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 Monday, August 19, 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 its
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 Retail 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 July 19, 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
July 22, 1996
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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 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.
- -----------------------------------------------------------------------------
July 19, 1996
COMBINED PROSPECTUS/PROXY STATEMENT FOR THE
DREYFUS ASSET ALLOCATION FUND, INC.
(GROWTH SERIES)
(INCOME SERIES)
SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON AUGUST 19, 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 Monday, August 19, 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
July 19, 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 May 31, 1996, the following numbers of Series Shares were issued
and outstanding:
NAME OF SERIES SHARES OUTSTANDING
GROWTH SERIES 159,527.337
INCOME SERIES 156,078.719
Proxy materials will be mailed to shareholders of record on or about
July 23, 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 its
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 Retail 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.
Page 1
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 July 19, 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.
- -----------------------------------------------------------------------------
Page 2
TABLE OF CONTENTS
PAGE
Summary............................................. 4
Reasons for the Exchange............................ 8
Information about the Exchange...................... 9
Additional Information about the Portfolios and Series 10
Voting Information.................................. 11
Financial Statements and Experts.................... 11
Other Matters....................................... 12
Notice to Banks, Broker/Dealers and
Voting Trustees and Their Nominees................ 12
Page 3
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 the 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.
Page 4
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 the
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.
Page 5
<TABLE>
ANNUAL FUND
OPERATING EXPENSES
(as a percentage
of average daily
net assets):
<S> <C> <C> <C>
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
GROWTH GROWTH RETAIL SHARES
PORTFOLIO SERIES GROWTH PORTFOLIO
Management Fees .75% .75% .75%
12b-1 Fees None None None
Other Expenses .52% 1.75% .52%
Total Fund
Operating Expenses 1.27% 2.50% 1.27%
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
INCOME INCOME RETAIL SHARES
PORTFOLIO SERIES INCOME PORTFOLIO
Management Fees .60% .75% .60%
12b-1 Fees None None None
Other Expenses .51% 1.75% .51%
Total Fund
Operating Expenses 1.11% 2.50% 1.11%
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:
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
GROWTH GROWTH RETAIL SHARES
PORTFOLIO SERIES GROWTH PORTFOLIO
1 Year $ 13 $ 25 $ 13
3 Years $ 40 $ 78 $ 40
5 Years $ 70 $133 $ 70
10 Years $153 $284 $153
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
INCOME INCOME RETAIL SHARES
PORTFOLIO SERIES INCOME PORTFOLIO
1 Year $ 11 $ 25 $ 11
3 Years $ 35 $ 78 $ 35
5 Years $ 61 $133 $ 61
10 Years $135 $284 $135
</TABLE>
Page 6
The information in the foregoing tables does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. Total
Fund Operating Expenses with respect to the Growth Series and the Income
Series are limited to the expense limitation provisions of the Management
Agreement between DAAF and Dreyfus.
Assuming the approval of the Exchange, Dreyfus believes that the
Retail shares of the Growth Portfolio and Income Portfolio initially will
have annual Total Fund Operating Expenses of approximately 1.27% and 1.11%,
respectively, of average net assets.
SHAREHOLDER SERVICES PLAN. Each Series' shares are subject to a
Shareholder Services Plan, pursuant to which the Series pays Premier Mutual
Fund Services, Inc., DAAF's distributor, for the provision of certain
services to Series' shareholders a fee at an annual rate of .25% of the value
of the average daily net assets of the Series' shares. Portfolio Shares are
not subject to a Shareholder Services Plan. See "Shareholder Services Plan"
in the DAAF 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 Timothy Ghriskey. He has held that
position since February 1996 and has been employed by Dreyfus since July
1995. Prior to joining Dreyfus, he was a Vice President and Associate Managing
Partner at Loomis, Sayles & Co. since 1985.
CAPITALIZATION. Each Portfolio has classified its shares into two
classes--Retail shares, which are referred to herein as Portfolio Shares, and
Institutional shares. Each Series' shares are of one class. The following
table sets forth as of May 31, 1996 (1) the capitalization of each Series,
(2) the capitalization of each Portfolio's Retail shares, and (3) the pro
forma capitalization of each Portfolio's Retail shares, as adjusted showing
the effect of the Exchange had it occurred on such date.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
GROWTH GROWTH RETAIL SHARES
PORTFOLIO SERIES GROWTH PORTFOLIO
Total net assets $17,208,961.25 $2,646,781.61 $19,855,742.86
Net asset value per share $16.26 $16.59 $16.26
Shares outstanding 1,058,350,656 159,527.337 1,221,129.353
PRO FORMA AFTER
DLPI EXCHANGE
RETAIL SHARES DAAF DLPI
INCOME INCOME RETAIL SHARES
PORTFOLIO SERIES INCOME PORTFOLIO
Total net assets $9,140,436.67 $2,1119,223.66 $11,289,660.33
Net asset value per share $13.08 $13.58 $13.08
Shares outstanding 701,007.574 156,078.719 863,027.731
</TABLE>
Page 7
PURCHASE PROCEDURES. The purchase procedures of the Series and
Portfolios (with respect to Retail 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 Retail 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 Retail 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 Boards of DAAF and DLPI have concluded that the Exchange is in
the best interests of their 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 May 31, 1996, the Growth Series and
Page 8
Income Series had assets under management of just $2,646,782 and $2,119,224,
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 August 23, 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.
Page 9
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 the 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 the 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 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 Exchange, and the holding period of the
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 DAAF's 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.
Page 10
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 May 31, 1996, the following were known by DAAF to own of
record and beneficially 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 -- 53.62%; and Income Series, Major Trading
Corporation, 200 Park Avenue, New York, New York 10166 -- 61.34%. 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. Major Trading Corporation, a New York corporation,
is an affiliate of Dreyfus.
As of May 31, 1996, the following were known by DLPI to own of
record and beneficially 5% or more of the outstanding voting securities of
the indicated Portfolio and Class: Growth Portfolio, Institutional shares,
Allomon Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank Center,
Pittsburgh, Pennsylvania 15258 --97.16%; Growth Portfolio, Retail shares,
Allomon Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank Center,
Pittsburgh, Pennsylvania 15258 -- 80.91%; Income Portfolio, Institutional
shares, Allomon Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank
Center, Pittsburgh, Pennsylvania 15258 -- 98.89%; and Income Portfolio, Retail
shares, Allomon Corporation, c/o Mellon Bank Corporation, 1 Mellon Bank
Center, Pittsburgh, Pennsylvania 15258 -- 92.58%. Allomon Corporation, a
Pennsylvania corporation, is an affiliate of Dreyfus.
As of May 31, 1996, Directors and officers of DLPI, as a group,
owned less than 1% of each Portfolio's outstanding shares. As of May 31,
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.
Page 11
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.
Page 12
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").
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 all or
substantially all of the assets of the Series in exchange solely for Retail
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 of the
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.
- ---------------
* Insert GROWTH SERIES or INCOME SERIES, as appropriate.
** Insert GROWTH PORTFOLIO or INCOME PORTFOLIO, as appropriate.
Page A-1
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 future
s 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 August 23, 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 time, 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
Page A-2
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 the
re 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
Page A-3
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).
Page A-4
(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.
Page A-5
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
Page A-6
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 A-7
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 A-8
DREYFUS ASSET ALLOCATION FUND, INC.
c/o The Dreyfus Corporation
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 its
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 its liabilities, for Retail 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
July 22, 1996
