value of a Portfolio Share shall be the net asset value
per share computed as of the Valuation Date, using the valuation procedures set
forth in DLPI's Articles of Incorporation and then-current prospectus or
statement of additional information.

2.3. The number of Portfolio Shares to be issued (including fractional
shares, if any) in exchange for the Series' net assets shall be determined by
dividing the value of the net assets of the Series determined using the same
valuation procedures referred to in paragraph 2.1 by the net asset value of one
Portfolio Share, determined in accordance with paragraph 2.2.

2.4. All computations of value shall be made in accordance with the regular
practices of the Portfolio.

3. CLOSING AND CLOSING DATE.

3.1. The Closing Date shall be May 31, 1996 or such later date as the
parties may mutually agree. All acts taking place at the Closing shall be deemed
to take place simultaneously as of the close of business on the Closing Date
unless otherwise provided. The Closing shall be held at 4:00 p.m., New York tme,
at the offices of The Dreyfus Corporation, 200 Park Avenue, New York, New York,
or such other time and/or place as the parties may mutually agree.

3.2. The Custodian shall deliver at the Closing a certificate of an
authorized officer stating that the Series' portfolio securities, cash and any
other assets have been delivered in proper form to the Portfolio within two
business days prior to or on the Closing Date.

3.3. If on the Valuation Date (a) the New York Stock Exchange or another
primary trading market for portfolio securities of the Portfolio or the Series
shall be closed to trading or trading thereon shall be restricted; or (b)
trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Portfolio or the Series is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.

3.4. The transfer agent for the Series shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of the Series Shareholders and the number and percentage ownership
of outstanding Series shares, owned by each such shareholder immediately prior
to the Closing. The Portfolio shall issue and deliver a confirmation evidencing
the Portfolio Shares to be credited on the Closing Date to the Secretary of the
Series, or provide evidence satisfactory to the Series that such Portfolio
Shares have been credited to the Series' account on the books of the Portfolio.
At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, receipts or other documents as such other party or its
counsel may reasonably request.

4. REPRESENTATIONS AND WARRANTIES.

4.1. The Series represents and warrants to the
Portfolio as follows:
(a) The Series is a series of DAAF, a corporation
duly organized and validly existing and in good standing under the laws of the
State of Maryland and has power to own all of its properties and assets and to
carry out this Agreement.

(b) The Series is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
non-diversified, management investment company, and such registration has not
been revoked or rescinded and is in full force and effect.

(c) The Series is not, and the execution,
delivery and performance of this Agreement will not result, in material
violation of DAAF's Articles of Incorporation dated May 11, 1993, as the same
may have been amended (the "Charter"), or its Bylaws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Series
is a party or by which it is bound.

(d) The Series has no material contracts or other
commitments outstanding (other than this Agreement) which will be terminated
with liability to it on or prior to the Closing Date.

(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or to its knowledge threatened against the
Series or any of its properties or assets which, if adversely determined, would
materially and adversely affect its financial condition or the conduct of its
business. The Series knows of no facts which might form the basis for the
institution of such proceedings, and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions herein contemplated.

(f) The Statement of Assets and Liabilities of
the Series for the fiscal year ended April 30, 1995 has been audited by Ernst &
Young LLP, independent auditors, and is in accordance with generally accepted
accounting principles, consistently applied, and such statement (copies of which
have been furnished to the Portfolio) fairly reflect the financial condition of
the Series as of such date, and there are no known contingent liabilities of the
Series as of such date not disclosed therein.

(g) Since April 30, 1995, there has not been any
material adverse change in the Series' financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Series of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as disclosed on the statement of
assets and liabilities referred to in paragraph 1.2 hereof.

(h) At the Closing Date, all Federal and other tax
returns and reports of the Series required by law to have been filed by such
dates shall have been filed, and all Federal and other taxes shall have been
paid so far as due, or provision shall have been made for the payment thereof,
and to the best of the Series' knowledge no such return is currently under
audit and no assessment has been asserted with respect to such returns.

(i) For each fiscal year of its
operation, the Series has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.

(j) All issued
and outstanding shares of the Series are, and at the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable. All of the
issued and outstanding shares of the Series will, at the time of Closing, be
held by the persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.4. The Series does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of the Series
shares, nor is there outstanding any security convertible into any of the Series
shares.

(k) On the Closing Date, the Series will have full
right, power and authority to sell, assign, transfer and deliver the assets to
be transferred by it hereunder.

(l) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the Closing Date by all
necessary action on the part of DAAF's Board and, subject to the approval of
the Series Shareholders, this Agreement will constitute the valid and legally
binding obligation of the Series, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and to general principles of equity and the discretion of the
court (regardless of whether the enforceability is considered in a proceeding in
equity or at law).

(m) The proxy statement of DAAF, on behalf of the
Series (the "Proxy Statement"), included in the Registration Statement referred
to in paragraph 5.5 (other than information therein that has been furnished by
the Portfolio) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading.

4.2. The Portfolio represents and warrants to the
Series as follows:

(a) The Portfolio is a series of DLPI, a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and has power to carry on its business as it is now
being conducted and to carry out this Agreement.

(b) The Portfolio is registered under the 1940
Act as an open-end, diversified, management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.

(c) The current prospectus and statement of
additional information of the DLPI conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading.

(d) The Portfolio is not, and the execution,
delivery and performance of this Agreement will not result, in material
violation of DLPI's Articles of Incorporation or Bylaws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Portfolio is a party or by which it is bound.

(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is currently pending
or to its knowledge threatened against the Portfolio or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Portfolio knows of no
facts which might form the basis for the institution of such proceedings, and is
not a party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.

(f) The Statement of Assets and Liabilities of
the Portfolio for the fiscal year ended September 30, 1995, has been audited by
Ernst & Young LLP, independent auditors, and are in accordance with generally
accepted accounting principles, consistently applied, and such statements
(copies of which have been furnished to the Series) fairly reflect the financial
condition of the Portfolio as of such dates.

(g) Since September 30, 1995 there has not been
any material adverse change in the Portfolio's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course of
business, or any incurrence by the Portfolio of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as disclosed on
the statement of assets and liabilities referred to in paragraph 4.2(f) hereof.

(h) At the Closing Date, all Federal and other
tax returns and reports of the Portfolio required by law then to be filed shall
have been filed, and all Federal and other taxes shown as due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof.

(i) For each fiscal year of its operation, the
Portfolio has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company.

(j) All issued and outstanding shares of the
Portfolio are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable. The
Portfolio does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Portfolio Shares, nor is there outstanding
any security convertible into any Portfolio Shares.

(k) The execution, delivery and performance of
this Agreement will have been duly authorized prior to the Closing Date by all
necessary action, if any, on the part of DLPI's Directors and shareholders, and
this Agreement will constitute the valid and legally binding obligation of the
Portfolio enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and to general principles of equity and
the discretion of the court (regardless of whether the enforceability is
considered in a proceeding in equity or at law).

(l) The Proxy Statement included in the
Registration Statement (only insofar as it relates to the Portfolio and is based
on information furnished by the Portfolio) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.

5. COVENANTS OF THE PORTFOLIO AND THE SERIES.

5.1. The Portfolio and the Series each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include payment of
customary dividends and distributions.

5.2. The Series will call a meeting of the Series Shareholders
to consider and act upon this Agreement and to take all other action necessary
to obtain approval of the transactions contemplated herein.

5.3. Subject to the provisions of this Agreement, the
Portfolio and the Series will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.

5.4. As promptly as practicable, but in any case within sixty
days after the Closing Date, the Series shall furnish the Portfolio, in such
form as is reasonably satisfactory to the Portfolio, a statement of the earnings
and profits of the Series for Federal income tax purposes which will be carried
over to the Portfolio as a result of Section 381 of the Code and which will be
certified by DAAF's President or its Vice President and Treasurer.

5.5. The Series will provide the Portfolio with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement, referred to in paragraph 4.1(m), all to
be included in a Registration Statement on Form N-14 of DLPI (the "Registration
Statement"), in compliance with the 1933 Act, the Securities Exchange Act of
1934, as amended, and the 1940 Act in connection with the meeting of the Series
Shareholders to consider approval of this Agreement and the transactions
contemplated herein.
5.6. The Portfolio agrees to use all reasonable efforts to

obtain the approvals and authorizations required by the 1933 Act, the 1940 Act
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
PORTFOLIO.

The obligations of the Portfolio to complete the transactions provided for
herein shall be subject, at its election, to the performance by the Series of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:

6.1. All representations and warranties of the Series
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.

6.2. The Series shall have delivered to the Portfolio a
statement of the Series' assets and liabilities, together with a list of the
Series' portfolio securities showing the tax basis of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified
by the Treasurer of DAAF.

6.3. The Series shall have delivered to the Portfolio on the
Closing Date a certificate executed in its name by DAAF's President or Vice
President and its Treasurer, in form and substance satisfactory to the
Portfolio, to the effect that the representations and warranties of the Series
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Portfolio shall reasonably
request.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SERIES.

The obligations of the Series to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Portfolio of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:

7.1. All representations and warranties of the Portfolio
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.

7.2. The Portfolio shall have delivered to the Series on the
Closing Date a certificate executed in its name by DLPI's President or Vice
President and its Treasurer, in form and substance reasonably satisfactory to
the Series, to the effect that the representations and warranties of the
Portfolio made in this Agreement are true and correct at and as of the Closing
Date, except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Series shall reasonably request.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
PORTFOLIO AND THE SERIES.

If any of the conditions set forth below do not exist on or
before the Closing Date with respect to the Series or the Portfolio, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.

8.1. This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of the outstanding
shares of the Series in accordance with the provisions of DAAF's Charter.

8.2. On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.

8.3. All consents of other parties and all other consents,
orders and permits of Federal, state and local regulatory authorities (including
those of the Securities and Exchange Commission and of state Blue Sky and
securities authorities) deemed necessary by the Portfolio or the Series to
permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the Portfolio or the
Series, provided that either party hereto may for itself waive any of such
conditions.

8.4. The Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.

8.5. The Series shall have declared a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to the Series Shareholders all of the Series' investment company
taxable income for all taxable years ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid) and all of its net
capital gain realized in all taxable years ending on or prior to the Closing
Date (after reduction for any capital loss carry forward).

8.6. The parties shall have received an opinion of Stroock &
Stroock & Lavan substantially to the effect that for Federal income tax
purposes:
(a) The transfer of all or substantially all of
the Series' assets in exchange for the Portfolio Shares and the assumption by
the Portfolio of certain identified liabilities of the Series will constitute a
"reorganization" within the meaning
of Section 368(a)(1)(C) of the Code; (b) No gain or loss will be recognized by
the Portfolio upon the receipt of the assets of the Series solely in exchange
for the Portfolio Shares and the assumption by the Portfolio of certain
identified liabilities of the Series; (c) No gain or loss will be recognized by
the Series upon the transfer of the Series' assets to the Portfolio in exchange
for the Portfolio Shares and the assumption by the Portfolio of certain
identified liabilities of the Series or upon the distribution (whether actual or
constructive) of the Portfolio Shares to Series Shareholders in exchange for
their shares of the Series; (d) No gain or loss will be recognized by the Series
Shareholders upon the exchange of their Series shares for the Portfolio Shares;
(e) The aggregate tax basis for the Portfolio Shares received by each of the
Series Shareholders pursuant to the Reorganization will be the same as the
aggregate tax basis of the Series shares held by such shareholder immediately
prior to the Reorganization, and the holding period of the Portfolio Shares to
be received by each Series Shareholder will include the period during which the
Series shares exchanged therefor were held by such shareholder (provided the
Series shares were held as capital assets on the date of the Reorganization);
and (f) The tax basis of the Series assets acquired by the Portfolio will be the
same as the tax basis of such assets to the Series immediately prior to the
Reorganization, and the holding period of the assets of the Series in the hands
of the Portfolio will include the period during which those assets were held by
the Series.

9. TERMINATION OF AGREEMENT.

9.1. This Agreement and the transaction contemplated hereby
may be terminated and abandoned by resolution of the Board of DAAF or of DLPI,
as the case may be, at any time prior to the Closing Date (and notwithstanding
any vote of the Series Shareholders) if circumstances should develop that, in
the opinion of either of the parties' Board, make proceeding with the Agreement
inadvisable.

9.2. If this Agreement is terminated and the transaction
contemplated hereby is abandoned pursuant to the provisions of this Section 9,
this Agreement shall become void and have no effect, without any liability on
the part of any party hereto or the directors, officers or shareholders of DLPI
or of DAAF, as the case may be, in respect of this Agreement, except that the
parties shall bear the aggregate expenses of the transaction contemplated hereby
in proportion to their respective net assets as of the date this Agreement is
terminated or the exchange contemplated hereby is abandoned.

10. WAIVER.

At any time prior to the Closing Date, any of the foregoing
conditions may be waived by the Board of DLPI or of DAAF if, in the judgment of
either, such waiver will not have a material adverse effect on the benefits
intended under this Agreement to the shareholders of the Portfolio or of the
Series, as the case may be.

11. MISCELLANEOUS.

11.1. None of the representations and warranties
included or provided for herein shall survive consummation of the
transactions contemplated hereby.

11.2. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof, and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature between them relating to the subject
matter hereof. Neither party shall be bound by any condition, definition,
warranty or representation, other than as set forth or provided in this
Agreement or as may be, on or subsequent to the date hereof, set forth in a
writing signed by the party to be bound thereby.

11.3. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflict of laws; provided, however, that the due
authorization, execution and delivery of this Agreement by the Portfolio and the
Series shall be governed and construed in accordance with the internal laws of
the State of Maryland without giving effect to principles of conflict of laws.

11.4. This Agreement may be executed in counterparts,
each of which, when executed and delivered, shall be deemed to be
an original.

11.5. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns, but no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.

<PAGE>

IN WITNESS WHEREOF, the Portfolio and the Series have caused
this Agreement and Plan of Reorganization to be executed and attested on its
behalf by its duly authorized representatives as of the date first above
written.

DREYFUS LIFETIME PORTFOLIOS, INC.,
on behalf of its *
PORTFOLIO

By:
Marie E. Connolly,
President

ATTEST:
John E. Pelletier,
Secretary

DREYFUS ASSET ALLOCATION FUND, INC.,
on behalf of its * SERIES

By:
Marie E. Connolly,
President

ATTEST:
John E. Pelletier,
Secretary

- --------
* Insert GROWTH or INCOME, as appropriate.

<PAGE>

DREYFUS ASSET ALLOCATION FUND, INC.
(GROWTH SERIES)

The undersigned shareholder of the Growth Series (the
"Series") of Dreyfus Asset Allocation Fund, Inc. ("DAAF") hereby appoints Mark
N. Jacobs and Michael A. Rosenberg, and each of them, the attorneys and proxies
of the undersigned, with full power of substitution, to vote, as indicated
herein, all of the shares of common stock of the Series standing in the name of
the undersigned at the close of business on March 26, 1996, at a Special Meeting
of Shareholders to be held at the offices of The Dreyfus Corporation, 200 Park
Avenue, 7th Floor, New York, New York 10166, at 10:00 a.m. on Thursday, May 30,
1996, and at any and all adjournments thereof, with all of the powers the
undersigned would possess if then and there personally present and especially
(but without limiting the general authorization and power hereby given) to vote
as indicated on the proposal, as more fully described in the Combined Proxy
State- ment/Prospectus for the meeting.

Please mark boxes in blue or black ink.

1. To approve an Agreement and Plan of Reorganization between
the Series and Dreyfus LifeTime Portfolios, Inc., on behalf of its Growth
Portfolio, providing for the transfer of substantially all of the assets of the
Series, subject to its liabilities.

FOR / / AGAINST / / ABSTAIN / /

2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting, or any
adjournment(s) thereof.

THIS PROXY IS SOLICITED BY DAAF'S BOARD OF DIRECTORS AND WILL BE VOTED FOR THE
ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.

Signature(s) should be exactly as name or names
appearing on this proxy. If shares are held
jointly, each holder should sign. If signing is
by attorney, executor, administrator, trustee or
guardian, please give full title.

Dated: May __, 1996

Signature(s)

Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope

<PAGE>

DREYFUS ASSET ALLOCATION FUND, INC.
(INCOME SERIES)

The undersigned shareholder of the Income Series (the
"Series") of Dreyfus Asset Allocation Fund, Inc. ("DAAF") hereby appoints Mark
N. Jacobs and Michael A. Rosenberg, and each of them, the attorneys and proxies
of the undersigned, with full power of substitution, to vote, as indicated
herein, all of the shares of common stock of the Series standing in the
name of the undersigned at the close of business on March 26, 1996, at a Special
Meeting of Shareholders to be held at the offices of The Dreyfus Corporation,
200 Park Avenue, 7th Floor, New York, New York 10166, at 10:00 a.m. on Thursday,
May 30, 1996, and at any and all adjournments thereof, with all of the powers
the undersigned would possess if then and there personally present and
especially (but without limiting the general authorization and power hereby
given) to vote as indicated on the proposal, as more fully described in the
Combined Prospectus/Proxy Statement for the meeting.

Please mark boxes in blue or black ink.

1. To approve an Agreement and Plan of Reorganization between
the Series and Dreyfus LifeTime Portfolios, Inc., on behalf of its Income
Portfolio, providing for the transfer of substantially all of the assets of the
Series, subject to its liabilities.

FOR / / AGAINST / / ABSTAIN / /

2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting, or any
adjournment(s) thereof.

THIS PROXY IS SOLICITED BY DAAF'S BOARD OF DIRECTORS AND WILL BE VOTED FOR THE
ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.

Dated: May __, 1996

Signature(s)

Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope

<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
May 10, 1996
Acquisition of the Assets of

DREYFUS ASSET ALLOCATION FUND, INC.
GROWTH SERIES
INCOME SERIES

144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611

By and in Exchange for Investor Class Shares of

DREYFUS LIFETIME PORTFOLIOS, INC.
GROWTH PORTFOLIO
INCOME PORTFOLIO
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-554-4611

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Combined Proxy
Statement/Prospectus dated March __, 1996, relating specifically to the proposed
transfer of all or substantially all of the assets and liabilities of the Growth
Series and the Income Series of Dreyfus Asset Allocation Fund, Inc. in exchange
for Investor Class shares of the Growth Portfolio and the Income Portfolio,
respectively, of Dreyfus LifeTime Portfolios, Inc. Each such transfer is to
occur pursuant to an Agreement and Plan of Reorganization. This Statement of
Additional Information consists of this cover page and the following described
documents, each of which is attached hereto and incorporated herein by
reference: 1. The Statement of Additional Information of Dreyfus LifeTime
Portfolios, Inc. dated January 15, 1996. 2. Annual Report of Dreyfus LifeTime
Portfolios, Inc. for the fiscal year ended September 30, 1995. 3. Annual Report
of Dreyfus Asset Allocation Fund, Inc. for the fiscal year ended April 30, 1995.
4. Semi-Annual Report of Dreyfus Asset Allocation Fund, Inc. for the six-month
period ended October 31, 1995. 5. Pro Forma Financial Statements.

The Combined Proxy Statement/Prospectus dated May 10, 1996 may be
obtained by writing to Dreyfus LifeTime Portfolios, Inc., c/o The Dreyfus
Corporation, 200 Park Avenue, New York, New York 10166.
<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
GROWTH PORTFOLIO
INVESTOR CLASS AND CLASS R
PART B
(STATEMENT OF ADDITIONAL INFORMATION)

JANUARY 15, 1996

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 January 15, 1996, 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 Objectives and Management Policies. . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . B-12
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
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . . B-31
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . B-32
Financial Statements . . . . . . . . . . . . . . . . . . . B-37
Report of Independent Auditors . . . . . . . . . . . . . . B-59

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

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

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
International
Total Assets Assets Domestic Assets Domestic Equity
------------ ------------- --------------- ---------------
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>
<S> <C> <C>
Portfolio Portfolio Overlay One Portfolio Overlay Two
- --------- --------------------- ---------------------

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 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>
<S> <C> <C>
Asset Class Portfolios Asset Class Benchmark
- ----------- ---------- ---------------------

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 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 eing 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

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 $1 billion, or primary
government securities dealers reporting to the Federal Reserve Bank of New York,
with respect to securities of the type in which the 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.

Commercial Paper and Other Short-Term Corporate Obligations. These
instruments 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. 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. 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. (Growth and Income
and Growth Portfolio only) 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, where a substantial market of qualified
institutional buyers has developed for certain unregistered securities purchased
by a Portfolio pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is not
possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Fund's Board 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

Derivatives. Each Portfolio may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular securities
or to increase potential income gain. Derivatives may provide a cheaper, quicker
or more specifically focused way for the Portfolio to invest than "traditional"
securities would.

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

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

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

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

Successful use of futures by a Portfolio also is subject to the ability of
the Advisers to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging purposes,
to ascertain the appropriate correlation between the transaction being hedged
and the price movements of the futures contract. For example, if a Portfolio
uses futures to hedge against the possibility of a decline in the market value
of securities held in its portfolio and the prices of such securities instead
increase, the Portfolio will lose part or all of the benefit of the increased
value of securities which it has hedged because it will have offsetting losses
in its futures positions.

Furthermore, if in such circumstances the Portfolio has insufficient cash,
it may have to sell securities to meet daily variation margin requirements. A
Portfolio may have to sell such securities at a time when it may be
disadvantageous to do so.

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

Specific Futures Transactions. A Portfolio may purchase and sell stock
index futures contracts. A stock index future obligates a Portfolio to pay or
receive an amount of cash equal to a fixed dollar amount specified in the
futures contract multiplied by the difference between the settlement price of
the contract on the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the opening of trading
in such securities on the next business day.

A Portfolio may purchase and sell interest rate futures contracts. An
interest rate future obligates the Portfolio to purchase or sell an amount of a
specific debt security at a future date at a specific price.

Growth and Income and Growth Portfolios may purchase and sell currency
futures. A foreign currency future obligates the Portfolio to purchase or sell
an amount of a specific currency at a future date at a specific price.

Options--In General. A Portfolio may purchase and write (i.e., sell) call
or put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period.

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

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

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

Growth and income and Growth Portfolios may purchase and sell call and put
options on foreign currency. These options convey the right to buy or sell the
underlying currency at a price which is expected to be lower or higher than the
spot price of the currency at the time the option is exercised or expires.

Successful use by a Portfolio of options will be subject to the ability of
the Advisers to predict correctly movements in the prices of individual stocks
or the stock market generally. To the extent such predictions are incorrect, a
Portfolio may incur losses.

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

Lending Portfolio Securities. In connection with its securities lending
transactions, a 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 must terminate the loan and regain the right to
vote the securities if a material event adversely affecting the investment
occurs.

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

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 "1940 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 Board members 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 1940 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 1940 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 1940 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 1940 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
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 68 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.

*DAVID W. BURKE, Director. Chairman of the Broadcasting Board of Governors,
an independent board within the United States Information Agency,
since August 1995. From August 1994 to February 1995, Mr. Burke was
Consultant to the Manager, and from October 1990 to August 1994, he
was Vice President and Chief Administrative Officer of the Manager.
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. He
is 59 years old and his address is 200 Park Avenue, New York 10166.

*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of 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 Dreyfus and Executive Vice
President and a director of Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus 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, and
Staffing Resources, Inc. He is 52 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, since November 1987. From 1960 to 1994, Mr. Fife was
President of Fife Associates, Inc. and other companies engaged in the
chemical and plastics industries. 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. He is 68 years
old and his address is The Chrysler Building, 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 61 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. He is also a director of Mid Ocean Reinsurance Co.
Ltd and Cooke and Bieler, Inc., investment counselors. 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 61 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 Board members of the Fund who
are not "interested persons" of the Fund, as defined in the 1940 Act, will be
selected and nominated by the Board members who are not "interested persons" of
the Fund.

The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The estimated amount of compensation
payable by the Fund to each Board member for the fiscal year ending September
30, 1996, and the aggregate amount of compensation paid to each Board member 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 $1,763 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 $414 for all Directors as a group.
** Estimated amount for the year ended 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 38 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 31 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.

ELIZABETH BACHMAN, Vice President and Assistant Secretary. Staff attorney
of the Distributor and an officer of other Investment Companies
advised or administered by the Manager. She is 26 years old.

MARGARET PARDO, Assistant Secretary. Legal Assistant with the Distributor
and an officer of other investment companies advised or administered
by Dreyfus. From June 1992 to April 1995, she was a Medical
Coordinator Officer at ORBIS International. Prior to June 1992, she
worked as Program Coordinator at Physicians World Communications
Group. She is 27 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 November 2, 1995.

The following persons are known by the Fund to own, beneficially and of
record, except where indicated, 5% or more of the outstanding voting securities
of the indicated Portfolio on November 2, 1995: Growth and Income Portfolio,
Investor Class -- Allomon Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1
Mellon Bank Center 151-657, Pittsburgh, Pennsylvania 15258 - 99.6186%; Growth
and Income Portfolio, Class R -- Allomon Corporation, C/O Mellon Bank, ATTN:
John Gaylord, 1 Mellon Bank Center 151-657, Pittsburgh, Pennsylvania 15258 -
92.6924%; Mac & Co. A/C 195-851 (record owner), FBO Office Max, Mellon Bank,
N.A., Mutual Funds, P.O. Box 320, Pittsburgh, Pennsylvania 15230-0320
(beneficial owner), -7.0975%; Income Portfolio, Investor Class -- Allomon
Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank Center 151-657,
Pittsburgh, Pennsylvania 15258 - 99.7805%; Income Portfolio, Class R - Allomon
Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank Center 151-657,
Pittsburgh, Pennsylvania 15258 - 92.6486%; Growth Portfolio, Investor Class --
Allomon Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon Bank Center
151-657, Pittsburgh, Pennsylvania 15258 - 99.1137%; Growth and Income Portfolio,
Class R -- Allomon Corporation, C/O Mellon Bank, ATTN: John Gaylord, 1 Mellon
Bank Center 151-657, Pittsburgh, Pennsylvania 15258 - 99.7303%.

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

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 or (ii) vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of the Portfolio, provided that
in either event the continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in the 1940 Act) of the
Fund or 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 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 1940 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; Christopher M. Condron, 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 and Julian M. Smerling, 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 Agreement. 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
or (ii) vote of a majority (as defined in the 1940 Act) of such Portfolio's
outstanding voting securities, provided that in either event the continuance
also is approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund or 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 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 1940 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
Fund's Board. The Advisers provide the Fund with portfolio managers who are
authorized by the Fund's Board 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 Advisers 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
Fund's Board, 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 September 30, 1995, the management fees
payable with respect to the Income Portfolio, Growth Portfolio, and Growth and
Income Portfolio amounted to $47,599, $82,882 and $61,635, respectively. These
fees were reduced pursuant to an undertaking by Dreyfus by $41,157, $56,446 and
$53,875, respectively, resulting in a net fee being paid of $6,442 by the Income
Portfolio, $20,436 by the Growth Portfolio and $7,760 by the Growth and Income
Portfolio.

As compensation for Mellon Equity's services, Dreyfus has agreed to pay
Mellon Equity a monthly fee at the annual rate described in the Fund's
Prospectus. For the period from March 31, 1995 (commencement of operations)
through September 30, 1995, the sub-investment advisory fee payable by Dreyfus
amounted to $27,765.90 with respect to the Income Portfolio, $38,678.43 with
respect to the Growth Portfolio and $28,762.87 with respect to the Growth and
Income Portfolio. All of such fees were absorbed by Dreyfus resulting in the
Portfolios paying no fee to Mellon Equity.

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 on a best
efforts basis pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus Family
of Funds and for certain other investment companies. 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 at any time. Purchase orders received by 4:00 P.M.,
New York time, on any business day that Dreyfus Transfer, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order. Purchase
orders made after 4:00 P.M., New York time, on any business day the Transfer
Agent and the New York Stock Exchange are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the New York Stock Exchange is
not open for business), will be credited to the shareholder's Fund account on
the second bank business day following such purchase order. 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 Fund's Board for its review. In addition, the Shareholder Services Plan
provides that it may not be amended without approval of the Board, and by the
Board members who are not "interested persons" (as defined in the 1940 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 Board members cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan. The
Shareholder Services Plan was so approved 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 Board members 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 Service Plan. As of October 1, 1995, the Fund terminated its
then-existing Service Plan, adopted pursuant to Rule 12b-1 under the 1940 Act,
which provided that the Fund (a) reimburse the Distributor for payments to
certain Service Agents for distributing each Portfolio's Investor Class shares
and servicing Investor Class shareholder accounts and (b) pay Dreyfus, Dreyfus
Service Corporation and any affiliate of either of them for advertising and
marketing relating to each Portfolio's Investor Class and servicing Investor
Class shareholder accounts at an aggregate annual rate of .25 of 1% of the value
of each Portfolio's average daily net assets. For the period March 31, 1995
(commencement of operations) through September 30, 1995, the Fund was charged
$9,913, $10,185 and $13,813 with respect to the Income Portfolio, Growth and
Income Portfolio and Growth Portfolio, respectively, for advertising, marketing
and distributing shares of the 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 ($1,000 minimum) 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, or to a correspondent bank if the
investor's bank is not a member of the Federal Reserve System. 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
Fund's Board 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 such 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 Privilege 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 Fund 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. Each 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 Advisers. 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 for the Growth and Income and Growth Portfolios
does not take place contemporaneously with the determination of prices of
certain portfolio securities. 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 Fund's Board, are valued at fair value as determined in
good faith by the Board. The Fund's Board will review the method of valuation on
a current basis. In making their good faith valuation of restricted securities,
the Board 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 Fund's Board if it believes that it no longer reflects the
value of the restricted securities. Restricted securities not of the same class
as securities for which a public market exists usually will be valued initially
at cost. Any subsequent adjustment from cost will be based upon considerations
deemed relevant by the Fund's Board.

New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, 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."

Management of the Fund believes that each Portfolio qualified for the
fiscal year ended September 30, 1995 as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"). Each Portfolio
intends to continue to so qualify if 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.

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 distributions, 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.

For the fiscal year ended September 30, 1995, the Fund paid total brokerage
commissions of $410, $16,001 and $32,428 with respect to the Income Portfolio,
Growth and Income Portfolio and 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.

PERFORMANCE INFORMATION

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

The Growth and Income Portfolio's total return for the .504 year period
from March 31, 1995 (commencement of operations) through September 30, 1995 was
14.32% and 14.48% for its Investor Class shares and Class R shares,
respectively. The Growth Portfolio's total return for the .504 year period from
March 31, 1995 (commencement of operations) through September 30, 1995 was
18.56% and 18.72% for its Investor Class shares and Class R shares,
respectively. The Income Portfolio's total return for the .504 year period from
March 31, 1995 (commencement of operations) through September 30, 1995 was 8.08%
and 8.24% 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. Average annual total
return is 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.

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.

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

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

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

Dreyfus Transfer, Inc., a wholly owned subsidiary of Dreyfus, is located at
One American Express Plaza, Providence, Rhode Island 02903, and serves as the
Fund's transfer and dividend disbursing agent. Under a transfer agency agreement
with the Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions payable
by the Fund. For these services, the Transfer Agent receives a monthly fee
computed on the basis of the number of shareholder accounts during the month,
and is reimbursed for certain out-of-pocket expenses. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's custodian. Neither
the Transfer Agent nor The Bank of New York 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.

APPENDIX

Description of certain ratings assigned by Standard & Poor's Ratings Group,
a division of The McGraw Hill Companies, Inc. ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), Fitch Investors Service, L.P. ("Fitch") and Duff &
Phelps Credit Rating Co. ("Duff"):

S&P
Bond Ratings
AAA

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA

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

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

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

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

Commercial Paper Rating

The designation A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.

Moody's
Bond Ratings
Aaa

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

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

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

Baa

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

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

Commercial Paper Rating

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

Fitch
Bond Ratings

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

AAA

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

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

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

BBB

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

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

Short-Term Ratings

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

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

F-1+

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

F-1

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

Duff
Bond Ratings
AAA

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

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

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

BBB

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

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

Commercial Paper Rating

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

DREYFUS LIFETIME PORTFOLIOS, INC., Income Portfolio
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995

PRINCIPAL
BONDS AND NOTES--66.5% AMOUNT VALUE
--------- -----
<S> <C> <C>
U.S. GOVERNMENT SECURITIES: U.S. Treasury Bonds:
11 5/8%, 11/15/2004................... $ 600,000 $ 820,969
U.S. Treasury Notes:
7 1/2%, 1/31/1997..................... 2,945,000 3,008,041
5 5/8%, 1/31/1998..................... 3,000,000 2,982,189
5 1/8%, 11/30/1998.................... 250,000 244,141
7 1/8%, 9/30/1999..................... 1,000,000 1,039,375
8 3/4%, 8/15/2000..................... 700,000 779,078
8%, 5/15/2001......................... 1,000,000 1,090,781
7 1/2%, 11/15/2001.................... 180,000 192,740
7 1/2%, 2/15/2005..................... 600,000 653,156
-----------
9,989,501
===========
TOTAL BONDS AND NOTES
(cost $10,577,780).................... $10,810,470
===========

SHORT-TERM INVESTMENTS--31.9%
U.S. TREASURY BILLS: 5.38%, 10/5/1995...................... 41,000 $ 40,971
5.33%, 10/12/1995..................... 40,000 39,931
5.34%, 10/19/1995..................... 161,000 160,554
5.40%, 11/2/1995...................... 75,000 74,636
5.41%, 11/16/1995..................(a) 2,448,000 2,431,035
5.27%, 11/30/1995..................... 50,000 49,554
5.30%, 12/7/1995...................... 2,415,000 2,390,705
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $5,187,909)......................................................... $ 5,187,386
===========
TOTAL INVESTMENTS
(cost $15,765,689)........................................................ 98.4% $15,997,856
====== ===========

CASH AND RECEIVABLES (NET).................................................... 1.6% $ 264,679
====== ===========

NET ASSETS.................................................................... 100.0% $16,262,535
====== ===========

NOTE TO STATEMENT OF INVESTMENTS;
(a) Partially held by the custodian in a segregated account as collateral for open futures positions.
</TABLE>

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

Financial Futures Purchased; MARKET VALUE UNREALIZED
NUMBER OF COVERED APPRECIATION
CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/95
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Standard & Poor's 500................ 13 $3,823,300 December '95 $160,420
========

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC., Growth and Income Portfolio
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
COMMON STOCKS--46.0% SHARES VALUE
------ -----
<S> <C> <C>
BASIC INDUSTRIES--2.5% Cabot..................................... 200 $ 10,625
Champion International.................... 1,400 75,425
Dow Chemical.............................. 700 52,150
duPont (E.I.) de Nemours.................. 300 20,625
Eastman Chemical.......................... 1,200 76,800
Federal Paper Board....................... 400 15,350
International Paper....................... 1,200 50,400
Lyondell Petrochemical.................... 1,000 25,875
PPG Industries............................ 500 23,250
Temple-Inland............................. 300 15,975
Union Carbide............................. 1,100 43,725
Wellman................................... 700 17,150
Weyerhaeuser.............................. 600 27,375
------------
454,725
------------
CAPITAL SPENDING--10.1% Advanced Micro Devices.................(a) 800 23,300
Applied Materials......................(a) 300 30,675
Arrow Electronics......................(a) 400 21,750
Avnet..................................... 700 36,138
Cabletron Systems......................(a) 800 52,700
Case...................................... 800 29,400
Caterpillar............................... 500 28,438
Ceridian...............................(a) 1,300 57,688
cisco Systems..........................(a) 900 62,100
Computer Associates International......... 1,350 57,038
Cummins Engine............................ 700 26,950
Deere & Co................................ 200 16,275
Eaton..................................... 1,600 84,800
General Electric.......................... 2,400 153,000
HBO & Co.................................. 800 50,000
Harnischfeger Industries.................. 300 10,012
HealthCare COMPARE.....................(a) 1,300 50,375
Hewlett-Packard........................... 600 50,025
Illinois Tool Works....................... 600 35,325
Intel..................................... 1,300 78,162
International Business Machines........... 1,500 141,563
Lockheed Martin........................... 1,200 80,550
Manpower.................................. 400 11,600
McDonnell Douglas......................... 400 33,100
Microsoft..............................(a) 700 63,350
Omnicom Group............................. 300 19,537
Oracle.................................(a) 1,100 42,212
Raytheon.................................. 1,200 102,000
Rockwell International.................... 1,100 51,975
Sun Microsystems.......................(a) 800 50,400
TRW....................................... 1,100 81,812
Teradyne...............................(a) 400 14,400
Texas Instruments......................... 1,500 119,812
3Com...................................(a) 600 27,300
------------
1,793,762
------------
CONSUMER CYCLICAL--5.9% American Greetings, Cl. A................. 900 $ 27,450
Capital Cities/ABC........................ 500 58,813
Chrysler.................................. 1,300 68,900
Circuit City Stores....................... 2,300 72,738
Eckerd.................................(a) 500 20,000
Ford Motor................................ 2,200 68,475
General Motors............................ 400 18,750
Goodyear Tire & Rubber.................... 600 23,625
Harley-Davidson........................... 500 12,188
King World Productions.................(a) 900 32,962
Magna International, Cl. A................ 400 18,050
Mattel.................................... 800 23,500
McDonald's................................ 1,600 61,200
Mirage Resorts.........................(a) 1,200 39,450
NIKE, Cl. B............................... 400 44,450
New York Times, Cl. A..................... 800 21,900
Philips Electronics, N.V.................. 1,200 58,500
Reynolds & Reynolds, Cl. A................ 900 30,937
Rite Aid.................................. 1,600 44,800
Safeway................................(a) 1,600 66,800
Sears, Roebuck & Co....................... 2,200 81,125
Tandy..................................... 1,400 85,050
V.F....................................... 600 30,600
Walgreen.................................. 1,700 47,600
------------
1,057,863
------------
CONSUMER STAPLES--6.0% Archer Daniels Midland.................... 2,310 35,516
CPC International......................... 900 59,400
Coca-Cola................................. 2,700 186,300
ConAgra................................... 1,500 59,438
Eastman Kodak............................. 700 41,475
Gillette.................................. 1,700 80,963
Heinz (H.J.).............................. 600 27,450
IBP....................................... 700 37,363
Johnson & Johnson......................... 2,300 170,487
Newell.................................... 900 22,275
PepsiCo................................... 1,400 71,400
Philip Morris Cos......................... 1,600 133,600
Procter & Gamble.......................... 600 46,200
Sara Lee.................................. 1,000 29,750
Unilever, N.V. (New York Shares).......... 400 52,000
Whitman................................... 1,200 24,750
------------
1,078,367
------------
ENERGY--4.4% Amoco..................................... 1,300 83,363
Atlantic Richfield........................ 400 42,950
Coastal................................... 500 16,812
Exxon..................................... 2,700 195,075
Mobil..................................... 1,200 119,550
Panhandle Eastern......................... 1,500 40,875
Phillips Petroleum........................ 800 26,000
Royal Dutch Petroleum (New York Shares)... 1,300 159,575
Smith International....................(a) 1,000 17,375
Tidewater................................. 1,000 28,125
Williams Cos.............................. 1,500 58,500
------------
788,200
------------
HEALTH CARE--4.2% Abbott Laboratories....................... 1,400 59,675
Amgen..................................(a) 1,200 59,850
Baxter International...................... 1,700 69,913
Becton, Dickinson & Co.................... 1,000 62,875
Boston Scientific......................(a) 500 21,312
Bristol-Myers Squibb...................... 600 43,725
Columbia/HCA Healthcare................... 1,200 58,350
Merck & Co................................ 2,700 151,200
Pfizer.................................... 1,500 80,062
Schering-Plough........................... 2,600 133,900
------------
740,862
------------
INTEREST SENSITIVE--6.0% Allstate.................................. 2,839 100,430
American National Insurance............... 300 17,475
Bank of New York.......................... 500 23,250
BankAmerica............................... 1,400 83,825
Bear Stearns Cos.......................... 1,700 36,550
CIGNA..................................... 900 93,712
Chemical Banking.......................... 1,500 91,313
Citicorp.................................. 1,700 120,275
Dean Witter, Discover & Co................ 1,300 73,125
EXEL Limited.............................. 1,100 63,938
First Chicago............................. 900 61,762
First USA................................. 1,100 59,675
Loews..................................... 200 29,100
NationsBank............................... 1,800 121,050
Providian................................. 100 4,150
Signet Banking............................ 900 23,625
Standard Federal Bancorporation........... 400 15,600
Travelers Group........................... 600 31,875
USLIFE.................................... 600 17,550
------------
1,068,280
------------
MINING AND METALS--.7% ASARCO.................................... 1,100 34,650
Alcan Aluminium........................... 700 22,663
Inland Steel Industries................... 1,000 22,750
Phelps Dodge.............................. 500 31,312
Reynolds Metals........................... 300 17,325
------------
128,700
------------
TRANSPORTATION--.7% AMR....................................(a) 200 14,425
CSX....................................... 400 33,650
Conrail................................... 500 34,375
Delta Air Lines........................... 300 20,775
Illinois Central, Ser. A.................. 700 27,387
------------
130,612
------------
UTILITIES--5.5% ALLTEL.................................... 700 20,913
Ameritech................................. 3,100 161,588
BellSouth................................. 2,100 153,563
Consolidated Edison....................... 2,200 66,825
DQE....................................... 1,150 30,475
Entergy................................... 2,900 75,762
General Public Utilities.................. 2,000 62,250
MCI Communications........................ 4,100 106,856
NYNEX..................................... 1,300 62,075
PECO Energy............................... 2,100 60,112
SBC Communications........................ 1,500 82,500
Sprint.................................... 2,400 84,000
WorldCom...............................(a) 300 9,637
------------
976,556
------------
TOTAL COMMON STOCKS
(cost $7,071,303) $ 8,217,927
============

PRINCIPAL
BONDS AND NOTES--32.1% AMOUNT
---------

U.S. GOVERNMENT SECURITIES: U.S. Treasury Bonds;
11.63%, 11/15/2004.................... $ 500,000 $ 684,141
------------

U.S. Treasury Notes:
7.50%, 1/31/1997...................... 1,715,000 1,751,711
5.63%, 1/31/1998...................... 1,350,000 1,341,985
5.13%, 11/30/1998..................... 350,000 341,797
7.13%, 9/30/1999...................... 500,000 519,688
8.75%, 8/15/2000...................... 300,000 333,891
8%, 5/15/2001......................... 300,000 327,234
7.50%, 11/15/2001..................... 100,000 107,078
5.75%, 8/15/2003...................... 325,000 316,062
------------
5,039,446
============

TOTAL BONDS AND NOTES
(cost $5,598,232)..................... $ 5,723,587
============

PRINCIPAL
SHORT-TERM INVESTMENTS--20.8% AMOUNT VALUE
--------- -----
U.S. TREASURY BILLS: 5.34%, 10/5/1995.......................(b) $ 71,000 $ 70,950
5.33%, 10/12/1995......................(b) 209,000 208,638
5.37%, 11/2/1995.......................(b) 180,000 179,127
5.41%, 11/16/1995......................(b) 709,000 704,087
5.25%, 12/7/1995.......................(b) 2,584,000 2,558,005
------------

NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open futures positions.
</TABLE>

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

UNREALIZED
MARKET VALUE APPRECIATION/
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES PURCHASED: CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
Deutsche Aktienindex...................... 1 $ 150,112 December '95 $ (3,039)
Financial Times 100....................... 2 272,618 December '95 (471)
Hang Seng................................. 1 62,572 December '95 (1,054)
Nikkei 300................................ 13 355,610 December '95 799
Russell 2000.............................. 13 2,025,400 December '95 22,070
Standard & Poor's 500..................... 2 588,200 December '95 16,355
----------
$ 34,660
==========

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC., Growth Portfolio
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995

COMMON STOCKS--71.6% SHARES VALUE
------ -----
<S> <C> <C>
BASIC INDUSTRIES--4.1% Cabot..................................... 400 $ 21,250
Champion International.................... 2,600 140,075
Dow Chemical.............................. 1,400 104,300
duPont (E.I.) de Nemours.................. 2,000 137,500
Eastman Chemical.......................... 2,500 160,000
Federal Paper Board....................... 800 30,700
International Paper....................... 2,600 109,200
Lyondell Petrochemical.................... 2,000 51,750
PPG Industries............................ 1,000 46,500
Temple-Inland............................. 600 31,950
Union Carbide............................. 1,600 63,600
Wellman................................... 1,100 26,950
Weyerhaeuser.............................. 1,200 54,750
------------
978,525
------------
CAPITAL SPENDING--15.5% Advanced Micro Devices.................(a) 1,700 49,513
Applied Materials......................(a) 600 61,350
Arrow Electronics......................(a) 800 43,500
Avnet..................................... 1,400 72,275
Cabletron Systems......................(a) 1,700 111,988
Case...................................... 1,600 58,800
Caterpillar............................... 1,100 62,563
Ceridian...............................(a) 2,700 119,813
cisco Systems..........................(a) 1,800 124,200
Computer Associates International......... 2,850 120,412
Cummins Engine............................ 1,300 50,050
Deere & Co................................ 500 40,687
Eaton..................................... 3,300 174,900
General Electric.......................... 4,600 293,250
HBO & Co.................................. 1,700 106,250
Harnischfeger Industries.................. 800 26,700
HealthCare COMPARE.....................(a) 2,700 104,625
Hewlett-Packard........................... 1,200 100,050
Illinois Tool Works....................... 1,200 70,650
Intel..................................... 2,700 162,337
International Business Machines........... 3,200 302,000
Lockheed Martin........................... 2,600 174,525
Manpower.................................. 900 26,100
McDonnell Douglas......................... 900 74,475
Microsoft..............................(a) 1,300 117,650
Omnicom Group............................. 600 39,075
Oracle.................................(a) 2,300 88,262
Raytheon.................................. 2,400 204,000
Rockwell International.................... 2,300 108,675
Sun Microsystems.......................(a) 1,800 113,400
TRW....................................... 2,200 163,625
Teradyne...............................(a) 1,000 36,000
Texas Instruments......................... 3,000 239,625
3Com...................................(a) 1,400 63,700
------------
3,705,025
------------
CONSUMER CYCLICAL--9.3% American Greetings, Cl. A................. 1,900 $ 57,950
Capital Cities/ABC........................ 1,200 141,150
Chrysler.................................. 2,500 132,500
Circuit City Stores....................... 4,800 151,800
Eckerd.................................(a) 900 36,000
Ford Motor................................ 4,500 140,063
General Motors............................ 800 37,500
Goodyear Tire & Rubber.................... 1,300 51,188
Harley-Davidson........................... 1,700 41,438
King World Productions.................(a) 1,900 69,588
Magna International, Cl. A................ 900 40,612
Mattel.................................... 1,700 49,937
McDonald's................................ 3,400 130,050
Mirage Resorts.........................(a) 2,400 78,900
NIKE, Cl. B............................... 800 88,900
New York Times, Cl. A..................... 1,700 46,537
Philips Electronics, N.V.................. 2,200 107,250
Reynolds & Reynolds, Cl. A................ 1,900 65,312
Rite Aid.................................. 3,200 89,600
Safeway................................(a) 3,300 137,775
Sears, Roebuck & Co....................... 4,600 169,625
Tandy..................................... 3,000 182,250
V.F....................................... 1,300 66,300
Walgreen.................................. 3,600 100,800
------------
2,213,025
------------
CONSUMER STAPLES--9.4% Archer Daniels Midland.................... 4,900 75,338
CPC International......................... 1,900 125,400
Coca-Cola................................. 5,600 386,400
ConAgra................................... 3,000 118,875
Eastman Kodak............................. 1,400 82,950
Gillette.................................. 3,600 171,450
Heinz (H.J.).............................. 1,300 59,475
IBP....................................... 1,500 80,062
Johnson & Johnson......................... 4,800 355,800
Newell.................................... 2,000 49,500
PepsiCo................................... 2,700 137,700
Philip Morris Cos......................... 3,400 283,900
Procter & Gamble.......................... 1,200 92,400
Sara Lee.................................. 2,100 62,475
Unilever, N.V. (New York Shares).......... 800 104,000
Whitman................................... 2,400 49,500
------------
2,235,225
------------

ENERGY--7.0% Amoco..................................... 2,800 179,550
Atlantic Richfield........................ 900 96,638
Coastal................................... 800 26,900
Exxon..................................... 5,700 411,825
Mobil..................................... 2,600 259,025
Panhandle Eastern......................... 3,100 84,475
Phillips Petroleum........................ 1,700 55,250
Royal Dutch Petroleum (New York Shares)... 2,700 331,425
Smith International....................(a) 2,100 36,487
Tidewater................................. 2,100 59,062
Williams Cos.............................. 3,000 117,000
------------
1,657,637
------------

HEALTH CARE--6.3% Abbott Laboratories....................... 3,600 153,450
Amgen..................................(a) 2,600 129,675
Baxter International...................... 3,400 139,825
Becton, Dickinson & Co.................... 1,800 113,175
Boston Scientific......................(a) 1,100 46,888
Bristol-Myers Squibb...................... 1,200 87,450
Columbia/HCA Healthcare................... 2,400 116,700
Merck & Co................................ 5,600 313,600
Pfizer.................................... 3,100 165,462
Schering-Plough........................... 4,700 242,050
------------
1,508,275
------------

INTEREST SENSITIVE--9.3% Allstate.................................. 5,964 210,976
American National Insurance............... 700 40,775
Bank of New York.......................... 1,000 46,500
BankAmerica............................... 2,900 173,638
Bear Stearns Cos.......................... 3,500 75,250
CIGNA..................................... 1,800 187,425
Chemical Banking.......................... 3,200 194,800
Citicorp.................................. 3,500 247,625
Dean Witter, Discover & Co................ 2,400 135,000
EXEL Limited.............................. 2,300 133,688
First Chicago............................. 1,900 130,388
First USA................................. 2,300 124,775
Loews..................................... 300 43,650
NationsBank............................... 3,800 255,550
Providian................................. 300 12,450
Signet Banking............................ 1,800 47,250
Standard Federal Bancorporation........... 900 35,100
Travelers Group........................... 1,300 69,062
USLIFE.................................... 1,500 43,875
------------
2,207,777
------------
MINING & METALS--1.1% ASARCO.................................... 2,300 72,450
Alcan Aluminium........................... 1,400 45,325
Inland Steel Industries................... 2,200 50,050
Phelps Dodge.............................. 1,000 62,625
Reynolds Metals........................... 600 34,650
------------
265,100
------------
TRANSPORTATION--1.1% AMR....................................(a) 400 $ 28,850
CSX....................................... 900 75,712
Conrail................................... 1,000 68,750
Delta Air Lines........................... 600 41,550
Illinois Central, Ser. A.................. 1,400 54,775
------------
269,637
------------
UTILITIES--8.5% ALLTEL.................................... 1,400 41,825
Ameritech................................. 6,500 338,813
BellSouth................................. 4,400 321,750
Consolidated Edison....................... 4,600 139,725
DQE....................................... 2,350 62,275
Entergy................................... 6,100 159,363
General Public Utilities.................. 4,100 127,613
MCI Communications........................ 8,700 226,743
NYNEX..................................... 2,400 114,600
PECO Energy............................... 4,400 125,950
SBC Communications........................ 3,200 176,000
Sprint.................................... 5,000 175,000
WorldCom...............................(a) 700 22,487
------------
2,032,144
------------
TOTAL COMMON STOCKS
(cost $14,751,836).................... $ 17,072,370
============

PRINCIPAL
SHORT-TERM INVESTMENTS--28.2% AMOUNT VALUE
--------- -----
U.S. TREASURY BILLS: 5.34%, 10/5/1995.......................(b) $ 191,000 $ 190,864
5.36%, 10/19/1995......................(b) 114,000 113,684
5.40%, 10/26/1995......................(b) 105,000 104,613
5.37%, 11/2/1995.......................(b) 1,803,000 1,794,255
5.16%, 11/9/1995.......................(b) 121,000 120,289
5.32%, 11/16/1995......................(b) 1,196,000 1,187,712
5.28%, 12/7/1995.......................(b) 3,237,000 3,204,436
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,716,972)..................... $ 6,715,853
===========
TOTAL INVESTMENTS (cost $21,468,808).......................................... 99.8% $23,788,223
====== ===========
CASH AND RECEIVABLES (NET).................................................... .2% $ 48,781
====== ===========
NET ASSETS.................................................................... 100.0% $23,837,004
====== ===========

NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open futures positions.
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

UNREALIZED
MARKET VALUE APPRECIATION/
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES PURCHASED: CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
CAC 40 Index.............................. 2 $ 141,110 December '95 $(9,396)
Deutsche Aktienindex...................... 2 300,223 December '95 (6,078)
Financial Times 100....................... 4 545,790 December '95 360
Hang Seng................................. 3 187,716 December '95 (3,208)
Nikkei 300................................ 38 1,034,983 December '95 (2,533)
Russell 2000.............................. 27 4,206,600 December '95 42,830
-------
$21,975
=======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995

INCOME GROWTH AND INCOME GR0WTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ----------------- ---------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
[cost--Note 4(b)]--see statement.............. $15,997,856 $17,662,321 $23,788,223
Cash.............................................. 82,413 8,380 30,078
Dividends and interest receivable................. 181,653 114,194 33,066
Receivable for futures variation margin........... -- 6,508 19,590
Prepaid expenses--Note 2(g)....................... 57,859 95,341 59,599
----------- ----------- -----------
16,319,781 17,886,744 23,930,556
----------- ----------- -----------
LIABILITIES:
Due to The Dreyfus Corporation.................... 10,683 6,439 11,489
Due to Distributor................................ 1,662 1,757 2,429
Payable for investment securities purchased....... -- 9,612 19,748
Payable for futures variation margin.............. 6,500 -- --
Accrued expenses and other liabilities............ 38,401 18,546 59,886
----------- ----------- -----------
57,246 36,354 93,552
----------- ----------- -----------
NET ASSETS............................................ $16,262,535 $17,850,390 $23,837,004
=========== =========== ===========
REPRESENTED BY:
Paid-in capital................................... $15,041,856 $15,666,553 $20,103,205
Accumulated undistributed investment income-net... 474,272 332,653 318,027
Accumulated undistributed net realized gain
on investments................................ 353,820 545,329 1,074,382
Accumulated net unrealized appreciation on
investments and foreign currency transactions [including $160,420,
$34,660 and $21,975 net unrealized appreciation on financial futures for
the Income Portfolio, Growth and Income Portfolio and Growth
Portfolio, respectively]--Note 4(b)........... 392,587 1,305,855 2,341,390
----------- ----------- -----------
NET ASSETS at value................................... $16,262,535 $17,850,390 $23,837,004
=========== =========== ===========
Shares of Common Stock outstanding:
Class R Shares
(50 million shares of $.001 par value
shares authorized)............................ 601,975 646,297 801,860
=========== =========== ===========
Investor Class Shares
(50 million shares of $.001 par value
shares authorized)............................ 601,320 601,948 805,586
=========== =========== ===========
NET ASSET VALUE per share:
Class R Shares
($8,140,844 / 601,975 shares)................. $13.52
======
($9,247,876 / 646,297 shares)................. $14.31
======
($11,898,401 / 801,860 shares)................ $14.84
======
Investor Class Shares
($8,121,691 / 601,320 shares)................. $13.51
======
($8,602,514 / 601,948 shares)................. $14.29
======
($11,938,603 / 805,586 shares)................ $14.82
======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF OPERATIONS
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995

INCOME GROWTH AND INCOME GR0WTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ----------------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest...................................... $ 531,783 $ 314,676 $ 231,188
Cash dividends (net of $1,565 and $2,987
foreign taxes withheld at source for
the Growth and Income Portfolio and
the Growth Portfolio, respectively)....... -- 90,530 184,266
----------- ----------- -----------
TOTAL INCOME ......................... 531,783 405,206 415,454
----------- ----------- -----------
EXPENSES--Note 2(d):
Management fee--Note 3(a)..................... $ 47,599 $ 61,635 $ 82,882
Legal fees.................................... 12,908 13,195 16,735
Distribution fees
(Investor Class shares)--Note 3(b)........ 9,913 10,185 13,812
Organization expenses--Note 2(g).............. 7,641 8,968 7,642
Registration fees............................. 5,187 8,545 7,306
Auditing fees................................. 4,083 4,083 4,333
Director's fees and expenses--Note 3(c)....... 3,400 3,252 4,022
Shareholder servicing costs................... 3,049 4,804 4,056
Shareholders' reports......................... 2,667 2,871 2,871
Custodian fees................................ 1,405 8,061 9,385
Miscellaneous................................. 816 829 829
----------- ----------- -----------
98,668 126,428 153,873
Less--reduction in management fee due to
undertakings--Note 3(a)................... 41,157 53,875 56,446
----------- ----------- -----------
TOTAL EXPENSES........................ 57,511 72,553 97,427
----------- ----------- -----------
INVESTMENT INCOME--NET................ 474,272 332,653 318,027
----------- ----------- -----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 4(a)....... $ 5,000 $ 197,726 $ 396,526
Net realized gain on financial futures
(including foreign currency
transactions)--Note 4(a);
Long Transactions................................. 348,820 347,603 677,856
----------- ----------- -----------
NET REALIZED GAIN................................. 353,820 545,329 1,074,382
----------- ----------- -----------
Net unrealized appreciation on investments (including foreign currency
transactions) (including $160,420, $34,660 and $21,975 net unrealized
appreciation on financial futures for the Income Portfolio, the Growth
and Income Portfolio and the Growth
Portfolio, respectively)...................... 392,587 1,305,855 2,341,390
----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS................... 746,407 1,851,184 3,415,772
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ 1,220,679 $ 2,183,837 $ 3,733,799
=========== =========== ===========

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 SEPTEMBER 30, 1995
INCOME
PORTFOLIO
---------
<S> <C>
OPERATIONS:
Investment income--net.............................................. $ 474,272
Net realized gain on investments.................................... 353,820
Net unrealized appreciation on investments for the period........... 392,587
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... 1,220,679
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares.................................................. 7,508,845
Investor Class shares........................................... 7,504,669
Cost of shares redeemed;
Investor Class shares........................................... (4,658)
-----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS...... 15,008,856
-----------
TOTAL INCREASE IN NET ASSETS............................ 16,229,535
===========
NET ASSETS:
Beginning of period--Note 1......................................... 33,000
-----------
End of period (including undistributed investment income-net of
$474,272 on September 30, 1995)................................. $16,262,535
===========

</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 600,655 600,353
Shares redeemed..................................................... -- (353)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 600,655 600,000
======= =======

See notes to financial statements.

</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995
GROWTH AND INCOME
PORTFOLIO
-----------------
<S> <C>
OPERATIONS:
Investment income--net.............................................. $ 332,653
Net realized gain on investments.................................... 545,329
Net unrealized appreciation on investments for the period........... 1,305,855
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 2,183,837
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares.................................................. 8,144,735
Investor Class shares........................................... 7,509,353
Cost of shares redeemed:
Class R shares.................................................. (20,620)
Investor Class shares........................................... (915)
-----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS...... 15,632,553
-----------
TOTAL INCREASE IN NET ASSETS............................ 17,816,390
NET ASSETS:
Beginning of period--Note 1......................................... 34,000
-----------
End of period (including undistributed investment income-net of
$332,653 on September 30, 1995)..................................... $17,850,390
===========
</TABLE>

SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 646,375 600,654
Shares redeemed..................................................... (1,438) (66)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 644,937 600,588
======= =======

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995
GROWTH
PORTFOLIO
---------
<S> <C>
OPERATIONS:
Investment income--net.............................................. $ 318,027
Net realized gain on investments.................................... 1,074,382
Net unrealized appreciation on investments for the period........... 2,341,390
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 3,733,799
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares.................................................. 10,007,843
Investor Class shares........................................... 10,067,618
Cost of shares redeemed;
Investor Class shares........................................... (5,256)
-----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS...... 20,070,205
-----------
TOTAL INCREASE IN NET ASSETS............................ 23,804,004
NET ASSETS:
Beginning of period--Note 1......................................... 33,000
-----------
End of period (including undistributed investment income-net of
$318,027 on September 30, 1995)................................. $23,837,004
-----------
</TABLE>

SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 800,540 804,636
Shares redeemed..................................................... -- (370)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 800,540 804,266
======= =======

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC.
FINANCIAL HIGHLIGHTS

Reference is made to pages 5 through 7 of the Fund's Prospectus dated
January 15, 1996.

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS

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 Portfolio. The Fund had no
operations until March 31, 1995 (when operations commenced for all Portfolios)
other than matters relating to its organization and registration as a
diversified 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 Portfolios' 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 provider 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 September 30, 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 Portfolios' 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. Investments
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.

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)

(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
unrealized gain or loss from investments.

Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, and currency
gains and 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 at fiscal
year end, resulting from changes in exchange rates. Such gains and losses are
included with net realized and unrealized gain and loss on investments.

(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.

(D) EXPENSES: Expenses directly attributable to each Portfolio are charged
to that Portfolio's operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.

(E) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are
recorded by each Portfolio on the ex-dividend date. Dividends from investment
income-net and dividends from net realized capital gain, with respect to each
Portfolio, are normally declared and paid annually, but each Portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain of a Portfolio can be offset by a capital loss carryover, if any,
of that Portfolio, 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 Portfolio is treated as a single entity for the purpose of
determining such qualification.

(G) OTHER: Organization expenses paid by the Portfolio 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 September 30, 1995, the unamortized
balance of such expenses of each of the respective Portfolio's amounted to the
following:

Income Portfolio $57,858 Growth Portfolio $57,858
Growth and Income Portfolio 67,900

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)
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 Portfolio's net
assets and is payable monthly at the following annual 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 Portfolio, exclusive of taxes, brokerage, interest on borrowings
(which, in the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates dividends accrued on securities sold short) and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund, that Portfolio 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 Portfolio
presently requires reimbursement of expenses in any full fiscal year that such
expenses (excluding 12b-1 Service Plan 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 Portfolio's 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 Portfolio 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 Portfolio, to the extent that
the Portfolios' 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 Portfolios' 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 Portfolios' 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 Portfolio, to the extent that the Portfolio's 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 Portfolio's
net assets.

The expense reimbursements, pursuant to the undertakings amounted to the
following for the period ended September 30, 1995:

Income Portfolio $41,157 Growth Portfolio $56,446
Growth and Income Portfolio 53,875

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
Total Fund Net Assets Average Daily Net Assets of each
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
distributing each Portfolio's Investor Class shares and servicing Investor Class
shareholder accounts ("Servicing") and (b) pays the Manager, Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, and any affiliate of
either of them (collectively, "Dreyfus") for advertising and marketing relating
to each Portfolio's Investor Class shares and for Servicing, at an aggregate
annual rate of .25 of 1% of the value of each Portfolio's 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 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 each Portfolio 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
Portfolio's average daily net assets of Investor Class shares for any full
fiscal year.
During the period ended September 30, 1995, the following was charged to
each Portfolio pursuant to the Plan:

Income Portfolio $ 9,913 Growth Portfolio $13,812
Growth and Income Portfolio 10,185

Effective October 1, 1995, the Plan has been terminated.

Effective October 2, 1995, the Fund has adopted a Shareholder Services Plan.
Under the Shareholder Services Plan, the Fund pays the Distributor, at an annual
rate of .25 of 1% of the value of the average daily net assets of the
Portfolio's Investor Class shares only for the provision of certain services.
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. The Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents.

(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.

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)

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
September 30, 1995:

PURCHASES SALES
----------- ----------
Income Portfolio............. $11,067,283 $ 511,484
Growth and Income Portfolio. 16,235,527 3,771,966
Growth Portfolio............. 21,542,148 7,187,600

The Fund may invest in financial futures contracts in order to gain exposure
to or protect against changes in the market. The Fund is exposed to market risk
as a result of changes in the value of the underlying financial instruments (see
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 September 30, 1995 and their related unrealized market appreciation
(depreciation) are set forth in the Statements of Financial Futures.

(B) The following summarizes accumulated net unrealized
appreciation on investments for each Portfolio at September 30,
1995:
<TABLE>
<CAPTION>
Gross Gross
Appreciation (Depreciation) Net ------------ -------------- ----------
<S> <C> <C> <C>
Income Portfolio..... $ 393,804 $ (1,217) $ 392,587
Growth and Income Portfolio.. 1,367,745 (61,890) 1,305,855
Growth Portfolio........ 2,495,195 (153,805) 2,341,390
</TABLE>

At September 30, 1995, the cost of investments of each Portfolio for Federal
income tax purposes was substantially the same as the cost for financial
reporting purposes. The cost of investments for Portfolio series for financial
reporting purposes as of September 30, 1995
was as follows:

Income Portfolio $15,765,689 Growth Portfolio $21,468,808
Growth and Income Portfolio 16,391,126

Dreyfus LifeTime Portfolios, Inc.
Report of Ernst & Young LLP, Independent Auditors

Shareholders and Board of Directors
Dreyfus LifeTime Portfolios, Inc.

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 the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Portfolios constituting the Dreyfus LifeTime Portfolios,
Inc. at September 30, 1995, and the results of their operations, the changes in
their net assets and the financial highlights for the period from March 31, 1995
to September 30, 1995, in conformity with generally accepted accounting
principles.

[Ernst & Young LLP signature logo]

New York, New York
November 8, 1995
<PAGE>

Dear Shareholder:
The letter that follows is the first annual report of Dreyfus LifeTime
Portfolios, Inc., a mutual fund that began operations in March of this year. It
is a pleasure to introduce the Portfolios' manager, Steven A. Falci, to those
who have invested in this mutual fund.

Steve Falci is a portfolio manager for our corporate affiliate, Mellon
Equity Associates, which is the Portfolios' sub-investment adviser. He has broad
experience in portfolio management, asset allocation and the application of
quantitative techniques to create investment solutions.

Prior to joining Mellon Equity Associates in April 1994, Steve was the
Managing Director--Pension Investments at NYNEX Corporation where he oversaw the
internally managed assets of the NYNEX Pension Fund and NYNEX Foundation. He was
responsible for equity and fixed income portfolio management and trading,
investment strategy and the generation of new portfolio applications.

Steve is a chartered financial analyst and is a member of
the Association for Investment Management and Research. He
received an MBA in finance and a B.S. in economics, both from
New York University.
Sincerely,

[Stephen E. Canter signature logo]

Stephen E. Canter
Chief Investment Officer
The Dreyfus Corporation

October 18, 1995 New York, N.Y.

LETTER TO SHAREHOLDERS

Dear Shareholder:
Dreyfus LifeTime Portfolios, Inc. commenced operations on March 31 of this
year. The Fund is composed of three separate portfolios, each specifically
designed for investors at particular points in the savings cycle. Each portfolio
follows an asset allocation strategy that involves an ongoing comparison of the
relative value of stocks and bonds across different markets.

ECONOMIC ENVIRONMENT
For most of the past twelve months, the U.S. economy expanded in spite of a
restrictive monetary policy pursued by the Federal Reserve Board until early
last summer. In July of this year the Fed switched gears and lowered its
short-term interest rates by a minimal amount. This action was taken because the
American economy had started to slow down and the central bank wanted to make
sure that the slowdown would not turn into a full-fledged recession.

The most recent economic statistics do indeed indicate that the Fed has
successfully reduced the rate of economic expansion, which in turn has warded
off threats of a recurrence of price or wage inflation.

Thanks to low interest rates, the construction industry continues to look
vigorous. However, retail sales and industrial production have cooled off. Gross
Domestic Product continues to grow, but at a reduced rate. Unemployment remains
steady at somewhat below six percent. However, job growth according to the
latest statistics has diminished its pace.

Many economists now are wondering whether this pause in economic growth is a
prelude to something more serious, or is simply a pause before faster growth is
resumed.

On the global scene, economic growth is slowing due to the long lagged
effects of the dynamic interest rate rise in 1994. Our analysis is that, while
short bursts of faster growth may temporarily occur, current monetary and fiscal
trends portend more below-average growth in 1996, with 1997 likely to see a more
sustained economic and earnings growth phase if the liquidity background
improves further. European economic activity is slowing and Japan remains in
need of a major stimulus program to accelerate growth in 1996.

MARKET ENVIRONMENT

As we see it, the financial markets have a continued positive background as
increased monetary liquidity and lower interest rates should occur in the
current slow-growth, low-inflation environment. The corollary of this for equity
investments is that the risk of some 1996 earnings disappointments has
increased. Therefore, stock selection and company focus must be made very
carefully.

A case in point is the sell-off in late September and early October of high
technology stocks, after they had reached unprecedented high prices and record
price/earnings ratios. To be sure, this has uncovered a number of situations
where these stocks are now much more attractively priced. However, the lesson
has been underscored that earnings and prospects for future earnings are
decisive in stock price fluctuations.

PORTFOLIO OVERVIEW

The Income Portfolio is designed for the investor with a short investment
horizon. It is designed to be the least risky of the three Portfolios. The
majority of assets are allocated to bonds and cash with a stock component of
about 25% of Portfolio assets included to combat inflation. We maintain constant
allocations to each asset class in this Portfolio and manage each asset class
passively, using an index-based approach.

The Growth and Income Portfolio is designed for the investor with an
intermediate investment horizon and is the most moderate of the Portfolios. A
modest portion of assets are allocated to international investments, with stocks
and bonds equally weighted both domestically and internationally. We can move
somewhat from baseline weights for the mix of international versus domestic
assets and for the mix of domestic stocks versus domestic bonds. To make these
decisions, we use proprietary asset allocation models developed by the
Portfolios' sub-investment advisor, Mellon Equity Associates. Except for
domestic stocks, all asset classes are passively managed.

The Growth Portfolio is designed for the investor with a longer investment
horizon and has the highest risk of the three portfolios. A larger portion of
assets, as compared to the Growth and Income Portfolio, are allocated to
international investments with stocks dominating the allocation for both
international and domestic assets. The allocation can vary significantly from
baseline weights and the asset allocation decisions are also implemented using
Mellon Equity's disciplined asset allocation process. Like the Growth and Income
Portfolio, all asset classes are passively managed with the exception of
domestic stocks.

For each Portfolio, Mellon Equity establishes an asset allocation baseline
that describes target levels or relative weights for the Portfolio's asset
classes. For each Portfolio, Mellon Equity then establishes active allocation
ranges. One deals with relative weighting (compared to the Portfolio baseline)
as between international and domestic assets; the other involves weightings for
domestic assets as between common stock and fixed-income assets.

To implement the first stage of allocation in the Growth Portfolio and the
Growth and Income Portfolio, we evaluate risk and return characteristics of
capital markets around the world and their correlation across countries,
including expected movements in currency markets.

In the second stage of allocation in domestic markets, we evaluate risk and
return characteristics of the domestic equity and fixed-income markets. We do
this 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. Using this analysis, we arrive at appropriate relative
weightings among domestic securities.

Mellon Equity maintains a continuous watch on these relative asset class
weights, making changes when required, subject to our assessment of current
economic conditions and investment opportunities.

In selecting securities for each Portfolio, we attempt to approximate the
investment characteristics of designated benchmark indices, while seeking to
exceed the returns of the benchmark.

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. Using this information, we value and rank stocks
based on our belief of expected performance relative to the asset class
benchmark.

PORTFOLIO RETURNS

As previously noted, Dreyfus LifeTime Portfolios began operations March 31,
1995. The fiscal year ended September 30, 1995. We are pleased to report the
following results for that period of six calendar months.

The Income Portfolio provided total returns in line with its benchmark. (See
graph on a later page.) Investor Class shares of the Income Portfolio returned
8.08% for the reporting period, and Class R shares 8.24%.*

The Growth and Income Portfolio and the Growth Portfolio both achieved
strong total returns.

The Growth and Income Portfolio's Investor Class and Class R shares achieved
total returns of 14.32% and 14.48%, respectively; the Growth Portfolio's
Investor Class and Class R shares achieved total returns of 18.56% and 18.72%,
respectively.*

The strong performance by these latter two Portfolios was generated by our
asset allocation decisions and successful stock selection in the domestic equity
component. Both Portfolios assumed their maximum stock positions in early May as
long maturity bond rates fell below 7%. This decision enhanced returns, because
stocks outperformed bonds over the subsequent months. The performance in
domestic stocks was attributable to stock selection across the broad market
sectors, rather than to superior performance of any particular sector of the
portfolio such as technology.

At present, the Growth and Income Portfolio and the Growth Portfolio remain
at their maximum stock weights reflecting the relative attractiveness of stocks
to bonds as indicated by our proprietary evaluation techniques.

It is a pleasure to count you among the investors in Dreyfus LifeTime
Portfolios. We look forward to a continuing and rewarding relationship.

Sincerely,
[Steven A. Falci signature logo]

Steven A. Falci
Portfolio Manager

October 18, 1995 New York, N.Y.

*Total return includes reinvestment of dividends and any capital gains
paid.

DREYFUS LIFETIME PORTFOLIOS, INC., Income Portfolio SEPTEMBER
30, 1995

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INVESTOR CLASS SHARES
AND CLASS R SHARES OF DREYFUS LIFETIME PORTFOLIOS, INC.-- INCOME PORTFOLIO WITH
THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT / CORPORATE BOND INDEX AND A
CUSTOMIZED BLENDED INDEX [SEE EXHIBIT A]

*Source: Lehman Brothers
**Source: Lehman Brothers, Lipper Analytical Services, Inc.,
and The Wall Street Journal

ACTUAL AGGREGATE TOTAL RETURNS

INVESTOR CLASS SHARES CLASS R SHARES
- ------------------------------------------------------- -------------------------------------------------------
<S> <C> <C> <C>
From Inception (3/31/95) to September 30, 1995 8.08% From Inception (3/31/95) to September 30, 1995 8.24%
</TABLE>

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor Class
shares and Class R shares of the Income Portfolio on 3/31/95 (Inception Date) to
a $10,000 investment made in the Lehman Brothers Intermediate
Government/Corporate Bond Index on that date as well as to a Customized Blended
Index reflecting the Portfolio's asset allocation baseline percentages
("Baseline") which are described below and in the Fund's prospectus. All
dividends and capital gain distributions are reinvested.

The Income Portfolio allocates your money among domestic bonds and stocks and
money market instruments. The Portfolio's performance shown in the line graph
takes into account all applicable fees and expenses. The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely accepted index of bond
market performance which does not take into account charges, fees and other
expenses. The Lehman Brothers Intermediate Government/Corporate Bond Index
("Lehman Index") was selected because (1) government and corporate bonds
represent the highest Baseline percentage of the Portfolio and (2) the
fixed-income portion of the Portfolio is invested to represent the Lehman Index.
The Customized Blended Index has been prepared by the Fund for purposes of more
accurate comparison to the Portfolio's overall portfolio composition. We have
combined the performance of unmanaged indices reflecting the Baseline
percentages set forth in the Prospectus, but in greater detail than the broader
prospectus Baseline percentages: Bonds--67.5%; Stocks--22.5%; and Treasury
Bills--10%. The Customized Blended Index combines returns from the Lehman Index,
the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") and the
90-day Treasury Bill rate, as it changes from time to time, and is weighted to
the aforementioned Baseline percentages. The Lehman Index is a widely accepted,
unmanaged index of Government and Corporate bond market performance composed of
U.S. Government, Treasury and agency securities, fixed-income securities and
nonconvertible investment grade corporate debt, with an average maturity of 1-10
years. The S&P 500 Index is a widely accepted, unmanaged index of overall stock
market performance. None of the foregoing indices reflect account charges, fees
or other expenses. Further information relating to the Portfolio's performance,
including expense reimbursements, if applicable, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this Report.

DREYFUS LIFETIME PORTFOLIOS, INC., Growth and Income Portfolio
SEPTEMBER 30, 1995

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INVESTOR CLASS SHARES
AND CLASS R SHARES OF DREYFUS LIFETIME PORTFOLIOS, INC.-- GROWTH AND INCOME
PORTFOLIO WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND A
CUSTOMIZED BLENDED INDEX

[SEE EXHIBIT B]
*Source: Lipper Analytical Services, Inc.
**Source: Lipper Analytical Services, Inc., Lehman Brothers,
Morgan Stanley & Co. Incorporated and J.P. Morgan & Co.
Incorporated
<TABLE>
<CAPTION>

ACTUAL AGGREGATE TOTAL RETURNS

INVESTOR CLASS SHARES CLASS R SHARES
- --------------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C>
From Inception (3/31/95) to September 30, 1995 14.32% From Inception (3/31/95) to September 30, 1995 14.48%
</TABLE>

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor Class
shares and Class R shares of the Growth and Income Portfolio on 3/31/95
(Inception Date) to a $10,000 investment made in the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") on that date as well as to a
Customized Blended Index reflecting the Portfolio's asset allocation baseline
percentages ("Baseline") which are described below and in the Fund's prospectus.
All dividends and capital gain distributions are reinvested.

The Growth and Income Portfolio allocates your money among domestic and foreign
stocks and bonds. The Portfolio's performance shown in the line graph takes into
account all applicable fees and expenses. The S&P 500 Index is a widely
accepted, unmanaged index of overall stock market performance which does not
take into account charges, fees and other expenses. The S&P 500 Index was
selected because (1) domestic common stocks represent a significant portion of
the Baseline and (2) the majority of the stock portion of the Portfolio is
invested in stocks included in the S&P 500 Index. Because the Portfolio has
significant fixed-income holdings, though, it can underperform an equity-only
index. The Customized Blended Index has been prepared by the Fund for purposes
of more accurate comparison to the Portfolio's overall portfolio composition. We
have combined the performance of unmanaged indices reflecting the Baseline
percentages set forth in the Prospectus, but in greater detail than the broader
prospectus Baseline percentages: Domestic Large Company Stocks-36%; Domestic
Small Company Stocks-9%; Foreign Stocks-5%; Domestic Bonds-45%; Foreign
Bonds-5%. The Customized Blended Index combines returns from the S&P 500 Index,
the Russell 2000 Index, the Morgan Stanley Capital International Europe,
Australasia, Far East (Free) Index-Hedged, $U.S. ("EAFE Index"), the Lehman
Brothers Intermediate Government/Corporate Bond Index ("Lehman Index") and the
J.P. Morgan Non-U.S. Government Bond Index-Hedged ("J.P. Morgan Global Index"),
and is weighted to the aforementioned Baseline percentages. The Russell 2000
Index is an unmanaged index and is composed of the 2,000 smallest companies in
the Russell 3000 Index. The Russell 3000 Index is composed of the largest U.S.
companies by market capitalization. The EAFE Index, which is the property of
Morgan Stanley & Co. Incorporated, is an unmanaged index composed of a sample of
companies representative of the market structure of 16 European and Pacific
Basin countries and includes net dividends reinvested. The Lehman Index is a
widely accepted, unmanaged index of Government and Corporate bond market
performance composed of U.S. Government, Treasury and agency securities,
fixed-income securities and nonconvertible investment grade corporate debt, with
an average maturity of 1-10 years. The J.P. Morgan Global Index is an index
Portfolio that measures returns on bonds from 12 world markets, hedged into U.S.
dollars. This index does not include a U.S. bonds component. None of the
foregoing indices reflect account charges, fees or other expenses. Further
information relating to the Portfolio's performance, including expense
reimbursements, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this Report.

DREYFUS LIFETIME PORTFOLIOS, INC., Growth Portfolio SEPTEMBER
30, 1995

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INVESTOR CLASS SHARES
AND CLASS R SHARES OF DREYFUS LIFETIME PORTFOLIOS, INC.-- GROWTH PORTFOLIO WITH
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND A CUSTOMIZED BLENDED
INDEX

[SEE EXHIBIT C]

*Source: Lipper Analytical Services, Inc.
**Source: Lipper Analytical Services, Inc., Lehman Brothers,
Morgan Stanley & Co. Incorporated and J.P. Morgan & Co.
Incorporated

ACTUAL AGGREGATE TOTAL RETURNS

INVESTOR CLASS SHARES CLASS R SHARES
- -------------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C>
From Inception (3/31/95) to September 30, 1995 18.56% From Inception (3/31/95) to September 30, 1995 18.72%
</TABLE>

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor Class
shares and Class R shares of the Growth Portfolio on 3/31/95 (Inception Date) to
a $10,000 investment made in the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index") on that date as well as to a Customized Blended Index
reflecting the Portfolio's asset allocation baseline percentages ("Baseline")
which are described below and in the Fund's prospectus. All dividends and
capital gain distributions are reinvested.

The Growth Portfolio allocates your money among domestic and foreign stocks and
bonds. The Portfolio's performance shown in the line graph takes into account
all applicable fees and expenses. The S&P 500 Index is a widely accepted,
unmanaged index of overall stock market performance which does not take into
account charges, fees and other expenses. The S&P 500 Index was selected because
(1) domestic common stocks represent the highest Baseline percentage of the
Portfolio's assets and (2) the majority of the stock portion of the Portfolio is
invested in stocks included in the S&P 500 Index. The Customized Blended Index
has been prepared by the Fund for purposes of more accurate comparison to the
Portfolio's overall portfolio composition. We have combined the performance of
unmanaged indices reflecting the Baseline percentages set forth in the
Prospectus, but in greater detail than the broader prospectus Baseline
percentages: Domestic Large Company Stocks-54.4%; Domestic Small Company
Stocks-13.6%; Foreign Stocks-12.0%; Domestic Bonds-17.0%; and Foreign
Bonds-3.0%. The Customized Blended Index combines returns from the S&P 500
Index, the Russell 2000 Index, the Morgan Stanley Capital International Europe,
Australasia, Far East (Free) Index-Hedged,$U.S. ("EAFE Index"), the Lehman
Brothers Intermediate Government/Corporate Bond Index ("Lehman Index") and the
J.P. Morgan Non-U.S. Government Bond Index-Hedged ("J.P. Morgan Global Index")
and is weighted to the aforementioned Baseline percentages. The Russell 2000
Index is an unmanaged index and is composed of the 2,000 smallest companies in
the Russell 3000 Index. The Russell 3000 Index is composed of the largest U.S.
companies by market capitalization.

The EAFE Index, which is the property of Morgan Stanley & Co. Incorporated, is
an unmanaged index composed of a sample of companies representative of the
market structure of 16 European and Pacific Basin countries and includes net
dividends reinvested. The Lehman Index is a widely accepted, unmanaged index of
Government and Corporate bond market performance composed of U.S. Government,
Treasury and agency securities, fixed-income securities and nonconvertible
investment grade corporate debt, with an average maturity of 1-10 years. The
J.P. Morgan Global Index is an index Portfolio that measures returns on bonds
from 12 world markets, hedged into U.S. dollars. This index does not include a
U.S. bonds component. None of the foregoing indices reflect account charges,
fees or other expenses. Further information relating to the Portfolio's
performance, including expense reimbursements, if applicable, is contained in
the Condensed Financial Information section of the Prospectus and elsewhere in
this Report.

DREYFUS LIFETIME PORTFOLIOS, INC., Income Portfolio
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
PRINCIPAL
BONDS AND NOTES--66.5% AMOUNT VALUE
--------- -----
<S> <C> <C>
U.S. GOVERNMENT SECURITIES: U.S. Treasury Bonds:
11 5/8%, 11/15/2004................... $ 600,000 $ 820,969
U.S. Treasury Notes:
7 1/2%, 1/31/1997..................... 2,945,000 3,008,041
5 5/8%, 1/31/1998..................... 3,000,000 2,982,189
5 1/8%, 11/30/1998.................... 250,000 244,141
7 1/8%, 9/30/1999..................... 1,000,000 1,039,375
8 3/4%, 8/15/2000..................... 700,000 779,078
8%, 5/15/2001......................... 1,000,000 1,090,781
7 1/2%, 11/15/2001.................... 180,000 192,740
7 1/2%, 2/15/2005..................... 600,000 653,156
-----------
9,989,501
===========
TOTAL BONDS AND NOTES
(cost $10,577,780).................... $10,810,470
===========

CASH AND RECEIVABLES (NET).................................................... 1.6% $ 264,679
====== ===========

NET ASSETS.................................................................... 100.0% $16,262,535
====== ===========

NOTE TO STATEMENT OF INVESTMENTS;
(a) Partially held by the custodian in a segregated account as collateral for open futures positions.
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC., Growth and Income Portfolio
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
COMMON STOCKS--46.0% SHARES VALUE
------ -----
<S> <C> <C>
BASIC INDUSTRIES--2.5% Cabot..................................... 200 $ 10,625
Champion International.................... 1,400 75,425
Dow Chemical.............................. 700 52,150
duPont (E.I.) de Nemours.................. 300 20,625
Eastman Chemical.......................... 1,200 76,800
Federal Paper Board....................... 400 15,350
International Paper....................... 1,200 50,400
Lyondell Petrochemical.................... 1,000 25,875
PPG Industries............................ 500 23,250
Temple-Inland............................. 300 15,975
Union Carbide............................. 1,100 43,725
Wellman................................... 700 17,150
Weyerhaeuser.............................. 600 27,375
------------
454,725
------------
CAPITAL SPENDING--10.1% Advanced Micro Devices.................(a) 800 23,300
Applied Materials......................(a) 300 30,675
Arrow Electronics......................(a) 400 21,750
Avnet..................................... 700 36,138
Cabletron Systems......................(a) 800 52,700
Case...................................... 800 29,400
Caterpillar............................... 500 28,438
Ceridian...............................(a) 1,300 57,688
cisco Systems..........................(a) 900 62,100
Computer Associates International......... 1,350 57,038
Cummins Engine............................ 700 26,950
Deere & Co................................ 200 16,275
Eaton..................................... 1,600 84,800
General Electric.......................... 2,400 153,000
HBO & Co.................................. 800 50,000
Harnischfeger Industries.................. 300 10,012
HealthCare COMPARE.....................(a) 1,300 50,375
Hewlett-Packard........................... 600 50,025
Illinois Tool Works....................... 600 35,325
Intel..................................... 1,300 78,162
International Business Machines........... 1,500 141,563
Lockheed Martin........................... 1,200 80,550
Manpower.................................. 400 11,600
McDonnell Douglas......................... 400 33,100
Microsoft..............................(a) 700 63,350
Omnicom Group............................. 300 19,537
Oracle.................................(a) 1,100 42,212
Raytheon.................................. 1,200 102,000
Rockwell International.................... 1,100 51,975
Sun Microsystems.......................(a) 800 50,400
TRW....................................... 1,100 81,812
Teradyne...............................(a) 400 14,400
Texas Instruments......................... 1,500 119,812
3Com...................................(a) 600 27,300
------------
1,793,762
------------
CONSUMER CYCLICAL--5.9% American Greetings, Cl. A................. 900 $ 27,450
Capital Cities/ABC........................ 500 58,813
Chrysler.................................. 1,300 68,900
Circuit City Stores....................... 2,300 72,738
Eckerd.................................(a) 500 20,000
Ford Motor................................ 2,200 68,475
General Motors............................ 400 18,750
Goodyear Tire & Rubber.................... 600 23,625
Harley-Davidson........................... 500 12,188
King World Productions.................(a) 900 32,962
Magna International, Cl. A................ 400 18,050
Mattel.................................... 800 23,500
McDonald's................................ 1,600 61,200
Mirage Resorts.........................(a) 1,200 39,450
NIKE, Cl. B............................... 400 44,450
New York Times, Cl. A..................... 800 21,900
Philips Electronics, N.V.................. 1,200 58,500
Reynolds & Reynolds, Cl. A................ 900 30,937
Rite Aid.................................. 1,600 44,800
Safeway................................(a) 1,600 66,800
Sears, Roebuck & Co....................... 2,200 81,125
Tandy..................................... 1,400 85,050
V.F....................................... 600 30,600
Walgreen.................................. 1,700 47,600
------------
1,057,863
------------
CONSUMER STAPLES--6.0% Archer Daniels Midland.................... 2,310 35,516
CPC International......................... 900 59,400
Coca-Cola................................. 2,700 186,300
ConAgra................................... 1,500 59,438
Eastman Kodak............................. 700 41,475
Gillette.................................. 1,700 80,963
Heinz (H.J.).............................. 600 27,450
IBP....................................... 700 37,363
Johnson & Johnson......................... 2,300 170,487
Newell.................................... 900 22,275
PepsiCo................................... 1,400 71,400
Philip Morris Cos......................... 1,600 133,600
Procter & Gamble.......................... 600 46,200
Sara Lee.................................. 1,000 29,750
Unilever, N.V. (New York Shares).......... 400 52,000
Whitman................................... 1,200 24,750
------------
1,078,367
------------
ENERGY--4.4% Amoco..................................... 1,300 83,363
Atlantic Richfield........................ 400 42,950
Coastal................................... 500 16,812
Exxon..................................... 2,700 195,075
Mobil..................................... 1,200 119,550
Panhandle Eastern......................... 1,500 40,875
Phillips Petroleum........................ 800 26,000
Royal Dutch Petroleum (New York Shares)... 1,300 159,575
Smith International....................(a) 1,000 17,375
Tidewater................................. 1,000 28,125
Williams Cos.............................. 1,500 58,500
------------
788,200
------------
HEALTH CARE--4.2% Abbott Laboratories....................... 1,400 59,675
Amgen..................................(a) 1,200 59,850
Baxter International...................... 1,700 69,913
Becton, Dickinson & Co.................... 1,000 62,875
Boston Scientific......................(a) 500 21,312
Bristol-Myers Squibb...................... 600 43,725
Columbia/HCA Healthcare................... 1,200 58,350
Merck & Co................................ 2,700 151,200
Pfizer.................................... 1,500 80,062
Schering-Plough........................... 2,600 133,900
------------
740,862
------------
INTEREST SENSITIVE--6.0% Allstate.................................. 2,839 100,430
American National Insurance............... 300 17,475
Bank of New York.......................... 500 23,250
BankAmerica............................... 1,400 83,825
Bear Stearns Cos.......................... 1,700 36,550
CIGNA..................................... 900 93,712
Chemical Banking.......................... 1,500 91,313
Citicorp.................................. 1,700 120,275
Dean Witter, Discover & Co................ 1,300 73,125
EXEL Limited.............................. 1,100 63,938
First Chicago............................. 900 61,762
First USA................................. 1,100 59,675
Loews..................................... 200 29,100
NationsBank............................... 1,800 121,050
Providian................................. 100 4,150
Signet Banking............................ 900 23,625
Standard Federal Bancorporation........... 400 15,600
Travelers Group........................... 600 31,875
USLIFE.................................... 600 17,550
------------
1,068,280
------------
MINING AND METALS--.7% ASARCO.................................... 1,100 34,650
Alcan Aluminium........................... 700 22,663
Inland Steel Industries................... 1,000 22,750
Phelps Dodge.............................. 500 31,312
Reynolds Metals........................... 300 17,325
------------
128,700
------------
TRANSPORTATION--.7% AMR....................................(a) 200 14,425
CSX....................................... 400 33,650
Conrail................................... 500 34,375
Delta Air Lines........................... 300 20,775
Illinois Central, Ser. A.................. 700 27,387
------------
130,612
------------
UTILITIES--5.5% ALLTEL.................................... 700 20,913
Ameritech................................. 3,100 161,588
BellSouth................................. 2,100 153,563
Consolidated Edison....................... 2,200 66,825
DQE....................................... 1,150 30,475
Entergy................................... 2,900 75,762
General Public Utilities.................. 2,000 62,250
MCI Communications........................ 4,100 106,856
NYNEX..................................... 1,300 62,075
PECO Energy............................... 2,100 60,112
SBC Communications........................ 1,500 82,500
Sprint.................................... 2,400 84,000
WorldCom...............................(a) 300 9,637
------------
976,556
------------
TOTAL COMMON STOCKS
(cost $7,071,303) $ 8,217,927
============

PRINCIPAL
BONDS AND NOTES--32.1% AMOUNT
---------

U.S. GOVERNMENT SECURITIES: U.S. Treasury Bonds;
11.63%, 11/15/2004.................... $ 500,000 $ 684,141
------------

TOTAL BONDS AND NOTES
(cost $5,598,232)..................... $ 5,723,587
============

TOTAL SHORT-TERM INVESTMENTS
(cost $3,721,591) $ 3,720,807
============
TOTAL INVESTMENTS (cost $16,391,126) 98.9% $ 17,662,321
====== ============
CASH AND RECEIVABLES (NET) 1.1% $ 188,069
====== ============
NET ASSETS 100.0% $ 17,850,390
====== ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open futures positions.
</TABLE>

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC., Growth Portfolio
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995

NOTES TO STATEMENT OF INVESTMENTS:
(a) Non-income producing.
(b) Partially held by the custodian in a segregated account as
collateral for open futures positions.
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1995

UNREALIZED
MARKET VALUE APPRECIATION/
NUMBER OF COVERED (DEPRECIATION)
FINANCIAL FUTURES PURCHASED: CONTRACTS BY CONTRACTS EXPIRATION AT 9/30/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
CAC 40 Index.............................. 2 $ 141,110 December '95 $(9,396)
Deutsche Aktienindex...................... 2 300,223 December '95 (6,078)
Financial Times 100....................... 4 545,790 December '95 360
Hang Seng................................. 3 187,716 December '95 (3,208)
Nikkei 300................................ 38 1,034,983 December '95 (2,533)
Russell 2000.............................. 27 4,206,600 December '95 42,830
-------
$21,975
=======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF OPERATIONS
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995

See notes to financial statements.
</TABLE>

</TABLE>

SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 600,655 600,353
Shares redeemed..................................................... -- (353)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 600,655 600,000
======= =======

See notes to financial statements.

</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995
GROWTH AND INCOME
PORTFOLIO
-----------------
<S> <C>
OPERATIONS:
Investment income--net.............................................. $ 332,653
Net realized gain on investments.................................... 545,329
Net unrealized appreciation on investments for the period........... 1,305,855
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 2,183,837
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares.................................................. 8,144,735
Investor Class shares........................................... 7,509,353
Cost of shares redeemed:
Class R shares.................................................. (20,620)
Investor Class shares........................................... (915)
-----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS...... 15,632,553
-----------
TOTAL INCREASE IN NET ASSETS............................ 17,816,390
NET ASSETS:
Beginning of period--Note 1......................................... 34,000
-----------
End of period (including undistributed investment income-net of
$332,653 on September 30, 1995)..................................... $17,850,390
===========
</TABLE>

<TABLE>
<CAPTION>
SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 646,375 600,654
Shares redeemed..................................................... (1,438) (66)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 644,937 600,588
======= =======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995
GROWTH
PORTFOLIO
---------
<S> <C>
OPERATIONS:
Investment income--net.............................................. $ 318,027
Net realized gain on investments.................................... 1,074,382
Net unrealized appreciation on investments for the period........... 2,341,390
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 3,733,799
-----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Class R shares.................................................. 10,007,843
Investor Class shares........................................... 10,067,618
Cost of shares redeemed;
Investor Class shares........................................... (5,256)
-----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS...... 20,070,205
-----------
TOTAL INCREASE IN NET ASSETS............................ 23,804,004
NET ASSETS:
Beginning of period--Note 1......................................... 33,000
-----------
End of period (including undistributed investment income-net of
$318,027 on September 30, 1995)................................. $23,837,004
-----------
</TABLE>

SHARES
----------------------------
CLASS R INVESTOR CLASS
------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 800,540 804,636
Shares redeemed..................................................... -- (370)
------- -------
NET INCREASE IN SHARES OUTSTANDING.............................. 800,540 804,266
======= =======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
FINANCIAL HIGHLIGHTS

Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each series for the period March 31, 1995
(commencement of operations) to September 30, 1995. This information has been
derived from the Portfolios' financial statements.

INCOME PORTFOLIO
---------------------------------------
CLASS R SHARES INVESTOR CLASS SHARES
-------------- ---------------------
<S> <C> <C>
PER SHARE DATA:

Net asset value, beginning of period................................ $12.50 $12.50
------ ------

INVESTMENT OPERATIONS:

Investment income--net.............................................. .40 .39

Net realized and unrealized gain on investments..................... .62 .62
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................ 1.02 1.01
------ ------

Net asset value, end of period...................................... $13.52 $13.51
====== ======

TOTAL INVESTMENT RETURN*................................................ 8.24% 8.08%

RATIOS/SUPPLEMENTAL DATA:

Ratio of operating expenses to average net assets*.................. .30% .43%

Ratio of net investment income to average net assets*............... 3.08% 2.95%

Decrease reflected in above expense ratios due to undertaking
by the Manager*................................................. .26% .26%

Portfolio Turnover Rate*............................................ 5.66% 5.66%
Net Assets, end of period (000's Omitted)........................... $8,141 $8,122

- -----------------
* Not annualized.

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)

Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each series for the period March 31, 1995
(commencement of operations) to September 30, 1995. This information has been
derived from the Portfolios' financial statements.

GROWTH AND INCOME PORTFOLIO
---------------------------------------
CLASS R SHARES INVESTOR CLASS SHARES
-------------- ---------------------
<S> <C> <C>
PER SHARE DATA:

Net asset value, beginning of period................................ $12.50 $12.50
------ ------

INVESTMENT OPERATIONS:

Investment income--net.............................................. .27 .27
Net realized and unrealized gain on investments..................... 1.54 1.52
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................ 1.81 1.79
------ ------

Net asset value, end of period...................................... $14.31 $14.29
====== ======

TOTAL INVESTMENT RETURN*................................................ 14.48% 14.32%

RATIOS/SUPPLEMENTAL DATA:

Ratio of operating expenses to average net assets*.................. .38% .51%

Ratio of net investment income to average net assets*............... 2.10% 1.98%

Decrease reflected in above expense ratios due to undertaking
by the Manager*................................................. .33% .33%

Portfolio Turnover Rate*............................................ 33.55% 33.55%
Net Assets, end of period (000's Omitted)........................... $9,248 $8,602

- -----------------
* Not annualized.

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS LIFETIME PORTFOLIOS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)

Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each series for the period March 31, 1995
(commencement of operations) to September 30, 1995. This information has been
derived from the Portfolios' financial statements.

GROWTH PORTFOLIO
---------------------------------------
CLASS R SHARES INVESTOR CLASS SHARES
-------------- ---------------------
<S> <C> <C>
PER SHARE DATA:

Net asset value, beginning of period................................ $12.50 $12.50
------ ------

INVESTMENT OPERATIONS:

Investment income--net.............................................. .21 .19

Net realized and unrealized gain on investments..................... 2.13 2.13
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................ 2.34 2.32
------ ------

Net asset value, end of period...................................... $14.84 $14.82
====== ------

TOTAL INVESTMENT RETURN*................................................ 18.72% 18.56%

RATIOS/SUPPLEMENTAL DATA:

Ratio of operating expenses to average net assets*.................. .38% .51%

Ratio of net investment income to average net assets*............... 1.51% 1.39%

Decrease reflected in above expense ratios due to undertaking
by the Manager*................................................. .26% .26%

Portfolio Turnover Rate*............................................ 52.86% 52.86%
Net Assets, end of period (000's Omitted)........................... $11,898 $11,939

- ---------------
* Not annualized.

See notes to financial statements.
</TABLE>

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS

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 Portfolio. The Fund had no
operations until March 31, 1995 (when operations commenced for all Portfolios)
other than matters relating to its organization and registration as a
diversified 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 Portfolios' 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 provider 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 September 30, 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

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Each Portfolios' 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.
Investments 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. DREYFUS LIFETIME PORTFOLIOS, INC. NOTES
TO FINANCIAL STATEMENTS (continued)
(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
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, and currency
gains and 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 at fiscal
year end, resulting from changes in exchange rates. Such gains and losses are
included with net realized and unrealized gain and loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(D) EXPENSES: Expenses directly attributable to each Portfolio are charged
to that Portfolio's operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(E) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are
recorded by each Portfolio on the ex-dividend date. Dividends from investment
income-net and dividends from net realized capital gain, with respect to each
Portfolio, are normally declared and paid annually, but each Portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain of a Portfolio can be offset by a capital loss carryover, if any,
of that Portfolio, 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 Portfolio is treated as a single entity for the purpose of
determining such qualification.
(G) OTHER: Organization expenses paid by the Portfolio 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 September 30, 1995, the unamortized
balance of such expenses of each of the respective Portfolio's amounted to the
following:

Income Portfolio $57,858 Growth Portfolio $57,858
Growth and Income Portfolio 67,900

DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)
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 Portfolio's net
assets and is payable monthly at the following annual 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 Portfolio, exclusive of taxes, brokerage, interest on borrowings
(which, in the view of Stroock & Stroock & Lavan, counsel to the Fund, also
contemplates dividends accrued on securities sold short) and extraordinary
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund, that Portfolio 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 Portfolio
presently requires reimbursement of expenses in any full fiscal year that such
expenses (excluding 12b-1 Service Plan 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 Portfolio's 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 Portfolio 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 Portfolio, to the extent that
the Portfolios' 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 Portfolios' 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 Portfolios' 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 Portfolio, to the extent that the Portfolio's 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 Portfolio's
net assets.
The expense reimbursements, pursuant to the undertakings amounted to the
following for the period ended September 30, 1995:

Income Portfolio $41,157 Growth Portfolio $56,446
Growth and Income Portfolio 53,875

The undertakings may be modified by the Manager from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the agreement.
DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)
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
Total Fund Net Assets Average Daily Net Assets of each
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%

Income Portfolio $ 9,913 Growth Portfolio $13,812
Growth and Income Portfolio 10,185

Effective October 1, 1995, the Plan has been terminated.
Effective October 2, 1995, the Fund has adopted a
Shareholder Services Plan. Under the Shareholder Services Plan, the Fund pays
the Distributor, at an annual rate of .25 of 1% of the value of the average
daily net assets of the Portfolio's Investor Class shares only for the provision
of certain services. 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. The Distributor may make
payments to Service Agents in respect of these services. The Distributor
determines the amounts to be paid to Service Agents.
(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.
DREYFUS LIFETIME PORTFOLIOS, INC.
NOTES TO FINANCIAL STATEMENTS
(continued)
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
September 30, 1995:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- ----------
<S> <C> <C>
Income Portfolio................. $11,067,283 $ 511,484
Growth and Income Portfolio...... 16,235,527 3,771,966
Growth Portfolio................. 21,542,148 7,187,600
</TABLE>

<TABLE>
<CAPTION>
Gross Gross
Appreciation (Depreciation) Net
------------ -------------- ----------
<S> <C> <C> <C>
Income Portfolio............. $ 393,804 $ (1,217) $ 392,587
Growth and Income Portfolio.. 1,367,745 (61,890) 1,305,855
Growth Portfolio............. 2,495,195 (153,805) 2,341,390
</TABLE>

Income Portfolio $15,765,689 Growth Portfolio
$21,468,808
Growth and Income Portfolio 16,391,126

Dreyfus LifeTime Portfolios, Inc.
Report of Ernst & Young LLP, Independent Auditors

Shareholders and Board of Directors
Dreyfus LifeTime Portfolios, Inc.

We have audited the accompanying statement of assets and liabilities,
including the statements of investments and financial futures, of Dreyfus
LifeTime Portfolios, Inc., (comprised of the Income Portfolio, the Growth and
Income Portfolio and the Growth Portfolio) as of September 30, 1995, and the
related statements of operations and changes in net assets and financial
highlights for the period from March 31, 1995 (commencement of operations) to
September 30, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
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 the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Portfolios constituting the Dreyfus LifeTime Portfolios,
Inc. at September 30, 1995, and the results of their operations, the changes in
their net assets and the financial highlights for the period from March 31, 1995
to September 30, 1995, in conformity with generally accepted accounting
principles.

[Ernst & Young LLP signature logo]

New York, New York
November 8, 1995

Dreyfus LifeTime
Portfolios, Inc.
200 Park Avenue
New York, NY 10166

Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166

Custodian
The Bank of New York
90 Washington Street
New York, NY 10286

Transfer Agent &
Dividend Disbursing Agent
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940

Further information is contained in the Prospectus, which must precede or
accompany this report.

LifeTime
Portfolios, Inc.
Annual Report

September 30, 1995

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
GROWTH AND INCOME PORTFOLIO INVESTOR CLASS AND CLASS R OF
DREYFUS LIFETIME PORTFOLIOS, INC. WITH THE STANDARD & POOR'S
500 COMPOSITE STOCK INDEX AND A CUSTOMIZED BLENDED INDEX

EXHIBIT A:
<TABLE>
<CAPTION>
LIFETIME
GROWTH AND LIFETIME STANDARD
INCOME GROWTH AND & POOR'S 500
PORTFOLIO INCOME COMPOSITE CUSTOMIZED
INVESTOR PORTFOLIO STOCK BLENDED
PERIOD CLASS CLASS R PRICE INDEX * INDEX **

*Source: Lipper Analytical Services, Inc. **Source: Lipper Analytical
Services, Inc., Lehman Brothers, Morgan Stanley & Co. Incorporated and J.P.
Morgan & Co. Incorporated

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INCOME PORTFOLIO
INVESTOR CLASS AND CLASS R OF DREYFUS LIFETIME PORTFOLIOS, INC. WITH THE LEHMAN
BROTHERS GOVERNMENT / CORPORATE INTERMEDIATE BOND INDEX AND A CUSTOMIZED BLENDED
INDEX

EXHIBIT A:
<TABLE>
<CAPTION>

LEHMAN BROTHERS
LIFETIME LIFETIME GOVERNMENT/
INCOME INCOME CORPORATE CUSTOMIZED
PERIOD PORTFOLIO PORTFOLIO INTERMEDIATE BLENDED
INVESTOR CLASS CLASS R BOND INDEX * INDEX **
<S> <C> <C> <C> <C>
3/31/95 10,000 10,000 10,000 10,000
4/30/95 10,128 10,136 10,123 10,154
5/31/95 10,416 10,424 10,430 10,458
6/30/95 10,512 10,520 10,499 10,566
7/31/95 10,600 10,608 10,501 10,653
8/31/95 10,664 10,672 10,596 10,729
9/30/95 10,808 10,824 10,673 10,893
</TABLE>
*Source: Lehman Brothers
**Source: Lehman Brothers, Lipper Analytical Services,
Inc., and The Wall Street Journal

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GROWTH PORTFOLIO
INVESTOR CLASS AND CLASS R OF DREYFUS LIFETIME PORTFOLIOS, INC. WITH THE
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND A CUSTOMIZED BLENDED INDEX

EXHIBIT A:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
LIFETIME LIFETIME STANDARD
GROWTH GROWTH & POOR'S 500 CUSTOMIZED
PERIOD PORTFOLIO PORTFOLIO COMPOSITE STOCK BLENDED
INVESTOR CLASS CLASS R PRICE INDEX * INDEX **
<S> <C> <C> <C> <C>
3/31/95 10,000 10,000 10,000 10,000
4/30/95 10,256 10,256 10,294 10,251
5/31/95 10,600 10,600 10,705 10,559
6/30/95 10,864 10,872 10,953 10,751
7/31/95 11,384 11,392 11,316 11,126
8/31/95 11,480 11,488 11,345 11,228
9/30/95 11,856 11,872 11,823 11,541

</TABLE>
*Source: Lipper Analytical Services, Inc. **Source: Lipper Analytical
Services, Inc., Lehman Brothers, Morgan Stanley & Co. Incorporated and J.P.
Morgan & Co. Incorporated
<PAGE>
Dear Shareholder:

It is a pleasure to send you this first annual report of the Dreyfus Growth
Portfolio of the Dreyfus Asset Allocation Fund, Inc. It covers the period from
inception of the Portfolio on October 18, 1994 through April 30, 1995, the
Fund's fiscal
year-end.

Dreyfus Growth Portfolio provided a total return of 5.53% for the period
since inception.* This compares with a total return of 9.10% for the Wilshire
5000 Index, which is the benchmark index used for the Portfolio for evaluating
performance.**

While the Portfolio can invest in any of the 5000 stocks composing the
Wilshire 5000 Index, during the period we chose to concentrate investments
primarily in technology, health care, selected chemicals, energy and producer
manufacturing. In addition, the Portfolio had some exposure to consumer stocks
which dampened overall performance.

Among the major holdings in the technology field were Microsoft, Motorola
and Texas Instruments, which have worked out well to date.

In health care, our principal investments were such names as Merck & Co.,
Johnson & Johnson, American Home Products, Baxter International and Abbott
Laboratories. This group began to show strength when the Clinton health reform
plan foundered in Congress.

In the energy group, we favored Texaco and Royal Dutch Petroleum, and in
energy services, Schlumberger.

The chemicals group benefited from restructuring in duPont (EI) deNemours
and Grace (W.R.). Among producer goods, holdings such as TRINOVA, Deere & Co.,
and Boeing proved rewarding.

The Portfolio also has holdings in American multinational companies that
derive a considerable share of their business from overseas sales. The low price
of the dollar on foreign exchange markets boosted profits for these companies
and strengthened their stocks. We look for this favorable trend to most likely
continue for the balance of this calendar year and into 1996, as we maintain
prudence in an investment field involving certain special risk considerations.

We appreciate your investment in the Portfolio and will continue to exert
our best effort to provide capital appreciation on your holdings.

Sincerely,
Ernest G. Wiggins
Portfolio Manager
May 16, 1995 New York, N.Y.

*Total return represents the change during the period in a hypothetical account
with dividends reinvested.

**SOURCE: WILSHIRE ASSOCIATES, INCORPORATED. - Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The Wilshire
5000 Index consists of all publicly traded stocks in the United States, and is a
widely accepted unmanaged index of overall stock market performance. The
Wilshire 5000 Index total return is from 10/31/94-4/30/95 (not from inception,
10/18/94).

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio COMPARISON OF
CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS GROWTH PORTFOLIO OF DREYFUS
ASSET ALLOCATION FUND, INC. WITH THE WILSHIRE 5000 INDEX

(Exhibit A)

$10,910 Wilshire 5000 Index*
$10,553 Dreyfus
Growth Portfolio In Dollars
*Source: Wilshire Associates, Incorporated

ACTUAL AGGREGATE TOTAL RETURN
- ----------------------------------------------------------------
From Inception (10/18/94) to April 30,
1995...................... 5.53%

Past performance is not predictive of future performance. The above graph
compares a $10,000 investment made in the Dreyfus Growth Portfolio on 10/18/94
(Inception Date) to a $10,000 investment made in the Wilshire 5000 Index on that
date. For comparative purposes, the value of the Index on 10/31/94 is used as
the beginning value on 10/18/94. All dividends and capital gain distributions
are reinvested. The Portfolio's performance takes into account all applicable
fees and expenses. The Wilshire 5000 Index consists of all publicly traded
stocks in the United States, and is a widely accepted, unmanaged index of
overall stock market performance which does not take into account charges, fees
and other expenses. Further information relating to the Portfolio's performance,
including expense reimbursements, if applicable, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this Report.

DREYFUS ASSET ALLOCATION FUND, INC. GROWTH PORTFOLIO
ACTUAL AGGREGATE TOTAL RETURN
FROM INCEPTION (10/18/94) TO APRIL 30, 1995
5.53%
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
- ---------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS APRIL 30, 1995

COMMON STOCKS--95.4% SHARES VALUE
- -------------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>

CONSUMER DURABLES--1.3% Mattel................................. 737 $ 17,504
----------

CONSUMER NON-DURABLES--5.7% CPC International...................... 500 29,313
Dean Foods............................. 245 6,982
General Mills.......................... 200 12,200
Heinz (H.J.)........................... 500 21,000
PepsiCo................................ 190 7,909
----------
77,404
----------

CONSUMER SERVICES--4.7% Gaylord Entertainment, Cl. A........... 500 11,812
Mirage Resorts......................... 500 (a) 15,000
Time Warner............................ 1,000 36,625
----------
63,437
----------

ENERGY--13.0% Amerada Hess........................... 640 32,400
Anadarko Petroleum..................... 400 16,450
Arethusa (OFF-Shore)................... 500 (a) 7,125
Burlington Resources................... 500 19,563
Energy Service......................... 675 (a) 11,306
Louisiana Land & Exploration........... 350 12,819
Schlumberger........................... 700 44,013
Texaco................................. 505 34,529
----------
178,205
----------

FINANCE--9.9% American International Group........... 300 32,025
EXEL................................... 775 35,262
Executive Risk......................... 1,025 (a) 18,066
First Interstate Bancorp............... 250 19,219
Transatlantic Holdings................. 480 30,480
----------
135,052
----------

HEALTH CARE--11.4% Abbott Laboratories.................... 200 7,875
American Home Products................. 200 15,425
Baxter International................... 300 10,425
Columbia/HCA Healthcare................ 575 24,150
Lilly (Eli)............................ 425 31,769
Scherer (R.P.)......................... 350 (a) 16,712
Schering-Plough........................ 95 7,161
SmithKline Beecham A.D.R............... 400 15,550
United Healthcare...................... 300 10,875
Watson Pharmaceuticals................. 525 (a) 16,341
----------
156,283
----------

INDUSTRIAL SERVICES--2.5% WMX Technologies....................... 500 13,625
Western Atlas.......................... 300 (a) 13,500
Wheelabrator Technology................ 500 7,250
----------
34,375
----------

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
- ---------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995

COMMON STOCKS (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------------- ---------- ----------

PROCESS INDUSTRIES--9.3% AlliedSignal........................... 200 $ 7,925
duPont (EI) deNemours.................. 500 32,937
Grace (W.R.)........................... 800 42,900
Lubrizol............................... 210 7,324
Monsanto............................... 300 24,975
Witco.................................. 380 10,877
----------
126,938
----------
PRODUCER MANUFACTURING--13.2% Authentic Fitness...................... 955 (a) 15,757
CBI Industries......................... 1,100 27,225
Cooper Industries...................... 790 30,810
Deere & Co............................. 300 24,600
Minnesota Mining & Manufacturing....... 265 15,801
Norton McNaughton...................... 435 (a) 7,504
Roper Industries....................... 600 16,200
TRINOVA................................ 1,225 42,569
----------
180,466
----------

RETAIL TRADE--7.6% Consolidated Stores.................... 685 (a) 11,731
Federated Department Stores............ 800 (a) 16,900
Home Shopping Network.................. 1,500 (a) 10,312
May Department Stores.................. 400 14,500
Sears, Roebuck......................... 500 27,125
Talbots................................ 310 9,416
Wal-Mart Stores........................ 600 14,250
----------
104,234
----------

TECHNOLOGY--12.9% Bay Networks........................... 200 (a) 7,275
cisco Systems.......................... 300 (a) 11,963
DSC Communications..................... 410 (a) 15,170
Electronic Arts........................ 650 (a) 14,950
General Instrument..................... 450 (a) 15,356
Intel.................................. 215 22,011
Microsoft.............................. 225 (a) 18,394
Motorola............................... 300 17,062
Novell................................. 700 (a) 15,225
Sierra On-Line......................... 625 (a) 11,797
Texas Instruments...................... 190 20,140
Thermo Electron........................ 140 (a) 7,542
----------
176,885
----------

TRANSPORTATION--3.9% Burlington Northern.................... 500 29,750
OMI.................................... 2,050 (a) 11,787
Overseas Shipholding................... 615 12,300
----------
53,837
----------

TOTAL COMMON STOCKS
(cost $1,197,213).................... $1,304,620
==========

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995

PRINCIPAL
SHORT-TERM INVESTMENTS-8.8% AMOUNT VALUE
- ------------------------------------------------------------------------------------------ ---------- ----------
U.S. TREASURY BILL; 6.37%, 7/6/1995
(cost $120,734)..................................... $122,000 $ 120,701
==========
TOTAL INVESTMENTS (cost $1,317,947).................................................... 104.2% $1,425,321
========== ==========

LIABILITIES, LESS CASH AND RECEIVABLES................................................. (4.2%) $ (56,997)
========== ==========

NET ASSETS ............................................................................ 100.0% $1,368,324
=========== ==========
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $1,317,947)-see statement.................................................. $1,425,321
Cash............................................................................... 17,529
Receivable for investment securities sold.......................................... 19,522
Dividends receivable............................................................... 4,294
Prepaid expenses................................................................... 15,469
Due from The Dreyfus Corporation................................................... 3,659
----------
1,485,794
LIABILITIES:
Due to Distributor................................................................. $ 830
Payable for investment securities purchased........................................ 92,270
Accrued expenses................................................................... 24,370 117,470
--------

NET ASSETS............................................................................. $1,368,324
==========
REPRESENTED BY:
Paid-in capital.................................................................... $1,297,177
Accumulated undistributed investment income-net.................................... 44,262
Accumulated net realized (loss) on investments..................................... (80,489)
Accumulated net unrealized appreciation on investments-Note 3...................... 107,374
----------
NET ASSETS at value applicable to 104,004 shares outstanding
(100 million shares of $.001 par value Common Stock authorized).................... $1,368,324
==========
NET ASSET VALUE, offering and redemption price per share
($1,368,324 / 104,004 shares)...................................................... $13.16
======

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF OPERATIONS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends................................................................... $ 55,629
Interest......................................................................... 7,917
--------
TOTAL INCOME................................................................... $ 63,546
EXPENSES:
Management fee-Note 2(a)......................................................... 4,800
Legal fees....................................................................... 26,395
Auditing fees.................................................................... 15,000
Registration fees................................................................ 8,557
Shareholder servicing costs-Note 2(b,c).......................................... 7,391
Custodian fees................................................................... 4,637
Prospectus and shareholders' reports-Note 2(b)................................... 3,733
Directors' fees and expenses-Note 2(d)........................................... 256
Miscellaneous.................................................................... 1,424
--------
72,193
Less-expense reimbursement from Manager due to
undertaking and expense limitation-Note 2(a)................................... 55,445
----------

TOTAL EXPENSES............................................................... 16,748
----------
INVESTMENT INCOME-NET........................................................ 46,798
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3(a)....................................... $ (80,489)
Net unrealized appreciation on investments......................................... 107,374
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.............................. 26,885
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 73,683
==========
See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF CHANGES IN NET ASSETS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
<S> <C>
OPERATIONS:
Investment income-net.............................................................. $ 46,798
Net realized (loss) on investments................................................. (80,489)
Net unrealized appreciation on investments for the period ......................... 107,374
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 73,683
----------

DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.............................................................. (2,536)
----------

CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...................................................... 1,789,201
Dividends reinvested............................................................... 2,536
Cost of shares redeemed............................................................ (494,560)
----------
Increase In Net Assets From Capital Stock Transactions.......................... 1,297,177
----------
TOTAL INCREASE IN NET ASSETS.................................................. 1,368,324

NET ASSETS:
Beginning of period-Note 1........................................................ --
----------
End of period (including undistributed investment
income-net of $44,262)......................................................... $ 1,368,324
==========

CAPITAL SHARE TRANSACTIONS: SHARES
----------
Shares sold....................................................................... 143,001
Shares issued for dividends reinvested............................................ 207
Shares redeemed................................................................... (39,204)
----------
NET INCREASE IN SHARES OUTSTANDING.............................................. 104,004
----------

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for the period October 18, 1994 (commencement of
operations) to April 30, 1995. This information has been derived from the
Portfolio's financial statements.
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period.............................................. $12.50
------
INVESTMENT OPERATIONS:
Investment income-net............................................................. .45
Net realized and unrealized gain on investments................................... .24
------
TOTAL FROM INVESTMENT OPERATIONS................................................ .69
DISTRIBUTIONS;
Dividends from investment income-net.............................................. (.03)
------
Net asset value, end of period.................................................... $13.16
======
TOTAL INVESTMENT RETURN............................................................... 5.53%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................................... 1.40%*
Ratio of net investment income to average net assets.............................. 3.91%*
Decrease reflected in above expense ratio due to
undertaking by the Manager and expense limitation............................... 4.63%*
Portfolio Turnover Rate........................................................... 497.41%*
Net Assets, end of period (000's Omitted)......................................... $1,368
- --------
*Not annualized.

See notes to financial statements.
</TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:

Dreyfus Asset Allocation Fund, Inc. (the "Fund") began operating under such
name on July 1, 1993 and is currently offering three portfolios, including the
Dreyfus Growth Portfolio (the "Portfolio"), which was authorized by the Board of
Directors on August 25, 1994. The Portfolio had no operations until October 18,
1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
Securities Act of 1933. Premier Mutual Fund Services, Inc. (the "Distributor")
acts as the distributor of the Portfolio's shares, which are sold to the public
without a sales load. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution Services,
Inc., a provider 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. The Dreyfus Corporation ("Manager") serves as
the Portfolio's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A.

As of April 30, 1995, Major Trading Corporation, a
subsidiary of Mellon Bank Investments Corporation, held 80,189
shares of Common Stock of the Portfolio. Mellon Bank Investments
Corporation is a subsidiary of Mellon Bank.

The Fund accounts separately for the assets, liabilities and operations of
each portfolio. Expenses directly attributable to each portfolio are charged to
that portfolio's operations; expenses which are applicable to all portfolios are
allocated among them.

(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.

(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.

(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, if any, are normally declared and paid annually, but the Portfolio
may make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the policy
of the Portfolio not to distribute such gain.

(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio NOTES TO FINANCIAL
STATEMENTS (CONTINUED) NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH
AFFILIATES:

(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .75 of 1% of the average daily
value of the Portfolio's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Portfolio's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Portfolio. The most stringent state expense limitation
applicable to the Portfolio 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 the Portfolio's net assets in accordance with California "blue
sky" regulations. However, the Manager had undertaken from October 18, 1994 to
April 30, 1995 to waive receipt of the management, service and distribution
fees. The expense reimbursement, pursuant to the undertaking and expenses
limitation, amounted to $55,445 for the period ended April 30, 1995.

The Manager may modify the expense limitation percentages from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.

(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Portfolio (a) reimburses the Distributor for payments to
certain Service Agents for distributing shares and (b) pays the Manager, Dreyfus
Service Corporation or any affiliate (collectively "Dreyfus") for advertising
and marketing relating to the Portfolio and servicing Shareholders accounts, at
an annual rate of .50 of 1% of the value of the Portfolio's average daily net
assets. Each of the Distributor and Dreyfus may pay Service Agents (a securities
dealer, financial institution or other industry professional) a fee in respect
of the Portfolio's shares owned by shareholders with whom the Service Agent has
a servicing relationship or for whom the Service Agent is the dealer or holder
of record. Each of the Distributor and Dreyfus determine the amounts to be paid
to Service Agents to which it will make payments and the basis on which such
payments are made. The Plan also separately provides for the Portfolio to bear
the costs of preparing, printing and distributing certain of the Portfolio'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 the Portfolio's average daily net assets for any full fiscal year.
For the period ended April 30, 1995, $4,829 was charged to the Portfolio
pursuant to the Distribution Plan.

(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor, at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio and
providing reports and other information, and services related to the maintenance
of shareholder accounts. The Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents. For the period ended April 30, 1995, $1,600 was charged to the
Portfolio pursuant to the Shareholder Services Plan.

(D) 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.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:

(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities during the period ended April 30, 1995 amounted
to $5,437,450 and $4,160,961, respectively.

In addition, the following table summarizes the Fund's option transactions
for the period ended April 30, 1995:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
-------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST (LOSS)
----------- -------- -------- --------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding October 18, 1994............... -- $ --
Contracts written.................................... 5 8,548
----------- --------
5 8,548
----------- --------
Contracts Terminated;
Closed............................................. 5 8,548 $ 8,753 $ (205)
----------- -------- ======== ========
Contracts outstanding April 30, 1995................. -- $ --
=========== ========
</TABLE>

As a writer of call options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes in the price of the financial
instrument underlying the option. Generally, the Fund would incur a gain, to the
extent of the premiums, if the price of the underlying financial instrument
decreases between the date the option is written and the date on which the
option is terminated. Generally, the Fund would realize a loss, if the price of
the financial instrument increases between those dates. At April 30, 1995, there
were no written call options outstanding.

(B) At April 30, 1995, accumulated net unrealized appreciation on
investments was $107,374, consisting of $123,162 gross unrealized appreciation
and $15,788 gross unrealized depreciation.

At April 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO

We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Asset Allocation Fund, Inc.,
Dreyfus Growth Portfolio (one of the Series constituting the Dreyfus Asset
Allocation Fund, Inc.) as of April 30, 1995, and the related statements of
operations and changes in net assets and financial highlights for the period
from October 18, 1994 (commencement of operations) to April 30, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our 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 the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus Asset Allocation Fund, Inc., Dreyfus Growth Portfolio at April 30, 1995,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from October 18, 1994 to April 30, 1995, in
conformity with generally accepted accounting principles.

Ernst & Young LLP

New York, New York
June 2, 1995

Asset Allocation
Fund, Inc.
Dreyfus
Growth Portfolio
Annual Report
April 30, 1995

DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS GROWTH PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN The Bank of New York 90 Washington Street New York, NY 10286 TRANSFER
AGENT & DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940

Further information is contained in the Prospectus, which must precede or
accompany this report.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
DREYFUS GROWTH PORTFOLIO OF DREYFUS ASSET ALLOCATION
FUND, INC. WITH THE WILSHIRE 5000 INDEX

EXHIBIT A:

DREYFUS
PERIOD GROWTH
PORTFOLIO WILSHIRE 5000 INDEX*
10/18/94 10,000 10,000
10/31/94 10,128 10,000
1/31/95 9,607 9,975
4/30/95 10,553 10,910
---------------------------------------------------

*Source: Wilshire Associates, Incorporated
<PAGE>

Dear Shareholder:

It is a pleasure to send you this first annual report of the Dreyfus Income
Portfolio of the Dreyfus Asset Allocation Fund, Inc. The Portfolio commenced
operations October 18, 1994. This report covers developments from that date
through April 30, 1995, the Fund's fiscal year-end.

Dreyfus Income Portfolio, in its six-and-a-half months of existence,
benefited in no small measure from a large position in 30-year Treasury bonds
that was established at the onset of operations of this Portfolio, and that has
been retained to date. The move in interest rates that has taken place since
October from above 8% (based on the 30-year Treasury benchmark) to present
levels below 7% has been a major factor in the Income Portfolio's performance.
From the Portfolio's inception date through April 30, it has provided a total
return of 11.14%.* This compares with a total return of 6.65% for the Customized
Blended Index, which, like the Portfolio, is composed of a defined weighting of
Treasury obligations, common stocks and cash equivalents that is more fully
described below.** The Shearson Lehman Intermediate Treasury Bond Index, which
the Portfolio has selected as a benchmark, posted a total return of 5.19% from
October 31, 1994 through April 30, 1995.***

The equity portion of the Portfolio benefited from a number of selections of
industry sectors, with technology, health care, certain process industries,
energy, and producer manufacturing contributing the most to performance.

Technology almost across the board has been strong, starting with
semiconductors such as Intel and Texas Instruments, communications with Motorola
and DSC Communications, and of course software via Microsoft.

In health care, gains came largely from drugs, where the Portfolio benefited
from significant positions in American Home Products, Schering-Plough and Merck
& Co., as well as from more diverse health care companies such as Johnson &
Johnson, Abbott Laboratories, and Baxter International.

In process industries, there has been a lot of corporate restructuring.
Holdings that were of particular benefit to the Portfolio in this sector
included duPont (EI) deNemours and Grace (W.R.).

The Portfolio's significant contrarian position in energy stocks finally
began to pay off in 1995 when this group began to recover from a previous slump.
Holdings in Texaco, Schlumberger and Royal Dutch Petroleum helped considerably.

Lastly, select positions in producer manufacturing such as TRINOVA, Deere &
Co. and Boeing turned in strong showings for the year.

<PAGE>
Your investment in the Portfolio is very much appreciated. Of course,
Portfolio composition and allocation percentages are subject to change over
time. In this regard, we will continue to exert our best efforts to achieve the
Portfolio's objective of maximizing current income, with a secondary goal of
capital appreciation.

Sincerely,
(Ernest G. Wiggins Signature
Ernest G. Wiggins
Portfolio Manager
May 16, 1995 New York, N.Y.

* Total return represents the change during the period in a hypothetical
account with dividends reinvested.

** The Customized Blended Index has been prepared by the Fund and is intended
to be a more accurate comparison to the Portfolio's general portfolio
composition than the benchmark index, which is the Shearson Lehman Intermediate
Treasury Bond Index, an unmanaged index viewed as being a leading indicator of
overall performance of U.S. Treasury notes and bonds.

We have combined the performance of unmanaged indices which reflect
benchmark percentages with respect to each asset class in which the Portfolio
invests as described in the Fund's Prospectus: 55% U.S. Treasury notes and
bonds, 35% common stocks, and 10% cash equivalents.

The Customized Blended Index combines returns from the Shearson Lehman
Intermediate Treasury Bond Index, the Standard & Poor's 500 Composite Stock
Price Index and the Bank Rate Monitor Index of money market returns, and is
weighted to the benchmark percentages. The Customized Blended Index covers the
period from 10/31/94 through 4/30/95 (not from inception, 10/18/94).

*** SOURCE: LEHMAN BROTHERS - Reflects the reinvestment of income dividends
and, where applicable, capital gain distributions. The Shearson Lehman Brothers
Intermediate Treasury Bond Index is a widely accepted index of U.S. Treasury
notes and bonds.

<PAGE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO COMPARISON OF
CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS INCOME PORTFOLIO OF DREYFUS
ASSET ALLOCATION FUND, INC. WITH THE SHEARSON LEHMAN INTERMEDIATE TREASURY INDEX
AND A CUSTOMIZED BLENDED INDEX

(Exhibit A)

In Dollars

Dreyfus Income Portfolio
$11,114

Customized Blended Index**
$10,665

Shearson Lehman Intermediate Treasury Bond Index*
$10,519

*Source: Lehman Brothers

**Source: Lipper Analytical Services, Inc., Lehman Brothers and
Bank Rate Monitor

ACTUAL AGGREGATE TOTAL RETURN

From Inception (10/18/94) to April 30,
1995......................... 11.14%

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in the Dreyfus Income
Portfolio on 10/18/94 (Inception Date) to a $10,000 investment made in the
Shearson Lehman Intermediate Treasury Bond Index on that date as well as to a
Customized Blended Index reflecting the Portfolio's benchmark percentage
allocations which are described below. For comparative purposes, the value of
each index on 10/31/94 is used as the beginning value on 10/18/94. All dividends
and capital gain distributions are reinvested.

The Dreyfus Income Portfolio allocates your money among U.S. Treasury notes and
bonds, stocks and money market instruments. The Portfolio's performance takes
into account all applicable fees and expenses. The Shearson Lehman Intermediate
Treasury Bond Index is a widely accepted index of U.S. Treasury notes and bonds
which does not take into account charges, fees and other expenses. The Shearson
Lehman Intermediate Treasury Bond Index was selected because (1) Treasuries
represent the highest benchmark percentage and (2) the weighted average maturity
of the Treasuries portion of the Portfolio ranges between 3 and 10 years. The
Customized Blended Index has been prepared by the Fund for purposes of more
accurate comparison to the Portfolio's general portfolio composition. We have
combined the performance of unmanaged indices reflecting the benchmark
percentages set forth in the Prospectus: 55% U.S. Treasury notes and bonds, 35%
common stocks, and 10% money market instruments. The benchmark percentages
represent the asset mix that The Dreyfus Corporation would expect to maintain
where its assessment of economic conditions and investment opportunities
indicate that the financial markets are fairly valued in relation to each other.
The Customized Blended Index combines returns from the Shearson Lehman
Intermediate Treasury Bond Index, The Standard & Poor's 500 Composite Stock
Price Index and the Bank Rate Monitor Index of money market returns, and is
weighted to the aforementioned benchmark percentages. Further information
relating to the Portfolio's performance, including expense reimbursements, if
applicable, is contained in the Condensed Financial Information section of the
Prospectus and elsewhere in this Report. <PAGE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF INVESTMENTS APRIL 30, 1995

<TABLE>
<CAPTION>
COMMON STOCKS--45.2% SHARES VALUE
- ----------------------------------------------------------------------------- ------ ----------
<S> <C> <C> <C>
CONSUMER DURABLES--.7% Mattel ................................... 430 $ 10,212
----------
CONSUMER NON-DURABLES--4.9% CPC International ........................ 300 17,587
Coca-Cola ................................ 150 8,719
General Mills ............................ 200 12,200
Heinz (H.J.) ............................. 600 25,200
PepsiCo .................................. 98 4,079
----------
67,785
----------
DRUGS--.6% SmithKline Beecham ADS ................... 200 7,775
----------
ENERGY--6.5% Amerada Hess ............................. 356 18,022
Occidental Petroleum ..................... 300 6,900
Royal Dutch Petroleum .................... 81 10,044
Schlumberger ............................. 396 24,898
Texaco ................................... 447 30,564
----------
90,428
----------
FINANCE--1.5% American International Group ............. 200 21,350
----------
HEALTH CARE--6.8% Abbott Laboratories ...................... 200 7,875
American Home Products ................... 203 15,656
Baxter International ..................... 200 6,950
Columbia/HCA Healthcare .................. 485 20,370
Johnson & Johnson ........................ 139 9,035
Lilly (Eli) .............................. 100 7,475
Merck & Co. .............................. 89 3,816
Pfizer ................................... 100 8,662
Schering-Plough .......................... 100 7,538
United Healthcare ........................ 200 7,250
----------
94,627
----------
INDUSTRIAL SERVICES--2.0% CBI Industries ........................... 300 7,425
WMX Technologies ......................... 717 19,538
----------
26,963
----------
PROCESS INDUSTRIES--6.8% Corning .................................. 204 6,809
duPont(EI)deNemours ...................... 500 32,938
Grace (W.R.) ............................. 545 29,226
Monsanto ................................. 300 24,975
----------
93,948
----------

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995

COMMON STOCKS (continued) SHARES VALUE
- ----------------------------------------------------------------------------- ------ ----------
<S> <C> <C> <C>
PRODUCER MANUFACTURING--5.8% Cooper Industries ........................ 447 $ 17,433
Deere & Co. .............................. 321 26,322
Minnesota Mining & Manufacturing ......... 121 7,215
TRINOVA .................................. 840 29,190
----------
80,160
----------
RETAIL TRADE--2.0% May Department Stores .................... 400 14,500
Wal-Mart Stores .......................... 569 13,514
----------
28,014
----------
TECHNOLOGY--6.6% Boeing ................................... 137 7,535
cisco Systems ............................ 200(a) 7,975
DSC Communications ....................... 100(a) 3,700
Intel .................................... 237 24,263
Microsoft ................................ 200(a) 16,350
Motorola ................................. 209 11,887
Texas Instruments ........................ 190 20,140
----------
91,850
----------
TRANSPORTATION--1.0% Burlington Northern ...................... 240 14,280
----------
TOTAL COMMON STOCKS
(cost $570,233) ........................ $ 627,392
==========

<CAPTION>
PRINCIPAL
U.S. TREASURY BONDS--52.3% AMOUNT
- ----------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
7.125%, 2/15/2023
(cost $693,616) ........................ $750,000 $ 724,453
==========
SHORT-TERM INVESTMENTS--7.5%
- -----------------------------------------------------------------------------

U.S. TREASURY BILL; 6.37%, 7/6/1995
(cost $103,927) ........................ $105,000 $ 103,882
==========

TOTAL INVESTMENTS (cost $1,367,776) ......................................... 105.0% $1,455,727
====== ==========

LIABILITIES, LESS CASH AND RECEIVABLES ...................................... (5.0%) $ (69,764)
====== ==========

NET ASSETS .................................................................. 100.0% $1,385,963
====== ==========

</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995

<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $1,367,776)--see statement .............................. $1,455,727
Cash .............................................................. 4,701
Receivable for investment securities sold ......................... 16,627
Dividends and interest receivable ................................. 11,595
Prepaid expenses .................................................. 11,584
Due from The Dreyfus Corporation .................................. 5,613
----------
1,505,847
LIABILITIES:
Due to Distributor ................................................ $ 825
Payable for investment securities purchased ....................... 96,855
Accrued expenses .................................................. 22,204 119,884
------- ----------
NET ASSETS $1,385,963
==========
REPRESENTED BY:
Paid-in capital ................................................... $1,273,465
Accumulated undistributed investment income--net .................. 2,667
Accumulated undistributed net realized gain on investments ........ 21,880
Accumulated net unrealized appreciation on investments--Note 3 .... 87,951
----------
NET ASSETS at value applicable to 101,059 shares outstanding
(100 million shares of $.001 par value Common Stock authorized) ... $1,385,963
==========
NET ASSET VALUE, offering and redemption price per share
($1,385,963 / 101,059 shares) ..................................... $13.71
======
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1995
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME:
INCOME:
Interest ..................................................... $29,714
Cash dividends ............................................... 5,175
-------
TOTAL INCOME ......................................... $ 34,889
EXPENSES:
Management fee--Note 2(a) .................................... 4,661
Legal fees ................................................... 17,649
Auditing fees ................................................ 15,000
Registration fees ............................................ 12,301
Shareholder servicing costs--Note 2(b,c) ..................... 6,778
Prospectus and shareholders' reports--Note 2(b) .............. 5,175
Custodian fees ............................................... 2,872
Directors' fees and expenses--Note 2(d) ...................... 198
Miscellaneous ................................................ 1,399
-------
66,033
Less--expense reimbursement from Manager due to
undertaking and expense limitation--Note 2(a) ............ 49,748
-------
TOTAL EXPENSES ....................................... 16,285
--------
INVESTMENT INCOME--NET ............................... 18,604
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3 ......................... $21,880
Net unrealized appreciation on investments ....................... 87,951
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ...... 109,831
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $128,435
========
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30,
1995
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS:
Investment income--net ....................................................... $ 18,604
Net realized gain on investments ............................................. 21,880
Net unrealized appreciation on investments for the period .................... 87,951
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... 128,435
----------
DIVIDEND TO SHAREHOLDERS FROM;
Investment income-net ........................................................ (15,937)
----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold ................................................ 1,330,845
Dividends reinvested ......................................................... 15,022
Cost of shares redeemed ...................................................... (72,402)
----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS ................... 1,273,465
----------
TOTAL INCREASE IN NET ASSETS ......................................... 1,385,963

NET ASSETS:
Beginning of period--Note 1 .................................................. --
----------
End of period (including undistributed investment
income--net of $2,667) ................................................... $1,385,963
==========
<CAPTION>
SHARES
----------
<S> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................................................. 105,429
Shares issued for dividends reinvested ....................................... 1,145
Shares redeemed .............................................................. (5,515)
----------
NET INCREASE IN SHARES OUTSTANDING ....................................... 101,059
==========
</TABLE>
See notes to financial statements.

<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------

FINANCIAL HIGHLIGHTS

Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for the period October 18, 1994 (commencement of
operations) to April 30, 1995. This information has been derived from the
Portfolio's financial statements.

<TABLE>
<CAPTION>
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period .......................................... $12.50
------
INVESTMENT OPERATIONS:
Investment income--net ........................................................ .20
Net realized and unrealized gain on investments ............................... 1.18
------
TOTAL FROM INVESTMENT OPERATIONS .......................................... 1.38
------
Distributions;
Dividends from investment income-net .......................................... (.17)
------
Net asset value, end of period ................................................ $13.71
======

TOTAL INVESTMENT RETURN 11.14%*

RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ....................................... 1.40%*
Ratio of net investment income to average net assets .......................... 1.60%*
Decrease reflected in above expense ratio due to
undertaking by the Manager and expense limitation ......................... 4.28%*
Portfolio Turnover Rate ....................................................... 94.33%*
Net Assets, end of period (000's Omitted) ..................................... $1,386
<FN>

- ------------

* Not annualized.
</FN>

</TABLE>
See notes to financial statements.

<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:

Dreyfus Asset Allocation Fund, Inc. (the "Fund") began operating under such
name on July 1, 1993 and is currently offering three portfolios, including the
Dreyfus Income Portfolio (the "Portfolio"), which was authorized by the Board of
Directors on August 25, 1994. The Portfolio had no operations until October 18,
1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
Securities Act of 1933. Premier Mutual Fund Services, Inc. (the "Distributor")
acts as the distributor of the Portfolio's shares, which are sold to the public
without a sales load. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution Services,
Inc., a provider 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. The Dreyfus Corporation ("Manager") serves as
the Portfolio's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A.

As of April 30, 1995, Major Trading Corporation, a subsidiary of Mellon Bank
Investments Corporation, held 81,065 shares of Common Stock of the Portfolio.
Mellon Bank Investments Corporation is a subsidiary of Mellon Bank.

(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. Dividends from net realized capital gain are normally declared and paid
annually, but the Portfolio may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To the
extent that net realized capital gain can be offset by capital loss carryovers,
if any, it is the policy of the Portfolio not to distribute such gain.

<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:

(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .75 of 1% of the average daily
value of the Portfolio's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Portfolio's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Portfolio. The most stringent state expense limitation
applicable to the Portfolio 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 the Portfolio's net assets in accordance with California "blue
sky" regulations. However, the Manager had undertaken from October 18, 1994 to
April 30, 1995 to waive receipt of the management, service and distribution
fees. The expense reimbursement, pursuant to the undertaking and expense
limitation, amounted to $49,748 for the period ended April 30, 1995.

The Manager may modify the expense limitation percentages from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.

(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Portfolio (a) reimburses the Distributor for payments to
certain Service Agents for distributing shares and (b) pays the Manager, Dreyfus
Service Corporation or any affiliate (collectively "Dreyfus") for advertising
and marketing relating to the Portfolio and servicing shareholders accounts, at
an aggregate annual rate of .50 of 1% of the value of the Portfolio's average
daily net assets. Each of the Distributor and Dreyfus may pay Service Agents (a
securities dealer, financial institution or other industry professional) a fee
in respect of the Portfolio's shares owned by shareholders with whom the Service
Agent has a servicing relationship or for whom the Service Agent is the dealer
or holder of record. Each of the Distributor and Dreyfus determine the amounts
to be paid to Service Agents to which it will make payments and the basis on
which such payments are made. The Plan also separately provides for the
Portfolio to bear the costs of preparing, printing and distributing certain of
the Portfolio'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 the Portfolio's average daily net assets for any
full fiscal year. For the period ended April 30, 1995, $4,838 was charged to the
Portfolio pursuant to the Distribution Plan.

For the period ended April 30, 1995, $1,554 was charged to the Portfolio
pursuant to the Shareholder Services Plan.

<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)

(D) 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 3--SECURITIES TRANSACTIONS:

The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1995 amounted
to $2,074,973 and $834,107, respectively.

At April 30, 1995, accumulated net unrealized appreciation on investments
was $87,951, consisting of $91,076 gross unrealized appreciation and $3,125
gross unrealized depreciation.

At April 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).

<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO REPORT OF
ERNST & YOUNG LLP, INDEPENDENT AUDITORS

SHAREHOLDERS AND BOARD OF DIRECTORS DREYFUS ASSET ALLOCATION FUND, INC.,
DREYFUS INCOME PORTFOLIO

We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Asset Allocation Fund, Inc.,
Dreyfus Income Portfolio (one of the Series constituting the Dreyfus Asset
Allocation Fund, Inc.) as of April 30, 1995, and the related statements of
operations and changes in net assets and financial highlights for the period
from October 18, 1994 (commencement of operations) to April 30, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our 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 the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus Asset Allocation Fund, Inc., Dreyfus Income Portfolio at April 30, 1995,
and the results of its operations, the changes in its net assets and the
financial highlights for the period from October 18, 1994 to April 30, 1995, in
conformity with generally accepted accounting principles.

(Ernst & Young LLP Signature Logo)

New York, New York
June 2, 1995

DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS INCOME PORTFOLIO
200 Park Avenue
New York, NY 10166

MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166

CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286

TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940

Further information is contained in the Prospectus, which must precede or
accompany this report.

<PAGE>
Dreyfus
Asset Allocation
Fund, Inc.
Dreyfus
Income Portfolio
Annual Report

April 30, 1995

<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE DREYFUS INCOME PORTFOLIO OF DREYFUS ASSET ALLOCATION
FUND, INC. WITH THE SHEARSON LEHMAN INTERMEDIATE
TREASURY INDEX AND A CUSTOMIZED BLENDED INDEX

EXHIBIT A:
DREYFUS SHEARSON LEHMAN CUSTOMIZED
PERIOD INCOME INTERMEDIATE BLENDED
PORTFOLIO TREASURY INDEX* INDEX **
<S> <C> <C> <C>
10/18/94 10,000 10,000 10,000
10/31/94 10,072 10,000 10,000
1/31/95 10,268 10,148 10,099
4/30/95 11,114 10,665

*Source: Lehman Brothers
**Source: Lipper Analytical Services, Inc., Lehman
Brothers and Bank Rate Monitor
</TABLE>

<PAGE>

Dear Shareholder:
The Growth Portfolio of Dreyfus Asset Allocation Fund, Inc. completed its
latest semi-annual fiscal period October 31, 1995. In this letter we report the
results for the six months and explain some of the major portfolio changes. To
place the half-year period in its broader setting, we also provide an analysis
of economic and market conditions that prevailed.

ECONOMIC ENVIRONMENT
The much-desired soft landing for the U.S. economy that the Federal Reserve
Board has been striving to attain appears to have occurred. This is the result
of more than a year of moves by the Fed to tighten interest rates, followed by a
token loosening of the reins last summer.

Now that some steam has been let out of the economic boiler, the central
bank must concern itself with the possibility that the economy might slow down
more than would be desirable. However, the latest economic statistics do not
contain convincing evidence of that happening. The housing industry is doing
well. Industrial orders continue to expand and gross domestic product keeps on
growing, albeit at a reduced rate.

In the meantime, the rate of inflation appears to be under firm control.
Consumer prices have advanced only at a very moderate pace, and average wages
have barely inched ahead. Unemployment is not getting out of hand, and hovers
near the so-called full employment level.

Retail spending has simmered down, in part because consumers are carrying
large debit balances in mortgage and credit card debts. To what extent this will
affect holiday shopping remains to be seen. The industrial sector of the
economy, however, appears to be forging ahead.

MARKET ENVIRONMENT

As your Fund reached the end of its reporting period, October 31, 1995,
stocks were not far below the record levels they had reached earlier in the
fall.

Among the factors accounting for this market strength were good corporate
profits and low interest rates. Third quarter profit reports from leading
corporations, while not universally favorable, were better than earlier
quarters. The extensive lean and mean corporate reorganizations of the past few
years appear to be paying off. Even though the pricing environment for most
corporate products is extremely competitive, manufacturers and service providers
appear able to squeeze out improved profits.

How long that continuing improvement will last is an open question. Many
economists think that profit levels may flatten out over the coming months. The
recent record on that score, however, has been encouraging.

Interest rates also have buoyed stock prices and sustained the bond market.
As the cost of borrowing has steadily decreased, many corporations have
benefitted.

Another factor in market strength has been the relentless advance of
technology, which has virtually forced corporations -- and now individual
households as well -- to reequip in order to keep up with technical progress.
The obvious result has been seen in record prices commanded during the year by
high technology stocks. While some disillusionment may set in, the market
clearly takes a very optimistic view of the long-range outlook for these
companies.

In addition, all equities have been favorably affected by the very large
inflow of investment money, on a regular basis, from 401(k) and other retirement
plans. To be sure, money managers could at some point turn off the spigot, and
divert this cash flow into bonds or money market instruments. During the past
year, however, equity purchases by pension funds and other retirement investors
have provided a supportive background for stock prices.

However, there are some concerns. One of the most significant has been the
wrangling between Congress and the White House over how to reduce Government
spending and cut the burden of the Government's perennial deficit. Hopefully,
this impasse will be settled soon, perhaps by the time this letter reaches its
readers. In the meantime, the uncertainties in Washington have been a source of
worry to investors.

The fading value of the U.S. dollar has also been a question mark. Yet,
after hitting a low last spring, the dollar has gradually recovered some lost
ground. This dollar rebound reflects weakness in the economies of Western Europe
and Japan, but also the strengthening of economic activity here at home.

PORTFOLIO OVERVIEW

For the six-month fiscal period, the Growth Portfolio produced a total
return of 9.65%.* This compares with a total return of 15.27% for the Wilshire
5000 index, which is the benchmark index used for the Portfolio for evaluating
performance.**

Three stock groups were primarily responsible for the fact that the
Portfolio's performance lagged the Wilshire 5000 Index.

Cable stocks, which we owned during the period, were affected by the long
delay in action by the U.S. Congress on the pending telecommunications bill. In
our view, the atmosphere of uncertainty that this created weakened cable
industry issues. Also during the period, consumer stocks in the Portfolio
reflected the nationwide slump in retail sales. We reduced our exposure in
Process Industry and Producer Manufacturing. Many of these companies are in the
midst of restructurings and in some cases, their value has already been
recognized. We continue to hold investments in companies such as Crown Cork &
Seal, duPont (I.E.) de Nemours and Grace (W.R.). In retrospect, however, we
believe that we were ahead of the market cycle with some of the investments in
the Process and Producer groups. Stocks that we sold included Roper Industries,
disposed of at a profit, and CBI at a loss.

Looking to the future, we believe the Portfolio will benefit from other
significant changes that we made during the period. First, reflecting our belief
that technology is becoming more prevalent in everyday life, we have
significantly increased the weighting in the Technology sector. We have added
new positions in Gartner Group, Hewlett-Packard and Safeguard Scientifics as
well as adding to our positions in Bay Networks and Cisco Systems. We further
believe that content will be very important for the development of the
Information Superhighway. To this end, we have added positions in Disney (Walt),
Liberty Media Group, Cl.A and Viacom Cl.A.

We have reduced our weighting in the Energy sector, taking a profit on a
significant portion of our holdings. Our remaining stocks in this area are
Amerada Hess and ENSCO.

Thank you for investing with Dreyfus. We look forward to continuing to serve
your investment needs.

Sincerely,
Signature

Ernest G. Wiggins
Portfolio Manager

Signature
Paul Kandel
Assistant Portfolio Manager

November 22, 1995 New York, N.Y.

*Total return includes reinvestment of dividends and any capital gains
paid. **SOURCE: WILSHIRE ASSOCIATES, INC.-- Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Wilshire 5000
Index consists of all publicly traded stocks in The United States, and is a
widely accepted unmanaged index of overall stock market performance.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1995 (UNAUDITED)

COMMON STOCKS--91.4% SHARES VALUE
------ ----------
<S> <C> <C>
COMMERCIAL SERVICES--2.3% Gartner Group.......................... 1,000 (a) $ 43,625
----------

CONSUMER DURABLES--3.4% General Motors......................... 450 19,688
Mattel................................. 737 21,189
Sierra On-Line......................... 625 (a) 23,281
----------
64,158
----------

CONSUMER NON-DURABLES--5.3% CPC International...................... 500 33,187
PepsiCo................................ 570 30,068
Seagram................................ 1,000 36,000
----------
99,255
----------

CONSUMER SERVICES--9.7% Disney (Walt).......................... 400 23,050
Liberty Media Group, Cl. A............. 850 20,931
Mirage Resorts......................... 1,000 (a) 32,750
Tele-Communications, Cl. A............. 1,400 (a) 23,800
Time Warner............................ 1,000 36,500
Viacom, Cl. A.......................... 900 (a) 44,775
----------
181,806
----------

ELECTRONIC TECHNOLOGY--15.6% Applied Materials...................... 600 (a) 30,075
Bay Networks........................... 500 (a) 33,125
cisco Systems.......................... 400 (a) 31,000
DSC Communications..................... 700 (a) 25,900
Hewlett-Packard........................ 350 32,419
Intel.................................. 400 27,950
Micron Technology...................... 500 35,312
Rohr................................... 2,000 (a) 29,750
Texas Instruments...................... 300 20,475
Thiokol................................ 800 27,700
----------
293,706
----------

ENERGY--1.8% Amerada Hess........................... 740 33,393
----------

FINANCE--9.9% ACE.................................... 650 22,100
Allstate............................... 463 17,015
Chemical Banking....................... 400 22,750
CorVel................................. 1,100 (a) 35,200
EXEL................................... 575 30,763
First Union............................ 450 22,331
Reliance Group Holdings................ 4,800 35,400
----------
185,559
----------

HEALTH SERVICES--2.3% McKesson............................... 480 22,920
On-Gard Systems........................ 2,500 (a) 19,688
----------
42,608
----------

HEALTH TECHNOLOGY--10.2% Bristol-Myers Squibb................... 300 22,875
Guidant................................ 1,200 38,400
Johnson & Johnson...................... 400 32,600
Lilly (Eli)............................ 266 25,702
Mentor................................. 1,200 26,400
Merck & Co............................. 500 28,750
Pfizer................................. 300 17,212
----------
191,939
----------

INDUSTRIAL SERVICES--2.9% ENSCO.................................. 675 (a) 11,390
Schlumberger........................... 700 43,575
----------
54,965
----------

PROCESS INDUSTRIES--4.8% Crown Cork & Seal...................... 800 (a) 27,900
duPont (E.I.) deNemours................ 300 18,713
Grace (W.R.)........................... 800 44,600
----------
91,213
----------

PRODUCER MANUFACTURING--6.6% AlliedSignal........................... 850 36,125
Cooper Industries...................... 1,278 43,132
Raychem................................ 500 23,188
Thermo Electron........................ 480 (a) 22,080
----------
124,525
----------

RETAIL TRADE--5.1% Harcourt General....................... 500 19,812
Home Shopping Network.................. 2,500 (a) 20,313
May Department Stores.................. 400 15,700
Talbots................................ 310 7,517
Wal-Mart Stores........................ 1,500 32,438
----------
95,780
----------

TECHNOLOGY SERVICES--3.5% Microsoft.............................. 300 (a) 30,000
Safeguard Scientifics.................. 800 (a) 36,000
66,000

TRANSPORTATION--3.8% Burlington Northern Santa Fe........... 250 20,969
CSX.................................... 200 16,750
Tidewater.............................. 1,300 34,287
72,006

UTILITIES--4.2% Frontier............................... 1,150 31,050
MCI Communications..................... 1,000 24,937
SBC Communications..................... 430 24,026
----------
80,013
----------

TOTAL COMMON STOCKS
(cost $1,619,354).................... $1,720,551
==========
PRINCIPAL
SHORT-TERM INVESTMENTS--7.3% AMOUNT VALUE
---------- ----------
U.S. TREASURY BILLS: 5.17%, 12/21/95........................ $ 84,000 $ 83,394
5.15%, 12/28/95........................ 55,000 54,547
----------

TOTAL SHORT-TERM INVESTMENTS
(cost $137,950)...................... $ 137,941
==========

TOTAL INVESTMENTS (cost $1,757,304)........................................ 98.7% $1,858,492
====== ==========

CASH AND RECEIVABLES (NET)................................................. 1.3% $ 24,135
====== ==========

NET ASSETS................................................................. 100.0% $1,882,627
====== ==========

NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

See independent accountants' review report and notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio STATEMENT OF
ASSETS AND LIABILITIES OCTOBER 31, 1995 (UNAUDITED)

ASSETS:
Investments in securities, at value
(cost $1,757,304)--see statement..................................... $1,858,492
Receivable for investment securities sold.............................. 130,761
Dividends receivable................................................... 758
Prepaid expenses....................................................... 5,993
Due from The Dreyfus Corporation....................................... 7,082
----------
2,003,086

LIABILITIES:
Due to Distributor..................................................... $ 392
Payable for investment securities purchased............................ 93,033
Accrued expenses and other liabilities................................. 27,034 120,459
------- ----------

NET ASSETS................................................................. $1,882,627
==========

REPRESENTED BY:
Paid-in capital........................................................ $1,664,243
Accumulated undistributed investment income--net....................... 44,297
Accumulated undistributed net realized gain on investments............. 72,899
Accumulated net unrealized appreciation on investments--Note 3......... 101,188
----------

NET ASSETS at value applicable to 130,502 outstanding shares of Common Stock,
equivalent to $14.43 per share
(100 million shares of $.001 par value authorized)..................... $1,882,627
==========

See independent accountants' review report and notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)

INVESTMENT INCOME:
INCOME:
Cash dividends (net of $34 foreign taxes withheld at source)....... $ 12,447
Interest........................................................... 2,080
--------
TOTAL INCOME................................................... $ 14,527
EXPENSES:
Management fee--Note 2(a).......................................... 6,580
Registration fees.................................................. 14,094
Prospectus and shareholders' reports--Note 2(b).................... 11,296
Shareholder servicing costs--Note 2(b,c)........................... 7,411
Custodian fees..................................................... 2,395
Auditing fees...................................................... 1,968
Legal fees......................................................... 293
Directors' fees and expenses--Note 2(d)............................ 285
Miscellaneous...................................................... 396
--------
44,718

Less--expense reimbursement from Manager due to
undertakings, and expense limitation--Note 2(a).................... 30,226
--------

TOTAL EXPENSES................................................. 14,492
--------
INVESTMENT INCOME--NET......................................... 35

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................... $153,388
Net unrealized (depreciation) on investments........................... (6,186)
--------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 147,202
--------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $147,237
========

See independent accountants' review report and notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995* (UNAUDITED)
---------- ----------------
OPERATIONS:
Investment income--net................................................. $ 46,798 $ 35
Net realized gain (loss) on investments................................ (80,489) 153,388
Net unrealized appreciation (depreciation) on investments
for the period..................................................... 107,374 (6,186)
---------- ----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 73,683 147,237
---------- ----------

DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net................................................. (2,536) --
---------- ----------

CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 1,789,201 581,825
Dividends reinvested................................................... 2,536 --
Cost of shares redeemed................................................ (494,560) (214,759)
---------- ----------

INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 1,297,177 367,066
---------- ----------

TOTAL INCREASE IN NET ASSETS....................................... 1,368,324 514,303

NET ASSETS:
Beginning of period.................................................... -- 1,368,324
---------- ----------

End of period (including undistributed investment
income--net of $44,262 and $44,297, respectively).................. $1,368,324 $1,882,627
========== ==========

SHARES SHARES
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 143,001 41,398
Shares issued for dividends reinvested................................. 207 --
Shares redeemed........................................................ (39,204) (14,900)
---------- ----------
NET INCREASE IN SHARES OUTSTANDING................................. 104,004 26,498
========== ==========

- ----------
* From October 18, 1994 (commencement of operations) to April 30, 1995.

See independent accountants' review report and notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
FINANCIAL HIGHLIGHTS

Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
derived from the Portfolio's financial statements.
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995(1) (UNAUDITED)
---------- ----------------
PER SHARE DATA:
Net asset value, beginning of period................................... $12.50 $13.16
------ ------
INVESTMENT OPERATIONS:
Investment income--net................................................. .45 --(3)
Net realized and unrealized gain on investments........................ .24 1.27
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................... .69 1.27
------ ------
DISTRIBUTIONS;
Dividends from investment income-net................................... (.03) --
------ ------
Net asset value, end of period......................................... $13.16 $14.43
====== ======

TOTAL INVESTMENT RETURN(2)................................................. 5.53% 9.65%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2)............................. 1.40% .83%
Ratio of net investment income to average net assets(2)................ 3.91% --
Decrease reflected in above expense ratios due to
undertaking by the Manager and expense limitation(2)............... 4.63% 1.73%
Portfolio Turnover Rate(2)............................................. 497.41% 124.43%
Net Assets, end of period (000's Omitted).............................. $1,368 $1,883

- ----------
(1) From October 18, 1994 (commencement of operations) to April 30, 1995.
(2) Not annualized.
(3) Based on an average of shares outstanding at each month end.

See independent accountants' review report and notes to financial statements.

</TABLE>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

As of October 31, 1995, Major Trading Corporation, a
subsidiary of Mellon Bank Investments Corporation, held 80,189
shares of Common Stock of the Portfolio. Mellon Bank Investments
Corporation is a subsidiary of Mellon Bank.

(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain, are normally declared and paid annually, but the Portfolio may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the policy
of the Portfolio not to distribute such gain.

NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:

(A) Pursuant to a management agreement ("Agreement") with
the Manager, the management fee is computed at the annual rate of .75 of 1% of
the average daily value of the Portfolio's net assets and is payable monthly.
The Agreement provides for an expense reimbursement from the Manager should the
Portfolio's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Portfolio. The most stringent state expense
limitation applicable to the Portfolio presently requires reimbursement of
expenses in any full fiscal year that such expenses (exclusive of 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 the Portfolio's net assets in accordance with California "blue sky"
regulations. However, the Manager had undertaken from May 1, 1995 through July
3, 1995 to waive receipt of the management, service and distribution fees, and
thereafter has currently undertaken through December 31, 1995, to reduce the
management fee paid by, or reimburse such excess expenses of the Portfolio, to
the extent that the Portfolio's aggregate annual expenses (exclusive of certain
expenses as described above) exceed an annual rate of 1.25 of 1% of the average
daily value of the Portfolio's net assets. The expense reimbursement, pursuant
to the undertakings and expense limitation, amounted to $30,226 for the six
months ended October 31, 1995.

The undertaking may be modified by the Manager from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the Agreement.

(B) Prior to September 1, 1995, the Portfolio had a Distribution Plan (the
"Plan") adopted pursuant to Rule 12b-1 under the Act, which provided that the
Portfolio (a) reimburse the Distributor for payments to certain Service Agents
for distributing the Portfolio's shares and (b) pay the Manager, Dreyfus Service
Corporation or any affiliate of either of them (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio and servicing shareholder
accounts, at an aggregate annual rate of .50 of 1% of the value of the
Portfolio's average daily net assets. Each of the Distributor and Dreyfus could
pay Service Agents (a securities dealer, financial institution, or other
industry professional) a fee in respect of the Portfolio's shares owned by
shareholders with whom the Service Agent had a servicing relationship or for
whom the Service Agent was the dealer or holder of record. Each of the
Distributor and Dreyfus determined the amounts to be paid to Service Agents to
which it made payments and the basis on which such payments were made. The Plan
also separately provided for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio'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 the Portfolio's
average daily net assets for any full fiscal year. During the period May 1, 1995
through August 31, 1995, the Portfolio was charged $4,088 pursuant to the Plan.
Effective September 1, 1995 the Plan was terminated.

(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for the provision of certain services. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio and
providing reports and other information, and services related to the maintenance
of shareholder accounts. The Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents. For the six months ended October 31, 1995, $2,193 was charged to
the Portfolio pursuant to the Shareholder Services Plan.

NOTE 3--SECURITIES TRANSACTIONS:

The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended October 31, 1995,
amounted to $2,334,707 and $2,066,004, respectively.

At October 31, 1995, accumulated net unrealized appreciation on investments
was $101,188, consisting of $149,954 gross unrealized appreciation and $48,766
gross unrealized depreciation.

At October 31, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of investments).

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Growth Portfolio

REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS

SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS GROWTH PORTFOLIO

We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Growth Portfolio (one of the
Series constituting the Dreyfus Asset Allocation Fund, Inc.) as of October 31,
1995, and the related statements of operations and changes in net assets and
financial highlights for the six month period ended October 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements and financial highlights taken as a whole. Accordingly, we
do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the statement of changes in net assets and financial highlights for
the period from October 18, 1994 (commencement of operations) to April 30, 1995
and in our report dated June 2, 1995, we expressed an unqualified opinion on
such statement of changes in net assets and financial highlights.

Ernst & Young LLP signature

New York, New York
December 1, 1995

DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS GROWTH PORTFOLIO
200 Park Avenue
New York, NY 10166

MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166

CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286

TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940

Further information is contained in the Prospectus, which must precede or
accompany this report.

Asset Allocation
Fund, Inc.
Dreyfus
Growth Portfolio
Semi-Annual Report

October 31, 1995
<PAGE>

Dear Shareholder:

The Income Portfolio of Dreyfus Asset Allocation Fund, Inc.
completed its latest semi-annual fiscal period October 31, 1995.

In this letter we summarize the major developments in the Portfolio during
this period, and report the results. To place the events of the half-year in a
broader setting, we also outline the economic and securities market conditions
that prevailed.

ECONOMIC ENVIRONMENT

The much-desired soft landing for the U.S. economy that the Federal Reserve
Board has been striving to attain appears to have occurred. This is the result
of more than a year of moves by the Fed to tighten interest rates, followed by a
token loosening of the reins last summer.

Now that the economy is no longer as overactive, the central bank must
concern itself with the possibility that the economy might slow down more than
would be desirable. However, the latest economic statistics do not contain
convincing evidence of that happening.

The housing industry is doing well. Industrial orders continue to expand and
gross domestic product keeps on growing, albeit at a reduced rate.

Retail spending has settled down, in part because consumers are carrying
large debit balances in mortgage and credit card debts. To what extent this will
affect holiday shopping remains to be seen. The industrial sector of the
economy, however, appears to be forging ahead.

MARKET ENVIRONMENT

As your Fund reached the end of its reporting period, October 31, 1995,
stocks were not far below the record levels they had reached earlier in the
fall.

Interest rates also have buoyed stock prices and sustained the bond market.
As the cost of borrowing has steadily decreased, many corporations have
benefitted.

PORTFOLIO OVERVIEW

For the first six months of its fiscal year, the period ending October 31,
1995, the Income Portfolio of Dreyfus Asset Allocation Fund provided a total
return of 9.63%.* This compares with a return of 6.25% for the Lehman
Intermediate Treasury Index** and 8.64% for the Customized Blended Index which,
like the Portfolio, is composed of a defined weighting of Treasury obligations,
common stocks and cash equivalents that is more fully described below.***

The Income Portfolio continued to benefit during much of the six-month
period from its position in 30-year bonds. Our analysis of the fixed income
market was that the slowing down of the U.S. economy would result in lower
interest rates which raises the selling price of bonds. Further, there was the
possibility that, if Congress and the White House could reach a budget
aggreement, the Federal Reserve might feel justified in reducing interest rates
once again. At one point during the six-month period we took profits in bonds,
but still hold a substantial position in these instruments.

In the common stock portion of the Fund, several significant changes were
made reflecting a new and less defensive posture toward the domestic economy and
its likely future prospects. The Federal Reserve's cut in the Fed Funds rate in
July caused our view of the stock market to turn more positive. A significant
new position in automotive stocks was established including both General Motors
and Ford Motor. Our positions in foods and beverages were much reduced with the
sales of CPC International, Coca Cola, General Mills and Heinz, and replaced
with a substantial new position in entertainment content including names such as
Disney (Walt), Viacom, Cl.A. and Time Warner. Changes in technology are making
American entertainment readily available to the world audience and in our
opinion it is an area where the U.S. is very competitive, probably more so than
in foods.

In the technology sector, profits were taken reflecting the dramatic stock
price increases in recent months.

The portfolio actually increased its weightings in communications-related
technology, often taking advantage of recent price weakness as our longer-term
outlook for this area is very positive.

The energy sector has been profitable for the Fund and we like its
longer-term prospects. We maintained our positions in Amerada Hess and Texaco.

As the investment environment became more turbulent in recent months,
investors searching for safe havens bid up health care stocks to levels where we
felt justified in taking profits.

Along with the Portfolio's new exposure to autos and the diminished holdings
in foods, beverages and health care, usually considered defensive groups, the
most significant changes are reflected in the much increased weighting in
chemicals and railroad stocks. These include increased positions in duPont
(E.I.) de Nemours, Monsanto, a new position in Praxair, and an expanded
weighting in railroad stocks including a new position in Union Pacific. It
should be noted that all of these companies are in the midst of restructurings
with their respective managements endeavoring to provide value for their
shareholders.

We very much appreciate your investment in this portfolio. We will of course
continue our best efforts to help you achieve your investment goals.
Sincerely,

Signature
Ernest G. Wiggins
Portfolio Manager

November 15, 1995 New York, N.Y.

*Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LEHMAN BROTHERS - The Lehman Intermediate Treasury Index is a
widely accepted index of U.S. Treasury notes and bonds.
***The Customized
Blended Index has been prepared by the Fund and is intended to be a more
accurate comparison to the Portfolio's general portfolio composition than the
benchmark index, which is the Lehman Intermediate Treasury Index, an unmanaged
index viewed as being a leading indicator of overall performance of U.S.
Treasury notes and bonds. We have combined the performance of unmanaged indices
that reflect benchmark percentages with respect to each asset class in which the
Portfolio invests as described in the Fund's Prospectus: 55% U.S. Treasury Notes
and Bonds, 35% common stocks, and 10% cash equivalents. The Customized Blended
Index combines returns from the Lehman Intermediate Treasury Index, the Standard
& Poor's 500 Composite Stock Price Index and the Bank Rate Monitor Index of
money market returns, and is weighted to the benchmark percentages.

<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF INVESTMENTS October 31, 1995 (Unaudited)
COMMON STOCKS--45.7% SHARES VALUE
-------- -----------
<S> <C> <C>
CONSUMER DURABLES--4.5% Ford Motor....................... 1,200 $ 34,500
General Motors................... 1,000 43,750
----------
78,250
----------

CONSUMER NON-DURABLES--1.7% Seagram.......................... 800 28,800
----------

CONSUMER SERVICES--5.4% Disney (Walt).................... 800 46,100
Time Warner...................... 500 18,250
Viacom, Cl. A.................... 600 (a) 29,850
----------
94,200
----------

ELECTRONIC TECHNOLOGY--3.3% cisco Systems.................... 200 (a) 15,500
DSC Communications............... 600 (a) 22,200
Motorola......................... 300 19,687
----------
57,387
----------

ENERGY--4.6% Amerada Hess..................... 956 43,140
Texaco........................... 547 37,264
----------
80,404
----------

INDUSTRIAL SERVICES--4.9% Browning-Ferris Industries....... 1,100 32,038
Schlumberger..................... 500 31,125
WMX Technologies................. 817 22,978
----------
86,141
----------

NON-ENERGY MINERALS--1.1% Aluminum Co. of America.......... 200 10,200
Nucor............................ 200 9,625
----------
19,825
----------

PROCESS INDUSTRIES--11.6% Crown Cork & Seal................ 1,100 (a) 38,362
duPont (E.I.) deNemours.......... 800 49,900
Grace (W.R.)..................... 600 33,450
International Paper.............. 300 11,100
Monsanto......................... 400 41,900
Praxair.......................... 1,000 27,000
----------
201,712
----------
PRODUCER MANUFACTURING--3.4% Allied Signal.................... 500 21,250
Cooper Industries................ 821 27,709
Dresser Industries............... 500 10,375
----------
59,334
----------
RETAIL TRADE--2.7% Home Depot....................... 700 26,075
Wal-Mart Stores.................. 1,000 21,625
----------
47,700
----------
TRANSPORTATION--2.5% Burlington Northern Santa Fe..... 200 16,775
Union Pacific.................... 400 26,150
----------
42,925
----------
TOTAL COMMON STOCKS
(cost $810,834)................ $ 796,678
==========

PRINCIPAL
U.S. TREASURY NOTES--53.2% AMOUNT
---------
5-5/8%, 6/30/1997
(cost $926,135)................ $928,000 $ 928,000
==========

TOTAL INVESTMENTS (cost $1,736,969)........................................ 98.9% $1,724,678
====== ==========

CASH AND RECEIVABLES (NET)................................................. 1.1% $ 18,717
====== ==========

NET ASSETS................................................................. 100.0% $1,743,395
====== ==========

NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $1,736,969)--see statement..................................... $1,724,678
Cash................................................................... 28,903
Receivable for investment securities sold.............................. 47,158
Dividends and interest receivable...................................... 18,308
Prepaid expenses....................................................... 4,731
Due from The Dreyfus Corporation....................................... 5,169
----------
1,828,947

LIABILITIES:
Due to Distributor..................................................... $ 364
Payable for investment securities purchased............................ 65,910
Accrued expenses....................................................... 19,278 85,552
------- ----------
NET ASSETS ................................................................ $1,743,395
==========
REPRESENTED BY:
Paid-in capital........................................................ $1,515,895
Accumulated undistributed investment income--net....................... 3,424
Accumulated undistributed net realized gain on investments............. 236,367
Accumulated net unrealized (depreciation) on investments--Note 3....... (12,291)
----------

NET ASSETS at value applicable to 117,562 outstanding shares of Common Stock,
equivalent to $14.83 per share
(100 million shares of $.001 par value authorized)..................... $1,743,395
==========

See independent accountants' review report and notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio

STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)

INVESTMENT INCOME:
INCOME:
Interest........................................................... $ 29,132
Cash dividends (net of $84 foreign taxes withheld at source)....... 7,338
---------
TOTAL INCOME................................................... $ 36,470
EXPENSES:
Management fee--Note 2(a).............................................. 6,099
Registration fees...................................................... 12,120
Prospectus and shareholders' reports--Note 2(b)........................ 10,586
Shareholder servicing costs--Note 2(b,c)............................... 7,040
Custodian fees......................................................... 2,371
Auditing fees.......................................................... 1,968
Legal fees............................................................. 365
Directors' fees and expenses--Note 2(d)................................ 322
Miscellaneous.......................................................... 348
---------
41,219

Less--expense reimbursement from Manager due to
undertaking and expense limitation--Note 2(a)........................ 27,644
---------

TOTAL EXPENSES..................................................... 13,575
--------
INVESTMENT INCOME--NET............................................. 22,895

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................... $ 214,487
Net unrealized (depreciation) on investments........................... (100,242)
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................... 114,245
--------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $137,140
</TABLE>

========

See independent accountants' review report and notes to
financial
statements.
<TABLE>
<CAPTION>

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995* (UNAUDITED)
<S> <C> <C>

OPERATIONS:
Investment income--net................................................. $ 18,604 $ 22,895
Net realized gain on investments....................................... 21,880 214,487
Net unrealized appreciation (depreciation)
on investments for the period ....................................... 87,951 (100,242)
---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 128,435 137,140
---------- ----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (15,937) (22,138)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 1,330,845 251,315
Dividends reinvested................................................... 15,022 20,909
Cost of shares redeemed................................................ (72,402) (29,794)
---------- ----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 1,273,465 242,430
---------- ----------
TOTAL INCREASE IN NET ASSETS................................... 1,385,963 357,432
NET ASSETS:
Beginning of period.................................................... -- 1,385,963
---------- ----------
End of period (including undistributed investment
income--net of $2,667 and $3,424, respectively).................... $1,385,963 $1,743,395
========== ==========

SHARES SHARES
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 105,429 17,108
Shares issued for dividends reinvested................................. 1,145 1,401
Shares redeemed.................................................... (5,515) (2,006)
------- -------
NET INCREASE IN SHARES OUTSTANDING................................. 101,059 16,503
======= =======

* From October 18, 1994 (commencement of operations) to April 30, 1995.
</TABLE>

See independent accountants' review report and notes to
financial
statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
FINANCIAL HIGHLIGHTS

PER SHARE DATA:
Net asset value, beginning of period................................... $12.50 $13.71
------ ------
INVESTMENT OPERATIONS:
Investment income--net................................................. .20 .20
Net realized and unrealized gain on investments........................ 1.18 1.12
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................... 1.38 1.32
------ ------
DISTRIBUTIONS;
Dividends from investment income--net.................................. (.17) (.20)
------ ------
Net asset value, end of period............................................. $13.71 $14.83
====== ======

TOTAL INVESTMENT RETURN(2)................................................. 11.14% 9.63%

RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2)............................. 1.40% .84%

Ratio of net investment income to average net assets(2)................ 1.60% 1.42%

Decrease reflected in above expense ratios due to
undertaking by the Manager and expense limitation(2)................. 4.28% 1.71%

Portfolio Turnover Rate(2)............................................. 94.33% 171.69%

Net Assets, end of period (000's Omitted).............................. $1,386 $1,743
- ----------
(1) From October 18, 1994 (commencement of operations) to April 30, 1995.
(2) Not annualized.

See independent accountants' review report and notes to financial statements.
</TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end management
investment company and currently offers three portfolios, including the Dreyfus
Income Portfolio (the "Portfolio"). Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Portfolio's shares, which are sold
to the public without a sales load. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider 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. The Dreyfus Corporation
("Manager") serves as the Portfolio's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A.
As of October 31, 1995, Major Trading Corporation, a
subsidiary of Mellon Bank Investments Corporation, held 82,161
shares of Common Stock of the Portfolio. Mellon Bank Investments
Corporation is a subsidiary of Mellon Bank.
The Fund accounts separately for the assets, liabilities and operations of
each portfolio. Expenses directly attributable to each portfolio are charged to
that portfolio's operations; expenses which are applicable to all portfolios are
allocated among them.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board of Directors. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a quarterly
basis. Dividends from net realized capital gain are normally declared and paid
annually, but the Portfolio may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To the
extent that net realized capital gain can be offset by capital loss carryovers,
if any, it is the policy of the Portfolio not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.

NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with
the Manager, the management fee is computed at the annual rate of .75 of 1% of
the average daily value of the Portfolio's net assets and is payable monthly.
The Agreement provides for an expense reimbursement from the Manager should the
Portfolio's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Portfolio. The most stringent state expense
limitation applicable to the Portfolio presently requires reimbursement of
expenses in any full fiscal year that such expenses (exclusive of 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 the Portfolio's net assets in accordance with California "blue sky"
regulations. However, the Manager had undertaken from May 1, 1995 through July
3, 1995 to waive receipt of the management, service and distribution fees, and
thereafter, has currently undertaken through December 31, 1995, to reduce the
management fee paid by or reimburse such excess expenses of the Portfolio, to
the extent that the Portfolio's aggregate annual expenses (exclusive of certain
expenses as described above) exceed an annual rate of 1.25 of 1% of the average
daily value of the Portfolio's net assets. The expense reimbursement, pursuant
to the undertakings and expense limitation, amounted to $27,644 for the six
months ended October 31, 1995.
The undertaking may be modified by the Manager from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the Agreement.
(B) Prior to September 1, 1995, the Portfolio had a Distribution Plan (the
"Plan") adopted pursuant to Rule 12b-1 under the Act, which provided that the
Portfolio (a) reimburse the Distributor for payments to certain Service Agents
for distributing the Portfolio's shares and (b) pay the Manager, Dreyfus Service
Corporation or any affiliate of either of them (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio and servicing shareholder
accounts, at an aggregate annual rate of .50 of 1% of the value of the
Portfolio's average daily net assets. Each of the Distributor and Dreyfus could
pay Service Agents (a securities dealer, financial institution, or other
industry professional) a fee in respect of the Portfolio's shares owned by
shareholders with whom the Service Agent had a servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determined the amounts to be paid to Service Agents to
which it made payments and the basis on which such payments were made. The Plan
also separately provided for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio'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 the Portfolio's
average daily net assets for any full fiscal year. During the period May 1, 1995
through August 31, 1995, the Portfolio was charged $4,113 pursuant to the Plan.
Effective September 1, 1995, the Plan was terminated.
(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for the provision of certain services. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio and
providing reports and other information, and services related to the maintenance
of shareholder accounts. The Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents. During the six months ended October 31, 1995, the Portfolio was
charged $2,033 pursuant to the Shareholder Services Plan.
(D) 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 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended October 31, 1995
amounted to $2,950,009 and $2,692,189, respectively.
At October 31, 1995, accumulated net unrealized depreciation on investments
was $12,291, consisting of $30,048 gross unrealized appreciation and $42,339
gross unrealized depreciation.
At October 31, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).

DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INCOME PORTFOLIO

We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Income Portfolio (one of the
Series constituting the Dreyfus Asset Allocation Fund, Inc.) as of October 31,
1995, and the related statements of operations and changes in net assets and
financial highlights for the six month period ended October 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements and financial highlights taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of changes in net assets and financial highlights for
the period from October 18, 1994 (commencement of operations) to April 30, 1995
and in our report dated June 2, 1995, we expressed an unqualified opinion on
such statement of changes in net assets and financial highlights.

Ernst & Young LLP signature

New York, New York
December 1, 1995

DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS INCOME PORTFOLIO
200 Park Avenue
New York, NY 10166

MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166

CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286

TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940

Further information is contained in the Prospectus, which must precede or
accompany this report.

Asset Allocation
Fund, Inc.
Dreyfus
Income Portfolio
Semi-Annual Report

October 31, 1995
<PAGE>
<TABLE>
<CAPTION>
Proforma Statement of Investments
Dreyfus LifeTime Portfolios, Inc., Income Portfolio
Shares/Principal Amount Value
September 30, 1995 (unaudited)
-------------------------------------------- --------------------------------------------------
Dreyfus Dreyfus
Dreyfus Asset Dreyfus Asset
Bonds and Notes--65.3% LifeTime Allocation LifeTime Allocation
Portfolios Fund Total Portfolios Fund Total
----------- ---------- ------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Bonds--4.6%
11 5/8%, 11/15/2004...................... $ 600,000 -- $ 600,000 $ 820,969 -- $ 820,969
----------- ------------

U.S. Treasury Notes--60.7%
7 1/2%, 1/31/1997........................ 2,945,000 -- 2,945,000 3,008,041 -- 3,008,041
5.625%, 6/30/1997........................ -- 928,000 928,000 -- 924,665 924,665
5 5/8%, 1/31/1998........................ 3,000,000 -- 3,000,000 2,982,189 -- 2,982,189
5 1/8%, 11/30/1998....................... 250,000 -- 250,000 244,141 -- 244,141
7 1/8%, 9/30/1999........................ 1,000,000 -- 1,000,000 1,039,375 -- 1,039,375
8 3/4%, 8/15/2000........................ 700,000 -- 7,000,000 779,078 -- 779,078
8%, 5/15/2001............................ 1,000,000 -- 1,000,000 1,090,781 -- 1,090,781
7 1/2%, 11/15/2001....................... 180,000 -- 180,000 192,740 -- 192,740
7 1/2%, 2/15/2005........................ 600,000 -- 600,000 653,156 -- 653,156
----------- ---------- ------------
9,989,501 924,665 10,914,166
----------- ---------- ------------
TOTAL BONDS AND NOTES
(cost $10,577,780)....................... $10,810,470 $ 924,665 $ 11,735,135
=========== ========== ============
Short-Term Investments--28.9%

U.S. Treasury Bills:
5.38%, 10/5/1995......................... 41,000 -- 41,000 $ 40,971 -- $ 40,971
5.33%, 10/12/1995........................ 40,000 -- 40,000 39,931 -- 39,931
5.34%, 10/19/1995........................ 161,000 -- 161,000 160,554 -- 160,554
5.40%, 11/2/1995......................... 75,000 -- 75,000 74,636 -- 74,636
5.41%, 11/16/1995.....................(a) 2,448,000 -- 2,448,000 2,431,035 -- 2,431,035
5.27%, 11/30/1995........................ 50,000 -- 50,000 49,554 -- 49,554
5.30%, 12/7/1995......................... 2,415,000 -- 2,415,000 2,390,705 -- 2,390,705
----------- ------------
TOTAL SHORT-TERM INVESTMENTS
(cost $5,187,909)........................ $ 5,187,386 -- $ 5,187,386
=========== ============

Common Stocks-4.3%

Consumer Durables--.4% Ford Motors............ -- 1,200 1,200 -- $ 37,350 $ 37,350
General Motors........ -- 700 700 -- 32,812 32,812
----------- -----------
-- 70,162 70,162
----------- -----------
Consumer Non-Durables--.2% Seagram........... -- 800 800 -- 28,700 28,700
----------- -----------

Consumer Services--.4% Disney (Walt)........... -- 800 800 -- 45,900 45,900
Viacom, Cl. A........ -- 600 (b) 600 (b) -- 29,850 29,850
----------- -----------
-- 75,750 75,750
----------- -----------

Electronic Technology--.3% cisco Systems.......... -- 250 (b) 250 (b) -- 17,250 17,250
DSC Communciations..... -- 300 (b) 300 (b) -- 17,775 17,775
Motorola............... -- 300 300 -- 22,913 22,913
----------- -----------
-- 57,938 57,938
----------- -----------

Energy--.4% Amerada Hess.......... -- 656 656 -- 31,898 31,898
Baker Hughes........... -- 700 700 -- 14,263 14,263
Texaco................. -- 547 547 -- 35,350 35,350
----------- -----------
-- 81,511 81,511
----------- -----------

Industrial Services--.7% Browning-Ferris Industries. -- 1,100 1,100 -- 33,412 33,412
CBI Industries............. -- 900 900 -- 21,375 21,375
Columbia/HCA HealthCare.... -- 500 500 -- 24,312 24,312
Schlumberger............... -- 396 396 -- 25,839 25,839
WMX Technologies........... -- 817 817 -- 23,285 23,285
----------- -----------
-- 128,223 128,223
----------- -----------

Non-Energy Minerals--.2% Alcan Aluminium LTD........ -- 350 350 -- 11,331 11,331
Aluminum Co of America..... -- 300 300 -- 15,862 15,862
Nucor...................... -- 200 200 -- 8,950 8,950
----------- -----------
-- 36,143 36,143
----------- -----------

Process Industries--.6% Crown Cork & Seal............ -- 700 (b) 700 (b) -- 27,125 27,125
Grace (W.R.)................. -- 400 400 -- 26,700 26,700
International Paper.......... -- 600 600 -- 25,200 25,200
Monsanto..................... -- 300 300 -- 30,225 30,225
----------- -----------
-- 109,250 109,250
----------- -----------

Producer Manufacturing--.4% Allied Signal............. -- 500 500 -- 22,062 22,062
Cooper Industries......... -- 821 821 -- 28,940 28,940
Dresser Industries........ -- 850 850 -- 20,294 20,294
----------- -----------
-- 71,296 71,296
----------- -----------

Retail Trade--.4% Home Depot................. -- 600 600 -- 23,925 23,925
Sears, Roebuck............. -- 500 500 -- 18,438 18,438
Wal-Mart Stores............ -- 1,000 1,000 -- 24,875 24,875
----------- -----------
-- 67,238 67,238

----------- -----------

Transportation--.3% Burlington Northern Santa Fe... -- 300 300 -- 21,750 21,750
Union Pacific............. -- 400 400 -- 26,500 26,500
----------- -----------
-- 48,250 48,250
----------- -----------

TOTAL COMMON STOCKS
(cost 810,834).......... $ 774,461 $ 774,461
=========== ===========

TOTAL INVESTMENTS (cost $15,765,689, $1,676,749 and
and $17,442,438, respectively)...................... 98.5% $15,997,856 $ 1,699,126 $ 17,696,982
===== =========== ============ ============

CASH AND RECEIVABLE (NET).............................. 1.5% 264,679 13,686 $ 278,365
===== =========== ============ ============

NET ASSETS............................................. 100.0% $16,262,535 $ 1,712,812 $ 17,975,347
===== =========== ============ ============
</TABLE>

Notes to Statement of Investments:

(a) Partially held by the custodian in a segregated account as collateral
for open futures positions.
(b) Non-income producing.

Statement of Financial Futures September 30, 1995
Financial Futures Purchased Market Value Unrealized
Number of Covered Appreciation
Contracts by Contracts Expiration at 9/30/95
--------- ------------ ----------- -------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500..................... 13 $ 3,823,300 December '95 $160,420

========
</TABLE>

See notes to pro forma financial statements.
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
September 30, 1995 (Unaudited)
Dreyfus Dreyfus
LifeTime Asset Allocation Pro-Forma
Income Income Combined
Portfolio Portfolio Adjustments (Note 1)
------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
--see statement................................ $ 15,997,856 $ 1,699,126 $ $ 17,696,982
Cash............................................. 82,413 5,604 88,017
Dividends and interest receivable................ 181,653 14,755 196,408
Receivable for investment securities sold........ -- 11,602 11,602
Prepaid expenses................................. 57,859 5,636 63,495
Due from The Dreyfus Corporation................. -- 3,529 3,529
------------ ------------ ------------ ------------
Total Assets.................................. 16,319,781 1,740,252 0 18,060,033
------------ ------------ ------------ ------------
LIABILITIES:
Due to The Dreyfus Corporation................... 10,683 -- 10,683
Due to Distributor............................... 1,662 518 2,180
Payable for investment securities purchased...... -- 13,095 13,095
Payable for futures variation margin............. 6,500 -- 6,500
Accrued expenses and other liabilities........... 38,401 13,827 52,228
------------ ------------ ------------ ------------
Total Liabilities............................. 57,246 27,440 0 84,686
------------ ------------ ------------ ------------
NET ASSETS.......................................... $ 16,262,535 $ 1,712,812 $ 0 $ 17,975,347
============ ============ ============ ============
REPRESENTED BY:
Paid-in capital.................................. $ 15,041,856 $ 1,461,214 $ $ 16,503,070
Accumulated undistributed investment income-net 474,272 110 474,382
Accumulated undistributed net realized gain on
investments.................................... 353,820 229,114 582,934
Accumulated net unrealized appreciation on
investments and foreign currency transactions
(including $160,420 net unrealized appreciation
on financial futures for the LifeTime
Income Portfolio).............................. 392,587 22,374 414,961
------------ ------------ ------------ ------------
NET ASSETS, at value................................ $ 16,262,535 $ 1,712,812 $ 0 $ 17,975,347
============ ============ ============ ============
Shares of Common Stock outstanding:
LifeTime Income Portfolio
Investors Shares................................. 601,320 126,781 * 728,101
============
Asset Allocation Income Portfolio................... 113,891 (113,891) --
===========

NET ASSET VALUE per share:
LifeTime Income Portfolio

Investor Class Shares
($8,121,691 / 601,320 shares).................. $13.51
======
Asset Allocation Income Portfolio
($1,712,812 / 113,891 shares).................. $15.04
======
Proforma Combined Portfolio
($9,834,503 / 728,101 shares).................. $13.51

=======

</TABLE>
- -------------------
* Assumes the issuance of 126,781 Investor shares applicable to common
stockholders of Asset Allocation Income Portfolio.

See notes to proforma financial statements.

<TABLE>
<CAPTION>
Statement of Operations
Year Ended September 30, 1995 (Unaudited) Dreyfus Dreyfus
LifeTime Asset Allocation Pro-Forma
Income Income Combined
Portfolio Portfolio Adjustments (Note 1)
------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
Investment Income:
Income:
Interest.............................................. $ 531,783 $ 29,714 $ $ 561,497
Cash dividends (net of $84 foreign taxes withheld on
the Asset Allocation Portfolio)................... -- 7,013 7,013
------------- ------------- ------------- ----------
Total Income...................................... 531,783 36,727 0 568,510
------------- ------------- ------------- ----------
Expenses:
Management fee........................................ $ 47,599 $ 5,832 $ (2,426)* $ 51,005
Legal fees............................................ 12,908 416 13,324
Distribution fees (Investor Class shares)............. 9,913 -- 9,913
Organization expenses................................. 7,641 -- 7,641
Registration fees..................................... 5,187 13,762 18,949
Auditing fees......................................... 4,083 -- 4,083
Director's fees and expenses.......................... 3,400 287 (520) 3,167
Shareholder servicing costs........................... 3,049 9,249 12,298
Prospectus and shareholders' reports.................. 2,667 9,691 12,358
Custodian fees........................................ 1,405 2,215 3,620
Miscellaneous......................................... 816 407 1,223
------------ ------------ ------------ ----------
98,668 41,859 (2,946) 137,581
Less--expense reimbursement from Manager due to
undertakings........................................ 41,157 27,318 68,475
------------ ------------ ------------ ----------
Total Expenses................................... 57,511 14,541 (2,946) 69,106
------------ ------------ ------------ ----------
INVESTMENT INCOME--NET........................... 474,272 22,186 2,946 499,404
------------ ------------ ------------ ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................ $ 5,000 $ 204,975 $ $ 209,975
Net realized gain on financial futures;
Long Transactions..................................... 348,820 -- 348,820
------------ ------------ ------------ ----------
Net Realized Gain..................................... 353,820 204,975 0 558,795
------------ ------------ ------------ ----------
Net unrealized appreciation on investments
(including $160,420 net unrealized appreciation on
financial futures for the Income Portfolio)........... 392,587 (39,580) 353,007
------------ ------------ ------------ ----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.. 746,407 165,395 0 911,802
------------ ------------ ------------ ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $ 1,220,679 $ 187,581 $ 2,946 $1,411,206
============ ============ ============ ==========
</TABLE>
- -----------
* Represents Average Net Assets of Asset Allocation Income Portfolio multiplied
by .15%.

See notes to pro forma financial statements.
DREYFUS LIFETIME PORTFOLIOS, INC.,Income Portfolio

NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)

NOTE 1 - Basis of Combination:

On February 1, 1996 the Boards of Dreyfus LifeTime Portfolios, Inc. and
Dreyfus Asset Allocation Fund, Inc. approved an Agreement and Plan of
Reorganization whereby, subject to approval by the shareholders of Dreyfus Asset
Allocation Fund, Inc., Income Portfolio, Dreyfus LifeTime Portfolios, Inc.,
Income Portfolio will acquire all the assets of the Income Portfolio of Dreyfus
Asset Allocation Fund Inc., subject to the liabilities of such Series, in
exchange for a number of shares equal to the pro rata net assets of Investor
class shares of the Dreyfus LifeTime Portfolios, Inc., Income Portfolio (the
"Merger").

The Merger will be accounted for as a tax free merger of investment
companies. The unaudited pro forma statements of investments, and of assets and
liabilities reflect the financial position of the respective series of Dreyfus
LifeTime Portfolios, Inc., Income Portfolio and Dreyfus Asset Allocation Fund,
Inc., Income Portfolio at September 30, 1995. The unaudited pro forma statement
of operations reflect the results of operations of the respective series of
Dreyfus LifeTime Portfolios, Inc., and Dreyfus Asset Allocation Fund, Inc., for
the year ended September 30, 1995 and the twelve months ended September 30,
1995. These statements have been derived from the Funds' books and records
utilized in calculating daily net asset value at the dates indicated above for
Dreyfus Lifetime Portfolios, Inc., Income Portfolio and Dreyfus Asset Allocation
Fund, Inc., Income Portfolio under generally accepted accounting principles. The
historical cost of investment securities will be carried forward to the
surviving entity and results of operations of Dreyfus LifeTime Portfolios, Inc.,
Income Portfolio for pre-combination periods will not be restated.

The pro forma statements of investments, assets and liabilities and
operations should be read in conjunction with the historical financial
statements of the Funds included or incorporated by reference in the Statements
of Additional Information. The pro forma combined financial statements are
presented for the information of the reader and may not necessarily be
representative of what the actual combined financial statements would have been
had the reorganization taken place effective for the periods presented in the
accompanying pro forma financial statements.

NOTE 2 - Portfolio Valuation:

Investments in securities (including options and financial futures) are
valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices, except for open
short positions, where the asked price is used for valuation purposes. Bid price
is used when no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under the
direction of the Board. Investments 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. 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.

NOTE 3 - Capital Shares:

The pro forma net asset value per share assumes 126,781 additional shares
of Common Stock of Dreyfus LifeTime Portfolios, Inc., Income Portfolio were
issued in connection with the proposed acquisition of Dreyfus Asset Allocation
Fund, Inc. by Dreyfus LifeTime Portfolios, Inc., as of September 30, 1995. The
number of additional shares issued was calculated by dividing the net assets of
Dreyfus Asset Allocation Fund, Inc., Income Portfolio at September 30, 1995 by
the net asset value per share of Dreyfus LifeTime Portfolios, Inc., Income
Portfolio at September 30, 1995 of $13.51 for Investor Class Shares. The pro
forma combined number of shares outstanding of 728,101 consists of the 126,781
shares issuable to Dreyfus Asset Allocation Fund, Inc., Income Portfolio in the
Merger and 601,320 shares of Dreyfus LifeTime Portfolios, Inc., Income Portfolio
outstanding at September 30, 1995.

NOTE 4 - Pro Forma Operating Expenses:

Although it is anticipated that there will be an elimination of certain
duplicative expenses as a result of the Merger, the actual amount of such
expenses can not be determined because it is not possible to predict the cost of
future operations.

NOTE 5 - Merger Costs:

Merger costs are estimated at approximately $60,000 and are not included
in the pro forma statement of operations since these costs are not reoccurring.
These costs represent the estimated expense of both Funds carrying out their
obligations under the Agreement and Plan of Reorganization and consist of
management's estimate of legal fees, accounting fees, printing costs and mailing
charges related to the proposed merger.

NOTE 6 - Federal Income Taxes:

Each Fund has elected to be taxed as a "regulated investment company"
under the Internal Revenue Code. After the Merger, Dreyfus LifeTime Portfolios,
Inc. intends to continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying with
the provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from all, or substantially all, Federal
income taxes.

The identified cost of investments for the Funds is substantially the
same for both financial accounting and federal income tax purposes. The tax cost
of investments will remain unchanged for the combined entity.

NOTE 7 - Dividends To Shareholders:

On or before the Merger, the Income Portfolio of Dreyfus Asset Allocation
Fund, Inc. is expected to distribute any undistributed net investment income and
accumulated net realized capital gains.