Registration No. 333-01213
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Pre-Effective Amendment No. X Post-Effective Amendment No. 1
(Check appropriate box or boxes)
DREYFUS LIFETIME PORTFOLIOS, INC.
(Exact Name of Registrant as Specified in Charter)
(212) 922-6000
(Area Code and Telephone Number)
c/o The Dreyfus Corporation
200 PARK AVENUE, NEW YORK, NEW YORK 10166
(Address of Principal Executive Offices: Number,
Street, City, State, Zip Code)
(Name and Address of Agent for Service)
Mark N. Jacobs, Esq.
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement is declared
effective.
It is proposed that this filing will become effective (check
appropriate box)
____ immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
---------------------
Registrant has previously filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended; accordingly, no fee is payable herewith. Registrant's Rule 24f-2
Notice for the fiscal year ended September 30, 1995 was filed on November 29,
1995.
<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Prospectus/Proxy
FORM N-14 ITEM NO. STATEMENT CAPTION
PART A
Item 1. Beginning of Registration Statement and
Outside Front Cover Page of Prospectus Cover Page
Item 2. Beginning and Outside Back Cover
Page of Prospectus Cover Page
Item 3. Synopsis Information and Risk Factors Summary
Item 4. Information About the Transaction Letter to
Shareholders;
Proposal No. 1;
Comparison of the
Series and
Portfolios
Item 5. Information About the Registrant Letter to
Shareholders;
Comparison of the
Series and
Portfolios
Item 6. Information About the Company
Being Acquired Letter to
Shareholders;
Comparison of the
Series and Portfolios
Item 7. Voting Information Letter to Shareholders;
Voting Information
Item 8. Interest of Certain Persons and Experts Not Applicable
Item 9. Additional Information Required for
Reoffering by Persons Deemed
to be Underwriters Not Applicable
Statement of Additional
PART B INFORMATION CAPTION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Not Applicable
Item 12. Additional Information About
the Registrant Statement of Additional
Information of Dreyfus
LifeTime Portfolios, Inc.
dated January 15, 19961
Item 13. Additional Information About
the Company Being Acquired Statement of Additional
Information of Dreyfus
Asset Allocation Fund, Inc.
dated September 1, 1995 1
Item 14. Financial Statements Statement of Additional
Information of Dreyfus
LifeTime Portfolios, Inc.
dated January 15, 1996 2
Statement of Additional
Information of Dreyfus
Asset Allocation Fund, Inc.
dated September 1, 1995 1
and Pro Forma
Financial Statements
PART C
Item 15. Indemnification
Item 16. Exhibits
Item 17. Undertakings
1 Incorporated herein by reference to the Registration Statement of the
Registrant on Form N-1A dated January 15, 1996 (File No. 33-66088).
2 Incorporated herein by reference to the Registration Statement of
Dreyfus Asset Allocation Fund, Inc. on Form N-1A dated September 1,
1995 (File No. 33-62626).
<PAGE>
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 Class R 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
<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 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 Class R 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 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.
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<PAGE>
JULY 19, 1996
COMBINED PROSPECTUS/PROXY STATEMENT FOR THE
DREYFUS ASSET ALLOCATION FUND, INC.
(GROWTH SERIES)
(INCOME SERIES)
Special Meeting of Shareholders
to be held on Monday, 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 Class R 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 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.
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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 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.
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.
ANNUAL FUND
OPERATING EXPENSES
(as a percentage of average
daily net assets):
Pro Forma
After
Exchange
DLPI DLPI
Class R DAAF Class R
Growth Growth Growth
Portfolio Series Portfilio
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%
ProForma
After
Exchange
DLPI DLPI
Class R DAAF Class R
Income Income Income
Portfolio Series 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
Exchange
DLPI DLPI
Class R Class R
Growth DAAF Growth
Portfolio Growth Portfolio
Series
1 Year $ 13 $ 25 $ 13
3 Years $ 40 $ 78 $ 40
5 Years $ 70 $133 $ 70
10 Years $153 $284 $153
Pro Forma
After
Exchange
DLPI DLPI
Class R DAAF Class R
Income Income Income
Portfolio Series Portfolio
1 Year $ 11 $ 25 $ 11
3 Years $ 35 $ 78 $ 35
5 Years $ 61 $133 $ 61
10 Years $135 $284 $135
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 Class R
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 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--Class R, which are referred to herein as Portfolio Shares, and Investor
Class. 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 Class R shares, and (3) the pro forma capitalization of each
Portfolio's Class R shares, as adjusted showing the effect of the Exchange had
it occurred on such date.
<TABLE>
<CAPTION>
Pro Forma
After
Exchange
DLPI DLPI
Class R DAAF Class R
Growth Growth Growth
Portfolio Series Portfolio
<S> <C> <C> <C>
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
A Exchange
DLPI DLPI
Class R DAAF Class R
Income Income Income
Portfolio Series Portfolio
Total net assets.................... $9,140,436.67 $2,119,223.66 $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>
PURCHASE PROCEDURES. The purchase procedures of the Series and Portfolios
(with respect to Class R 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 Class R 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 Class R 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 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.
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 binging 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.
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, Investor Class, Allomon Corporation, c/o
Mellon Bank Corporation, 1 Mellon Bank Center, Pittsburgh, Pennsylvania 15258 --
97.16%; Growth Portfolio, Class R, Allomon Corporation, c/o Mellon Bank
Corporation, 1 Mellon Bank Center, Pittsburgh, Pennsylvania 15258 -- 80.91%;
Income Portfolio, Investor Class, Allomon Corporation, c/o Mellon Bank
Corporation, 1 Mellon Bank Center, Pittsburgh, Pennsylvania 15258 -- 98.89%; and
Income Portfolio, Class R, 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.
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>
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 Class R 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;
* Insert GROWTH SERIES or INCOME SERIES, as appropriate.
** Insert GROWTH PORTFOLIO or INCOME PORTFOLIO, as appropriate.
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.
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 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 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, noinvestigation 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.
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.
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 Todd Lebo and Lawrence B.
Stoller, 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 July 19, 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 Monday, August 19, 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: ______ __, 1996
Signature(s)
Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope
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 Todd
Lebo and Lawrence B. Stoller, 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 July 19, 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 Monday, August 19,
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.
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: ______________, 1996
Signature(s)
Signature(s)
Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope
<PAGE>
PROSPECTUS JANUARY 15, 1996
DREYFUS LIFETIME PORTFOLIOS, INC.
DREYFUS LIFETIME PORTFOLIOS, INC. (THE "FUND") IS AN OPEN-END, MANAGEMENT
INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. THE FUND PERMITS YOU TO INVEST IN
THREE SEPARATE DIVERSIFIED PORTFOLIOS (EACH, A "PORTFOLIO"):
INCOME PORTFOLIO, THE PRIMARY GOAL OF WHICH IS TO MAXIMIZE CURRENT INCOME,
ITS SECONDARY GOAL IS CAPITAL APPRECIATION; GROWTH AND INCOME PORTFOLIO, THE
GOAL OF WHICH IS TO MAXIMIZE TOTAL RETURN, CONSISTING OF CAPITAL APPRECIATION
AND CURRENT INCOME; AND GROWTH PORTFOLIO, THE GOAL OF WHICH IS CAPITAL
APPRECIATION. EACH PORTFOLIO WILL FOLLOW AN INVESTMENT STRATEGY THAT ALLOCATES
THE PORTFOLIO'S ASSETS AMONG COMMON STOCKS, FIXED-INCOME SECURITIES AND, IN THE
CASE OF THE INCOME PORTFOLIO, SHORT-TERM MONEY MARKET INSTRUMENTS.
BY THIS PROSPECTUS, EACH PORTFOLIO IS OFFERING INVESTOR CLASS SHARES AND
CLASS R SHARES. INVESTOR CLASS SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT
AS TO THE SERVICES OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS.
INVESTOR CLASS SHARES ARE OFFERED TO ANY INVESTOR. CLASS R SHARES ARE
OFFERED ONLY TO INSTITUTIONAL INVESTORS ACTING FOR THEMSELVES OR IN A FIDUCIARY,
ADVISORY, AGENCY, CUSTODIAL OR SIMILAR CAPACITY, FOR QUALIFIED OR NON-QUALIFIED
EMPLOYEE BENEFIT PLANS, INCLUDING PENSION, PROFIT-SHARING SEP-IRA AND OTHER
DEFERRED COMPENSATION PLANS, WHETHER ESTABLISHED BY CORPORATIONS, PARTNERSHIPS,
NON-PROFIT ENTITIES OR STATE AND LOCAL GOVERNMENTS, BUT NOT INCLUDING IRA'S OR
IRA "ROLLOVER ACCOUNTS".
INVESTORS CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY.
THE DREYFUS CORPORATION SERVES AS EACH PORTFOLIO'S INVESTMENT ADVISER. THE
DREYFUS CORPORATION HAS ENGAGED MELLON EQUITY ASSOCIATES ("MELLON EQUITY") TO
SERVE AS EACH PORTFOLIO'S SUB-INVESTMENT ADVISER AND PROVIDE DAY-TO-DAY
MANAGEMENT OF EACH PORTFOLIO'S INVESTMENTS. THE DREYFUS CORPORATION AND MELLON
EQUITY ARE REFERRED TO COLLECTIVELY AS THE "ADVISERS."
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT AN
INVESTOR SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED JANUARY 15, 1996, WHICH MAY
BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN
THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED
HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT 144 GLENN CURTISS
BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN
TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
{This Page Intentionally Left Blank]
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses.......... 4
Condensed Financial Information........ 5
Description of the Fund..................7
Management of the Fund...................11
How to Buy Fund Shares...................13
Shareholder Services.....................16
How to Redeem Fund Shares............... 19
Shareholder Services Plan............... 21
Dividends, Distributions and Taxes.......22
Performance Information..................23
General Information..................... 24
Appendix.................................26
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
INCOME GROWTH AND INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- -------------------------- --------------------------
Investor Investor Investor
Class R Class Class R Class Class R Class
------------ -------------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees.................. .60% .60% .75% .75% .75% .75%
Other Expenses................... .51% .77% .66% .92% .52% .78%
Total Portfolio Operating
Expenses......................... 1.11% 1.37% 1.41% 1.67% 1.27% 1.53%
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:
1 Year ............. $11 $14 $14 $17 $13 $16
3 Years ............ $35 $43 $45 $53 $40 $48
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. Other Expenses and Total Portfolio Operating Expenses
are based on estimated amounts for the current fiscal year. The information in
the foregoing table has been restated to reflect the Fund's termination of its
Rule 12b-1 Plan, but does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. Certain Service Agents (as defined below)
may charge their clients direct fees for effecting transactions in Fund shares;
such fees are not reflected in the foregoing table. For a further description of
the various costs and expenses incurred in the operation of the Fund, as well as
expense reimbursement or waiver arrangements, see "Management of the Fund," "How
to Buy Fund Shares" and "Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by Ernst & Young
LLP, the Fund's independent auditors, whose report thereon appears in the
Statement of Additional Information. Further financial data and related notes
are included in the Statement of Additional Information, available upon request.
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 Portfolio for the period March 31, 1995
(commencement of operations) through September 30, 1995. This information has
been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
-----------------------------------------------
PER SHARE DATA: Class R Shares Investor Class Shares
------------------- -----------------------
<S> <C> <C>
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(1)............................................ 18.72% 18.56%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets(1)................ .38% .51%
Ratio of net investment income to average net assets(1)............. 1.51% 1.39%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation(1).......................... .26% .26%
Portfolio Turnover Rate(1).......................................... 52.86% 52.86%
Net Assets, end of period (000's omitted)........................... $11,898 $11,939
(1)Not annualized.
GROWTH AND INCOME PORTFOLIO
---------------------------------------------------
PER SHARE DATA: Class R Shares Investor Class Shares
----------------------- ------------------------
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 year........................................ $14.31 $14.29
========== ===========
TOTAL INVESTMENT RETURN(1)............................................ 14.48% 14.32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets(1)................ .38% .51%
Ratio of net investment income to average net assets(1)............. 2.10% 1.98%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation(1).......................... .33% .33%
Portfolio Turnover Rate(1).......................................... 33.55% 33.55%
Net Assets, end of period (000's omitted)........................... $9,248 $8,602
(1)Not annualized.
INCOME PORTFOLIO
---------------------------------------------------
PER SHARE DATA: Class R Shares Investor Class Shares
----------------- ---------------------------
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 year........................................ $13.52 $13.51
========== ===========
TOTAL INVESTMENT RETURN1)............................................. 8.16% 8.08%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(1).......................... .30% .43%
Ratio of net investment income to average net assets(1)............. 3.08% 2.95%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation(1).......................... .26% .26%
Portfolio Turnover Rate(1).......................................... 5.66% 5.66%
Net Assets, end of period (000's omitted)........................... $8,141 $8,122
</TABLE>
(1)Not annualized.
DESCRIPTION OF THE FUND
GENERAL
By this Prospectus, two classes of shares of each Portfolio are being
offered--Investor Class shares and Class R shares (each such class being
referred to as a "Class"). The Classes are identical, except that Investor Class
shares are subject to fees for certain services which are described under
"Shareholder Services Plan." The shareholder services fees paid by the Investor
Class will cause such Class to have a higher expense ratio and to pay lower
dividends than Class R.
Class R shares may not be purchased directly by individuals, although
institutions may purchase Class R shares for accounts maintained by individuals.
Such institutions have agreed to transmit copies of this Prospectus and all
relevant Fund materials, including proxy materials, to each individual or entity
for whose account the institution purchases Class R shares, to the extent
required by law. The Fund treats the institution investing in Class R shares as
the Fund shareholder entitled to the rights and privileges described herein.
INVESTMENT OBJECTIVES
The INCOME PORTFOLIO'S primary investment objective is to maximize current
income. Capital appreciation is a secondary objective.
The GROWTH AND INCOME PORTFOLIO'S investment objective is to maximize total
return, consisting of capital appreciation and current income.
The GROWTH PORTFOLIO'S investment objective is capital appreciation.
Each Portfolio's investment objective cannot be changed 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. There
can be no assurance that a Portfolio's investment objective will be achieved.
MANAGEMENT POLICIES
INVESTMENT APPROACH -- The Growth and Income Portfolio and the Growth
Portfolio seek to achieve their investment objective by following an asset
allocation strategy that contemplates shifts among common stock and fixed-income
securities. The Income Portfolio will allocate its assets among common stock,
fixed-income securities and short-term money market instruments. In selecting
investments for a Portfolio, Mellon Equity will employ a multi-step process
that, first, establishes an asset allocation baseline, or weighting of a
Portfolio's assets towards a particular asset class, second, establishes ranges
within which to allocate a Portfolio's assets among the asset classes, third,
uses proprietary asset allocation models to recommend an allocation among asset
classes and, fourth, selects the securities within the asset classes.
The Portfolios employ a strategic asset allocation investment technique
that involves an ongoing comparison of the relative value of stocks and bonds
across different markets. Each Portfolio diversifies among stocks, bonds and, in
the case of the Income Portfolio, money market instruments, based on Mellon
Equity's assessment of current economic conditions and investment opportunities
both domestically and internationally. For the Growth Portfolio and the Growth
and Income Portfolio, a target allocation is set and then adjusted within
defined ranges based upon Mellon Equity's assessment of return and risk
characteristics of each. For the Income Portfolio, Mellon Equity sets a target
allocation for the Portfolio's investments, but does not actively manage the
Portfolio's assets.
The Income Portfolio invests exclusively in domestic securities and may
invest up to 10% of its assets in money market instruments. The target
allocation is 25% equity securities and 75% fixed-income securities. All equity
investments will consist of large capitalization stocks (typically with market
capitalizations of greater than $1.4 billion). The Growth and Income Portfolio
divides its investments between equity securities and fixed-income securities
and may invest up to 15% of its assets in international securities. Equity and
fixed-income investments may range from 35% to 65% of the Portfolio with a
target allocation of 50% in each asset class. The equity portion is divided into
80% large capitalization stocks and 20% small capitalization stocks (typically
with market capitalizations of less than $1.4 billion).
The Growth Portfolio divides its investments between equity securities and
fixed-income securities and may invest up to 25% of its assets in international
securities. Equity investments may range from 65% to 100% of the portfolio with
a target allocation of 80%. The equity portion is divided into 80% large
capitalization stocks and 20% small capitalization stocks. Fixed-income
investments may range from 0% to 35% of the portfolio with a target allocation
of 20%.
Mellon Equity will attempt, in selecting securities for each Portfolio, to
approximate the investment characteristics of designated benchmark indices but
with expected returns that exceed the benchmark. The designated benchmark
indices, which are described in detail below, are listed in the following table:
<TABLE>
<CAPTION>
<S> <C> <C>
ASSET CLASS PORTFOLIOS BENCHMARK INDEX
------------ ------------- ---------------------------
Domestic Large Cap Equity Income, Growth and Income Standard & Poor's 500
and Growth Index ("S&P 500 Index")*
Domestic Small Cap Equity Growth and Income and Growth Russell 2000 Index
International Equity Growth and Income Morgan Stanley Capital
and Growth International Europe, Australia,
Far East (Free) Index ("EAFE Index")Registration Mark**
Domestic Fixed-Income Income, Growth and Lehman Brothers Government/Corporate
Income and Growth Intermediate Bond Index ("Lehman
Government/Corporate Index")
International Fixed-Income Growth and Income and Growth J.P. Morgan Non-US Government Bond
Index-Hedged ("J.P. Morgan Global Index")
* "Standard & Poor's," "S&P" and "S&P 500Registration Mark" are trademarks
of Standard & Poor's, a division of The McGraw Hill Companies, Inc.
** In U.S. Dollars.
</TABLE>
Mellon Equity may 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, where possible, full index replication will be
used, otherwise a statistically based "sampling" technique will be used to
construct portfolios. This process will be used with respect to the equity asset
class, for example, to select stocks so that the market capitalizations,
industry weightings, dividend yields, beta and, with respect to the
international equity asset class, country weightings closely approximate those
of the designated index. The sampling technique is expected to be an effective
means of substantially duplicating the investment performance of the benchmark
index. It may, however, provide investment performance relative to the benchmark
index with the same degree of accuracy that complete or full replication would
provide. 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 index.
A further explanation of the Fund's allocation process is provided in the
Statement of Additional Information.
COMMON STOCKS. The S&P 500 Index is composed of 500 common stocks, most of
which are listed on the New York Stock Exchange. The weightings of stocks in the
S&P500 Index are based on each stock's relative total market capitalization;
that is, its market price per share times the number of shares outstanding.
Because of this weighting, as of November 30, 1995, approximately 46.3% of the
S&P 500 Index was composed of the 50 largest companies.
The Russell 2000 Index is composed of 2,000 common stocks of U.S. companies
with market capitalizations ranging between $23 million and $2.23 billion as of
November 30, 1995.
The EAFE Index is a broadly diversified international index composed of the
equity securities of approximately 1,000 companies located outside the United
States. The weightings of stocks in the EAFE Index are based on each stock's
market capitalization relative to the total market capitalization of all stocks
in the Index. Because of this weighting, as of November 30, 1995, approximately
40.7% of the EAFE Index was composed of equity securities of Japanese issuers.
FIXED-INCOME SECURITIES. The Lehman Government/Corporate Index is composed
of approximately 5,000 fixed-income securities, including U.S. Government
securities and investment grade corporate bonds, each with an outstanding market
value of at least $25 million and maturities of less than ten years and greater
than one year. As of November 30, 1995, U.S. Government securities and corporate
debt securities represented 78% and 22%, respectively, of the Lehman Brothers
Government/Corporate Intermediate Bond Index, and the average maturity of such
securities was 4.27 years.
The J.P. Morgan Global Government Index is composed of traded, fixed-rate
government bonds from twelve countries with maturities of greater than one year.
The twelve countries are Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, the Netherlands, Spain, Sweden and the United Kingdom.
MONEY MARKET INSTRUMENTS. The short-term money market instruments in which
the Income Portfolio only invests consist of U.S. Government securities, bank
obligations, including certificates of deposit, time deposits and bankers'
acceptances and other short-term obligations of domestic or foreign banks,
domestic savings and loan associations and other banking institutions having
total assets in excess of $1 billion; commercial paper, and repurchase
agreements, as set forth under "Appendix -- Certain Portfolio Securities." The
Income Portfolio will purchase only money market instruments having remaining
maturities of 13 months or less. When the Advisers determine that market
conditions warrant, a Portfolio may adopt a temporary defensive posture and
invest without limitation in money market instruments.
INVESTMENT TECHNIQUES
The annual portfolio turnover rate of each Portfolio is not expected to
exceed 100%. Each Portfolio also may engage in various investment and hedging
techniques such as options and futures transactions, lending portfolio
securities and, with respect to the Growth and Income Portfolio and Growth
Portfolio, foreign currency transactions. See also "Investment Considerations
and Risks" and "Appendix -- Investment Techniques" below and "Investment
Objectives and Management Policies -- Management Policies" in the Statement of
Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Since each Portfolio will have any given time a different asset
mix to achieve its investment objective, the risks of investing will vary
depending on the Portfolio selected for investment. Before selecting a Portfolio
in which to invest, the investor should assess the risks associated with the
types of investments made by the Portfolio. The net asset value per share of
each Portfolio should be expected to fluctuate. Investors should consider each
Portfolio as a supplement to an overall investment program and should invest
only if they are willing to undertake the risks involved. See "Investment
Objectives and Management Policies -- Management Policies" in the Statement of
Additional Information for a further discussion of certain risks.
EQUITY SECURITIES -- Equity securities fluctuate in value, often based on
factors unrelated to the value of the issuer of the securities, and such
fluctuations can be pronounced. Changes in value of a Portfolio's investments
will result in changes in the value of its shares and thus the Portfolio's total
return to investors.
The securities of the smaller companies in which the Growth and Income and
Growth Portfolio's 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 subject to a
greater degree to changes in earnings and prospects.
FIXED-INCOME SECURITIES -- For the portion of a Portfolio's assets invested
in fixed-income securities, investors should be aware that even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities generally are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing entities.
Certain securities that may be purchased by the Portfolios, such as those rated
Baa by Moody's Investors Service, Inc. ("Moody's") and BBB by Standard & Poor's
Ratings Group, a division of The McGraw Hill Companies, Inc. ("S&P"), Fitch
Investors Service, L.P. ("Fitch") and Duff & Phelps Credit Rating Co. ("Duff"),
may be subject to such risk with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a security held by a Portfolio has been changed,
the Advisers will consider all circumstances deemed relevant in determining
whether such Portfolio should continue to hold the security. See "Appendix" in
the Statement of Additional Information.
FOREIGN SECURITIES -- Foreign securities markets generally are not as
developed or efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable U.S.
issuers. Similarly, volume and liquidity in most foreign securities markets are
less than in the United States and, at times, volatility of price can be greater
than in the United States.
Because stock certificates and other evidences of ownership of such
securities usually are held outside the United States, the Growth and Income
Portfolio and Growth Portfolio will be subject to additional risks, which
include possible adverse political and economic developments, possible seizure
or nationalization of foreign deposits and possible adoption of governmental
restrictions that might adversely affect the payment of principal, interest and
dividends on the foreign securities or might restrict the payment of principal,
interest and dividends to investors located outside the country of the issuers,
whether from currency blockage or otherwise.
Since foreign securities often are purchased with and payable in currencies
of foreign countries, the value of these assets as measured in U.S. dollars may
be affected favorably or unfavorably by changes in currency rates and exchange
control regulations.
FOREIGN CURRENCY TRANSACTIONS _ Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by
intervention by U.S. or foreign governments or central banks, or the failure to
intervene, or by currency controls or political developments in the United
States or abroad. See "Appendix -- Investment Techniques -- Foreign Currency
Transactions."
USE OF DERIVATIVES -- Each Portfolio may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. The Derivatives a Portfolio may use include options and
futures. While Derivatives can be used effectively in furtherance of the
Portfolio's investment objective, under certain market conditions, they can
increase the volatility of the Portfolio's net asset value, can decrease the
liquidity of the Portfolio's investments and make more difficult the accurate
pricing of the Portfolio's investments. See "Appendix -- Investment Techniques
- -- Use of Derivatives" below and "Investment Objectives and Management Policies
- -- Management Policies -- Derivatives"in the Statement of Additional
Information.
ZERO COUPON SECURITIES -- Federal income tax law requires the holder of a
zero coupon security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To maintain
its qualification as a regulated investment company and avoid liability for
Federal income taxes, each Portfolio may be required to distribute such income
accrued with respect to these securities and may have to dispose of such
securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
NON-DIVERSIFIED STATUS -- Each Portfolio's classification as a
non-diversified" investment company, means that the proportion of each
Portfolio's assets that may be invested in the securities of a single issuer is
not limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest not
more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of each Portfolio's assets may be invested in the
securities of a limited number of issuers, some of which may be within the same
industry, each Portfolio's portfolio securities may be more sensitive to changes
in the market value of a single issuer. However, to meet Federal tax
requirements, at the close of each quarter no Portfolio may have more than 25%
of its total assets invested in any one issuer and, with respect to 50% of its
total assets, more than 5% of its total assets invested in any one issuer. No
Portfolio may invest more than 25% of its assets in any one industry. These
limitations do not apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for each Portfolio are
made independently from those of other investment companies or accounts advised
by the Advisers. However, if such other investment companies or accounts are
prepared to invest in, or desire to dispose of, securities of the type in which
a Portfolio invests, available investments or opportunities for sales will be
allocated equitably to each. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by the Portfolio or the
price paid or received by the Portfolio.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as each Portfolio's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of September 30, 1995, The Dreyfus Corporation managed or
administered approximately $80 billion in assets for more than 1.8 million
investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall management of
the Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board in accordance with Maryland law.
The Dreyfus Corporation has engaged Mellon Equity, located at 500 Grant
Street, Pittsburgh, Pennsylvania 15258, 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. As of September 30,
1995, Mellon Equity managed approximately $7.6 billion in assets and serves as
the investment adviser for 13 other investment companies.
Mellon Equity, subject to the supervision and approval of The Dreyfus
Corporation, 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 with The
Dreyfus Corporation, subject to the overall authority of the Fund's Board in
accordance with Maryland law. In providing its services, Mellon Equity may use
the services of one or more of its affiliates. Each Portfolio's primary
portfolio manager is Steven A. Falci. He has held that position since the
inception of the Fund 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.
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Federal Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon is
among the twenty-five largest bank holding companies in the United States based
on total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank,
N.A., Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including The Dreyfus
Corporation, Mellon managed more than $203 billion in assets as of September 30,
1995, including approximately $80 billion in mutual fund assets. As of September
30, 1995, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for more than $717
billion in assets, including $55 billion in mutual fund assets.
Under the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of
.60 of 1% of the value of the Income Portfolio's average daily
net assets and .75 of 1% of the value of each of the Growth and
Income Portfolio's and Growth Portfolio's average daily net
assets. The management fee payable for the Growth and Income
Portfolio and Growth Portfolio is higher than that paid by most
other investment companies.
Under the Sub-Investment Advisory Agreement, The Dreyfus Corporation has
agreed to pay Mellon Equity an annual fee payable monthly, at the following
rate: .35% of each Portfolio's average daily net assets up to $600 million in
Fund assets; .25% of the Portfolio's average daily net assets when the Fund's
assets are between $600 million and $1.2 billion; .20% of the Portfolio's
average daily net assets when the Fund's assets are between $1.2 billion and
$1.8 billion; and .15% of the Portfolio's average daily net assets when the
Fund's assets are over $1.8 billion.
EXPENSES -- All expenses incurred in the operation of the Fund are borne by
the Fund, except to the extent specifically assumed by The Dreyfus Corporation.
The expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, brokerage fees and commissions, if any, fees of Board
members who are not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of The Dreyfus Corporation, Mellon Equity or
any of their affiliates, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports and meetings, and any extraordinary
expenses. Expenses attributable to a particular Portfolio are charged against
the assets of that Portfolio; other expenses of the Fund are allocated among the
Portfolios on the basis determined by the Board of Directors, including, but not
limited to, proportionately in relation to the net assets of each Portfolio.
From time to time, The Dreyfus Corporation may waive receipt of its fee
and/or voluntarily assume certain expenses of a Portfolio, which would have the
effect of lowering the overall expense ratio of that Portfolio and increasing
yield to its investors at the time such amounts are waived or assumed, as the
case may be. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive, nor will the Fund reimburse The Dreyfus Corporation
for any amounts it may assume.
The Dreyfus Corporation may pay the Fund's distributor for shareholder
services from The Dreyfus Corporation's own assets, including past profits but
not including the management fee paid by the Fund. The Fund's distributor may
use part or all of such payments to pay Service Agents (as defined below) in
respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor's ultimate parent company is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, is located at One
American Express Plaza, Providence, Rhode Island 02903, and serves as the Fund's
Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New
York, 90 Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
Shares of each Class are sold without a sales charge. Certain financial
institutions (which may include banks), securities dealers and other industry
professionals (collectively, "Service Agents") effecting transactions in
Investor class shares and institutions effecting transactions in Class R shares
for the accounts of their clients may charge their clients direct fees in
connection with such transactions.
Investor Class shares are offered to any investor. Class R shares are
offered only to institutional investors acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, for qualified or non-qualified
employee benefit plans SEP-IRA's or other programs, including pension,
profit-sharing and other deferred compensation plans, whether established by
corporations, partnerships, non-profit entities or state and local governments
("Retirement Plans"). The term "Retirement Plans" does not include IRA's or IRA
"Rollover Accounts." Class R shares may be purchased for a Retirement Plan only
by a custodian, trustee, investment manager or other entity authorized to act on
behalf of such Plan.
Stock certificates are issued only upon an investor's written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment for each Class is $2,500, or $1,000 if the
investor is a client of a Service Agent which has made an aggregate minimum
initial purchase for its customers of $2,500. Subsequent investments must be at
least $100. However, the minimum initial investment for Dreyfus-sponsored Keogh
Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only one participant is $750,
with no minimum on subsequent purchases. Individuals who open an IRA also may
open a non-working spousal IRA with a minimum initial investment of $250.
Subsequent investments in a spousal IRA must be at least $250. The initial
investment must be accompanied by the Fund's Account Application. For full-time
or part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Fund's Board, or
the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries who elect to have a portion
of their pay directly deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to offer Fund shares without
regard to minimum purchase requirements to employees participating in certain
qualified or non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to the Fund. The Fund reserves the right to vary further the initial
and subsequent investment minimum requirements at any time. Investor Class
shares also are offered without regard to the minimum initial investment
requirements through Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step
Program described under "Shareholder Services." These services enable an
investor to make regularly scheduled investments and may provide investors with
a convenient way to invest for long-term financial goals. Investors should be
aware, however, that periodic investment plans do not guarantee a profit and
will not protect an investor against loss in a declining market.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes various
limitations on the amount that may be contributed to certain Retirement Plans.
These limitations apply with respect to participants at the plan level and,
therefore, do not directly affect the amount that may be invested in the Fund by
a Retirement Plan. Participants and plan sponsors should consult their tax
advisers for details.
Investors may purchase Fund shares by check or wire, or, with respect to
Investor Class shares only, through the Dreyfus TELETRANSFER Privilege described
below. Checks should be made payable to "The Dreyfus Family of Funds," or, if
for Dreyfus retirement plan accounts, to "The Dreyfus Trust Company, Custodian."
Payments to open new accounts which are mailed should be sent to The Dreyfus
Family of Funds, P.O. Box 9387, Providence, Rhode Island 02940-9387, together
with the investor's Account Application indicating which Portfolio and Class of
shares is being purchased. For subsequent investments, the investor's Fund
account number should appear on the check and an investment slip should be
enclosed and sent to The Dreyfus Family of Funds, P.O. Box 105, Newark, New
Jersey 07101-0105. For Dreyfus retirement plan accounts, both initial and
subsequent investments should be sent to The Dreyfus Trust Company, Custodian,
P.O. Box 6427, Providence, Rhode Island 02940-6427. Neither initial nor
subsequent investments should be made by third party check. Purchase orders may
be delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the
location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information."
Wire payments may be made if the investor's bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the relevant
Portfolio's DDA # as shown below, for purchase of shares in the investor's name:
DDA #8900251785 Dreyfus LifeTime Portfolios, Inc./Income Portfolio_Class R; or
DDA #8900104511 Dreyfus LifeTime Portfolios, Inc./Income Portfolio_Investor
Class; or DDA #8900251778 Dreyfus LifeTime Portfolios, Inc./Growth and Income
Portfolio_Class R; or DDA #8900118253 Dreyfus LifeTime Portfolios, Inc./Growth
and Income Portfolio_Investor Class; or DDA #8900251794 Dreyfus LifeTime
Portfolios, Inc./Growth Portfolio_Class R; or DDA #8900227745 Dreyfus LifeTime
Portfolios, Inc./Growth Portfolio_Investor Class. The wire must include the
investor's Fund account number (for new accounts, the investor's Taxpayer
Identification Number ("TIN") should be included instead), account registration
and dealer number, if applicable. If an investor's initial purchase of Portfolio
shares is by wire, the investor should call 1-800-645-6561 after the investor
has completed the wire payment in order to obtain his or her Fund account
number. The investor should include his or her Fund account number on the Fund's
Account Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received.
Investors may obtain further information about remitting funds in this manner
from their bank. All payments should be made in U.S. dollars and, to avoid fees
and delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in an investor's account does not clear. The Fund
makes available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial institution
that is an Automated Clearing House member. The investor must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit the
investor's Fund account. The instructions must specify the investor's Fund
account registration and Fund account number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the amount invested
through such dealers in Fund shares by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees eligible for participation in such plans or programs or (ii) such
plan's or program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Distributor to such plans or
programs exceeds $1,000,000 ("Eligible Benefit Plans"). Shares of funds in the
Dreyfus Family of Funds then held by Eligible Benefit Plans will be aggregated
to determine the fee payable. The Distributor reserves the right to cease paying
these fees at any time. The Distributor will pay such fees from its own funds,
other than amounts received from the Fund, including past profits or any other
source available to it.
Shares are sold on a continuous basis at the net asset value per share next
determined after an order in proper form is received by the Transfer agent or
other agent. Net asset value per share is determined as of the close of trading
on the floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value, option and futures contracts will be
valued 15 minutes after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share of each Class is computed by dividing the
value of the Portfolio's net assets represented by such Class (i.e., the value
of its assets less liabilities) by the total number of shares of such Class
outstanding. Each Portfolio's investments are valued based on market value or,
where market quotations are not readily available, based on fair value as
determined in good faith by the Board of Directors. For further information
regarding the methods employed in valuing the Portfolio's investments, see
"Determination of Net Asset Value" in the Statement of Additional Information.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Portfolio shares may be transmitted,
and must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution could
be held liable for resulting fees and/or losses.
Federal regulations require that investors provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject the
investor to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE -- INVESTOR CLASS
An investor may purchase Investor Class shares (minimum $500, maximum
$150,000 per day) by telephone if he has checked the appropriate box and
supplied the necessary information on the Fund's Account Application or has
filed a Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these documents and
the investor's Fund account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be so
designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If an investor has selected the Dreyfus TELETRANSFER Privilege, he may
request a Dreyfus TELETRANSFER purchase of Investor Class shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES
An investor may purchase, in exchange for Investor Class shares or Class R
shares of a Portfolio, shares of the same class of another Portfolio or shares
of certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in the investor's state of
residence. These funds have different investment objectives which may be of
interest to investors. To use this service, investors should consult their
Service Agent or call 1-800-645-6561 to determine if it is available and whether
any conditions are imposed on its use. WITH RESPECT TO CLASS R SHARES HELD BY
RETIREMENT PLANS, EXCHANGES MAY BE MADE ONLY BETWEEN A SHAREHOLDER'S RETIREMENT
PLAN ACCOUNT IN ONE FUND AND SUCH SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN
ANOTHER FUND.
To request an exchange, an investor must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, the investor
must obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have a
value of at least the minimum initial investment required for the fund into
which the exchange is being made. 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. The Telephone Exchange Privilege
may be established for an existing account by written request, signed by all
shareholders on the account, or by a separate signed Shareholder Services Form,
also available by calling 1-800-645-6561. If an investor has established the
Telephone Exchange Privilege, the investor may telephone exchange instructions
by calling 1-800-645-6561 or, if calling from overseas, 516-794-5452. See "How
to Redeem Fund Shares_ Procedures." Upon an exchange, the following shareholder
services and privileges, as applicable and where available, will be
automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus TELETRANSFER Privilege and the dividends and distributions
payment option (except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into funds sold with a sales
load. If an investor is exchanging into a fund that charges a sales load, the
investor may qualify for share prices which do not include the sales load or
which reflect a reduced sales load, if the shares of the Fund from which the
investor is exchanging were: (a) purchased with a sales load, (b) acquired by a
previous exchange from shares purchased with a sales load, or (c) acquired
through reinvestment of dividends or distributions paid with respect to the
foregoing categories of shares. To qualify, at the time of the exchange the
investor must notify the Transfer Agent or the investor's Service Agent must
notify the Distributor. Any such qualification is subject to confirmation of the
investor's holdings through a check of appropriate records. See "Shareholder
Services" in the Statement of Additional Information. No fees currently are
charged shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal fee in accordance with rules promulgated by the
Securities and Exchange Commission. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges may be
modified or terminated at any time upon notice to shareholders. See "Dividends,
Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables a shareholder to invest regularly
(on a semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of a Portfolio, in shares of the same class of another Portfolio or shares of
other funds in the Dreyfus Family of Funds of which such shareholder is
currently an investor. WITH RESPECT TO CLASS R SHARES HELD BY RETIREMENT PLANS,
EXCHANGES PURSUANT TO THE DREYFUS AUTO-EXCHANGE PRIVILEGE MAY BE MADE ONLY
BETWEEN A SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ONE FUND AND SUCH
SHAREHOLDER'S RETIREMENT PLAN ACCOUNT IN ANOTHER FUND. The amount the investor
designates, which can be expressed either in terms of a specific dollar or share
amount ($100 minimum), will be exchanged automatically on the first and/or
fifteenth day of the month according to the schedule the investor has selected.
Shares will be exchanged at the then-current net asset value; however, a sales
load may be charged with respect to exchanges into funds sold with a sales load.
See "Shareholder Services" in the Statement of Additional Information. The right
to exercise this Privilege may be modified or canceled by the Fund or the
Transfer Agent. An investor may modify or cancel the investor's exercise of this
Privilege at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence , Rhode Island 02940-9671. The Fund may charge
a service fee for the use of this Privilege. No such fee currently is
contemplated. See "Dividends, Distributions and Taxes.". For more information
concerning this Privilege and the funds in the Dreyfus Family of Funds eligible
to participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits a shareholder to purchase Portfolio
shares (minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by the shareholder. Portfolio shares are purchased by
transferring funds from the bank account designated by the shareholder. At the
shareholder's option, the bank account designated by the shareholder will be
debited in the specified amount, and Portfolio shares will be purchased, once a
month, on either the first or fifteenth day, or twice a month, on both days.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, the shareholder must file an
authorization form with the Transfer Agent. Shareholders may obtain the
necessary authorization form by calling 1-800-645-6561. A shareholder may cancel
his participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427, and the notification will be effective three business
days following receipt. The Fund may modify or terminate this Privilege at any
time or charge a service fee. No such fee currently is contemplated. See
"Dividends, Distributions and Taxes."
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables a shareholder to
purchase Portfolio shares (minimum of $100 and maximum of $50,000 per
transaction) by having Federal salary, Social Security, or certain veterans',
military or other payments from the Federal government automatically deposited
into such shareholder's Fund account. A shareholder may deposit as much of such
payments as such shareholder elects. To enroll in Dreyfus Government Direct
Deposit, the shareholder must file with the Transfer Agent a completed Direct
Deposit Sign-Up Form for each type of payment that the shareholder desires to
include in this Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate a shareholder's
participation in this Privilege. A shareholder may elect at any time to
terminate his participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate a shareholder's participation upon 30
days' notice to such shareholder.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits a shareholder to purchase Portfolio
shares (minimum of $100 per transaction) automatically on a regular basis.
Depending upon the direct deposit program of the shareholder's employer, a
shareholder may have part or all of his paycheck transferred to his existing
Dreyfus account electronically through the Automated Clearing House system at
each pay period. To establish a Dreyfus Payroll Savings Plan account, the
shareholder must file an authorization form with his employer's payroll
department. The shareholder's employer must complete the reverse side of the
form and return it to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode Island 02940-9671. A shareholder may obtain the necessary authorization
form by calling 1-800-645-6561. A shareholder may change the amount of purchase
or cancel the authorization only by written notification to the shareholder's
employer. It is the sole responsibility of the shareholder's employer, not the
Distributor, The Dreyfus Corporation, the Fund, the Transfer Agent or any other
person, to arrange for transactions under the Dreyfus Payroll Savings Plan. The
Fund may modify or terminate this Privilege at any time or charge a service fee.
No such fee currently is contemplated. Shares held under Keogh Plans, IRAs or
other retirement plans are not eligible for this Privilege.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables a shareholder to purchase Investor Class
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program
account, a shareholder must supply the necessary information on the Fund's
Account Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or to request the
necessary authorization form(s), please call toll free 1-800-782-6620. A
shareholder may terminate participation in this Program at any time by
discontinuing participation in Dreyfus-AUTOMATIC Asset Builder, Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case
may be, as provided under the terms of such Privilege(s). The Fund may modify or
terminate this Program at any time. Investors who wish to purchase Fund shares
through the Dreyfus Step Program in conjunction with a Dreyfus-sponsored
retirement plan may do so only for IRAs, SEP-IRAs and IRA "Rollover Accounts."
DREYFUS DIVIDEND OPTIONS Dreyfus Dividend Sweep enables a shareholder to
invest automatically dividends or dividends and capital gain distributions, if
any, paid by a Portfolio in shares of the same class of another Portfolio or
other funds in the Dreyfus Family of Funds of which the shareholder is an
investor. Shares of the other fund will be purchased at the then-current net
asset value; however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If the shareholder is investing in a
fund that charges a sales load, such shareholder may qualify for share prices
which do not include the sales load or which reflect a reduced sales load. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACH permits a shareholder to transfer electronically dividends or
dividends and capital gain distributions, if any, from the Fund to a designated
bank account. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. Banks may
charge a fee for this service. For more information concerning these privileges
or to request a Dividend Options Form, please call toll free 1-800-645-6561. You
may cancel these privileges by mailing written notification to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment
in or cancellation of these privileges is effective three business days
following receipt. These privileges are available only for existing accounts and
may not be used to open new accounts. Minimum subsequent investments do not
apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated. Shares held under Keogh Plans or IRAs are not eligible for Dreyfus
Dividend Sweep.
AUTOMATIC WITHDRAWAL PLAN The Automatic Withdrawal Plan permits a
shareholder to request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if such shareholder has a $5,000 minimum
account. Particular Retirement Plans, including Dreyfus sponsored retirement
plans, may permit certain participants to establish an automatic withdrawal plan
from such Retirement Plans. Participants should consult their Retirement Plan
sponsor and tax adviser for details. Such a withdrawal plan is different than
the Automatic Withdrawal Plan. An application for the Automatic Withdrawal Plan
can be obtained by calling 1-800-645-6561. There is a service charge of 50cents
for each withdrawal check. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
RETIREMENT PLANS The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k)
Salary Reduction Plans and 403(b)(7) Plans. Plan support services also are
available. An investor can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL
Shareholders may request redemption of their shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When a
request is received in proper form, the Portfolio will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents or
other institutions may charge their clients a nominal fee for effecting
redemptions of Portfolio shares. Any certificates representing Portfolio shares
being redeemed must be submitted with the redemption request. The value of the
shares redeemed may be more or less than their original cost, depending upon the
Portfolio's then-current net asset value.
Distributions from qualified Retirement Plans and certain non-qualified
deferred compensation plans, except distributions representing returns of
non-deductible contributions to the Retirement Plan, generally are taxable
income to the participant. Distributions from such a Retirement Plan to a
participant prior to the time the participant reaches age 59-1/2 or becomes
permanently disabled may subject the participant to an additional 10% penalty
tax imposed by the IRS. Participants should consult their tax advisers
concerning the timing and consequences of distributions from a Retirement Plan.
Participants in qualified Retirement Plans will receive a disclosure statement
describing the consequences of a distribution from such a Plan from the
administrator, trustee or custodian of the Plan, before receiving the
distribution. The Fund will not report to the IRS redemptions of Portfolio
shares by qualified Retirement Plans or certain non-qualified deferred
compensation plans. The administrator, trustee or custodian of such Retirement
Plans will be responsible for reporting distributions from such Plans to the
IRS.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.
HOWEVER, IF AN INVESTOR HAS PURCHASED PORTFOLIO SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMITS A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO THE INVESTOR PROMPTLY UPON BANK
CLEARANCE OF THE INVESTOR'S PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS
OR MORE. IN ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK,
THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER
AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF
THE INVESTOR'S SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF THE INVESTOR
OTHERWISE HAS A SUFFICIENT COLLECTED BALANCE IN THE INVESTOR'S ACCOUNT TO COVER
THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND THE INVESTOR WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Portfolio shares will not be
redeemed until the Transfer Agent has received the investor's Account
Application.
The Fund reserves the right to redeem an investor's account at its option
upon not less than 45 days' written notice if the net asset value of the
investor's account is $500 or less and remains so during the notice period.
PROCEDURES
Investors may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if the investor has checked the appropriate box
and supplied the necessary information on the Account Application or has filed a
Shareholder Services Form with the Transfer Agent, through the Wire Redemption
Privilege, the Telephone Redemption Privilege, or, for Investor Class shares
only, the Dreyfus TELETRANSFER Privilege. Other redemption procedures may be in
effect for clients of certain Service Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the right
to refuse any request made by wire or telephone, including requests made shortly
after a change of address, and may limit the amount involved or the number of
such requests. The Fund may modify or terminate any redemption Privilege at any
time or charge a service fee upon notice to shareholders. No such fee is
currently contemplated.
Investors may redeem Portfolio shares by telephone if they have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If an investor selects the telephone
redemption privilege or telephone exchange privilege (which is granted
automatically unless the investor refuses it), such investor authorizes the
Transfer Agent to act on telephone instructions from any person representing
himself or herself to be the investor, and reasonably believed by the Transfer
Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent instructions. Neither the Fund nor the Transfer Agent
will be liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Portfolio shares. In such cases, investors should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in an investor's redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Portfolio's net asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, an investor
may redeem his shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427. Redemption requests may be delivered
in person only to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED
TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of
the nearest Dreyfus Financial Center, please call one of the telephone numbers
listed under "General Information."
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature 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. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank of
the Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE -- An investor may request by wire or telephone
that redemption proceeds (minimum $1,000) be wired to the investor's account at
a bank which is a member of the Federal Reserve System, or a correspondent bank
if the investor's bank is not a member. An investor also may direct that
redemption proceeds be paid by check (maximum $150,000 per day) made out to the
owners of record and mailed to the investor's address. Redemption proceeds of
less than $1,000 will be paid automatically by check. Holders of jointly
registered Fund or bank accounts may have redemption proceeds of not more than
$250,000 wired within any 30-day period. An investor may telephone redemption
requests by calling 1-800-645-6561 or, if calling from overseas, 516-794-5452.
The Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- An investor may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
the investor's address. An investor may telephone redemption instructions by
calling 1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held
under Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE -- INVESTOR CLASS -- An investor may request
by telephone that redemption proceeds (minimum $500 per day) be transferred
between the investor's Fund account and the investor's bank account. Only a bank
account maintained in a domestic financial institution which is an Automated
Clearing House member may be designated. Redemption proceeds will be on deposit
in the investor's account at an Automated Clearing House member bank ordinarily
two days after receipt of the redemption request or, at the investor's request,
paid by check (maximum $150,000 per day) and mailed to the investor's address.
Holders of jointly registered Fund or bank accounts may redeem through the
Dreyfus TELETRANSFER Privilege for transfer to their bank account not more than
$250,000 within any 30-day period.
If an investor has selected the Dreyfus TELETRANSFER Privilege, the
investor may request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares issued in certificate
form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
(INVESTOR CLASS ONLY)
The Fund has adopted a Shareholder Services Plan, pursuant to which it pays
the Distributor for the provision of certain services to each Portfolio's
Investor Class shareholders a fee at an annual rate of .25 of 1% of the value of
the average daily net assets of the Portfolio's Investor Class Shares. 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Code, each Portfolio is treated as a separate corporation for
purposes of qualification and taxation as a regulated investment company. Each
Portfolio ordinarily pays dividends from its net investment income and
distributes net realized securities gains, if any, once a year, but it may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. No Portfolio will make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. Investors may choose whether to receive dividends and
distributions in cash or to reinvest in additional Portfolio shares. Dividends
and distributions paid in cash to Retirement Plans, however, may be subject to
additional tax as described below. All expenses are accrued daily and deducted
before declaration of dividends to investors. Dividends paid by each Class will
be calculated at the same time and in the same manner and will be of the same
amount, except that the expenses attributable solely to the Investor Class or
Class R will be borne exclusively by such Class. Investor Class shares will
receive lower per share dividends than Class R shares because of the higher
expenses borne by the Investor Class. See "Annual Fund Operating Expenses."
Dividends paid by a Portfolio to qualified Retirement Plans or certain
non-qualified deferred compensation plans ordinarily will not be subject to
taxation until the proceeds are distributed from the Retirement Plan. The Fund
will not report dividends paid to such Plans to the IRS. Generally,
distributions from such Retirement Plans, except those representing returns of
non-deductible contributions thereto, will be taxable as ordinary income and, if
made prior to the time the participant reaches age 59-1/2, generally will be
subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from such a Retirement Plan (other than
certain governmental or church plans) for any taxable year following the year in
which the participant reaches age 70-1/2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian of
such a Retirement Plan will be responsible for reporting distributions from such
Plans to the IRS. Participants in qualified Retirement Plans will receive a
disclosure statement describing the consequences of a distribution from such a
Plan from the administrator, trustee or custodian of the Plan prior to receiving
the distribution. Moreover, certain contributions to a qualified Retirement Plan
in excess of the amounts permitted by law may be subject to an excise tax.
Dividends derived from net investment income, together with distributions
from net realized short-term securities gains and all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds,
paid by a Portfolio will be taxable to U.S. shareholders and to certain
non-qualified Retirement Plans as ordinary income whether received in cash or
reinvested in Portfolio shares. Distributions from net realized long-term
securities gains of a Portfolio will be taxable to U.S. shareholders and to
certain non-qualified Retirement Plans as long-term capital gains for Federal
income tax purposes, regardless of how long shareholders have held their
Portfolio shares and whether such distributions are received in cash or
reinvested in Portfolio shares. The Code provides that the net capital gain of
an individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and distributions may be subject to state and local
taxes.
Dividends derived from net investment income, together with distributions
from net realized short-term securities gains and all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds,
paid by a Portfolio to a foreign investor generally are subject to U.S.
non-resident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions from
net realized long-term securities gains paid by a Portfolio to a foreign
investor as well as the proceeds of any redemptions from a foreign investor's
account, regardless of the extent to which gain or loss may be realized,
generally will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below, unless
the foreign investor certifies his non-U.S. residency status.
The exchange of shares of one fund or portfolio for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize, or an exchange on behalf of a Retirement Plan which is not tax exempt
may result in, a taxable gain or loss.
Notice as to the tax status of dividends and distributions will be mailed
to investors annually. Investors also will receive periodic summaries of their
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. Participants in a Retirement
Plan should receive periodic statements from the trustee, custodian or
administrator of their Plan.
With respect to individual investors and certain non-qualified Retirement
Plans, Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN furnished
in connection with opening an account is correct or that such shareholder has
not received notice from the IRS of being subject to backup withholding as a
result of a failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify a Portfolio to
institute backup withholding if the IRS determines a shareholder's TIN is
incorrect or if a shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account, and may be claimed as a credit on the record owner's
Federal income tax return.
Management of the Fund believes that each Portfolio has qualified for the
fiscal year ended September 30, 1995 as a "regulated investment company" under
the Code. Each Portfolio intends to continue to so qualify if such qualification
is in the best interests of its shareholders. Such qualification relieves the
Portfolio of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. In addition,
each Portfolio is subject to a non-deductible 4% excise tax, measured with
respect to certain undistributed amounts of taxable investment income and
capital gains.
Investors should consult their tax advisers regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class may be calculated
on the basis of average annual total return and/or total return. These total
return figures reflect changes in the price of the shares and assume that any
income dividends and/or capital gains distributions made by the Portfolio during
the measuring period were reinvested in shares of the same Class. These figures
also take into account any applicable shareholder services fees. As a result, at
any given time, the performance of the Investor Class should be expected to be
lower than that of Class R. Performance for each Class will be calculated
separately.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Portfolio was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of a
stated period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of each
Portfolio's performance will include the Portfolio's average annual total return
for one, five and ten year periods, or for shorter periods depending upon the
length of time during which the Portfolio has operated.
Total return is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Total return generally is expressed as a
percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the net asset value per share at
the beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end of
the period which assumes the application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc., Russell 2000 Index, Standard &
Poor's 500 Stock Index, the Dow Jones Industrial Average and other industry
publications.
GENERAL INFORMATION
The Fund was organized as a corporation under the laws of Maryland on July
15, 1993, and commenced operations on March 31, 1995. The Fund is authorized to
issue 300 million shares of Common Stock (with 100 million shares allocated to
each Portfolio), par value $.001 per share. Each Portfolio's shares are
classified into two classes_Investor Class and Class R. Each share has one vote
and shareholders will vote in the aggregate and not by class except as otherwise
required by law. However, only holders of Investor Class shares will be entitled
to vote on matters submitted to shareholders pertaining to the Shareholder
Services Plan.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Fund's By-Laws, the holders of
at least 10% of the shares outstanding and entitled to vote may require the Fund
to hold a special meeting of shareholders for purposes of removing a Director
from office and for any other purpose. Fund shareholders may remove a Director
by the affirmative vote of a majority of the Fund's outstanding voting shares.
In addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.
The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act and for other purposes. A shareholder of one Portfolio is not
deemed to be a shareholder of any other Portfolio. For certain matters Fund
shareholders vote together as a group; as to others they vote separately by
Portfolio.
To date, the Fund's Board has authorized the creation of three series of
shares. All consideration received by the Fund for shares of one of the
Portfolios and all assets in which such consideration is invested will belong to
that Portfolio (subject only to the rights of creditors of the Fund) and will be
subject to the liabilities related thereto. The assets attributable to, and the
expenses of, one Portfolio (and as to classes within a Portfolio) are treated
separately from those of the other Portfolios (and classes). The Fund has the
ability to create from time to time, new portfolios of shares without
shareholder approval.
The Transfer Agent maintains a record of your ownership and will send you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling 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.
APPENDIX
INVESTMENT TECHNIQUES FOREIGN CURRENCY TRANSACTIONS (GROWTH AND INCOME AND
GROWTH PORTFOLIOS ONLY) -- Foreign currency transactions may be entered into for
a variety of purposes, including: to fix in U.S. dollars, between trade and
settlement date, the value of a security the Portfolio has agreed to buy or
sell; or to hedge the U.S. dollar value of securities the Portfolio already
owns, particularly if it expects a decrease in the value of the currency in
which the foreign security is denominated; or to gain exposure to the foreign
currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, the Portfolio's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Portfolio agreeing to
exchange an amount of a currency it did not currently own for another currency
at a future date in anticipation of a decline in the value of the currency sold
relative to the currency the Portfolio contracted to receive in the exchange.
The Portfolio's success in these transactions will depend principally on the
Advisers' ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar.
BORROWING MONEY -- Each Portfolio is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to borrow in
an amount up to 331/3% of the value of such company's total assets. Each
Portfolio currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of its total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of the Portfolio's total assets, the Portfolio
will not make any additional investments.
USE OF DERIVATIVES -- Although neither the Fund nor a Portfolio will be a
commodity pool, Derivatives subject the Portfolio to the rules of the Commodity
Futures Trading Commission which limit the extent to which the Portfolio can
invest in certain Derivatives. Each Portfolio may invest in futures contracts
and options with respect thereto for hedging purposes without limit. However,
none of the Portfolios may invest in such contracts and options for other
purposes if the sum of the amount of initial margin deposits and premiums paid
for unexpired options with respect to such contracts, other than bona fide
hedging purposes, exceed 5% of the liquidation value of the Portfolio's assets,
after taking into account unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Each Portfolio may invest up to 5% of its asset, represented by the premium
paid, in the purchase of call and put options. Each Portfolio may write (i.e.,
sell) covered call and put option contracts to the extent of 20% of the value of
its net assets at the time such option contracts are written. When required by
the Securities and Exchange Commission, the Portfolio will set aside permissible
liquid assets in a segregated account to cover its obligations relating to its
purchase of Derivatives. To maintain this required cover, a Portfolio may have
to sell portfolio securities at disadvantageous prices or times since it may not
be possible to liquidate a Derivative position at a reasonable price.
Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Portfolio's performance.
If a Portfolio invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Portfolio's return
or result in a loss. The Portfolio also could experience losses it its
Derivatives were poorly correlated with its other investments, or if the
Portfolio were unable to liquidate its position because of an illiquid secondary
market. The market for many Derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid an unpredictable changes
in their prices for Derivatives.
LENDING PORTFOLIO SECURITIES -- Each Portfolio may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. In connection with such loans, the
Portfolio continues to be entitled to payments in amounts equal to the interest
or other distributions payable on the loaned securities. Loans of portfolio
securities afford the Portfolio an opportunity to earn interest on the amount of
the loan and at the same time to earn income on the loaned securities'
collateral. Loans of portfolio securities may not exceed 331/3% of the value of
the Portfolio's total assets. In connection with such loans, the Portfolio will
receive collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. Such loans are
terminable by the Portfolio at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.
FORWARD COMMITMENTS -- Each Portfolio may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The payment
obligation and the interest rate that will be received on a forward commitment
or when-issued security are fixed at the time the Portfolio enters into the
commitment. However, the Portfolio does not make a payment until it receives
delivery from the other party to the transaction. The Portfolio will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but a Portfolio may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the Portfolio
consisting of cash, cash equivalents or U.S. Government securities or other high
quality liquid debt securities at least equal at all times to the amount of the
commitments will be established and maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES MONEY MARKET INSTRUMENTS -- Each Portfolio may
invest, in the circumstances described under "Description of the Fund --
Management Policies," in the following types of money market instruments.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in the interest rates, maturities and time of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, are supported by the full faith and credit of the U.S.
Treasury; others, by the right of the issuer to borrow from the U.S. Treasury;
others, by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies or instrumentalities, no assurance can be
given that it will always do so, because the U.S. Government is not obligated to
do so by law.
REPURCHASE AGREEMENTS. In a repurchase agreement a Portfolio buys and the
seller agrees to repurchase, security at a mutually agreed upon time and price
(usually seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. Repurchase
agreements could involve risks in the event of a default or insolvency of the
other party to the agreement, including possible delays or restrictions upon the
Portfolio's ability to dispose of the underlying securities. Each Portfolio may
enter into repurchase agreements with certain banks or non-bank dealers.
BANK OBLIGATIONS. Each Portfolio may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, the
Portfolio may be subject to additional investment risks that are different in
some respects from those incurred by a fund which invests only in debt
obligations of U.S. domestic issuers.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by a Portfolio will consist only of direct obligations which, at the
time of their purchase, are (a) rated not lower than Prime-1 by Moody's, A-1 by
S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies having an
outstanding unsecured debt issue currently rated not lower than Aa3 by Moody's
or AA- by S&P, Fitch or Duff, or (c) if unrated, determined by the Advisers to
be of comparable quality to those rated obligations which may be purchased by
the Portfolio.
ZERO COUPON SECURITIES -- Each Portfolio may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been stripped
of their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Each Portfolio also may invest in zero coupon securities issued by
corporations and financial institutions which constitute a proportionate
ownership of the issuer's pool of underlying U.S. Treasury securities. A zero
coupon security pays no interest to its holder during its life and is sold at a
discount to its face value at maturity. The amount of the discount fluctuates
with the market price of the security. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES --
Each of the Growth and Income Portfolio and Growth Portfolio may invest in
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Advisers to be of comparable quality to the other obligations in which
the Portfolio may invest. Such securities also include debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS -- Each of the
Growth and Income Portfolio and Growth Portfolio may invest in the securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") and
European Depositary Receipts ("EDRs"). These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are receipts issued in Europe typically by non-United States
banks and trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the
United States securities markets and EDRs and CDRs in bearer form are designed
for use in Europe.
INVESTMENT COMPANIES -- Each Portfolio may invest in securities issued by
other investment companies to the extent consistent with its investment
objective. Under the 1940 Act, the Portfolio's investment in such securities,
subject to certain exceptions, currently is limited to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the Portfolio's net
assets with respect to any one investment company and (iii) 10% of the
Portfolio's net assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain other
expenses.
ILLIQUID SECURITIES -- Each Portfolio may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Portfolio's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or contractual
restrictions on resale, repurchase agreements providing for settlement in more
than seven days after notice, certain privately negotiated non-exchange traded
options and securities used to cover such options. As to these securities, a
Portfolio is subject to a risk that should the Fund desire to sell them when a
ready buyer is not available at a price the Fund deems representative of their
value, the value of the Portfolio's net assets could be adversely affected.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
December 1, 1995
DREYFUS ASSET ALLOCATION
FUND, INC.
SUPPLEMENT TO PROSPECTUS
DATED SEPTEMBER 1, 1995
THE FOLLOWING INFORMATION SUPPLEMENTS OR REPLACES THE INFORMATION CONTAINED
IN THE SECTIONS OF THE FUND'S PROSPECTUS ENTITLED "MANAGEMENT OF THE FUND," "HOW
TO BUY FUND SHARES," "SHAREHOLDER SERVICES," AND "HOW TO REDEEM FUND SHARES":
Dreyfus Transfer, Inc., a wholly-owned subsidiary of The Dreyfus
Corporation, is located at One American Express Plaza, Providence, Rhode Island
02903, and serves as the Fund's Transfer and Dividend Disbursing Agent (the
"Transfer Agent").
Effective January 1, 1996, the telephone number for the following
transactions is 1-800-645-6561 or, if you are calling from overseas,
516-794-5452:
* Dreyfus TELETRANSFER Privilege
* Telephone Exchange Privilege
* Wire Redemption Privilege
* Telephone Redemption Privilege
<PAGE>
PROSPECTUS SEPTEMBER 1, 1995
DREYFUS ASSET ALLOCATION FUND, INC.
________________________________________________________________
DREYFUS ASSET ALLOCATION FUND, INC. (THE "FUND") IS AN OPEN-END,
NON-DIVERSIFIED MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. THE FUND
PERMITS YOU TO INVEST IN THREE SEPARATE NON-DIVERSIFIED PORTFOLIOS (EACH, A
"PORTFOLIO"): DREYFUS TOTAL RETURN PORTFOLIO, WHICH SEEKS TO MAXIMIZE TOTAL
RETURN; DREYFUS INCOME PORTFOLIO, WHICH SEEKS TO MAXIMIZE CURRENT INCOME, WITH A
SECONDARY GOAL OF CAPITAL APPRECIATION; AND DREYFUS GROWTH PORTFOLIO, WHICH
SEEKS CAPITAL APPRECIATION. EACH PORTFOLIO WILL FOLLOW AN INVESTMENT STRATEGY
THAT ACTIVELY ALLOCATES THE PORTFOLIO'S ASSETS AMONG COMMON STOCKS, U.S.
TREASURY NOTES AND BONDS AND SHORT-TERM MONEY MARKET INSTRUMENTS. IN ADDITION TO
USUAL INVESTMENT PRACTICES, EACH PORTFOLIO MAY USE SPECULATIVE INVESTMENT
TECHNIQUES SUCH AS SHORT-SELLING, BORROWING FOR INVESTMENT PURPOSES, AND FUTURES
AND OPTIONS TRANSACTIONS. YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME
WITHOUT CHARGE OR PENALTY. YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING
DREYFUS TELE-TRANSFER. THE DREYFUS CORPORATION PROFESSIONALLY MANAGES EACH
PORTFOLIO. THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 1, 1995, WHICH MAY
BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN
THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED
HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT 144 GLENN CURTISS
BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN
TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
________________________________________________________________
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses............ 3
Condensed Financial Information........... 4
Description of the Fund................... 4
Management of the Fund.................... 14
How to Buy Fund Shares.................... 16
Shareholder Services...................... 18
How to Redeem Fund Shares ................ 21
Shareholder Services Plan................. 23
Dividends, Distributions and Taxes........ 24
Performance Information................... 25
General Information....................... 25
________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________________________________________________
[This Page Intentionally Left Blank]
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Dreyfus Dreyfus Dreyfus
Total Return Income Growth
Portfolio Portfolio Portfolio
______________ ____________ _________
<S> <C> <C> <C>
Management Fees........................................................ .75% .75% .75%
Other Expenses......................................................... .69% 1.75% 1.75%
Total Operating Expenses............................................... 1.44% 2.50% 2.50%
Example:
You 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:
1 YEAR................................................................. $ 15 $ 25 $ 25
3 YEARS................................................................ $ 46 $ 78 $ 78
5 YEARS................................................................ $ 79 $ 133 $ 133
10 YEARS............................................................... $ 172 $ 284 $ 284
- ------------------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESEN-TATIVE OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED.
MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH PORTFOLIO'S ACTUAL PERFORMANCE
WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- --------------------------------------------------------------------------------------------
</TABLE>
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. Other Expenses and Total Operating Expenses for the Dreyfus Income
Portfolio and Dreyfus Growth Portfolio are based on estimated amounts for the
current fiscal year. The information in the foregoing table has been restated to
reflect the Fund's termination of its Rule 12b-1 Plan, but does not reflect any
fee waivers or expense reimbursement arrangements that may be in effect. You can
purchase Portfolio shares without charge directly from the Fund's distributor;
you may be charged a nominal fee if you effect transactions in Fund shares
through a securities dealer, bank or other financial institution. See
"Management of the Fund," "How to Buy Fund Shares" and "Shareholder Services
Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst & Young
LLP, the Fund's independent auditors, whose report thereon appears in the
Statement of Additional Information. Further financial data and related notes
for each Portfolio are included in the Statement of Additional Information,
available upon request.
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 Portfolio for the periods indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
TOTAL RETURN INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
___________________________________ ___________________________ __________________
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1994(1) APRIL 30, 1995 APRIL 30, 1995(2) APRIL 30, 1995(2)
__________________ _______________ ___________________________ __________________
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period...... $12.50 $12.49 $12.50 $12.50
___________ ____________ _____________ _____________
INVESTMENT OPERATIONS:
Investment income-net .................... .24 .39 .20 .45
Net realized and unrealized gain (loss)
on investments (.11) 1.35 1.18 .24
___________ ____________ _____________ _____________
TOTAL FROM INVESTMENT OPERATIONS............ .13 1.74 1.38 .69
___________ ____________ _____________ _____________
DISTRIBUTIONS:
Dividends from investment income-net........ (.13) (.37) (.17) (.03)
Dividends from net realized gain
on investments (.01) (.05) -- --
___________ ____________ _____________ _____________
TOTAL DISTRIBUTIONS....................... (.14) (.42) (.17) (.03)
___________ ____________ _____________ _____________
Net asset value, end of period.............. $12.49 $13.81 $13.71 $13.16
___________ ____________ _____________ _____________
TOTAL INVESTMENT RETURN..................... .99%(3) 14.22% 11.14%(3) 5.53%(3)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets... .16%(3) .67% 1.40%(3) 1.40%(3)
Ratio of net investment income to
average net assets 2.48%(3) 3.00% 1.60%(3) 3.91%(3)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation... 1.58%(3) 1.27% 1.60%(3) 4.63%(3)
Portfolio Turnover Rate................... - 160.11% 94.33%(3) 497.41%(3)
Net Assets, end of period (000's omitted). $51,063 $56,639 $1,386 $1,368
</TABLE>
(1). From July 1, 1993 (commencement of operations) through
April 30, 1994.
(2). From October 18, 1994 (commencement of operations) through
April 30, 1995.
(3) Not annualized.
Further information about the performance of each Portfolio is contained in
the Fund's annual report which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund divided into separate
portfolios. Each Portfolio is treated as a separate entity for certain matters
under the Investment Company Act of 1940 and for other purposes, and a
shareholder of one Portfolio is not deemed to be a shareholder of any other
Portfolio. As described below, for certain matters Fund shareholders vote
together as a group; as to others they vote separately by Portfolio.
INVESTMENT OBJECTIVES
Dreyfus Total Return Portfolio seeks to maximize total return, consisting
of capital appreciation and current income. Dreyfus Income Portfolio seeks to
maximize current income, with a secondary goal of capital appreciation. Dreyfus
Growth Portfolio seeks capital appreciation. Each Portfolio's investment
objective cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of such Portfolio's outstanding
voting shares. There can be no assurance that a Portfolio's investment objective
will be achieved.
MANAGEMENT POLICIES
Each Portfolio seeks to achieve its investment objective by following an
asset allocation strategy that contemplates shifts, which may be frequent, among
common stocks, U.S. Treasury Notes and Bonds with remaining maturities at the
time of purchase of at least one year, and short-term money market instruments.
The Portfolios differ only with respect to their asset class weightings and, in
the case of the Dreyfus Growth Portfolio, the types of common stocks in which it
may invest. The following table sets forth for each Portfolio the asset classes,
benchmark percentages and asset class strategy ranges within which The Dreyfus
Corporation intends to manage the Portfolio's assets:
<TABLE>
<CAPTION>
DREYFUS TOTAL DREYFUS INCOME DREYFUS GROWTH
RETURN PORTFOLIO PORTFOLIO PORTFOLIO
__________________________ ___________________________ ___________________________
ASSET BENCHMARK STRATEGY BENCHMARK STRATEGY BENCHMARK STRATEGY
CLASS PERCENTAGE RANGE PERCENTAGE RANGE PERCENTAGE RANGE
______ ___________ ___________ ___________ _________ ___________ __________
<S> <C> <C> <C> <C> <C> <C>
Common Stocks 55% 40-70% 35% 25-45% 80% 65-95%
U.S. Treasury Notes and
Bonds 35% 25-50% 55% 45-70% - -
Short-Term Money Market
Instruments 10% 0-15% 10% 0-15% - -
Debt Instruments (consisting - - - - 20% 5-35%
of U.S. Treasury Notes and
Bonds and Short-Term Money
Market Instruments)
</TABLE>
The Dreyfus Corporation has broad latitude in selecting the class of
investments and market sectors in which each Portfolio will invest. Under normal
market conditions, The Dreyfus Corporation expects to adhere to the asset class
strategy ranges set forth above; however, it reserves the right to vary the
asset class mix and the percentage of securities invested in any asset class or
market from the benchmark percentages and asset class strategy ranges set forth
above as the risk/return characteristics of either markets or asset classes, as
assessed by The Dreyfus Corporation, vary over time. None of the Portfolios will
be managed as a balanced portfolio. The asset allocation mix for each Portfolio
will be determined by The Dreyfus Corporation at any given time in light of its
assessment of current economic conditions and investment opportunities. Some of
the factors that The Dreyfus Corporation may consider in determining each
Portfolio's asset allocation mix include the following: (1) level and direction
of long-term interest rates versus short-term interest rates; (2) historical
investment returns for each asset class in which the Portfolio can invest
relative to the prevailing business cycle; and (3) general economic conditions,
such as current inflation, unemployment and capacity utilization figures, that
could affect investments. The asset allocation mix selected will be a primary
determinant of a Portfolio's investment performance. Under certain market
conditions, limiting a Portfolio's asset allocation among these asset classes
may inhibit its ability to achieve its investment objective.
COMMON STOCKS _ The common stocks in which the Dreyfus Total Return
Portfolio and the Dreyfus Income Portfolio invest consist of those included in
the Standard & Poor's 500 Stock Index (the "S&P 500 Index"). The S&P 500 Index
is composed of 500 selected common stocks, most of which are listed on the New
York Stock Exchange. The composition of the S&P 500 Index is determined by
Standard & Poor's Corporation based on such factors as the market capitalization
and trading activity of each stock and its adequacy as a representative of
stocks in a particular industry group, and may be changed from time to time. The
common stocks in which the Dreyfus Growth Portfolio invests consist of those
included in the Wilshire 5000 Index. The Wilshire 5000 Index is composed of all
publicly-traded common stocks in the United States. The Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's Corporation or Wilshire
Associates.
- --------------------
"Standard & Poor's," "S&PRegistration Mark" and "S&P 500
Registration Mark" are trademarks of Standard & Poor's Corporation.
U.S. TREASURY NOTES AND BONDS _ Each Portfolio invests in U.S. Treasury
Notes and Bonds with remaining maturities at the time of purchase by the
Portfolio of at least one year. Under normal circumstances, the dollar-weighted
average maturity of this portion of each Portfolio's investments is expected to
range between 3 and 10 years.
MONEY MARKET INSTRUMENTS _ The short-term money market instruments in which
each Portfolio invests consist of U.S. Government securities, bank obligations,
including certificates of deposit, time deposits and bankers' acceptances and
other short-term obligations of domestic or foreign banks, domestic savings and
loan associations and other banking institutions having total assets in excess
of $1 billion, commercial paper and repurchase agreements, as set forth under
"Certain Portfolio Securities" below. For temporary defensive purposes, a
Portfolio may invest up to 100% of its assets in money market instruments, but
at no time will such Portfolio's investments in bank obligations, including time
deposits, exceed 25% of its assets.
INVESTMENT TECHNIQUES
Each Portfolio also may engage in various investment and hedging techniques
such as leveraging, short-selling, options and futures transactions, and lending
portfolio securities, each of which involves risk. See "Risk Factors" below.
Options and futures transactions involve so-called "derivative securities."
LEVERAGE THROUGH BORROWING _ Each Portfolio may borrow for investment
purposes up to 331/3% of the value of its total assets. This borrowing, which is
known as leveraging, generally will be unsecured, except to the extent a
Portfolio enters into reverse repurchase agreements described below. Leveraging
will exaggerate the effect on net asset value of any increase or decrease in the
market value of the Portfolio's investment securities. Money borrowed for
leveraging will be subject to interest costs that may or may not be recovered by
appreciation of the securities purchased; in certain cases, interest costs may
exceed the return received on the securities purchased.
Among the forms of borrowing in which each Portfolio may engage is the
entry into reverse repurchase agreements with banks, brokers or dealers. These
transactions involve the transfer by a Portfolio of an underlying debt
instrument in return for cash proceeds based on a percentage of the value of the
security. The Portfolio retains the right to receive interest and principal
payments on the security. At an agreed upon future date, the Portfolio
repurchases the security at principal, plus accrued interest. In certain types
of agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based on the prevailing overnight repurchase rate.
SHORT-SELLING _ Each Portfolio may make short sales, which are transactions
in which the Portfolio sells a security it does not own in anticipation of a
decline in the market value of that security. To complete such a transaction,
the Portfolio must borrow the security to make delivery to the buyer. The
Portfolio 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 Portfolio. A
Portfolio will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Portfolio replaces the borrowed security. A Portfolio will realize a gain if the
security declines in price between those dates.
Each Portfolio may purchase call options to provide a hedge against an
increase in the price of a security sold short by the Portfolio. When a
Portfolio purchases a call option it has to pay a premium to the person writing
the option and a commission to the broker selling the option. If the option is
exercised by the Portfolio, the premium and the commission paid may be more than
the amount of the brokerage commission charged if the security were to be
purchased directly. See "Call and Put Options on Specific Securities" below.
No securities will be sold short by a Portfolio if, after effect is given
to any such short sale, the total market value of all securities sold short by
the Portfolio would exceed 25% of the value of its net assets. No Portfolio may
sell short the securities of any single issuer on a national securities exchange
to the extent of more than 5% of the value of its net assets. No Portfolio may
sell short the securities of any class of an issuer to the extent, at the time
of the transaction, of more than 5% of the outstanding securities of that class.
In addition to the short sales discussed above, each Portfolio may make
short sales "against the box," a transaction in which the Portfolio enters into
a short sale of a security which the Portfolio owns. At no time will a Portfolio
have more than 15% of the value of its net assets in deposits on short sales
against the box.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES _ Each Portfolio may invest up
to 5% of its assets, represented by the premium paid, in the purchase of call
and put options in respect of specific securities (or groups or "baskets" of
specific securities) in which the Portfolio may invest. Each Portfolio may write
covered call and put option contracts to the extent of 20% of the value of its
net assets at the time such option contracts are written.
A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price at
any time during the option period. Conversely, a put option gives the purchaser
of the option the right to sell, and obligates the writer to buy, the underlying
security at the exercise price at any time during the option period. A covered
call option sold by a Portfolio, which is a call option with respect to which
the Portfolio owns the underlying security, exposes the Portfolio during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying security or to possible continued holding of
a security which might otherwise have been sold to protect against depreciation
in its market price. The principal reason for writing covered call options is to
realize, through the receipt of premiums, a greater return than would be
realized on the Portfolio's securities alone. A covered put option sold by a
Portfolio exposes the Portfolio during the term of the option to a decline in
price of the underlying security. Similarly, the principal reason for writing
covered put options is to realize income in the form of premiums. A put option
sold by a Portfolio is covered when, among other things, cash or liquid
securities are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken.
To close out a position when writing covered options, a Portfolio may make
a "closing purchase transaction" by purchasing an option on the same security
with the same exercise price and expiration date as the option which it has
previously written. To close out a position as a purchaser of an option, a
Portfolio may make a "closing sale transaction," which involves liquidating the
Portfolio's position by selling the option previously purchased. A Portfolio
will realize a profit or loss from a closing purchase or sale transaction
depending upon the difference between the amount paid to purchase an option and
the amount received from the sale thereof.
The Fund intends to treat options in respect of specific securities that
are not traded on a national securities exchange and the securities underlying
covered call options written by the Portfolios as illiquid securities. See
"Certain Portfolio Securities_Illiquid Securities" below.
Each Portfolio will purchase options only to the extent permitted by the
policies of state securities authorities in states where shares of such
Portfolio are qualified for offer and sale.
STOCK INDEX OPTIONS _ Each Portfolio may purchase and write put and call
options on stock indices listed on U.S. securities exchanges or traded in the
over-the-counter market. A stock index fluctuates with changes in the market
values of the stocks included in the index.
The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements in the Portfolio's investments
correlate with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index rather than the
price of a particular stock, whether a Portfolio will realize a gain or loss
from the purchase or writing of options on an index depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the
price of a particular stock. Accordingly, successful use by each Portfolio of
options on stock indices will be subject to The Dreyfus Corporation's ability to
predict correctly movements in the direction of the stock market generally or of
a particular industry. This requires different skills and techniques than
predicting changes in the price of individual stocks.
When a Portfolio writes an option on a stock index, the Portfolio will
place in a segregated account with the Fund's custodian cash or liquid
securities in an amount at least equal to the market value of the underlying
stock index and will maintain the account while the option is open or otherwise
will cover the transaction.
FUTURES TRANSACTIONS _ IN GENERAL _ The Fund is not a commodity pool.
However, as a substitute for a comparable market position in the underlying
securities or for hedging purposes, each Portfolio may engage in futures and
options on futures transactions as described below.
Each Portfolio's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, a Portfolio may not engage in
such transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired commodity options, other than for bona fide hedging
transactions, would exceed 5% of the liquidation value of the Portfolio's
assets, after taking into account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5%. Pursuant to regulations and/or published
positions of the Securities and Exchange Commission, each 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. To the extent a Portfolio engages in the use
of futures and options on futures other than for bona fide hedging purposes, the
Portfolio may be subject to additional risk.
Initially, when purchasing or selling futures contracts a Portfolio will be
required to deposit with the Fund's custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Portfolio upon termination of the futures position, assuming
all contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Portfolio may elect to close the position by taking an
opposite position at the then prevailing price, which will operate to terminate
the Portfolio's existing position in the contract.
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 a Portfolio
to substantial losses. If it is not possible, or the Portfolio determines not,
to close a futures position in anticipation of adverse price movements, the
Portfolio will be required to make daily cash payments of variation margin. In
such circumstances, an increase in the value of the portion of a Portfolio's
securities being hedged, if any, may offset partially or completely losses on
the futures contract. However, no assurance can be given that the price of the
securities being hedged will correlate with the price movements in a futures
contract and thus provide an offset to losses on the futures contract.
To the extent a Portfolio is engaging in a futures transaction as a hedging
device, because of the risk of an imperfect correlation between securities owned
by the Portfolio that are the subject of a hedging transaction and the futures
contract used as a hedging device, it is possible that the hedge will not be
fully effective if, for example, losses on the portfolio securities exceed gains
on the futures contract or losses on the futures contract exceed gains on the
portfolio securities. For futures contracts based on indices, the risk of
imperfect correlation increases as the composition of the Portfolio's securities
vary from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being hedged
and movements in the price of futures contracts, the Portfolio may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar amount of
the securities being hedged if the historical volatility of the futures contract
has been less or greater than that of the securities. Such "over hedging" or
"under hedging" may adversely affect a Portfolio's net investment results if the
market does not move as anticipated when the hedge is established.
Successful use of futures by a Portfolio also is subject to The Dreyfus
Corporation's ability to predict correctly movements in the direction of the
market or interest rates. For example, if a Portfolio has hedged against the
possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, 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.The
Portfolio may have to sell such securities at a time when it may be
disadvantageous to do so.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
Call options sold by a Portfolio with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with the instruments underlying, the
futures contract. Put options sold by a Portfolio with respect to futures
contracts will be covered in the same manner as put options on specific
securities as described above.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES _ Each Portfolio may
purchase and sell stock index futures contracts and options on stock index
futures contracts as a substitute for a comparable market position in the
underlying securities or for hedging purposes.
A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the agreement is made. No physical
delivery of the underlying stocks in the index is made. With respect to stock
indices that are permitted investments, each Portfolio intends to purchase and
sell futures contracts on the stock index for which it can obtain the best price
with consideration also given to liquidity.
The price of stock index futures may not correlate perfectly with the
movement in the stock index because of certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
would distort the normal relationship between the index and futures markets.
Secondly, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
also may cause temporary price distortions.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS _ Each Portfolio may invest in interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position or to hedge against adverse movements in interest rates.
To the extent a Portfolio has invested in interest rate futures contracts
or options on interest rate futures contracts as a substitute for a comparable
market position, the Portfolio will be subject to the investment risks of having
purchased the securities underlying the contract.
Each Portfolio may purchase call options on interest rate futures contracts
to hedge against a decline in interest rates and may purchase put options on
interest rate futures contracts to hedge its portfolio securities against the
risk of rising interest rates.
Each Portfolio may sell call options on interest rate futures contracts to
partially hedge against declining prices of its portfolio securities. If the
futures price at expiration of the option is below the exercise price, the
Portfolio will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in such Portfolio's
holdings. Each Portfolio may sell put options on interest rate futures contracts
to hedge against increasing prices of the securities which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is higher than the exercise price, the Portfolio will retain the full
amount of the option premium which provides a partial hedge against any increase
in the price of securities which the Portfolio intends to purchase. If a put or
call option sold by a Portfolio is exercised, the Portfolio will incur a loss
which will be reduced by the amount of the premium it receives. Depending on the
degree of correlation between changes in the value of its portfolio securities
and changes in the value of its futures positions, a Portfolio's losses from
existing options on futures may to some extent be reduced or increased by
changes in the value of its portfolio securities.
Each Portfolio also may sell options on interest rate futures contracts as
part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or that
there will be a correlation between price movements in the options on interest
rate futures and price movements in a Portfolio's securities which are the
subject of the hedge. In addition, a Portfolio's purchase of such options will
be based upon predictions as to anticipated interest rate trends, which could
prove to be inaccurate.
FUTURE DEVELOPMENTS _ Each Portfolio may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts and
any other derivative investments which are not presently contemplated for use by
the Fund 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 on behalf of a Portfolio, the Fund
will provide appropriate disclosure in its prospectus or statement of additional
information.
LENDING PORTFOLIO SECURITIES _ From time to time, each Portfolio may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 331/3% of the value of such Portfolio's total assets. In
connection with such loans, the Portfolio will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Each Portfolio can increase its income
through the investment of such collateral. The Portfolio engaging in the
portfolio loan transaction continues to be entitled to payments in amounts equal
to the interest, dividends or other distributions payable on the loaned security
and receives interest on the amount of the loan. Such loans will be terminable
at any time upon specified notice. A Portfolio might experience risk of loss if
the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Portfolio.
FORWARD COMMITMENTS _ Each Portfolio may purchase debt securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. A Portfolio will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Portfolio may sell these securities before the
settlement date if it is deemed advisable. A Portfolio will not accrue income in
respect of a security purchased on a when-issued or forward commitment basis
prior to its stated delivery date.
Securities purchased on a when-issued or forward commitment basis and
certain other debt securities held by the Portfolios are subject to changes in
value (both 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
when-issued or forward commitment basis may expose a Portfolio to risk because
they may experience such fluctuations prior to their actual delivery.
Purchasing debt securities on a when-issued or forward commitment 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. A segregated account of each Portfolio consisting of cash,
cash equivalents or U.S. Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the when-issued or
forward commitments will be established and maintained at the Fund's custodian
bank. Purchasing debt securities on a when-issued or forward commitment 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.
CERTAIN PORTFOLIO SECURITIES
U.S. GOVERNMENT SECURITIES _ Each Portfolio may purchase securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, which
include U.S. Treasury securities that differ in their interest rates, maturities
and times of issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Principal
and interest may fluctuate based on generally recognized reference rates or the
relationship of rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no assurance can
be given that it will always do so, because the U.S. Government is not obligated
to do so by law.
ZERO COUPON SECURITIES _ Each Portfolio may invest in zero coupon U.S.
Treasury securities, which are Treasury Notes and Bonds that have been stripped
of their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Each Portfolio also may invest in zero coupon securities issued by
corporations and financial institutions which constitute a proportionate
ownership of the issuer's pool of underlying U.S. Treasury securities. A zero
coupon security pays no interest to its holder during its life and is sold at a
discount to its face value at maturity. The amount of the discount fluctuates
with the market price of the security. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
REPURCHASE AGREEMENTS _ Repurchase agreements involve the acquisition by a
Portfolio of an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Portfolio to resell, the instrument at a fixed
price, usually not more than one week after its purchase. Certain costs may be
incurred in connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Portfolio may be delayed or
limited.
BANK OBLIGATIONS _ Each Portfolio may purchase certificates of deposit,
time deposits, bankers' acceptances and other short-term obligations of domestic
banks, foreign subsidiaries of domestic banks, foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, domestic savings and
loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, the Fund may
be subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by each Portfolio will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation. No Portfolio will
invest more than 15% of the value of its net assets in time deposits that are
illiquid and in other illiquid securities.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS
Commercial paper consists of short-term, unsecured promissory notes issued
to finance short-term credit needs. The commercial paper purchased by a
Portfolio will consist only of direct obligations which, at the time of their
purchase, are (a) rated not lower than Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), A-1 by Standard & Poor's Corporation ("S&P"), F-1 by Fitch
Investors Service, Inc. ("Fitch") or Duff-1 by Duff & Phelps Credit Rating Co.
("Duff"), (b) issued by companies having an outstanding unsecured debt issue
currently rated not lower than Aa3 by Moody's or AA- by S&P, Fitch or Duff, or
(c) if unrated, determined by The Dreyfus Corporation to be of comparable
quality to those rated obligations which may be purchased by the Portfolio. Each
Portfolio may purchase floating and variable rate demand notes and bonds, which
are obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time or at
specified intervals.
ILLIQUID SECURITIES _ Each Portfolio may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Portfolio's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or contractual
restrictions on resale, repurchase agreements providing for settlement in more
than seven days after notice, and certain privately negotiated non-exchange
traded options and securities used to cover such options. As to these
securities, a Portfolio is subject to a risk that should the Portfolio desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Portfolio's net assets could be
adversely affected.
CERTAIN FUNDAMENTAL POLICIES
Each Portfolio may (i) borrow money to the extent permitted under the
Investment Company Act of 1940, which currently limits borrowing to no more than
331/3% of the value of the Portfolio's total assets; and (ii) invest up to 25%
of the value of its total assets in the securities of issuers in a single
industry, provided that there is no such limitation on investments in securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
This paragraph describes fundamental policies that cannot be changed as to a
Portfolio without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of such Portfolio's outstanding voting shares.
See "Investment Objective and Management Policies_Investment Restrictions" in
the Fund's Statement of Additional Information.
RISK FACTORS CERTAIN INVESTMENT TECHNIQUES
The use of investment techniques such as short-selling, engaging in
financial futures and options transactions, leverage through borrowing,
purchasing securities on a forward commitment basis and lending portfolio
securities involves greater risk than that incurred by many other funds with a
similar objective. Using these techniques may produce higher than normal
portfolio turnover and may affect the degree to which a Portfolio's net asset
value fluctuates. Portfolio turnover may vary from year to year, as well as
within a year. Higher portfolio turnover rates are likely to result in
comparatively greater brokerage commissions or transaction costs. See "Portfolio
Transactions" in the Fund's Statement of Additional Information.
Each Portfolio's ability to engage in certain short-term transactions may
be limited by the requirement that, to qualify as a regulated investment
company, the Portfolio must earn less than 30% of its gross income from the
disposition of securities held for less than three months. This 30% test limits
the extent to which a Portfolio may sell securities held for less than three
months, effect short sales of securities held for less than three months, write
options expiring in less than three months and invest in certain futures
contracts, among other strategies. However, portfolio turnover will not
otherwise be a limiting factor in making investment decisions.
EQUITY SECURITIES _ Investors should be aware that equity securities
fluctuate in value, often based on factors unrelated to the value of the issuer
of the securities, and that fluctuations can be pronounced. Changes in the value
of a Portfolio's equity securities will result in changes in the value of the
Portfolio's shares and thus the Portfolio's yield and total return to investors.
FIXED-INCOME SECURITIES _ Investors should be aware that even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Thus, if interest rates have increased from the time a security
was purchased, such security, if sold, might be sold at a price less than its
cost. Similarly, if interest rates have declined from the time a security was
purchased, such security, if sold, might be sold at a price greater than its
cost. In either instance, if the security was purchased at face value and held
to maturity, no gain or loss would be realized. The value of U.S. Treasury
securities also will be affected by the supply and demand, as well as the
perceived supply and demand, for such securities.
FOREIGN SECURITIES _ Since the stocks of some foreign issuers are included
in the S&P 500 Index and the Wilshire 5000 Index, a Portfolio's investments may
contain securities of such foreign issuers which may subject the Portfolio to
additional investment risks with respect to those securities that are different
in some respects from those incurred by a fund that invests only in securities
of domestic issuers. Such risks include future political and economic
developments, the possible imposition of withholding taxes on income payable on
the securities, the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions that might adversely affect an
investment in these securities and the possible seizure or nationalization of
foreign deposits. No Portfolio will invest more than 20% of the value of its
assets in the common stocks of foreign issuers. See "Certain Portfolio
Securities_Bank Obligations" above.
OTHER INVESTMENT CONSIDERATIONS _ Each Portfolio's net asset value per
share is not fixed and should be expected to fluctuate. You should purchase
Portfolio shares only as a supplement to an overall investment program and only
if you are willing to undertake the risks involved.
Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to accrue income with respect to these securities
prior to the receipt of cash payments. To maintain its qualification as a
regulated investment company and avoid liability for Federal income taxes, each
Portfolio may be required to distribute such income accrued with respect to
these securities and may have to dispose of such securities under
disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.
Each Portfolio's classification as a "non-diversified" investment company
means that the proportion of the Portfolio's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940. A "diversified" investment company is required by the Investment Company
Act of 1940 generally, with respect to 75% of its total assets, to invest not
more than 5% of such assets in the securities of a single issuer and to hold not
more than 10% of the outstanding voting securities of a single issuer. However,
each Portfolio intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue Code of
1986, as amended (the "Code"), which requires that, at the end of each quarter
of its taxable year, (i) at least 50% of the market value of the Portfolio's
total assets be invested in cash, U.S. Government securities, the securities of
other regulated investment companies and other securities, with such other
securities of any one issuer limited for the purposes of this calculation to an
amount not greater than 5% of the value of the Portfolio's total assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of the Portfolio's total assets be invested in the securities of
any one issuer (other than U.S. Government securities or the securities of other
regulated investment companies). Because a relatively high percentage of each
Portfolio's assets may be invested in the securities of a limited number of
issuers, some of which may be within the same industry or economic sector, the
Portfolio's securities may be more susceptible to any single economic, political
or regulatory occurrence than the securities of a diversified investment
company.
Investment decisions for each Portfolio are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to dispose
of, securities of the type in which a Portfolio invests at the same time as such
Portfolio, available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Portfolio or the price paid or received by the Portfolio.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, was formed in 1947 and serves as the Fund's investment adviser. The
Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A., which is
a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of May 31,
1995, The Dreyfus Corporation managed or administered approximately $76 billion
in assets for more than 1.8 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall management of
the Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors in accordance with Maryland
law. The primary portfolio manager of each Portfolio is Ernest G. Wiggins, Jr.
He has held that position since May 12, 1994 and has been an employee of The
Dreyfus Corporation 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. The Fund's other
portfolio managers are identified in the Fund's Statement of Additional
Information. The Dreyfus Corporation also provides research services for the
Fund as well as for other funds advised by The Dreyfus Corporation through a
professional staff of portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company incorporated under
Pennsylvania law in 1971 and registered under the Federal Bank Holding Company
Act of 1956, as amended. Mellon provides a comprehensive range of financial
products and services in domestic and selected international markets. Mellon is
among the twenty-five largest bank holding companies in the United States based
on total assets. Mellon's principal wholly-owned subsidiaries are Mellon Bank,
N.A., Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including The Dreyfus
Corporation, Mellon managed more than $203 billion in assets as of June 30,
1995, including approximately $73 billion in proprietary mutual fund assets. As
of March 31, 1995, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for approximately $707
billion in assets, including approximately $71 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to pay The
Dreyfus Corporation a monthly fee at the annual rate of .75 of 1% of the value
of each Portfolio's average daily net assets. The management fee is higher than
that paid by most other investment companies. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors at the time such
amounts are waived or assumed, as the case may be. The Fund will not pay The
Dreyfus Corporation at a later time for any amounts it may waive, nor will the
Fund reimburse The Dreyfus Corporation for any amounts it may assume. For the
fiscal year ended April 30, 1995, no management fee was paid by the Fund with
respect to any Portfolio pursuant to an undertaking by The Dreyfus Corporation.
All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by The Dreyfus Corporation. 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 Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of The Dreyfus Corporation, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone and
personnel expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional information,
for regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Expenses attributable to a particular Portfolio are
charged against the assets of that Portfolio; other expenses of the Fund are
allocated between the Portfolios on the basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Portfolio.
The Dreyfus Corporation may pay the Fund's distributor for shareholder
services from The Dreyfus Corporation's own assets, including past profits but
not including the management fee paid by the Fund. The Fund's distributor may
use part or all of such payments to pay Service Agents (as defined below) in
respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109. The
Distributor 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 Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's
Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New
York, 90 Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
Portfolio shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Portfolio shares through the
Distributor or certain financial institutions, securities dealers and other
industry professionals (collectively, "Service Agents"). Stock certificates are
issued only upon your written request. No certificates are issued for fractional
shares. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client of
a Service Agent which has made an aggregate minimum initial purchase for its
customers of $2,500. Subsequent investments must be at least $100. The initial
investment must be accompanied by the Fund's Account Application. For full-time
or part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Fund's Board, or
the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries who elect to have a portion
of their pay directly deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to offer Portfolio shares without
regard to minimum purchase requirements to employees participating in certain
qualified or non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to the Fund.
The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time. Portfolio shares also are offered
without regard to the minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step Program described
under "Shareholder Services." These services enable you to make regularly
scheduled investments and may provide you with a convenient way to invest for
long-term financial goals. You should be aware, however, that periodic
investment plans do not guarantee a profit and will not protect an investor
against loss in a declining market.
You may purchase Portfolio shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to "The
Dreyfus Trust Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For subsequent
investments, your Fund account number should appear on the check and an
investment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box 105, Newark, New Jersey 07101-0105. For Dreyfus retirement plan accounts,
both initial and subsequent investments should be sent to The Dreyfus Trust
Company, Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427. Neither
initial nor subsequent investments should be made by third party check.
Purchase orders may be delivered in person only to a Dreyfus Financial Center.
THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON
RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center,
please call one of the telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial bank that
is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the applicable
Portfolio's DDA# as shown below, for purchase of Portfolio shares in your name:
DDA# 8900118202/Dreyfus Asset Allocation Fund,
Inc./Dreyfus Total Return Portfolio
DDA# 8900104481/Dreyfus Asset Allocation Fund,
Inc./Dreyfus Income Portfolio
DDA# 8900104503/Dreyfus Asset Allocation Fund,
Inc./Dreyfus Growth Portfolio
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
shares is by wire, please call 1-800-645-6561 after completing your wire payment
to obtain your Fund account number. Please include your Fund account number on
the Fund's Account Application and promptly mail the Account Application to the
Fund, as no redemptions will be permitted until the Account Application is
received. You may obtain further information about remitting funds in this
manner from your bank. All payments should be made in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks. A charge will be imposed if
any check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial institution
that is an Automated Clearing House member. You must direct the institution to
transmit immediately available funds through the Automated Clearing House to The
Bank of New York with instructions to credit your Fund account. The instructions
must specify your Fund account registration and your Fund account number
PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of the amount invested
through such dealers in Portfolio shares by employees participating in qualified
or non-qualified employee benefit plans or other programs where (i) the
employers or affiliated employers maintaining such plans or programs have a
minimum of 250 employees eligible for participation in such plans or programs or
(ii) such plan's or program's aggregate investment in the Dreyfus Family of
Funds or certain other products made available by the Distributor to such plans
or programs exceeds one million dollars ("Eligible Benefit Plans"). All present
holdings of shares of funds in the Dreyfus Family of Funds by Eligible Benefit
Plans will be aggregated to determine the fee payable with respect to each
purchase of Portfolio shares. The Distributor reserves the right to cease paying
these fees at any time. The Distributor will pay such fees from its own funds,
other than amounts received from the Fund, including past profits or any other
source available to it.
Shares of each Portfolio are sold on a continuous basis at the net asset
value per share next determined after an order in proper form is received by the
Transfer Agent or other agent. Net asset value per share is determined as of the
close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m., New York time), on each day the New York Stock Exchange is open for
business. For purposes of determining net asset value, options and futures
contracts will be valued 15 minutes after the close of trading on the floor of
the New York Stock Exchange. Net asset value per share is computed by dividing
the value of the Portfolio's net assets (i.e., the value of its assets less
liabilities) by the total number of such Portfolio's shares outstanding. Each
Portfolio's investments are valued each business day generally by using
available market quotations or at fair value which may be determined by one or
more pricing services approved by the Board of Directors. For further
information regarding the methods employed in valuing the Portfolios'
investments, see "Determination of Net Asset Value" in the Fund's Statement of
Additional Information.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of Portfolio shares may be transmitted,
and must be received by the Transfer Agent, within three business days after the
order is placed. If such payment is not received within three business days
after the order is placed, the order may be canceled and the institution could
be held liable for resulting fees and/or losses.
Federal regulations require that you provide a certified TIN upon opening
or reopening an account. See "Dividends, Distributions and Taxes" and the Fund's
Account Application for further information concerning this requirement. Failure
to furnish a certified TIN to the Fund could subject you to a $50 penalty
imposed by the Internal Revenue Service (the "IRS"). DREYFUS TELETRANSFER
PRIVILEGE
You may purchase shares (minimum $500, maximum $150,000 per day) by
telephone if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify or
terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may request a
Dreyfus TELETRANSFER purchase of shares by telephoning 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
FUND EXCHANGES
You may purchase, in exchange for shares of a Portfolio, shares in one of
the other Portfolios or shares of certain other funds managed or administered by
The Dreyfus Corporation, to the extent such shares are offered for sale in your
state of residence. These funds have different investment objectives which may
be of interest to you. If you desire to use this service, you should consult
your Service Agent or call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the Transfer
Agent in writing or by telephone. Before any exchange into a fund offered by
another prospectus, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses may
be obtained by calling 1-800-645-6561. Except in the case of personal retirement
plans, the shares being exchanged must have a current value of at least $500;
furthermore, when establishing a new account by exchange, the shares being
exchanged must have a value of at least the minimum initial investment required
for the fund into which the exchange is being made. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless you check the applicable "No" box on the Account
Application, indicating that you specifically refuse this privilege. The
Telephone Exchange Privilege may be established for an existing account by
written request, signed by all shareholders on the account, or by a separate
signed Shareholder Services Form, also available by calling 1-800-645-6561. If
you have established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. See "How to Redeem Fund Shares - Procedures."
Upon an exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange Privilege,
Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER
Privilege and the dividend/capital gain distribution option (except for Dreyfus
Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into funds sold with a sales
load. If you are exchanging into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which reflect a
reduced sales load, if the shares of the fund from which you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange from
shares purchased with a sales load, or (c) acquired through reinvestment of
dividends or distributions paid with respect to the foregoing categories of
shares. To qualify, at the time of your exchange you must notify the Transfer
Agent or your Service Agent must notify the Distributor. Any such qualification
is subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional Information.
No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
Fund Exchanges may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another
is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder and, therefore, an
exchanging shareholder may realize a taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of a
Portfolio, in shares of one of the other Portfolios or shares of certain other
funds in the Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a specific
dollar or share amount ($100 minimum), will be exchanged automatically on the
first and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value; however,
a sales load may be charged with respect to exchanges into funds sold with a
sales load. See "Shareholder Services" in the Statement of Additional
Information. The right to exercise this Privilege may be modified or cancelled
by the Fund or the Transfer Agent. You may modify or cancel your exercise of
this Privilege at any time by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The Fund may
charge a service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss. For more information concerning this Privilege
and the funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please call
toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER Registration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Portfolio shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Shares of a Portfolio are purchased by transferring funds from
the bank account designated by you. At your option, the bank account designated
by you will be debited in the specified amount, and Portfolio shares will be
purchased, once a month, on either the first or fifteenth day, or twice a month,
on both days. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization form
with the Transfer Agent. You may obtain the necessary authorization form by
calling 1-800-645-6561. You may cancel your participation in this Privilege or
changethe amount of purchase at any time by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or,
if for Dreyfus retirement plan accounts, to The Dreyfus Trust Company,
Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427, and the notifica-
tion will be effective three business days following receipt. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No such
fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Portfolio shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or other
payments from the Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. To enroll in
Dreyfus Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you desire
to include in the Privilege. The appropriate form may be obtained by calling
1-800-645-6561. Death or legal incapacity will terminate your participation in
this Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you. DREYFUS PAYROLL
SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Portfolio shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon your employer's direct deposit program, you may have part or all of your
paycheck transferred to your existing Dreyfus account electronically through the
Automated Clearing House system at each pay period. To establish a Dreyfus
Payroll Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse side of
the form and return it to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. You may obtain the necessary authorization
form by calling 1-800-645-6561. You may change the amount of purchase or cancel
the authorization only by written notification to your employer. It is the sole
responsibility of your employer, not the Distributor, The Dreyfus Corporation,
the Fund, the Transfer Agent or any other person, to arrange for transactions
under the Dreyfus Payroll Savings Plan. The Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Portfolio shares without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account, you
must supply the necessary information on the Fund's Account Application and file
the required authorization form(s) with the Transfer Agent. For more information
concerning this Program, or to request the necessary authorization form(s),
please call toll free 1-800-782-6620. You may terminate your participation in
this Program at any time by discontinuing your participation in
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan, as the case may be, as provided under the terms of
such Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through the Dreyfus Step Program in
conjunction with a Dreyfus-sponsored retirement plan may do so only for IRAs,
SEP-IRAs and IRA "Rollover Accounts."
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by a Portfolio in shares
of another Portfolio of the Fund or shares of another fund in the Dreyfus Family
of Funds of which you are a shareholder. Shares of the other fund will be
purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales load.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load. See "Shareholder Services" in the Statement of Additional
Information. Dreyfus Dividend ACH permits you to transfer electronically on the
payment date dividends or dividends and capital gain distributions, if any, from
the Fund to a designated bank account. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges or to request a Dividend
Options Form, please call toll free 1-800-645-6561. You may cancel these
privileges by mailing written notification to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or cancellation of
these privileges is effective three business days following receipt. These
privileges are available only for existing accounts and may not be used to open
new accounts. Minimum subsequent investments do not apply for Dreyfus Dividend
Sweep. The Fund may modify or terminate these privileges at any time or charge a
service fee. No such fee currently is contemplated. Shares held under Keogh
Plans, IRAs or other retirement plans are not eligible for these privileges.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly basis
if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. There is a service
charge of 50cents for each withdrawal check. The Automatic Withdrawal Plan may
be ended at any time by you, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
RETIREMENT PLANS
The Fund offers a variety of pension and profit-sharing plans, including
Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts," 401(k) Salary Reduction
Plans and 403(b)(7) Plans. Plan support services also are available. You can
obtain details on the various plans by calling the following numbers toll free:
for Keogh Plans, please call 1-800-358-5566; for IRAs and IRA "Rollover
Accounts," please call 1-800-645-6561; and for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time. Redemption requests
should be transmitted to the Transfer Agent as described below. When a request
is received in proper form, the Fund will redeem the shares at the next
determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents may
charge their clients a nominal fee for effecting redemptions of Portfolio
shares. Any certificates representing Portfolio shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Portfolio's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.
HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS TELETRANSFER
PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A
WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL
BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH
MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE
TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE
PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT
TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE,
DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon not
less than 45 days' written notice if your account's net asset value is $500 or
less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure through the
Transfer Agent, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. Other redemption procedures may
be in effect for clients of certain Service Agents. The Fund makes available to
certain large institutions the ability to issue redemption instructions through
compatible computer facilities.
You may redeem shares by telephone if you have checked the appropriate box
on the Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. If you select a telephone redemption privilege or telephone
exchange privilege (which is granted automatically unless you refuse it), you
authorize the Transfer Agent to act on telephone instructions from any person
representing himself or herself to be you, and reasonably believed by the
Transfer Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent instructions. Neither the Fund nor the Transfer Agent
will be liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of a Portfolio's shares. In such cases, you should consider using
the other redemption procedures described herein. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption had been used. During the delay,
the Portfolio's net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. Redemption requests may be delivered in
person only to a Dreyfus Financial Center.
THESE REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY
UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial Center,
please call one of the telephone numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including each owner of
a joint account, and each signature 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. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank of
the Federal Reserve System in accordance with a written signature-guaranteed
request.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which is
a member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. To establish the Wire Redemption Privilege, you must check the
appropriate box and supply the necessary information on the Fund's Account
Application or file a Shareholder Services Form with the Transfer Agent. You may
direct that redemption proceeds be paid by check (maximum $150,000 per day) made
out to the owners of record and mailed to your address. Redemption proceeds of
less than $1,000 will be paid automatically by check. Holders of jointly
registered Fund or bank accounts may have redemption proceeds of not more than
$250,000 wired within any 30-day period. You may telephone redemption requests
by calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. The Fund reserves the right to refuse any redemption request,
including requests made shortly after a change of address, and may limit the
amount involved or the number of such requests. This Privilege may be modified
or terminated at any time by the Transfer Agent or the Fund. The Fund's
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE_You may redeem shares (maximum $150,000 per
day) by telephone if you have checked the appropriate box on the Fund's Account
Application or have filed a Shareholder Services Form with the Transfer Agent.
The redemption proceeds will be paid by check and mailed to your address. You
may telephone redemption instructions by calling 1-800-221-4060 or, if you are
calling from overseas, call 1-401-455-3306. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the amount involved or the number of telephone
redemption requests. This Privilege may be modified or terminated at any time by
the Transfer Agent or the Fund. Shares held under Keogh Plans, IRAs or other
retirement plans, and shares for which certificates have been issued, are not
eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE_You may redeem shares (minimum $500 per day)
by telephone if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. The proceeds will be transferred between
your Fund account and the bank account designated in one of these documents.
Only such an account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. Redemption proceeds will
be on deposit in your account at an Automated Clearing House member bank
ordinarily two days after receipt of the redemption request or, at your request,
paid by check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus
TELETRANSFER Privilege for transfer to their bank account not more than $250,000
within any 30-day period. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Fund may modify or
terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may request a
Dreyfus TELETRANSFER redemption of shares by telephoning 1-800-221-4060 or, if
you are calling from overseas, call 1-401-455-3306. Shares held under Keogh
Plans, IRAs or other retirement plans, and shares issued in certificate form,
are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan, pursuant to which it pays
the Distributor for the provision of certain services to Portfolio shareholders
a fee at the annual rate of .25 of 1% of the value of each Portfolio's average
daily net assets. 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DREYFUS TOTAL RETURN PORTFOLIO AND DREYFUS GROWTH PORTFOLIO -- Declare and
pay dividends from net investment income annually. DREYFUS INCOME PORTFOLIO _
Declares and pays dividends from net investment income quarterly.
APPLICABLE TO ALL PORTFOLIOS _ Under the Code, each Portfolio of the Fund
is treated as a separate corporation for purposes of qualification and taxation
as a regulated investment company. Each Portfolio distributes net realized
securities gains, if any, once a year, but it may make distributions on a more
frequent basis to comply with the distribution requirements of the Code, in all
events in a manner consistent with the provisions of the Investment Company Act
of 1940. No Portfolio will make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or have expired. You
may choose whether to receive dividends and distributions in cash or to reinvest
in additional shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
Dividends derived from net investment income, together with distributions
from net realized short-term securities gains and all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds,
paid by the Portfolios will be taxable to U.S. shareholders as ordinary income
whether received in cash or reinvested in additional Portfolio shares.
Distributions from net realized long-term securities gains of the Portfolios
will be taxable to U.S. shareholders as long-term capital gains for Federal
income tax purposes, regardless of how long shareholders have held their
Portfolio shares and whether such distributions are received in cash or
reinvested in Fund shares. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and distributions may be subject to state and local
taxes.
Dividends derived from net investment income, together with distributions
from net realized short-term securities gains and all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds,
paid by the Portfolios to a foreign investor generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions from
net realized long-term securities gains paid by the Portfolios to a foreign
investor as well as the proceeds of any redemptions from a foreign investor's
account, regardless of the extent to which gain or loss may be realized,
generally will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below, unless
the foreign investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your account
which will include information as to dividends and distributions from securities
gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN furnished
in connection with opening an account is correct or that such shareholder has
not received notice from the IRS of being subject to backup withholding as a
result of a failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or if
a shareholder has failed to properly report taxable dividend and interest income
on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account, and may be claimed as a credit on the record owner's
Federal income tax return.
Management of the Fund believes that each Portfolio has qualified for the
fiscal year ended April 30, 1995 as a "regulated investment company" under 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 a Portfolio of any liability for Federal income
taxes to the extent its earnings are distributed in accordance with applicable
provisions of the Code. Each Portfolio is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on the basis of
average annual total return and/or total return.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in a Portfolio was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of a
stated period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of each
Portfolio's performance will include such Portfolio's average annual total
return for one, five and ten year periods, or for shorter periods depending upon
the length of time during which the Portfolio has operated.
Total return is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Total return generally is expressed as a
percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the net asset value per share at
the beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end of
the period which assumes the application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Portfolios' shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc., Standard & Poor's 500 Stock Index,
the Dow Jones Industrial Average, Moody's Bond Survey Bond Index, Bond Buyer's
20-Bond Index, Wilshire 5000 Index and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on May 12, 1993, and commenced
operations on July 1, 1993. On August 26, 1994, the Fund commenced offering
shares of the Dreyfus Income Portfolio and the Dreyfus Growth Portfolio and the
existing portfolio of the Fund began operating as the Dreyfus Total Return
Portfolio. The Fund is authorized to issue 300 million shares of Common Stock
(with 100 million allocated to each Portfolio), par value $.001 per share. Each
share has one vote.
Unless otherwise required by the Investment Company Act of 1940, ordinarily
it will not be necessary for the Fund to hold annual meetings of shareholders.
As a result, Fund shareholders may not consider each year the election of
Directors or the appointment of auditors. However, pursuant to the Fund's
By-Laws, the holders of at least 10% of the shares outstanding and entitled to
vote may require the Fund to hold a special meeting of shareholders for purposes
of removing a Director from office or for any other purpose. Fund shareholders
may remove a Director by the affirmative vote of a majority of the Fund's
outstanding voting shares. In addition, the Board of Directors will call a
meeting of shareholders for the purpose of electing Directors if, at any time,
less than a majority of the Directors then holding office have been elected by
shareholders.
To date, the Board of Directors has authorized the creation of three series
of shares. All consideration received by the Fund for shares of one of the
Portfolios and all assets in which such consideration is invested will belong to
that Portfolio (subject only to the rights of creditors of the Fund) and will be
subject to the liabilities related thereto. The income attributable to, and the
expenses of, one Portfolio are treated separately from those of the other
Portfolios. The Fund has the ability to create, from time to time, new series
without shareholder approval.
Rule 18f-2 under the Investment Company Act of 1940 provides that any
matter required to be submitted under the provisions of the Investment Company
Act of 1940 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, the Rule exempts the selection of independent accountants
and the election of Directors from the separate voting requirements of the Rule.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquires may be made to your Service Agent or by writing to the
Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by
calling 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.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June 26, 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 Class R 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 June 26, 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 Class R 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 June 26, 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 of
Communications Satellite Corporation, General RE Corporation and Logistics
Management Institute. She is also a Trustee of the Alfred P. Sloan Foundation,
Vice Chairman of the Board of Trustees of Lafayette College, Vice Chairman of
the Citizens Network for Foreign Affairs and a member of the Council on Foreign
Relations. From 1980 to 1994, Mrs. Benson was a director of the Grumman
Corporation. Mrs. Benson served as a consultant to the U.S. Department of State
and to SRI International from 1980 to 1981. From 1977 to 1980, she was Under
Secretary of State for Security Assistance, Science and Technology. Mrs. Benson
is 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 U1.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.
A
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.
AA
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.
AA
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.
A
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.
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
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>
<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
------------
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
------------
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>
<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>
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>
<TABLE>
<CAPTION>
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>
<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>
<TABLE>
<CAPTION>
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.
(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
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.
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.
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 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
<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
<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 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
<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 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.
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
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>
<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
------------
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
------------
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>
<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>
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>
<TABLE>
<CAPTION>
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>
<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>
<TABLE>
<CAPTION>
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
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.
(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
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.
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.
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>
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 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 **
<S> <C> <C> <C> <C>
3/31/95 10,000 10,000 10,000 10,000
4/30/95 10,208 10,208 10,294 10,204
5/31/95 10,536 10,536 10,705 10,522
6/30/95 10,728 10,736 10,953 10,678
7/31/95 11,072 11,080 11,316 10,909
8/31/95 11,160 11,176 11,345 11,003
9/30/95 11,432 11,448 11,823 11,239
</TABLE>
*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.
<TABLE>
<CAPTION>
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.
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.
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.
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 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.
(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, $1,554 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.
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)
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
Growth 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 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, 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 $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.
(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 $2,334,707 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.
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 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.
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 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
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)
<S> <C> <C>
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>
Proforma Statement of Investments
Dreyfus LifeTime Portfolios, Inc., Income Portfolio
<CAPTION>
Shares/Principal Amount Value
----------------------------------- ---------------------------------------
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 pHess.......... -- 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 $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
==== =========== ============ ============
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.p
</TABLE>
<TABLE>
<CAPTION>
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 pro forma financial statements.
</TABLE>
<PAGE>
<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
Class R Shares................................... 601,975 126,687 * 728,662
============
Asset Allocation Income Portfolio................... 113,891 (113,891) --
===========
NET ASSET VALUE per share:
LifeTime Income Portfolio
Class R Shares
($8,140,844 / 601,975 shares).................. $13.52
======
Asset Allocation Income Portfolio
($1,712,812 / 113,891 shares).................. $15.04
======
Proforma Combined Portfolio
($9,853,656 / 728,662 shares).................. $13.52
======
- ------------------
* Assures the issuance of 126,687 Class R shares applicable to common
stockholders of Asset Allocation Income Portfolio.
See notes to proforma financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
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
============ ============ ============ ==========
- -----------
* Represents Average Net Assets of Asset Allocation Income Portfolio
multiplied by .15%.
See notes to pro forma financial statements.
</TABLE>
<PAGE>
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 Class R
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 occurred at September 30, 1995.
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 126,687 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 $13.52 for Class R Shares. The pro forma
combined number of shares outstanding of 728,662 consists of the 126,687 shares
issuable to Dreyfus Asset Allocation Fund, Inc., Income Portfolio the merger and
601,975 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 proposed 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 $62,000 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.
<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
PART C
OTHER INFORMATION
Item 15. Indemnification.
The response to this item is incorporated by reference to Item 27 of Part C
of Post-Effective Amendment No. 6 to the Registrant's Registration Statement on
Form N-1A as filed on January 12, 1996.
Item 16. Exhibits - All references are to Pre-Effective
Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A, filed on July 23, 1993 (File
No. 33-66088) (the "Registration Statement") unless
otherwise noted.
(1) Registrant's Articles of Incorporation, as amended.
(2) Registrant's Bylaws, as revised.
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization.
(5) Not Applicable.
(6)(a)Registrant's Management Agreement, as revised.
(6)(b)Registrant's Sub-Investment Advisory Agreement, as
revised.
(7) Registrant's Distribution Agreement, as revised.
(8) Not Applicable.
(9) Registrant's Amended and Restated Custody Agreement.
(10) Rule 18f-3 Plan is incorporated by reference to
Exhibit (18) of Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A
filed on January 12, 1996.
(11) Opinion of Stroock & Stroock & Lavan
regarding legality of issuance of shares and other
matters is incorporated by reference to Exhibit (10)
to the Registration Statement.
(12) Opinion and consent of Stroock & Stroock & Lavan
regarding tax matters.
(13) Not Applicable.
(14)(a) Consent of Stroock & Stroock & Lavan
(14)(b) Consent of Independent Auditors.
(15) Not Applicable.
(16) Powers of Attorney.
(17) Form of Proxy.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered
through the use of a prospectus which is a part of
this registration statement by any person or party
who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933, as
amended, the reoffering prospectus will contain the
information called for by the applicable registration
form for reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above
will be filed as a part of an amendment to the
registration statement and will not be used until the
amendment is effective, and that, in determining any
liability under the Securities Act of 1933, as
amended, each post-effective amendment shall be
deemed to be a new registration statement for the
securities offered therein, and the offering of the
securities at that time shall be deemed to be the
initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant, in the City of New York, State of New
York, on the 18th day of June, 1996.
DREYFUS LIFETIME PORTFOLIOS, INC.
(Registrant)
By:/s/Marie E. Connolly
Marie E. Connolly, President
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Eric B. Fischman and Elizabeth Bachman, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to this Registration
Statement (including post- effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/Marie E. Connolly President and Treasurer June 18, 1996
Marie E. Connolly (Principal Executive
Officer)
/s/John F. Tower, III Assistant Treasurer June 18, 1996
John F. Tower, III (Principal Financial
and Accounting Officer)
/s/Joseph S. DiMartino Director June 18, 1996
Joseph S. DiMartino
/s/Lucy Wilson Benson Director June 18, 1996
Lucy Wilson Benson
/s/David W. Burke Director June 18, 1996
David W. Burke
/s/Martin D. Fife Director June 18, 1996
Martin D. Fife
/s/Whitney I. Gerard Director June 18, 1996
Whitney I. Gerard
/s/Robert R. Glauber Director June 18, 1996
Robert R. Glauber
/s/Arthur A. Hartman Director June 18, 1996
Arthur A. Hartman
/s/George L. Perry Director June 18, 1996
George L. Perry
/s/Paul Wolfowitz Director June 18, 1996
Paul Wolfowitz
INDEX OF EXHIBITS
(1) Articles of Incorporation, as amended.
(2) By-Laws, as revised.
(6)(a) Management Agreement, as revised.
(6)(b) Sub-Investment Advisory Agreement, as revised.
(7) Distribution Agreement, as revised.
(9) Amended and Restated Custody Agreement.
(12) Opinion and consent of Stroock & Stroock & Lavan
regarding tax matters.
(14)(a) Consent of Stroock & Stroock & Lavan
(14)(b) Consent of Ernst & Young LLP, Independent Auditors.
<PAGE>
EXHIBIT 1
ARTICLES OF INCORPORATION
OF
DREYFUS GROWTH ALLOCATION FUND, INC.
FIRST: The undersigned, David Stephens, whose address is Seven Hanover
Square, New York, New York 10004-2696, being at least eighteen years of age,
hereby forms a corporation under the Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter called the "corporation")
is Dreyfus Growth Allocation Fund, Inc.
THIRD: The corporation is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, lend, write
options on, exchange, distribute or otherwise dispose of and deal in
and with securities of every nature, kind, character, type and form,
including without limitation of the generality of the foregoing, all
types of stocks, shares, futures contracts, bonds, debentures, notes,
bills and other negotiable or non-negotiable instruments, obligations,
evidences of interest, certificates of interest, certificates of
participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or
created by or guaranteed as to principal and interest by any state or
local government or any agency or instrumentality thereof, by the
United States Government or any agency, instrumentality, territory,
district or possession thereof, by any foreign government or any
agency, instrumentality, territory, district or possession thereof, by
any corporation organized under the laws of any state, the United
States or any territory or possession thereof or under the laws of any
foreign country, bank certificates of deposit, bank time deposits,
bankers' acceptances and commercial paper; to pay for the same in cash
or by the issue of stock, including treasury stock, bonds or notes of
the corporation or otherwise; and to exercise any and all rights,
powers and privileges of ownership or interest in respect of any and
all such investments of every kind and description, including without
limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers
and privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the
assets of the corporation;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in,
shares of stock of the corporation, including shares of stock of the
corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of
shares of stock of the corporation any funds or property of the
corporation whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the State of
Maryland;
(e) to conduct its business, promote its purposes and carry on
its operations in any and all of its branches and maintain offices
both within and without the State of Maryland, in any States of the
United States of America, in the District of Columbia and in any other
parts of the world; and
(f) to do all and everything necessary, suitable, convenient, or
proper for the conduct, promotion and attainment of any of the
businesses and purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or expedient for the
accomplishment of any of such businesses and purposes and which might
be engaged in or carried on by a corporation incorporated or organized
under the Maryland General Corporation Law, and to have and exercise
all of the powers conferred by the laws of the State of Maryland upon
corporations incorporated or organized under the Maryland General
Corporation Law.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of these
Articles of Incorporation; provided, that the corporation shall not conduct any
business, promote any purpose, or exercise any power or privilege within or
without the State of Maryland which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The post office address of the principal office of the corporation
within the State of Maryland, and of the resident agent of the corporation
within the State of Maryland, is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
FIFTH: (1) The total number of shares of stock which the corporation has
authority to issue is three hundred million (300,000,000) shares of Common
Stock, all of which are of a par value of one tenth of one cent ($.001) each.
(2) The aggregate par value of all the authorized shares of stock is
three hundred thousand dollars ($300,000.00).
(3) The Board of Directors of the corporation is authorized, from
time to time, to fix the price or the minimum price or the consideration or
minimum consideration for, and to authorize the issuance of, the shares of stock
of the corporation.
(4) The Board of Directors of the corporation is authorized, from
time to time, to further classify or to re- classify, as the case may be, any
unissued shares of stock of the corporation by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption of the stock.
(5) Subject to the power of the Board of Directors to reclassify
unissued shares, the shares of each class of stock of the corporation shall have
the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
(a) (i) All consideration received by the corporation for the
issuance or sale of shares together with all income, earnings, profits and
proceeds thereof, shall irrevocably belong to such class for all purposes,
subject only to the rights of creditors, and are herein referred to as
"assets belonging to" such class.
(ii) The assets belonging to such class shall be charged with the
liabilities of the corporation in respect of such class and with such
class's share of the general liabilities of the corporation, in the latter
case in proportion that the net asset value of such class bears to the net
asset value of all classes. The determination of the Board of Directors
shall be conclusive as to the allocation of liabilities, including accrued
expenses and reserves, to a class.
(iii) Dividends or distributions on shares of each class, whether
payable in stock or cash, shall be paid only out of earnings, surplus or
other assets belonging to such class.
(iv) In the event of the liquidation or dissolution of the
corporation, stockholders of each class shall be entitled to receive, as a
class, out of the assets of the corporation available for distribution to
stockholders, the assets belonging to such class and the assets so
distributable to the stockholders of such class shall be distributed among
such stockholders in proportion to the number of shares of such class held
by them.
(b) A class may be invested with one or more other classes in a
common investment portfolio. Notwith- standing the provisions of paragraph
(5)(a) of this Article Fifth, if two or more classes are invested in a
common investment portfolio, the shares of each such class of stock of the
corporation shall be subject to the following preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, and, if there are
other classes of stock invested in a different investment portfolio, shall
also be subject to the provisions of paragraph (5)(a) of this Article Fifth
at the portfolio level as if the classes invested in the common investment
portfolio were one class:
(i) The income and expenses of the investment portfolio shall be
allocated among the classes invested in the investment portfolio in
accordance with the number of shares outstanding of each such class or as
otherwise determined by the Board of Directors.
(ii) As more fully set forth in this paragraph (5)(b) of Article
Fifth, the liabilities and expenses of the classes invested in the same
investment portfolio shall be determined separately from those of each
other and, accordingly, the net asset value, the dividends and
distributions payable to holders, and the amounts distributable in the
event of liquidation of the corporation to holders of shares of the
corporation's stock may vary from class to class invested in the same
investment portfolio. Except for these differences and certain other
differences set forth in this paragraph (5) of Article Fifth, the classes
invested in the same investment portfolio shall have the same preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption.
(iii) The dividends and distributions of investment income and
capital gains with respect to the classes invested in the same investment
portfolio shall be in such amounts as may be declared from time to time by
the Board of Directors, and such dividends and distributions may vary among
the classes invested in the same investment portfolio to reflect differing
allocations of the expenses of the corporation among the classes and any
resultant differences between the net asset values per share of the
classes, to such extent and for such purposes as the Board of Directors may
deem appropriate. The allocation of investment income, capital gains,
expenses and liabilities of the corporation among the classes shall be
determined by the Board of Directors in a manner that is consistent with
the order dated January 14, 1993 (Investment Company Act of 1940 Release
No. 19214) issued by the Securities and Exchange Commission in connection
with the application for exemption filed by Dreyfus A Bonds Plus, Inc., et
al., and any existing or future amendment to such order or any rule or
interpretation under the Investment Company Act of 1940, as amended, that
modifies or supersedes such order (the "Order").
(c) On each matter submitted to a vote of the stockholders, each
holder of a share of stock shall be entitled to one vote for each share
standing in his name on the books of the corporation irrespective of the
class thereof. All holders of shares of stock shall vote as a single class
except as may otherwise be required by law pursuant to any applicable
order, rule or interpretation issued by the Securities and Exchange
Commission, or otherwise, or except with respect to any matter which
affects only one or more classes of stock, in which case only the holders
of shares of the class or classes affected shall be entitled to vote.
Except as provided above, all provisions of the Articles of
Incorporation relating to stock of the corporation shall apply to shares of, and
to the holders of, all classes of stock.
(6) Notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion than a majority of the votes of
stockholders entitled to be cast in order to take or authorize any action, any
such action may be taken or authorized upon the concurrence of a majority of the
aggregate number of votes entitled to be cast thereon.
(7) The presence in person or by proxy of the holders of one-third
of the shares of stock of the corporation entitled to vote (without regard to
class) shall constitute a quorum at any meeting of the stockholders, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more classes of
stock, in which case the presence in person or by proxy of the holders of
one-third of the shares of stock of each class required to vote as a class on
the matter shall constitute a quorum.
(8) The corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the corporation, but excluding
the right to receive a stock certificate evidencing a fractional share.
(9) No holder of any shares of any class of the corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any shares
of any class which the corporation proposes to issue, or any rights or options
which the corporation proposes to issue or to grant for the purchase of shares
of any class or for the purchase of any shares, bonds, securities, or
obligations of the corporation which are convertible into or exchangeable for,
or which carry any rights to subscribe for, purchase, or otherwise acquire
shares of any class of the corporation; and any and all of such shares, bonds,
securities or obligations of the corporation, whether now or hereafter
authorized or created, may be issued, or may be reissued or transferred if the
same have been reacquired and have treasury status, and any and all of such
rights and options may be granted by the Board of Directors to such persons,
firms, corporations and associations, and for such lawful consideration, and on
such terms, as the Board of Directors in its discretion may determine, without
first offering the same, or any thereof, to any said holder.
SIXTH: (1) The number of directors of the corporation, until such number
shall be increased or decreased pursuant to the by-laws of the corporation, is
one. The number of directors shall never be less than the minimum number
prescribed by the Maryland General Corporation Law.
(2) The name of the person who shall act as director of the
corporation until the first annual meeting or until his successor or successors
are duly chosen and qualify is as follows: A. Thomas Smith III
(3) The initial by-laws of the corporation shall be adopted by the
directors at their organizational meeting or by their informal written action,
as the case may be. Thereafter, the power to make, alter, and repeal the by-laws
of the corporation shall be vested in the Board of Directors of the corporation.
(4) Any determination made in good faith by or pursuant to the
direction of the Board of Directors, as to: the amount of the assets, debts,
obligations, or liabilities of the corporation; the amount of any reserves or
charges set up and the propriety thereof; the time of or purpose for creating
such reserves or charges; the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged
or shall be then or thereafter required to be paid or discharged); the value of
any investment or fair value of any other asset of the corporation; the amount
of net investment income; the number of shares of stock outstanding; the
estimated expense in connection with purchases or redemptions of the
corporation's stock; the ability to liquidate investments in orderly fashion;
the extent to which it is practicable to deliver a cross-section of the
portfolio of the corporation in payment for any such shares, or as to any other
matters relating to the issue, sale, purchase, redemption and/or other
acquisition or disposition of investments or shares of the corporation, or the
determination of the net asset value of shares of the corporation shall be final
and conclusive, and shall be binding upon the corporation and all holders of its
shares, past, present and future, and shares of the corporation are issued and
sold on the condition and understanding that any and all such determinations
shall be binding as aforesaid.
SEVENTH: (1) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law, no
director or officer of the corporation shall have any liability to the
corporation or its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as a director or officer
of the corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(2) The corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The corporation shall indemnify and advance expenses to its officers to the
same extent as its directors and to such further extent as is consistent with
law. The board of directors may, through a by-law, resolution or agreement, make
further provisions for indemnification of directors, officers, employees and
agents to the fullest extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article SEVENTH shall be effective to
protect or purport to protect any director or officer of the corporation against
any liability to the corporation or its stockholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law in this
Article SEVENTH are to the law as from time to time amended. No amendment to the
Articles of Incorporation of the corporation shall affect any right of any
person under this Article SEVENTH based on any event, omission or proceeding
prior to such amendment.
EIGHTH: Any holder of shares of stock of the corporation may require the
corporation to redeem and the corporation shall be obligated to redeem at the
option of such holder all or any part of the shares of the corporation owned by
said holder, at the redemption price, pursuant to the method, upon the terms and
subject to the conditions hereinafter set forth:
(a) The redemption price per share shall be the net asset value per
share determined at such time or times as the Board of Directors of the
corporation shall designate in accordance with any provision of the
Investment Company Act of 1940, any rule or regulation thereunder or
exemption or exception therefrom, or any rule or regulation made or adopted
by any securities association registered under the Securities Exchange Act
of 1934.
(b) Net asset value per share of a class shall be determined by
dividing:
(i) The total value of the assets of such class or, in the case of a
class invested in a common investment portfolio with other classes, such
class's proportionate share of the total value of the assets of the common
investment portfolio, such value determined as provided in Subsection (c)
below less, to the extent determined by or pursuant to the direction of the
Board of Directors, all debts, obligations and liabilities of such class
(which debts, obligations and liabilities shall include, without limitation
of the generality of the foregoing, any and all debts, obligations,
liabilities, or claims, of any and every kind and nature, fixed, accrued
and otherwise, including the estimated accrued expenses of management and
supervision, administration and distribution and any reserves or charges
for any or all of the foregoing, whether for taxes, expenses or otherwise)
but excluding such class' liability upon its shares and its surplus, by
(ii) The total number of shares of such class outstanding.
The Board of Directors is empowered, in its absolute discretion, to
establish other methods for determining such net asset value whenever such
other methods are deemed by it to be necessary in order to enable the
corporation to comply with, or are deemed by it to be desirable provided
they are not inconsistent with, any provision of the Investment Company Act
of 1940 or any rule or regulation thereunder.
(c) In determining for the purposes of these Articles of
Incorporation the total value of the assets of the corporation at any time,
investments and any other assets of the corporation shall be valued in such
manner as may be determined from time to time by the Board of Directors.
(d) Payment of the redemption price by the corporation may be made
either in cash or in securities or other assets at the time owned by the
corporation or partly in cash and partly in securities or other assets at
the time owned by the corporation. The value of any part of such payment to
be made in securities or other assets of the corporation shall be the value
employed in determining the redemption price. Payment of the redemption
price shall be made on or before the seventh day following the day on which
the shares are properly presented for redemption hereunder, except that
delivery of any securities included in any such payment shall be made as
promptly as any necessary transfers on the books of the issuers whose
securities are to be delivered may be made.
The corporation, pursuant to resolution of the Board of Directors,
may deduct from the payment made for any shares redeemed a liquidating
charge not in excess of five percent (5%) of the redemption price of the
shares so redeemed, and the Board of Directors may alter or suspend any
such liquidating charge from time to time.
(e) Redemption of shares of stock by the corporation is conditional
upon the corporation having funds or property legally available therefor.
(f) The corporation, either directly or through an agent, may
repurchase its shares, out of funds legally available therefor, upon such
terms and conditions and for such consideration as the Board of Directors
shall deem advisable, by agreement with the owner at a price not exceeding
the net asset value per share as determined by the corporation at such time
or times as the Board of Directors of the corporation shall designate, less
a charge not to exceed five percent (5%) of such net asset value, if and as
fixed by resolution of the Board of Directors of the corporation from time
to time, and take all other steps deemed necessary or advisable in
connection therewith.
(g) The corporation, pursuant to resolution of the Board of
Directors, may cause the redemption, upon the terms set forth in such
resolution and in subsections (a) through (e) and subsection (h) of this
Article EIGHTH, of shares of stock owned by stockholders whose shares have
an aggregate net asset value less than such amount as may be fixed from
time to time by the Board of Directors. Notwithstanding any other provision
of this Article EIGHTH, if certificates representing such shares have been
issued, the redemption price need not be paid by the corporation until such
certificates are presented in proper form for transfer to the corporation
or the agent of the corporation appointed for such purpose; however, the
redemption shall be effective, in accordance with the resolution of the
Board of Directors, regardless of whether or not such presentation has been
made.
(h) The obligations set forth in this Article EIGHTH may be
suspended or postponed as may be permissible under the Investment Company
Act of 1940 and the rules and regulations thereunder.
(i) The Board of Directors may establish other terms and conditions
and procedures for redemption, including requirements as to delivery of
certificates evidencing shares, if issued.
NINTH: All persons who shall acquire stock or other securities of the
corporation shall acquire the same subject to the provisions of the
corporation's Charter, as from time to time amended.
TENTH: From time to time any of the provisions of the Charter of the
corporation may be amended, altered or repealed, including amendments which
alter the contract rights of any class of stock outstanding, and other
provisions authorized by the Maryland General Corporation Law at the time in
force may be added or inserted in the manner and at the time prescribed by said
Law, and all rights at any time conferred upon the stockholders of the
corporation by its Charter are granted subject to the provisions of this
Article.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: July 15, 1993
/s/ David Stephens
David Stephens, Incorporator
ARTICLES OF AMENDMENT
DREYFUS GROWTH ALLOCATION FUND, INC. a Maryland corporation having its
principal office in the State of Maryland at 32 South Street, Baltimore,
Maryland (hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation that:
FIRST:The charter of the Corporation is hereby amended by striking Article
SECOND of the Articles of Incorporation and inserting in lieu thereof the
following:
"SECOND: The name of the corporation (hereinafter called the corporation')
is Dreyfus Retirement Portfolios, Inc."
SECOND: The charter of the Corporation is hereby amended by striking
Article FIFTH (1) of the Articles of Incorporation and inserting in lieu thereof
the following:
"FIFTH : (1) The total number of shares of stock which the corporation has
authority to issue is three hundred million (300,000,000) shares of Common
Stock, all of which are of a par value of one tenth of one cent ($.001) each, of
which one hundred million (100,000,000) shares are classified as shares of the
Growth and Income Portfolio, one hundred million (100,000,000) shares are
classified shares of the Income Portfolio and one hundred million (100,000,000)
shares are classified as shares of the Growth Portfolio. All of the authorized
shares of Common Stock are further classified as Investor Class shares
(50,000,000) allocated to each Portfolio) and Class R shares (50,000,000
allocated to each Portfolio)."
THIRD: Each share of Common Stock of the Corporation that is issued and
outstanding when these Articles of Amendment become effective will at such time
automatically convert into and be reclassified as an issued and outstanding
Class R share of the Growth and Income Portfolio.
FOURTH: The Board of Directors of the Corporation approved the foregoing
amendments to the charter as set forth in Articles FIRST, SECOND and THIRD
hereto, and declared that said amendment was advisable. The Corporation's sole
stockholder approved said amendment by consent action on March 9, 1995.
The undersigned Vice President acknowledges these Articles of Amendment to
be the corporate act of the Corporation and states that to the best of his
knowledge, information and belief the matters and facts set forth in these
Articles with respect to the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and that this statement
is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Growth Allocation Fund, Inc. has caused this
instrument to be filed in its name and on its behalf by its Vice President, Eric
B. Fischman, and witnessed by its Assistant Secretary, Ruth D. Leibert, on the
10th day of March, 1995.
DREYFUS GROWTH ALLOCATION FUND, INC.
BY:/s/Eric B. Fischman
Eric B. Fischman, Vice President
WITNESSED:
/s/Ruth D. Leibert
Ruth D. Leibert, Assistant Secretary
ARTICLES OF AMENDMENT
DREYFUS RETIREMENT PORTFOLIOS, INC., a Maryland corporation having its
principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking Article
SECOND of the Articles of Incorporation and inserting in lieu thereof the
following:
"SECOND: The name of the corporation (hereinafter called the corporation)
is Dreyfus LifeTime Portfolios, Inc."
SECOND: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
THIRD: These Articles of Amendment were approved by at least a majority of
the entire Board of Directors of the Corporation and are limited to changes
expressly permitted by Section 2-605 of subtitle 6 of Title 2 of the Maryland
General Corporation Law to be made without the affirmative vote of the
stockholders of the Corporation.
The Vice President acknowledges these Articles of Amendment to be the
corporate act of the Corporation and states that to the best of his knowledge,
information and belief the matters and facts set forth in these Articles with
respect to the authorization and approval of the amendment of the Corporation's
charter are true in all material respects, and that this statement is made under
the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Retirement Portfolios, Inc. has caused this
instrument to be filed in its name and on its behalf by its Vice President, Eric
B. Fischman, and witnessed by its Assistant Secretary, Ruth D. Leibert, on the
27th day of April, 1995.
DREYFUS RETIREMENT PORTFOLIOS, INC.
BY:/s/ Eric B. Fischman
Eric B. Fischman, Vice President
ATTEST:
/s/ Ruth D. Leibert
Ruth D. Leibert,
Assistant Secretary
<PAGE>
EXHIBIT 2
BY-LAWS
OF
DREYFUS LIFETIME PORTFOLIOS, INC.
(A Maryland Corporation)
___________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing shares of
stock shall set forth thereon the statements prescribed by Section 2-211 of the
Maryland General Corporation Law ("General Corporation Law") and by any other
applicable provision of law and shall be signed by the Chairman of the Board or
the President or a Vice President and countersigned by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed
with the corporate seal. The signatures of any such officers may be either
manual or facsimile signatures and the corporate seal may be either facsimile or
any other form of seal. In case any such officer who has signed manually or by
facsimile any such certificate ceases to be such officer before the certificate
is issued, it nevertheless may be issued by the corporation with the same effect
as if the officer had not ceased to be such officer as of the date of its issue.
No certificate representing shares of stock shall be issued for any share
of stock until such share is fully paid, except as otherwise authorized in
Section 2-207 of the General Corporation Law.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require, in its discretion, the owner
of any such certificate or his legal representative to give bond, with
sufficient surety, to the corporation to indemnify it against any loss or claim
that may arise by reason of the issuance of a new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions restricting the
transferability of shares of stock, if any, transfers of shares of stock of the
corporation shall be made only on the stock transfer books of the corporation by
the record holder thereof or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation or with a
transfer agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares of stock properly endorsed and the payment of all
taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining stockholders
entitled to notice of, or to vote at, any meeting of stockholders, or
stockholders entitled to receive payment of any dividend or the allotment of any
rights or in order to make a determination of stockholders for any other proper
purpose. Such date, in any case, shall be not more than 90 days, and in case of
a meeting of stockholders not less than 10 days, prior to the date on which the
meeting or particular action requiring such determination of stockholders is to
be held or taken. In lieu of fixing a record date, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period but
not to exceed 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) The record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
the notice of meeting is mailed or the day 30 days before the meeting, whichever
is the closer date to the meeting; and (2) The record date for the determination
of stockholders entitled to receive payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which the resolution of
the Board of Directors declaring the dividend or allotment of rights is adopted,
provided that the payment or allotment date shall not be more than 60 days after
the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share of stock" or "shares of stock" or "stockholder" or
"stock-holders" refers to an outstanding share or shares of stock and to a
holder or holders of record of outstanding shares of stock when the corporation
is authorized to issue only one class of shares of stock and said reference also
is intended to include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class or series upon
which or upon whom the Charter confers such rights where there are two or more
classes or series of shares or upon which or upon whom the General Corporation
Law confers such rights notwithstanding that the Charter may provide for more
than one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder.
5. STOCKHOLDER MEETINGS -- ANNUAL MEETINGS. If a meeting of the
stockholders of the corporation is required by the Investment Company Act of
1940, as amended, to elect the directors, then there shall be submitted to the
stockholders at such meeting the question of the election of directors, and a
meeting called for that purpose shall be designated the annual meeting of
stockholders for that year. In other years in which no action by stockholders is
required for the aforesaid election of directors, no annual meeting need be
held.
- SPECIAL MEETINGS. Special stockholder meetings for any purpose may be
called by the Board of Directors or the President and shall be called by the
Secretary for the purpose of removing a Director and for all other purposes
whenever the holders of shares entitled to at least ten percent of all the votes
entitled to be cast at such meeting shall make a duly authorized request that
such meeting be called. Such request shall state the purpose of such meeting and
the matters proposed to be acted on thereat, and no other business shall be
transacted at any such special meeting. Notwithstanding the foregoing, unless
requested by stockholders entitled to cast a majority of the votes entitled to
be cast at the meeting, a special meeting of the stockholders need not be called
at the request of stockholders to consider any matter that is substantially the
same as a matter voted on at any special meeting of the stockholders held during
the preceding twelve (12) months.
- PLACE AND TIME. Stockholder meetings shall be held at such place, either
within the State of Maryland or at such other place within the United States,
and at such date or dates as the directors from time to time may fix.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written or printed
notice of all meetings shall be given by the Secretary and shall state the time
and place of the meeting. The notice of a special meeting shall state in all
instances the purpose or purposes for which the meeting is called. Written or
printed notice of any meeting shall be given to each stockholder either by mail
or by presenting it to him personally or by leaving it at his residence or usual
place of business not less than ten days and not more than ninety days before
the date of the meeting, unless any provisions of the General Corporation Law
shall prescribe a different elapsed period of time, to each stockholder at his
address appearing on the books of the corporation or the address supplied by him
for the purpose of notice. If mailed, notice shall be deemed to be given when
deposited in the United States mail addressed to the stockholder at his post
office address as it appears on the records of the corporation with postage
thereon prepaid. Whenever any notice of the time, place or purpose of any
meeting of stockholders is required to be given under the provisions of these
by-laws or of the General Corpora- tion Law, a waiver thereof in writing, signed
by the stockholder and filed with the records of the meeting, whether before or
after the holding thereof, or actual attendance or representation at the meeting
shall be deemed equivalent to the giving of such notice to such stockholder. The
foregoing requirements of notice also shall apply, whenever the corporation
shall have any class of stock which is not entitled to vote, to holders of stock
who are not entitled to vote at the meeting, but who are entitled to notice
thereof and to dissent from any action taken thereat.
- STATEMENT OF AFFAIRS. The President of the corporation or, if the Board
of Directors shall determine otherwise, some other executive officer thereof,
shall prepare or cause to be prepared annually a full and correct statement of
the affairs of the corporation, including a balance sheet and a financial
statement of operations for the preceding fiscal year, which shall be filed at
the principal office of the corporation in the State of Maryland.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting: the President, the Chairman of the Board, a Vice President or, if none
of the foregoing is in office and present and acting, by a chairman to be chosen
by the stockholders. The Secretary of the corporation or, in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present the chairman of the meeting
shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether for the purposes of determining his presence at
a meeting, or whether by waiving notice of any meeting, voting or participating
at a meeting, expressing consent or dissent without a meeting or otherwise.
Every proxy shall be executed in writing by the stockholder or by his duly
authorized attorney-in-fact and filed with the Secretary of the corporation. No
unrevoked proxy shall be valid after eleven months from the date of its
execution, unless a longer time is expressly provided therein.
- INSPECTORS OF ELECTION. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the direc- tors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath to execute faithfully the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting
or any stock- holder, the inspector or inspectors, if any, shall make a report
in writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
- VOTING. Each share of stock shall entitle the holder thereof to one vote,
except in the election of directors, at which each said vote may be cast for as
many persons as there are directors to be elected. Except for election of
directors, a majority of the votes cast at a meeting of stockholders, duly
called and at which a quorum is present, shall be sufficient to take or
authorize action upon any matter which may come before a meeting, unless more
than a majority of votes cast is required by the corporation's Articles of
Incorporation. A plurality of all the votes cast at a meeting at which a quorum
is present shall be sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if a consent in writing,
setting forth such action, is signed by all the stockholders entitled to vote on
the subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action and such consent and
waiver are filed with the records of the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed under the direction of a Board of Directors. The use of the
phrase "entire board" herein refers to the total number of directors which the
corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person of
full age. A director need not be a stockholder, a citizen of the United States
or a resident of the State of Maryland. The initial Board of Directors shall
consist of one person. Thereafter, the number of directors constituting the
entire board shall never be less than three or the number of stockholders,
whichever is less. At any regular meeting or at any special meeting called for
that purpose, a majority of the entire Board of Directors may increase or
decrease the number of directors, provided that the number thereof shall never
be less than three or the number of stockholders, whichever is less, nor more
than twelve and further provided that the tenure of office of a director shall
not be affected by any decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors shall consist of the
director named in the Articles of Incorporation and shall hold office until the
first meeting of stockholders or until his successor has been elected and
qualified. Thereafter, directors who are elected at a meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until their successors have been elected and
qualified. Newly created directorships and any vacancies in the Board of
Directors, other than vacancies resulting from the removal of directors by the
stockholders, may be filled by the Board of Directors, subject to the provisions
of the Investment Company Act of 1940. Newly created directorships filled by the
Board of Directors shall be by action of a majority of the entire Board of
Directors then in office. All vacancies to be filled by the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum thereof.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors conveniently may assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Maryland as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the President or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Whenever any notice of the time,
place or purpose of any meeting of directors or any committee thereof is
required to be given under the provisions of the General Corporation Law or of
these by-laws, a waiver thereof in writing, signed by the director or committee
member entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance at the meeting
shall be deemed equivalent to the giving of such notice to such director or such
committee member.
- QUORUM AND ACTION. A majority of the entire Board of Directors shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided such majority shall constitute at least one-third of the entire Board
and, in no event, less than two directors. A majority of the directors present,
whether or not a quorum is present, may adjourn a meeting to another time and
place. Except as otherwise specifically provided by the Articles of
Incorporation, the General Corporation Law or these by-laws, the action of a
majority of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, or the President or any other director chosen by the Board, shall
preside at all meetings.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for
cause or without cause by the stockholders, who may elect a successor or
successors to fill any resulting vacancy or vacancies for the unexpired term of
the removed director or directors.
6. COMMITTEES. The Board of Directors may appoint from among its members an
Executive Committee and other committees composed of two or more directors and
may delegate to such committee or committees, in the intervals between meetings
of the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the corporation, except the power
to amend the by-laws, to approve any consolidation, merger, share exchange or
transfer of assets, to declare dividends, to issue stock or to recommend to
stockholders any action requiring the stockholders' approval. In the absence of
any member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Directors to act in the place of such absent member.
7. INFORMAL ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board of Directors or any such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or any
such committee.
Members of the Board of Directors or any committee designated thereby may
participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and shall have a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors, and may have such other officers, assistant officers and agents as
the Board of Directors shall authorize from time to time. Any two or more
offices, except those of President and Vice President, may be held by the same
person, but no person shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of Directors whenever, in
its judgment, the best interests of the corporation will be served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation in the State of
Maryland prescribed by the General Corporation Law is 32 South Street, c/o The
Corporation Trust Incorporated, Baltimore, Maryland 21202. The name and address
of the resident agent in the State of Maryland prescribed by the General
Corporation Law are: The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
The corporation shall maintain, at its principal office in the State of
Maryland prescribed by the General Corporation Law or at the business office or
an agency of the corporation, an original or duplicate stock ledger containing
the names and addresses of all stockholders and the number of shares of each
class held by each stockholder. Such stock ledger may be in written form or any
other form capable of being converted into written form within a reasonable time
for visual inspection.
The corporation shall keep at said principal office in the State of
Maryland the original or a certified copy of the by-laws, including all
amendments thereto, and shall duly file thereat the annual statement of affairs
of the corporation prescribed by Section 2-314 of the General Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the corporation
and shall be in such form and contain such other words and/or figures as the
Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws is vested in the
Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall
indemnify its directors to the fullest extent that indemnification of directors
is permitted by the law. The corporation shall indemnify its officers to the
same extent as its directors and to such further extent as is consistent with
law. The corporation shall indemnify its directors and officers who while
serving as directors or officers also serve at the request of the corporation as
a director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the same extent as its directors and, in the case of officers,
to such further extent as is consistent with law. The indemnifica- tion and
other rights provided by this Article shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. This Article shall not protect
any such person against any liability to the corporation or any stockholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
2. ADVANCES. Any current or former director or officer of the corporation
seeking indemnification within the scope of this Article shall be entitled to
advances from the corporation for payment of the reasonable expenses incurred by
him in con- nection with the matter as to which he is seeking indemnification in
the manner and to the fullest extent permissible under the General Corporation
Law. The person seeking indemnification shall provide to the corporation a
written affirmation of his good faith belief that the standard of conduct
necessary for indemnification by the corporation has been met and a written
undertaking to repay any such advance if it should ultimately be determined that
the standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the person seeking
indemnification shall provide a security in form and amount acceptable to the
corporation for his undertaking; (b) the corporation is insured against losses
arising by reason of the advance; or (c) a majority of a quorum of directors of
the corporation who are neither "interested persons" as defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended, nor parties to the
proceeding ("disinterested non-party directors"), or independent legal counsel,
in a written opinion, shall have determined, based on a review of facts readily
avail- able to the corporation at the time the advance is proposed to be made,
that there is reason to believe that the person seeking indemnification will
ultimately be found to be entitled to indemnification.
3. PROCEDURE. At the request of any person claiming indemnification under
this Article, the Board of Directors shall determine, or cause to be determined,
in a manner consistent with the General Corporation Law, whether the standards
required by this Article have been met. Indemnification shall be made only
following: (a) a final decision on the merits by a court or other body before
whom the proceeding was brought that the person to be indemnified was not liable
by reason of disabling conduct or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct by (i) the vote of
a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and agents who are
not officers or directors of the corporation may be indemnified, and reasonable
expenses may be advanced to such employees or agents, as may be provided by
action of the Board of Directors or by contract, subject to any limitations
imposed by the Investment Company Act of 1940, as amended.
5. OTHER RIGHTS. The Board of Directors may make further provision
consistent with law for indemnification and advance of expenses to directors,
officers, employees and agents by resolution, agreement or otherwise. The
indemnification provided by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other agreement
or resolution of stockholders or disinterested non-party directors or otherwise.
6. AMENDMENTS. References in this Article are to the General Corporation
Law and to the Investment Company Act of 1940 as from time to time amended. No
amendment of the by-laws shall affect any right of any person under this Article
based on any event, omission or proceeding prior to the amendment.
Dated: July 15, 1993
As Revised: April 28, 1995
<PAGE>
EXHIBIT 6(a)
MANAGEMENT AGREEMENT
DREYFUS LIFETIME PORTFOLIOS, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
Amended, February 2, 1995
Revised, April 28, 1995
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund") consisting of the series
named on Schedule 1 hereto, as such Schedule may be revised from time to time
(each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its charter documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
investment adviser.
In this connection it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect. We have
discussed and concur in your employing on this basis Mellon Equity Associates,
Inc. to act as the sub-investment adviser to each Series (the "Sub-Investment
Adviser") to provide day-to-day management of each Series' investments.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objectives and policies as stated in the Fund's Prospectus
and Statement of Additional Information as from time to time in effect. In
connection therewith, you will supervise the continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of each Series' assets
conducted by the Sub-Investment Adviser. You will furnish to the Fund such
statistical information, with respect to the investments which a Series may hold
or contemplate purchasing, as the Fund may reasonably request. The Fund wishes
to be informed of important developments materially affecting any Series'
portfolio and shall expect you, on your own initative, to furnish to the Fund
from time to time such information as you may believe appropriate for this
purpose.
In addition, you will supply office facilities (which may be in your own
offices), data processing services, clerical, accounting and bookkeeping
services, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; prepare reports to
the Series' stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities; calculate the
net asset value of each Series' shares; and generally assist in all aspects of
the Fund's operations. You shall have the right, at your expense, to engage
other entities to assist you in performing some or all of the obligations set
forth in this paragraph, provided each such entity enters into an agreement with
you in form and substance reasonably satisfactory to the Fund. You agree to be
liable for the acts or omissions of each such entity to the same extent as if
you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that neither you nor the Sub-Investment Adviser shall be
liable hereunder for any error of judgment or mistake of law or for any loss
suffered by one or more Series, provided that nothing herein shall be deemed to
protect or purport to protect you or the Sub-Investment Adviser against any
liability to the Fund or the relevant Series or to its security holders to which
you would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of your duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder, or to which
the Sub-Investment Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
under its Sub-Investment Advisory Agreement with you or by reason of its
reckless disregard of its obligations and duties under said Agreement.
In consideration of services rendered pursuant to this Agreement, the Fund
will pay you on the first business day of each month a fee at the rate set forth
opposite each Series' name on Schedule 1 hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information. The fee for the
period from the date of the commencement of the public sale of a Series' shares
to the end of the month during which such sale shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement and will pay all fees of the Sub-Investment
Adviser in connection with its duties in respect of the Fund. All other expenses
to be incurred in the operation of the Fund (other than those borne by the Sub-
Investment Adviser) will be borne by the Fund, except to the extent specifically
assumed by you. The expenses to be borne by the Fund include, without
limitation, the following: 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 you or the Sub-Investment Adviser or any affiliate of you
or the Sub-Investment Adviser, Securities and Exchange Commission fees and state
Blue Sky qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Fund's existence, costs attributable
to investor services (including, without limitation, telephone and personnel
expenses), costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
As to each Series, if in any fiscal year the aggregate expenses of the
Series (including fees pursuant to this Agreement, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation of
any state having jurisdiction over the Series, the Fund may deduct from the fees
to be paid hereunder, or you will bear, such excess expense to the extent
required by state law. Your obligation pursuant hereto will be limited to the
amount of your fees hereunder. 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 Fund understands that you and the Sub-Investment Adviser now act, and
that from time to time hereafter you or the Sub-Investment Adviser may act, as
investment adviser to one or more other investment companies and fiduciary or
other managed accounts, and the Fund has no objection to your and the Sub-
Investment Adviser's so acting, provided that when the purchase or sale of
securities of the same issuer is suitable for the investment objectives of two
or more such companies or accounts which have available funds for investment,
the available securities will be allocated in a manner believed to be equitable
to each company or account. It is recognized that in some cases this procedure
may adversely affect the price paid or received by one or more Series or the
size of the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
Neither you nor the Sub-Investment Adviser shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for a loss resulting
from willful misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from reckless disregard by you of your obligations
and duties under this Agreement and, in the case of the Sub-Investment Adviser,
for a loss resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under its Sub-Investment Advisory Agreement. Any
person, even though also your officer, director, partner, employee or agent, who
may be or become an officer, Board member, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting on any business of the
Fund, to be rendering such services to or acting solely for the Fund and not as
your officer, director, partner, employee or agent or one under your control or
direction even though paid by you.
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date") and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. As to
each Series, this Agreement is terminable without penalty, on 60 days' notice,
by the Fund's Board or by vote of holders of a majority of such Series' shares
or, upon not less than 90 days' notice, by you. This Agreement also will
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in said Act).
The Fund recognizes that from time to time your directors, officers and
employees may serve as directors, trustees, partners, officers and employees of
other corporations, business trusts, partnerships or other entities (including
other investment companies) and that such other entities may include the name
"Dreyfus" as part of their name, and that your corporation or its affiliates may
enter into investment advisory or other agreements with such other entities. If
you cease to act as the Fund's investment adviser, the Fund agrees that, at your
request, the Fund will take all necessary action to change the name of the Fund
to a name not including "Dreyfus" in any form or combination of words.
The Fund is agreeing to the provisions of this Agreement that limit the
Sub-Investment Adviser's liability and other provisions relating to the
Sub-Investment Adviser so as to induce the Sub-Investment Adviser to enter into
its Sub-Investment Advisory Agreement with you and to perform its obligations
thereunder. The Sub-Investment Adviser is expressly made a third party
beneficiary of this Agreement with rights as respects the Fund to the same
extent as if it had been a party hereto.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS LIFETIME PORTFOLIOS, INC.
By:________________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date
Reapproval Day
Income Portfolio .60 of 1% February 2, 1997
February 2nd
Growth and Income
Portfolio .75 of 1% February 2, 1997
February 2nd
Growth Portfolio .75 of 1% February 2, 1997
February 2nd
<PAGE>
EXHIBIT 6(b)
SUB-INVESTMENT ADVISORY AGREEMENT
THE DREYFUS CORPORATION
200 Park Avenue
New York, New York 10166
February 2, 1995
Revised, April 28, 1995
Mellon Equity Associates, Inc.
500 Grant Street
Pittsburgh, Pennsylvania 15258
Dear Sirs:
As you are aware, Dreyfus Lifetime Portfolios, Inc. (the "Fund") desires to
employ its capital by investing and reinvesting the same in investments of the
type and in accordance with the limitations specified in its charter documents
and in its Pros- pectus and Statement of Additional Information as from time to
time in effect, copies of which have been or will be submitted to you, and in
such manner and to such extent as from time to time may be approved by the
Fund's Board. The Fund intends to employ The Dreyfus Corporation (the "Adviser")
to act as its investment adviser pursuant to a written agreement (the
"Management Agreement"), a copy of which has been furnished to you. The Adviser
desires to employ you to act as the sub-investment adviser to each of the Fund's
series named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series").
In this connection, it is understood that from time to time you will employ
or associate with yourself such person or persons as you may believe to be
particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the Adviser, you will provide
investment management of each Series' portfolio in accordance with such Series'
investment objectives and policies as stated in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect. In
connection therewith, you will supervise each Series' investments and conduct a
continuous program of investment, evaluation and, if appropriate, sale and
reinvestment of such Series' assets. You will furnish to the Adviser or the Fund
such statistical information, with respect to the investments which a Series may
hold or contemplate purchasing, as the Adviser or the Fund may reasonably
request. The Fund and the Adviser wish to be informed of important developments
materially affecting any Series' portfolio and shall expect you, on your own
initiative, to furnish to the Fund or the Adviser from time to time such
information as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to be
provided hereunder, and the Adviser agrees as an inducement to your undertaking
the same that you shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by the Fund or the Adviser, provided
that nothing herein shall be deemed to protect or purport to protect you against
any liability to the Adviser, the Fund or the Series or its security holders to
which you would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay you, on the first business day of each month, out of the
management fee it receives with respect to the Series and only to the extent
thereof, a fee at the rate set forth opposite each Series' name on Schedule 1
hereto. Net asset value shall be computed on such days and at such time or times
as described in the Fund's then-current Prospectus and Statement of Additional
Information. The fee for the period from the date following the commencement of
the public sale of a Series' shares (after any sales are made to the Adviser) to
the end of the month during which such sale shall have been commenced shall be
pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable within 10 business days of date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of each
Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund (other than those borne by the Adviser) will be borne by
the Fund, except to the extent specifically assumed by you. The expenses to be
borne by the Fund include, without limitation, the following: 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 you or the Adviser or any affiliate of you
or the Adviser, Securities and Exchange Commis- sion fees and state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
stockholders, costs of stockholders' reports and meetings, and any extraordinary
expenses.
As to each Series, if in any fiscal year the aggregate expenses of the
Series (including fees pursuant to the Fund's Management Agreement, but
excluding interest, taxes, brokerage and, with the prior written consent of the
necessary state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Series, the Adviser
may deduct from the fees to be paid hereunder, or you will bear such excess
expense on a pro-rata basis with the Adviser, in the proportion that the
sub-advisory fee payable to you pursuant to this Agreement bears to the fee
payable to the Adviser pursuant to the Management Agreement, to the extent
required by state law. Your obligation pursuant hereto will be limited to the
amount of your fees hereunder. 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 Adviser understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Adviser has no
objection to your so acting, provided that when purchase or sale of securities
of the same issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds for investment,
the available securities will be allocated in a manner believed by you to be
equitable to each company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one or more Series
or the size of the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to assist in
the performance of your duties hereunder will not devote their full time to such
services and nothing contained herein shall be deemed to limit or restrict your
right or the right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
You shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund or the Adviser in connection with the matters to
which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the performance of
your duties or from reckless disregard by you of your obligations and duties
under this Agreement. Any person, even though also your officer, director,
partner, employee or agent, who may be or become an officer, Board member,
employee or agent of the Fund, shall be deemed, when rendering services to the
Fund or acting on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director, partner, employee,
or agent or one under your control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set forth
opposite such Series' name on Schedule 1 hereto (the "Reapproval Date") and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Series' outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. As to
each Series, this Agreement is terminable without penalty (i) by the Adviser
upon 60 days' notice to you, (ii) by the Fund's Board or by vote of the holders
of a majority of such Series' shares upon 60 days' notice to you, or (iii) by
you upon not less than 90 days' notice to the Fund and the Adviser. This
Agreement also will terminate automatically, as to the relevant Series, in the
event of its assignment (as defined in said Act). In addition, notwithstanding
anything herein to the contrary, if the Management Agreement terminates for any
reason, this Agreement shall terminate effective upon the date the Management
Agreement terminates.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE DREYFUS CORPORATION
By:_________________________
Accepted:
MELLON EQUITY ASSOCIATES, INC.
By:__________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date
Reapproval
Day
Income Portfolio * February 2, 1997
February 2nd
Growth and Income
Portfolio * February 2, 1997
February 2nd
Growth Portfolio * February 2, 1997
February 2nd
________________________________
* .35% of the Portfolio's average daily net assets up to $600 million in
Fund assets; .25% of the Portfolio's average daily net assets when the Fund's
assets are between $600 million and $1.2 billion; .20% of the Portfolio's
average daily net assets when the Fund's assets are between $1.2 billion and
$1.8 billion; and .15% of the Portfolio's average daily net assets when the
Fund's assets are over $1.8 billion.
<PAGE>
EXHIBIT 7
DISTRIBUTION AGREEMENT
DREYFUS LIFETIME PORTFOLIOS, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
Amended, February 2, 1995
Revised, April 28, 1995
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that you
shall be, for the period of this agreement, the distributor of (a) shares of
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series are set forth
on such Exhibit, shares of the Fund. For purposes of this agreement the term
"Shares" shall mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by, and in
accordance with, the registration statement and prospectus then in effect under
the Securities Act of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you will enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market, economic
or political conditions, or by abnormal circumstances of any kind, the Fund's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Fund shall advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all expenses which may be
incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.7 The Fund shall furnish you from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as you may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
you upon request with: (a) semi-annual reports and annual audited reports of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as you may reasonably request.
1.8 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an 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 not misleading. The Fund may
but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the form furnished to
you from time to time, in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and directors, and any
person who controls you within the meaning of Section 15 of the Securities Act
of 1933, as amended, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling person, may incur under the Securities Act of 1933, as amended, or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Fund's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's agreement to
indemnify you, your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Fund at
its address set forth above within ten days after the summons or other first
legal process shall have been served. The failure so to notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this paragraph
1.9. The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Fund and approved
by you.
In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by you or them. The Fund's indemnification agreement
contained in this paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of you, your officers and directors, or
any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons and their successors. The Fund agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Fund or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its several officers
and Board members, and any person who controls the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its officers or
Board members, or any such controlling person, may incur under the Securities
Act of 1933, as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its officers or
Board members, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information not
misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your address set forth above within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on your part, and in any other event the Fund,
its officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to the Fund, its officers or Board
members, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph
1.10. This agreement of indemnity will inure exclusively to the Fund's
benefit, to the benefit of the Fund's officers and Board members, and their
respective estates, and to the benefit of any controlling persons and their
successors.
You agree promptly to notify the Fund of the commencement of any litigation
or proceedings against you or any of your officers or directors in connection
with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund under any of the
provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for amendments
to the registration statement or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities and Exchange Commission
of any stop order suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement of a
material fact made in the registration statement or prospectus then in effect or
which requires the making of a change in such registration statement or
prospectus in order to make the statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission with respect
to any amendments to any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be offered
for sale at a price per share (the "offering price") approximately equal to (a)
their net asset value (determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those persons set forth
in the then-current prospectus, which shall be the percentage of the offering
price of such Shares as set forth in the Fund's then-current prospectus. The
offering price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund offered for sale by
you may be subject to a contingent deferred sales charge as set forth in the
Fund's then-current prospectus. You shall be entitled to receive any sales
charge or contingent deferred sales charge in respect of the Shares. Any
payments to dealers shall be governed by a separate agreement between you and
such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval Date") set
forth on Exhibit A hereto (and, if the Fund has Series, a separate Reapproval
Date shall be specified on Exhibit A for each Series), and thereafter shall
continue automatically for successive annual periods ending on the day (the
"Reapproval Day") of each year set forth on Exhibit A hereto, provided such
continuance is specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may be, provided that
in either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any party
to this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable without penalty, on 60
days' notice, by vote of holders of a majority of the Fund's or, as to any
relevant Series, such Series' outstanding voting securities or by the Fund's
Board as to the Fund or the relevant Series, as the case may be. This agreement
is terminable by you, upon 270 days' notice, effective on or after the fifth
anniversary of the date hereof. This agreement also will terminate
automatically, as to the Fund or relevant Series, as the case may be, in the
event of its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you shall not perform any
services for any entity other than investment companies advised or administered
by The Dreyfus Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this agreement may not
devote their full time to such service and nothing contained in this agreement
shall be deemed to limit or restrict your or any of your affiliates right to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon it shall become
a binding agreement between us.
Very truly yours,
DREYFUS LIFETIME PORTFOLIOS, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:_______________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Income Portfolio February 2, 1997 February 2nd
Growth and Income
Portfolio February 2, 1997 February 2nd
Growth Portfolio February 2, 1997 February 2nd
<PAGE>
EXHIBIT 9
AMENDED AND RESTATED
CUSTODY AGREEMENT
Amended and Restated Custody Agreement made as of April 28, 1995 between
DREYFUS LIFETIME PORTFOLIOS, INC., a corporation organized and existing under
the laws of the State of Maryland, having its principal office and place of
business at 200 Park Avenue, New York, New York 10166 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a
banking business, having its principal office and place of business at 90
Washington Street, New York, New York 10286 (hereinafter called the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth
the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Treasurer, the
Controller or any other person, whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Directors of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
2. "Available Balance" shall mean for any given day during a calendar year
the aggregate amount of Federal Funds held in the Fund's custody account(s) at
The Bank of New York, or its successors, as of the close of such day or, if such
day is not a business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party such party's making a
general assignment, arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or the entry of an order for relief under
the Federal bankruptcy law or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or if a
petition is presented for the winding up or liquidation of the party or a
resolution is passed for its winding up or liquidation, or it seeks, or becomes
subject to, the appointment of an administrator, receiver, trustee, custodian or
other similar official for it or for all or substantially all of its assets or
its taking any action in furtherance of, or indicating its consent to approval
of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and Federal agency securities, its successor or
successors and its nominee or nominees.
5. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
6. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to the Custodian,
which is actually received by the Custodian and signed on behalf of the Fund by
any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker- dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated account so denominated and
pledged to the Custodian as security for, and in consideration of, the
Custodian's issuance of (a) any Put Option guarantee letter or similar document
described in para- graph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer Price Index, all
items and all urban consumers, U.S. city average 1982-84 equals 100, as first
published without seasonal adjustment by the Bureau of Labor Statistics, the
Department of Labor, without regard to subsequent revisions or corrections by
such Bureau.
10. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified Securities (excluding
Futures Contracts) which are owned by the writer thereof and subject to
appropriate restrictions.
11. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Directors specifically
approving deposits in DTC. The term "Depository" shall further mean and include
any other person authorized to act as a depository under the Investment Company
Act of 1940, its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of the Fund's
Directors specifically approving deposits therein by the Custodian.
12. "Earnings Credit" shall mean for any given day during a calendar year
the product of (a) the Federal Funds Rate for such date minus .25%, and (b) 82%
of the Available Balance.
13. "Federal Funds" shall mean immediately available same day funds.
14. "Federal Funds Rate" shall mean, for any day, the Federal Funds
(Effective) interest rate so denominated as published in Federal Reserve
Statistical Release H.15 (519) and applicable to such day and each succeeding
day which is not a business day.
15. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities, including, without limitation, U.S. Treasury
Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a specified month at an
agreed upon price.
16. "Futures Contract" shall mean a Financial Futures Contract and/or Stock
Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
18. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant or Clearing Member, or in the name
of the Fund for the benefit of a broker, dealer, futures commission merchant or
Clearing Member, or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant or Clearing
Member (a "Margin Account Agreement"), separate and distinct from the custody
account, in which certain Securities and/or money of the Fund shall be deposited
and withdrawn from time to time in connection with such transactions as the Fund
may from time to time determine. Securities held in the Book-Entry System or the
Depository shall be deemed to have been deposited in, or withdrawn from, a
Margin Account upon the Custodian's effecting an appropriate entry on its books
and records.
19. "Merger" shall mean (a) with respect to the Fund, the consolidation or
amalgamation with, merger into, or transfer of all or substantially all of its
assets to, another entity, where the Fund is not the surviving entity, and (b)
with respect to the Custodian, any consolidation or amalgamation with, merger
into, or transfer of all or substantially all of its assets to, another entity,
except for any such consolidation, amalgamation, merger or transfer of assets
between the Custodian and The Bank of New York Company, Inc. or any subsidiary
thereof, or the Irving Bank Corporation or any subsidiary thereof, provided that
the surviving entity agrees to be bound by the terms of this Agreement.
20. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and interest by the
government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in Federal funds on the same date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation, a clearing agency
registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
22. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Fund to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix B or such other Certificate as may be received by the
Custodian from time to time.
23. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from an Authorized Person or from a person reasonably believed by
the Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
27. "Security" shall be deemed to include, without limitation, Money Market
Securities, Call Options, Put Options, Stock Index Options, Stock Index Futures
Contracts, Stock Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, common stock
and other instruments or rights having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities (including, without limitation, general obligation bonds,
revenue bonds and industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing any
other rights or interest therein, or any property or assets.
28. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of the Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
29. "Shares" shall mean the shares of Common Stock of the Fund, each of
which, in the case of a Fund having Series, is allocated to a particular Series.
30. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
31. "Stock Index Option" shall mean an exchange traded option entitling the
holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
32. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
all the Securities and moneys at any time owned by the Fund during the period of
this Agreement, except that (a) if the Custodian fails to provide for the
custody of any of the Fund's Securities and moneys located or to be located
outside the United States in a manner satisfactory to the Fund, the Fund shall
be permitted to arrange for the custody of such Securities and moneys located or
to be located outside the United States other than through the Custodian at
rates to be negotiated and borne by the Fund and (b) if the Custodian fails to
continue any existing sub-custodial or similar arrangements on substantially the
same terms as exist on the date of this Agreement, the Fund shall be permitted
to arrange for such or similar services other than through the Custodian at
rates to be negotiated and borne by the Fund. The Custodian shall not charge the
Fund for any such terminated services after the date of such termination.
2. The Custodian hereby accepts appointment as such custodian and agrees to
perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by it, including cash received for the
issuance of its shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and such moneys until
actually received by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Directors of the Fund approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of Securities of the Fund
in the Depository the Fund shall deliver to the Custodian a certified resolution
of the Directors of the Fund approving, authorizing and instructing the
Custodian on a continuous and on-going basis until instructed to the contrary by
a Certificate actually received by the Custodian to deposit in the Depository
all Securities eligible for deposit therein and to utilize the Depository to the
extent possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys of the Fund deposited in either the Book-Entry System or
the Depository will be represented in accounts which include only assets held by
the Custodian for customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity. Prior to the
Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options as provided in this
Agreement, the Custodian shall have received a certified resolution of the
Fund's Board of Directors approving, authorizing and instructing the Custodian
on a continuous and on-going basis, until instructed to the contrary by a
Certificate actually received by the Custodian, to accept, utilize and act in
accordance with such confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate account in the name of the Fund
all moneys received by it for the account of the Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as provided in Article IV hereof;
(b) In payment of dividends or distributions, as provided in Article XI
hereof;
(c) In payment of original issue or other taxes, as provided in Article XII
hereof;
(d) In payment for Shares redeemed by it, as provided in Article XII
hereof;
(e) Pursuant to Certificates setting forth the name and address of the
person to whom the payment is to be made, and the purpose for which payment is
to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XV hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where Securities are transferred to the
account of the Fund, the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of the Book-Entry System or the Depository.
At least monthly and from time to time, the Custodian shall furnish the Fund
with a detailed statement of the Securities and moneys held for the Fund under
this Agreement.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held for the Fund, which are issued or issuable
only in bearer form, except such Securities as are held in the Book-Entry
System, shall be held by the Custodian in that form; all other Securities held
for the Fund may be registered in the name of the Fund, in the name of any duly
appointed registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund. The Custodian shall hold all
such Securities which are not held in the Book-Entry System or in the Depository
in a separate account in the name of the Fund physically segregated at all times
from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
therein deposited, shall with respect to all Securities held for the Fund in
accordance with this Agreement:
(a) Collect all income due or payable and, in any event, if the Custodian
receives a written notice from the Fund specifying that an amount of income
should have been received by the Custodian within the last 90 days, the
Custodian will provide a conditional payment of income within 60 days from the
date the Custodian received such notice, unless the Custodian reasonably
concludes that such income was not due or payable to the Fund, provided that the
Custodian may reverse any such conditional payment upon its reasonably
concluding that all or any portion of such income was not due or payable, and
provided further that the Custodian shall not be liable for failing to collect
on a timely basis the full amount of income due or payable in respect of a
"floating rate instrument" or "variable rate instrument" (as such terms are
defined under Rule 2a-7 under the Investment Company Act of 1940, as amended) if
it has acted in good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount payable upon such Securities
which are called, but only if either (i) the Custodian receives a written notice
of such call, or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be amended at any
time by the Custodian upon five business days' prior notification to the Fund;
(c) Present for payment and collect the amount payable upon all Securities
which may mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the Federal Income Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository with
respect to Securities therein deposited, for the account of the Fund all rights
and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian, directly
or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities not
described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain possession of any instrument or certificate
representing any Futures Contract, Option or Futures Contract Option until after
it shall have determined, or shall have received a Certificate from the Fund
stating, that any such instruments or certificates are available. The Fund shall
deliver to the Custodian such a Certificate no later than the business day
preceding the availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the Investment
Company Act of 1940, as amended, in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options or Futures
Contract Options by making payments or deliveries specified in Certificates
received by the Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer or futures
commission merchant of a statement or confirmation reasonably believed by the
Custodian to be in the form customarily used by brokers, dealers, or futures
commission merchants with respect to such Futures Contracts, Options or Futures
Contract Options, as the case may be, confirming that such Security is held by
such broker, dealer or futures commission merchant, in book-entry form or
otherwise, in the name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that payments to or deliveries from
the Margin Account shall be made in accordance with the terms and conditions of
the Margin Account Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision in this Agreement
to the contrary, make payment for any Futures Contract, Option or Futures
Contract Option for which such instruments or such certificates are available
only against the delivery to the Custodian of such instrument or such
certificate, and deliver any Futures Contract, Option or Futures Contract Option
for which such instruments or such certificates are available only against
receipt by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS, FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of any Option, Futures Contract, Futures Contract Option or Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market Securities,
a Certificate, Oral Instructions or Written Instructions, specifying with
respect to each such purchase: (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the principal amount purchased and
accrued interest, if any; (c) the date of purchase and settlement; (d) the
purchase price per unit; (e) the total amount payable upon such purchase; (f)
the name of the person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (g) the name of the
broker to which payment is to be made. The Custodian shall, upon receipt of
Securities purchased by or for the Fund, pay out of the moneys held for the
account of the Fund the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale of
any Option, Futures Contract, Futures Contract Option or Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and (ii)
with respect to each sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such sale:
(a) the name of the issuer and the title of the Security; (b) the number of
shares or principal amount sold, and accrued interest, if any; (c) the date of
sale; (d) the sale price per unit; (e) the total amount payable to the Fund upon
such sale; (f) the name of the broker through whom or the person to whom the
sale was made, and the name of the clearing broker, if any; and (g) the name of
the broker to whom the Securities are to be delivered. The Custodian shall
deliver the Securities upon receipt of the total amount payable to the Fund upon
such sale, provided that the same conforms to the total amount payable as set
forth in such Certificate, Oral Instructions or Written Instructions. Subject to
the foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund shall
deliver to the Custodian a Certificate specifying with respect to each Option
purchased: (a) the type of Option (put or call); (b) the name of the issuer and
the title and number of shares subject to such Option or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Stock Index Options purchased; (c) the expiration date; (d) the exercise price;
(e) the dates of purchase and settlement; (f) the total amount payable by the
Fund in connection with such purchase; (g) the name of the Clearing Member
through which such Option was purchased; and (h) the name of the broker to whom
payment is to be made. The Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and registered
nominee of the Custodian) as custodian for the Fund, out of moneys held for the
account of the Fund, the total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant to
paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the type of Option (put or call);
(b) the name of the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options sold; (c) the date of sale;
(d) the sale price; (e) the date of settlement; (f) the total amount payable to
the Fund upon such sale; and (g) the name of the Clearing Member through which
the sale was made. The Custodian shall consent to the delivery of the Option
sold by the Clearing Member which previously supplied the confirmation described
in preceding paragraph 1 of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a Certificate specifying with respect to such Call Option: (a) the name of the
issuer and the title and number of shares subject to the Call Option; (b) the
expiration date; (c) the date of exercise and settlement; (d) the exercise price
per share; (e) the total amount to be paid by the Fund upon such exercise; and
(f) the name of the Clearing Member through which such Call Option was
exercised. The Custodian shall, upon receipt of the Securities underlying the
Call Option which was exercised, pay out of the moneys held for the account of
the Fund the total amount payable to the Clearing Member through whom the Call
Option was exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a Certificate specifying with respect to such Put Option: (a) the name of the
issuer and the title and number of shares subject to the Put Option; (b) the
expiration date; (c) the date of exercise and settlement; (d) the exercise price
per share; (e) the total amount to be paid to the Fund upon such exercise; and
(f) the name of the Clearing Member through which such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the exercise of the
Put Option, deliver or direct the Depository to deliver the Securities, provided
the same conforms to the amount payable to the Fund as set forth in such
Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Stock Index Option:
(a) the type of Stock Index Option (put or call); (b) the number of Options
being exercised; (c) the stock index to which such Option relates; (d) the
expiration date; (e) the exercise price; (f) the total amount to be received by
the Fund in connection with such exercise; and (g) the Clearing Member from
which such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Covered
Call Option: (a) the name of the issuer and the title and number of shares for
which the Covered Call Option was written and which underlie the same; (b) the
expiration date; (c) the exercise price; (d) the premium to be received by the
Fund; (e) the date such Covered Call Option was written; and (f) the name of the
Clearing Member through which the premium is to be received. The Custodian shall
deliver or cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall impose, or direct the
Depository to impose, upon the underlying Securities specified in the
Certificate such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any receipts for
Securities in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the name of the issuer and the title and number of
shares subject to the Covered Call Option; (b) the Clearing Member to whom the
underlying Securities are to be delivered; and (c) the total amount payable to
the Fund upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct the Depository to deliver, the underlying Securities as specified in
the Certificate for the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to such Put Option: (a)
the name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (b) the expiration date; (c) the
exercise price; (d) the premium to be received by the Fund; (e) the date such
Put Option is written; (f) the name of the Clearing Member through which the
premium is to be received and to whom a Put Option guarantee letter is to be
delivered; (g) the amount of cash, and/or the amount and kind of Securities, if
any, to be deposited in the Segregated Security Account; and (h) the amount of
cash and/or the amount and kind of Securities to be deposited into the
Collateral Account. The Custodian shall, after making the deposits into the
Collateral Account specified in the Certificate, issue a Put Option guarantee
letter substantially in the form utilized by the Custodian on the date hereof,
and deliver the same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described in the preceding
paragraph is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the name of the issuer and title and number of
shares subject to the Put Option; (b) the Clearing Member from which the
underlying Securities are to be received; (c) the total amount payable by the
Fund upon such delivery; (d) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Collateral Account; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be withdrawn from the
Segregated Security Account. Upon the return and/or cancellation of any Put
Option guarantee letter or similar document issued by the Custodian in
connection with such Put Option, the Custodian shall pay out of the moneys held
for the account of the Fund the total amount payable to the Clearing Member
specified in the Certificate as set forth in such Certificate, and shall make
the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) whether such Stock Index Option is a put or a call; (b) the
number of Options written; (c) the stock index to which such Option relates; (d)
the expiration date; (e) the exercise price; (f) the Clearing Member through
which such Option was written; (g) the premium to be received by the Fund; (h)
the amount of cash and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the Collateral
Account; and (j) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Margin Account, and the name in which such account is
to be or has been established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into the Segregated
Security Account specified in the Certificate, and either (1) deliver such
receipts, if any, which the Custodian has specifically agreed to issue, which
are in accordance with the customs prevailing among Clearing Members in Stock
Index Options and make the deposits into the Collateral Account specified in the
Certificate, or (2) make the deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) such information as may be necessary to identify the Stock
Index Option being exercised; (b) the Clearing Member through which such Stock
Index Option is being exercised; (c) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (d) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security Account and the
amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Collateral Account. Upon the return and/or cancellation of the receipt,
if any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay to the Clearing Member specified in the Certificate the
total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
name of the issuer and the title and number of shares subject to the Option, or,
in the case of a Stock Index Option, the stock index to which such Option
relates and the number of Options held; (c) the exercise price; (d) the premium
to be paid by the Fund; (e) the expiration date; (f) the type of Option (put or
call); (g) the date of such purchase; (h) the name of the Clearing Member to
which the premium is to be paid; and (i) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral Account, a
specified Margin Account or the Segregated Security Account. Upon the
Custodian's payment of the premium and the return and/or cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to
the Option being liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration or exercise of, or consummation of a Closing
Purchase Transaction with respect to, any Option purchased or written by the
Fund and described in this Article, the Custodian shall delete such Option from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and upon the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral Account, the Margin
Account and/or the Segregated Security Account as may be specified in a
Certificate received in connection with such expiration, exercise, or
consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Futures
Contract (or with respect to any number of identical Futures Contract(s)): (a)
the category of Futures Contract (the name of the underlying stock index or
financial instrument); (b) the number of identical Futures Contracts entered
into; (c) the delivery or settlement date of the Futures Contract(s); (d) the
date the Futures Contract(s) was (were) entered into and the maturity date; (e)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (f) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Segregated Security Account; (g) the name of the
broker, dealer or futures commission merchant through which the Futures Contract
was entered into; and (h) the amount of fee or commission, if any, to be paid
and the name of the broker, dealer or futures commission merchant to whom such
amount is to be paid. The Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and conditions of the Margin Account
Agreement. The Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and deposit in the Segregated Security Account the
amount of cash and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar payment required to be made
by the Fund to a broker, dealer or futures commission merchant with respect to
an outstanding Futures Contract shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a broker, dealer
or futures commission merchant to the Fund with respect to an outstanding
Futures Contract shall be received and dealt with by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Fund until delivery or settlement is made on such Futures Contract, the
Fund shall deliver to the Custodian a Certificate specifying: (a) the Futures
Contract; (b) with respect to a Stock Index Futures Contract, the total cash
settlement amount to be paid or received, and with respect to a Financial
Futures Contract, the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer or futures commission merchant to or from which
payment or delivery is to be made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Segregated Security Account. The Custodian
shall make the payment or delivery specified in the Certificate and delete such
Futures Contract from the statements delivered to the Fund pursuant to paragraph
3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment of the fee or
commission, if any, specified in the Certificate and delete the Futures Contract
being offset from the statements delivered to the Fund pursuant to paragraph 3
of Article III herein, and make such withdrawals from the Segregated Security
Account as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund,
the Fund shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract Option: (a) the type of Futures Contract Option (put or
call); (b) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Contract
Option purchased; (c) the expiration date; (d) the exercise price; (e) the dates
of purchase and settlement; (f) the amount of premium to be paid by the Fund
upon such purchase; (g) the name of the broker or futures commission merchant
through which such option was purchased; and (h) the name of the broker or
futures commission merchant to whom payment is to be made. The Custodian shall
pay the total amount to be paid upon such purchase to the broker or futures
commission merchant through whom the purchase was made, provided that the same
conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the
Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) the type
of Futures Contract Option (put or call); (b) the type of Futures Contract and
such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (c) the date of sale; (d) the sale
price; (e) the date of settlement; (f) the total amount payable to the Fund upon
such sale; and (g) the name of the broker or futures commission merchant through
which the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the particular Futures Contract Option
(put or call) being exercised; (b) the type of Futures Contract underlying the
Futures Contract Option; (c) the date of exercise; (d) the name of the broker or
futures commission merchant through which the Futures Contract Option is
exercised; (e) the net total amount, if any, payable by the Fund; (f) the
amount, if any, to be received by the Fund; and (g) the amount of cash and/or
the amount and kind of Securities to be deposited in the Segregated Security
Account. The Custodian shall make the payments, if any, and the deposits, if
any, into the Segregated Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the type of Futures Contract Option (put or call);
(b) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract Option; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the name of the broker or futures commission merchant through which
the premium is to be received; and (g) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Segregated Security Account.
The Custodian shall, upon receipt of the premium specified in the Certificate,
make the deposits into the Segregated Security Account, if any, as specified in
the Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option exercised; (b) the type
of Futures Contract underlying the Futures Contract Option; (c) the name of the
broker or futures commission merchant through which such Futures Contract Option
was exercised; (d) the net total amount, if any, payable to the Fund upon such
exercise; (e) the net total amount, if any, payable by the Fund upon such
exercise; and (f) the amount of cash and/or the amount and kind of Securities to
be deposited in the Segregated Security Account. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a Put Option is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the particular Futures Contract Option
exercised; (b) the type of Futures Contract underlying such Futures Contract
Option; (c) the name of the broker or futures commission merchant through which
such Futures Contract Option is exercised; (d) the net total amount, if any,
payable to the Fund upon such exercise; (e) the net total amount, if any,
payable by the Fund upon such exercise; and (f) the amount and kind of
Securities and/or cash to be withdrawn from or deposited in the Segregated
Security Account, if any. The Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in the Certificate, make the
payments, if any, and the deposits, if any, into the Segregated Security Account
as specified in the Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to a
previously written Futures Contract Option described in this Article in order to
liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) that the transaction is a
closing transaction; (b) the type of Futures Contract and such other information
as may be necessary to identify the Futures Contract underlying the Futures
Contract Option; (c) the exercise price; (d) the premium to be paid by the Fund;
(e) the expiration date; (f) the name of the broker or futures commission
merchant to which the premium is to be paid; and (g) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from the Segregated
Security Account. The Custodian shall effect the withdrawals from the Segregated
Security Account specified in the Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased by
the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein, and (b) make such withdrawals from, and/or,
in the case of an exercise, such deposits into, the Segregated Security Account
as may be specified in a Certificate. The deposits to and/or withdrawals from
the Margin Account, if any, shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a Futures
Contract Option described in this Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d) the
sale price per unit; (e) the total amount credited to the Fund upon such sales,
if any; (f) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated Security
Account; and (h) the name of the broker through which such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or dividends,
if any, required to effect such closing-out to be delivered to the broker; (c)
the dates of the closing-out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to the Fund upon such closing-out; (f) the net
total amount payable to the broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the Margin
Account; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and (i) the name of
the broker through which the Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to the Fund upon such
closing-out and the return and/or cancellation of the receipts, if any, issued
by the custodian with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account and the
Segregated Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions or
Written Instructions specifying: (a) the total amount payable to the Fund in
connection with such Reverse Repurchase Agreement; (b) the broker or dealer
through or with which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by the Fund to such broker or
dealer; (d) the date of such Reverse Repurchase Agreement; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to the
Fund specified in the Certificate, Oral Instructions or Written Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Segregated Security Account, specified in such Certificate, Oral Instructions or
Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article, the Fund shall promptly deliver a Certificate or,
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the total
amount payable by the Fund in connection with such termination; (c) the amount
and kind of Securities to be received by the Fund in connection with such
termination; (d) the date of termination; (e) the name of the broker or dealer
with or through which the Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon receipt of the
amount and kind of Securities to be received by the Fund specified in the
Certificate, Oral Instructions or Written Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Segregated Security
Account, specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund fails to specify in
a Certificate the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so notify
the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account to
the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in and
to any property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law, the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIII herein.
5. On each business day, the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which cash
and/or Securities are maintained in a Collateral Account, the Custodian shall
furnish the Fund with a Statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the delivery to the
Fund of such statement, the Fund shall furnish to the Custodian a Certificate or
Written Instructions specifying the then market value of the securities
described in such statement.
In the event such then market value is indicated to be less than the
Custodian's obligation with respect to any outstanding Put Option, guarantee
letter or similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the
Directors, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent of the
Fund on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral Instructions,
Written Instructions or Certificate, as the case may be, the Custodian shall pay
out of the moneys held for the account of the Fund the total amount payable to
the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF COMMON STOCK
1. Whenever the Fund shall sell any of its Shares, it shall deliver to the
Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale of
such Shares.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the account of the Fund.
3. Upon issuance of any of the Fund's Shares in accordance with the
foregoing provisions of this Article, the Custodian shall pay, out of the money
held for the account of the Fund, all original issue or other taxes required to
be paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall hereafter redeem
any of its Shares, it shall furnish to the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice setting forth the
number of Shares received by the Transfer Agent for redemption and that such
Shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held for the account of the Fund
of the total amount specified in the Certificate issued pursuant to the
foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any of
the Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from the Fund or its agent setting forth that the redemption is in
good form for redemption in accordance with the check redemption procedure,
honor the check presented as part of such check redemption privilege out of the
money held in the account of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf
of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is for any other reason indebted
to the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article XIII),
such overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund payable on demand and shall bear interest from the date
incurred at a rate per annum (based on a 360-day year for the actual number of
days involved) equal to the Federal Funds Rate plus l/2%, such rate to be
adjusted on the effective date of any change in such Federal Funds Rate but in
no event to be less than 6% per annum, except that any overdraft resulting from
an error by the Custodian shall bear no interest. Any such overdraft or
indebtedness shall be reduced by an amount equal to the total of all amounts due
the Fund which have not been collected by the Custodian on behalf of the Fund
when due because of the failure of the Custodian to make timely demand or
presentment for payment. In addition, the Fund hereby agrees that the Custodian
shall have a continuing lien and security interest in and to any property at any
time held by it for the benefit of the Fund or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any balance
of account standing to the Fund's credit on the Custodian's books. For purposes
of this Section 1 of Article XIII, "overdraft" shall mean a negative Available
Balance.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank; (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or other
loan agreement; (c) the time and date, if known, on which the loan is to be
entered into; (d) the date on which the loan becomes due and payable; (e) the
total amount payable to the Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities; and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of Incorporation
and as disclosed in its most recent and currently effective prospectus to lend
its portfolio Securities, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan: (a) the name of the
issuer and the title of the Securities; (b) the number of shares or the
principal amount loaned; (c) the date of loan and delivery; (d) the total amount
to be delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately identified;
and (e) the name of the broker, dealer or financial institution to which the
loan was made. The Custodian shall deliver the Securities thus designated to the
broker, dealer or financial institution to which the loan was made upon receipt
of the total amount designated as to be delivered against the loan of
Securities. The Custodian may accept payment in connection with a delivery
otherwise than through the Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds and may deliver Securities in
accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, either hereunder or under any Margin
Account Agreement, except for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may, with respect to questions
of law arising hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its own counsel, at
the expense of the Fund, and shall be fully protected with respect to anything
done or omitted by it in good faith in conformity with such advice or opinion.
The Custodian shall be liable to the Fund for any loss or damage resulting from
the use of the Book-Entry System or any Depository arising by reason of any
negligence, misfeasance or willful misconduct on the part of the Custodian or
any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall be
under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or written
by or for the Fund, the legality of the purchase, sale or writing thereof, or
the propriety of the amount paid or received therefor;
(b) The legality of the issue or sale of any of the Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by the Fund;
(e) The legality of any borrowing by the Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XIV of this Agreement, nor shall the Custodian be under any duty or obligation
to see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of the Fund is adequate collateral for the Fund against any
loss it might sustain as a result of such loan.
The Custodian specifically, but not by way of limitation, shall not be
under any duty or obligation periodically to check or notify the Fund that the
amount of such cash collateral held by it for the Fund is sufficient collateral
for the Fund, but such duty or obligation shall be the sole responsibility of
the Fund.
In addition, the Custodian shall be under no duty or obligation to see that
any broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities held
in any Margin Account, Segregated Security Account or Collateral Account in
connection with transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, futures commission
merchant or Clearing Member makes payment to the Fund of any variation margin
payment or similar payment which the Fund may be entitled to receive from such
broker, dealer, futures commission merchant or Clearing Member, to see that any
payment received by the Custodian from any broker, dealer, futures commission
merchant or Clearing Member is the amount the Fund is entitled to receive, or to
notify the Fund of the Custodian's receipt or non-receipt of any such payment;
provided however that the Custodian, upon the Fund's written request, shall, as
Custodian, demand from any broker, dealer, futures commission merchant or
Clearing Member identified by the Fund the payment of any variation margin
payment or similar payment that the Fund asserts it is entitled to receive
pursuant to the terms of a Margin Account Agreement or otherwise from such
broker, dealer, futures commission merchant or Clearing Member.
3. The Custodian shall not be liable for, or considered to be the Custodian
of, any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of the Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing the Fund's interest at the Book-Entry
System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange, offers, tenders,
interest rate changes or similar matters relating to Securities held in the
Depository, unless the Custodian shall have actually received timely notice from
the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue amount on Securities held in the Depository, the
Custodian shall make a claim against the Depository on behalf of the Fund,
except that the Custodian shall not be under any obligation to appear in,
prosecute or defend any action, suit or proceeding in respect to any Securities
held by the Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense and liability
be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as Depository
or Depositories or as Sub-Custodian or Sub-Custodians, including, but not
limited to, banking institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Fund's Board of Directors adopted in accordance with
Rule 17f-5 under the Investment Company Act of 1940, as amended. Notwithstanding
anything to the contrary contained in this Agreement, the Custodian shall hold
harmless and indemnify the Fund from and against any losses, actions, claims,
demands, expenses and proceedings, including counsel fees, that occur as a
result of any act or omission of any Foreign Sub-Custodian or Depository with
respect to the safekeeping of moneys and securities of the Fund.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
its Articles of Incorporation.
9. (a) The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all reasonable out-of- pocket expenses and such
compensation and fees as are specified on Schedule A hereto. The Custodian shall
not deem amounts payable in respect of foreign custodial services to be
out-of-pocket expenses, it being the parties' intention that all fees for such
services shall be as set forth on Schedule B hereto and shall be provided for
the term of this Agreement without any automatic or unilateral increase. The
Custodian shall have the right to unilaterally increase the figures on Schedule
A on or after March 1, 1994 and on or after each succeeding March 1 thereafter
by an amount equal to 50% of the increase in the Consumer Price Index for the
calendar year ending on the December 31 immediately preceding the calendar year
in which such March 1 occurs, provided, however, that during each such annual
period commencing on a March 1, the aggregate increase during such period shall
not be in excess of 10%. Any increase by the Custodian shall be specified in a
written notice delivered to the Fund at least thirty days prior to the effective
date of the increase. The Custodian may charge such compensation and any
expenses incurred by the Custodian in the performance of its duties pursuant to
such agreement against any money held by it for the account of the Fund. The
Custodian shall also be entitled to charge against any money held by it for the
account of the Fund the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement. The expenses which the Custodian may charge
against the account of the Fund include, but are not limited to, the expenses of
Sub-Custodians and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and sale of
Securities of the Fund.
(b) The Fund shall receive a credit for each calendar month against such
compensation and fees of the Custodian as may be payable by the Fund with
respect to such calendar month in an amount equal to the aggregate of its
Earnings Credit for such calendar month. In no event may any Earnings Credits be
carried forward to any fiscal year other than the fiscal year in which it was
earned, or, unless permitted by applicable law, transferred to, or utilized by,
any other person or entity, provided that any such transferred Earnings Credit
can be used only to offset compensation and fees of the Custodian for services
rendered to such transferee and cannot be used to pay the Custodian's
out-of-pocket expenses. For purposes of this sub- section (b), the Fund is
permitted to transfer Earnings Credits only to The Dreyfus Corporation, its
affiliates and/or any investment company now or in the future sponsored by The
Dreyfus Corporation or any of its affiliates or for which The Dreyfus
Corporation or any of its affiliates acts as the sole investment adviser or as
the principal distributor. For purposes of this sub-section (b), a fiscal year
shall mean the twelve-month period commencing on the effective date of this
Agreement and on each anniversary thereof.
10. The Custodian shall be entitled to rely upon any Certificate, notice or
other instrument in writing received by the Custodian and reasonably believed by
the Custodian to be a Certificate. The Custodian shall be entitled to rely upon
any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or XI hereof. The Fund agrees to forward to the
Custodian a Certificate or facsimile thereof, confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral Instructions
or Written Instructions are given to the Custodian.
The Fund agrees that the fact that such confirming instructions are not
received by the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in
acting upon Oral Instructions given to the Custodian hereunder concerning such
transactions, provided such instructions reasonably appear to have been received
from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
13. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository, or O.C.C., and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article XII as part of any check redemption privilege program of
the Fund, except for any such liability, claim, loss and demand arising out of
the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian in
accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or responsi- bilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Any termination may be effected only by the terminating party giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than two hundred seventy (270) days after the date of
giving of such notice.
(b) The Fund may at any time terminate this Agreement if the Custodian has
materially breached its obligations under this Agreement and such breach has
remained uncured for a period of thirty days after the Custodian's receipt from
the Fund of written notice specifying such breach.
(c) Either party, immediately upon written notice to the other party, may
terminate this Agreement upon the Merger or Bankruptcy of the other party.
(d) The Fund may at any time terminate this Agreement if the Custodian has
materially breached its obligations under the "Amendment to Transfer Agency
Agreements" dated August 18, 1989 and has not cured such breach as promptly as
practicable and in any event within seven days of its receipt of written notice
of such breach, provided that the Custodian shall not be permitted to cure any
such material breach arising from the willful misconduct of the Custodian.
In the event notice of termination is given by the Fund, it shall be
accompanied by a copy of a resolution of the Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event notice of termination is given by the
Custodian, the Fund shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of its Directors, certified by the Secretary or
any Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice, this Agreement shall terminate and the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on that date
deliver directly to the successor custodian all Securities and moneys then owned
by the Fund and held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled.
2. If a successor custodian is not designated by the Fund or the Custodian
in accordance with the preceding paragraph, the Fund shall, upon the date
specified in the notice of termination of this Agreement and upon the delivery
by the Custodian of all Securities (other than Securities held in the Book-Entry
System which cannot be delivered to the Fund) and moneys then owned by the Fund,
be deemed to be its own custodian, and the Custodian shall thereby be relieved
of all duties and responsibilities pursuant to this Agreement, other than the
duty with respect to Securities held in the Book-Entry System, in any Depository
or by a Clearing Member which cannot be delivered to the Fund, to hold such
Securities hereunder in accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate setting forth the names of
the present Authorized Persons. The Fund agrees to furnish to the Custodian a
new Certificate in similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund setting forth the names of the present Officers of
the Fund. The Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event any such present Officer ceases to be an Officer of
the Fund, or in the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon the
signatures of the Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 110
Washington Street, 13th Floor, New York, New York 10286, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its offices at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Directors of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of New York.
8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized, as of the day
and year first above written.
DREYFUS LIFETIME PORTFOLIOS, INC.
By:______________________
Attest:
THE BANK OF NEW YORK
By: ___________________
Attest:
Appendix A
DREYFUS LIFETIME PORTFOLIOS, INC.
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN ACCOUNT
FOR PORTFOLIO SECURITIES TRANSACTIONS
Group I Group II
Frank Greene, Phyllis Paul R. Casti, Jr. Thomas J. Durante
Meiner, Paul R. Casti, Jr., Jeffrey N. Nachman James M. Windels
Thomas J. Durante Jean Philip Toia Paul T. Molloy
Farley, Gregory S. Gruber, Lawrence Kash Jean Farley
Paul T. Molloy, Jeffrey N. Joseph I. Connolly
Nachman, James M. Windels, Gregory S. Gruber
Anna Mancini and Mary
Kate Macchia
Cash Account
1. Fees payable to The Bank of New York pursuant to written agreement with
the Fund for services rendered in its capacity as Custodian or agent of the
Fund, or to The Shareholder Services Group, Inc. in its capacity as Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be from Group II, except
that an officer of the Fund who also is listed in Group II shall sign only once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either Group I or Group II, or
both such Groups, except that an officer of the Fund who also is listed in Group
II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be from Group II, except
that an officer of the Fund who also is listed in Group II shall sign only once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or Group II, including any
one of the following: Paul R. Casti, Jr., James M. Windels, Jeffrey N. Nachman,
Joseph I. Connolly or Philip Toia, except that no individual shall be authorized
to sign more than once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
Joseph I. Connolly, Philip Toia, Paul R. Casti,
Jr., Thomas J. Durante, Jean Farley, Gregory S.
Gruber, Paul T. Molloy, Jeffrey N. Nachman,
James M. Windels, Mary Kate Macchia, Robert
Salviolo, Katya Jiminez, Paul Goerke, Christine
O'Hara and Anna Mancini.
DREYFUS LIFETIME PORTFOLIOS, INC.
CUSTODY AGREEMENT
APPENDIX B
The undersigned Officers of the Fund do hereby certify that the following
individuals, whose specimen signatures are on file with The Bank of New York,
have been duly elected or appointed by the Fund's Board to the position set
forth opposite their names and have qualified therefor:
Name Position
Marie E. Connolly President and Treasurer
John E. Pelletier Vice President and Secretary
Frederick C. Dey Vice President and Assistant
Treasurer
Eric B. Fischman Vice President and Assistant
Secretary
Joseph S. Tower, III Assistant Treasurer
John J. Pyburn Assistant Treasurer
Elizabeth Bachman Assistant Secretary
Steven A. Falci Portfolio Manager
___________________ ____________________
Eric B. Fischman, Elizabeth Bachman,
Vice President Assistant Secretary
<PAGE>
CUSTODY AGREEMENT
APPENDIX C
The following are designated publications for purposes of paragraph 5(b) of
Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
The New York Times
Standard & Poor's Called Bond Record
The Wall Street Journal
<PAGE>
CUSTODY AGREEMENT
APPENDIX D
Name of Series
Growth
Income
Growth & Income
<PAGE>
Schedule A
The fees payable to the Custodian with respect to securities held in
domestic custody are annexed hereto.
<PAGE>
DREYFUS LIFETIME PORTFOLIOS, INC.
Domestic Custody Fees
Basic Fee: 1/100 of 1% per annum of the first $500,000,000,
and 1/200 of 1% of the excess over $500,000,000
per annum of the total market value of domestic
securities held.
Custodial Transactions:
$8.00 per transaction for each receipt and
delivery of book entry securities through DTC/FRB.
$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing
options (preparation of depository or escrow
receipts) and initial futures transactions.
$5.00 for futures variation margin maintenance.
$7.00 for P&I paydowns.
$10.00 for GNMA PTC settlements.
$200.00 for the collection of interest on
securities held in "street name".
Schedule B
The fees payable to the Custodian with respect to securities held in
foreign custody are as set forth in a letter dated January 13, 1995 from Jerome
P. Isoldi of The Bank of New York to Frederick C. Dey, a copy of which is
attached hereto.
<PAGE>
Exhibit 12
June __, 1996
Dreyfus LifeTime Portfolios, Inc.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
Dreyfus Asset Allocation Fund, Inc.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
Re: Registration Statement on Form N-14
(Registration No. 333-01213)
Gentlemen:
You have requested our opinion as to certain Federal income tax
consequences of the reorganization contemplated by the Agreement and Plan of
Reorganization, substantially in the form included as Exhibit A to the
Registration Statement on Form N-14 of Dreyfus LifeTime Portfolios, Inc. (Reg.
No. 333-01213) (the "Registration Statement"), between Dreyfus Asset Allocation
Fund, Inc. ("DAAF"), on behalf of each of its Growth Series (the "Growth
Series") and Income Series (the "Income Series) (each, an "Acquired Series"),
and Dreyfus LifeTime Portfolios, Inc. ("DLPI"), on behalf of each of its Growth
Portfolio (the "Growth Portfolio") and Income Portfolio (the "Income Portfolio")
(each, an "Acquiring Fund"). You have advised us that each Acquired Series and
Acquiring Fund has qualified and will qualify as a "regulated investment
company" within the meaning of Subchapter M of Chapter 1 of the Internal Revenue
Code of 1986, as amended (the "Code"), for each of its taxable years ending on
or before or including the Closing Date.
In rendering this opinion, we have examined the Agreement and Plan of
Reorganization, the Registration Statement, the Articles of Incorporation of
DLPI dated July 15, 1993, as amended on March 10, 1995 and April 24, 1995, the
Articles of Incorporation of DAAF dated May 11, 1993, the Prospectus and
Statement of Additional Information of each of DLPI and DAAF, incorporated by
reference in the Registration Statement, and such other documents as we have
deemed necessary or relevant for the purpose of this opinion. In issuing our
opinion, we have relied upon the representation of DAAF that its Articles of
Incorporation is the document pursuant to which it has operated to date and that
it has operated in accordance with all laws applicable to such entity and the
statements and representations made herein and in the Registration Statement. We
also have relied upon the representation of DLPI that its Articles of
Incorporation, as amended, is the document pursuant to which it has operated to
date and will operate following the reorganization and that it has operated and
will operate following the reorganization in accordance with all laws applicable
to such entity and the statements and representations made herein and in the
Registration Statement. As to various questions of fact material to this
opinion, where relevant facts were not independently established by us, we have
relied upon statements of, and written information provided by, representatives
of DLPI and DAAF. We also have examined such matters of law as we have deemed
necessary or appropriate for the purpose of this opinion. We note that our
opinion is based on our examination of such law, our review of the documents
described above, the statements and representations referred to above and in the
Registration Statement and the Agreement and Plan of Reorganization, the
provisions of the Code, the regulations, published rulings and announcements
thereunder, and the judicial interpretations thereof currently in effect. Any
change in applicable law or any of the facts and circumstances described in the
Registration Statement, or inaccuracy of any statements or representations on
which we have relied, may affect the continuing validity of our opinion.
Capitalized terms not defined herein have the respective meanings given
such terms in the Agreement and Plan of Reorganization.
Based on the foregoing, it is our opinion that for Federal income tax
purposes:
(a) The transfer of all or substantially all of an Acquired Series' assets
in exchange for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of certain identified liabilities of the Acquired 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 Acquiring Fund upon the
receipt of the assets of an Acquired Series solely in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Series;
(c) No gain or loss will be recognized by an Acquired Series upon the
transfer of the Acquired Series' assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of certain
identified liabilities of the Acquired Series or upon the distribution of the
Acquiring Fund Shares to Acquired Series Shareholders in exchange for their
shares of the Acquired Series;
(d) No gain or loss will be recognized by Acquired Series Shareholders upon
the exchange of their Acquired Series shares for the Acquiring Fund Shares;
(e) The aggregate tax basis for the Acquiring Fund Shares received by an
Acquired Series Shareholder pursuant to the reorganization will be the same as
the aggregate tax basis of the Acquired Series shares held by such shareholder
immediately prior to the reorganization, and the holding period of the Acquiring
Fund Shares to be received by the Acquired Series Shareholder will include the
period during which the Acquired Series shares exchanged therefor were held by
such shareholder (provided the Acquired Series shares were held as capital
assets on the date of the reorganization); and
(f) The tax basis of an Acquired Series' assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired Series
immediately prior to the reorganization, and the holding period of the assets of
the Acquired Series in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Series.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Proxy
Statement/Prospectus included in the Registration Statement, and to the filing
of this opinion as an exhibit to any Statement, and to the filing of this
opinion as an exhibit to any application made by or on behalf of DLPI or any
distributor or dealer in connection with the registration and qualification of
DLPI or the Acquiring Fund Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
<PAGE>
EXHIBIT 14(a)
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
We hereby consent to the use of our legal opinion regarding the legality of
issuance of shares and other matters filed as Exhibit (10) of Pre-Effective
Amendment No. 1 to the Registrant's Registration statement on Form N-1A filed on
July 23, 1993, which opinion is incorporated by reference as an exhibit to this
Registration Statement on Form N-14. In giving such permission, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
June ___, 1996
EXHIBIT 14(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Financial
Statements and Experts" in this Registration Statement (Form N-14) of Dreyfus
LifeTime Portfolios, Inc.
We also consent to the use of our reports dated November 8, 1995, June 2,
1995 and June 2, 1995 for Dreyfus LifeTime Portfolios, Inc., Dreyfus Asset
Allocation Fund, Inc., Dreyfus Income Portfolio and Dreyfus Asset Allocation
Fund, Inc., Dreyfus Growth Portfolio, respectively, and to the references to our
firm under the captions "Condensed Financial Information" and "Custodian,
Transfer and Dividend Disbursing Agent, Counsel and Independent Auditors"
included in the Registration Statements of Dreyfus Lifetime Portfolios, Inc.
dated January 15, 1996 and Dreyfus Asset Allocation Fund, Inc. dated September
1, 1995 which are incorporated by reference in this Registration Statement.
ERNST & YOUNG LLP
New York, New York
June __, 1996
