DREYFUS LIFETIME PORTFOLIOS INC, N-14, 1999-05-07

DREYFUS LIFETIME PORTFOLIOS INC
N-14, 1999-05-07

Previous: CASH RESOURCE TRUST /MA/, AW, 1999-05-07

Next: IPC HOLDINGS LTD, 10-Q, 1999-05-07

Registration No. 333-_____
==============================================================================
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. ____ Post-Effective Amendment No. _____

(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:

Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982

Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement is declared effective.

Registrant is registering shares of Common Stock, par value $.001 per
share. No filing fee is required because Registrant previously registered 300
million shares on Form N-1A (Registration Nos. 811-7878; 33-66088) pursuant to
Rule 24f-2 under the Investment Company Act of 1940.

<PAGE>

DREYFUS LIFETIME PORTFOLIOS, INC.
Form N-14
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 Cover Page
Statement and Outside Front
Cover Page of Prospectus

Item 2. Beginning and Outside Back Cover Page
Cover Page of Prospectus

Item 3. Synopsis Information and Summary
Risk Factors

Item 4. Information About the Letter to Shareholders;
Transaction Comparison of the Funds

Item 5. Information About the
Registrant Letter to Shareholders;
Comparison of the Funds

Item 6. Information About the Company Letter to Shareholders;
Being Acquired Comparison of the Funds

Item 7. Voting Information Letter to Shareholders;
Voting Information

Item 8. Interest of Certain Persons Not Applicable
and Experts

Item 9. Additional Information Required Not Applicable
for Reoffering by Persons Deemed
to be Underwriters

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 February 1, 1999(1)

Item 13. Additional Information About Statement of Additional
the Company Being Acquired Information of Dreyfus Asset
Allocation Fund, Inc. dated
September 1, 1998(2)

Item 14. Financial Statements Statement of Additional
Information of Dreyfus
LifeTime Portfolios, Inc.
dated February 1, 1999(1);
Statement of Additional
Information of Dreyfus Asset
Allocation Fund, Inc. dated
September 1, 1998(2) 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 February 4, 1999 (File No. 33-66088).

2 Incorporated herein by reference to the Registration Statement of Dreyfus
Asset Allocation Fund, Inc. on Form N-1A dated August 28, 1998 (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 Dreyfus Asset Allocation Fund, Inc. (the "Fund"),
you are entitled to vote on the proposal described below and in the enclosed
materials. Management of the Fund has determined that it would be in the best
interest of the Fund and its shareholders if the Fund were to exchange its
assets (subject to liabilities) for shares of another fund advised by The
Dreyfus Corporation that has the same investment objective and similar
management policies. A larger fund should enhance the ability of portfolio
managers to select a larger number of portfolio securities on more favorable
terms and thereby diversify investments through a larger number of portfolio
issues. Additionally, greater aggregate net assets should enable shareholders to
share in the benefits of economies of scale, which may result in lower overall
expense ratios by spreading the fixed costs of fund operations over a larger
asset base.

The fund selected for this purpose is the Growth and Income Portfolio
(the "Acquiring Fund") of Dreyfus LifeTime Portfolios, Inc. The Fund would
exchange (the "Exchange") all of its assets, subject to liabilities, for
Investor Class shares of the Acquiring Fund (collectively, the "Acquiring Fund
Shares"). Promptly thereafter, the Fund would distribute pro rata the Acquiring
Fund Shares received in the Exchange to its shareholders in complete liquidation
of the Fund. Thus, each shareholder will receive for his or her shares of the
Fund a number of Acquiring Fund Shares equal to the value of such Fund shares as
of the date of the Exchange. The Exchange will not result in the imposition of
Federal income tax on you. Shareholders who do not wish to participate in the
Exchange may redeem their shares prior to the Exchange.

Further information about the transaction is contained in the enclosed
materials. Please take the time to review carefully the enclosed materials and
then vote by completing, dating, signing and returning the enclosed proxy card.
A self-addressed, postage-paid envelope has been enclosed for your convenience.

THE FUND'S BOARD MEMBERS RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOR OF
THE PROPOSED TRANSACTION. IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE
RECEIVED NO LATER THAN July 31, 1999.

If you have any questions after considering the enclosed materials,
please call toll-free 1-800-645-6561.

Sincerely,

Marie E. Connolly,
President, Dreyfus Asset
Allocation Fund, Inc.
June ___, 1999

<PAGE>

Preliminary Copy

DREYFUS ASSET ALLOCATION FUND, INC.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders:

A Special Meeting of Shareholders of Dreyfus Asset Allocation Fund,
Inc. (the "Fund") will be held at the offices of The Dreyfus Corporation, 200
Park Avenue, 7th Floor, New York, New York 10166, on Friday, August 6, 1999 at
10:00 a.m. for the following purposes:

1. To approve or disapprove an Agreement and Plan of Reorganization
(the "Plan") providing for the transfer of all of the Fund's assets and
liabilities to the Growth and Income Portfolio (the "Acquiring Fund") of
Dreyfus LifeTime Portfolios, Inc. ("DLPI") solely in exchange (the
"Exchange") for Investor Class shares of the Acquiring Fund ("Acquiring
Fund Shares"). The Fund will distribute the Acquiring Fund Shares received
in the Exchange to its shareholders in an amount equal in net asset value
to shares of the Fund held by such shareholders as of the date of the
Exchange, after which the Fund will be dissolved; 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 June 4, 1999, will
be entitled to receive notice of and to vote at the meeting.

By Order of the Board of Directors

Margaret W. Chambers,
Secretary

New York, New York
June __, 1999

==============================================================================

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 WILL
HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF
LESS THAN A QUORUM OF THE SHARES ELIGIBLE TO VOTE IS
REPRESENTED. IN THAT EVENT, THE ACQUIRED FUND, AT ITS
SHAREHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES
IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE
COULD BE CRITICAL TO ENABLE THE ACQUIRED FUND TO HOLD
THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY
CARD IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL
BENEFIT FROM YOUR COOPERATION.

==============================================================================

<PAGE>
START

Preliminary Copy June __, 1999

TRANSFER OF THE ASSETS OF

DREYFUS ASSET ALLOCATION FUND, INC.

TO AND IN EXCHANGE FOR INVESTOR CLASS SHARES OF

GROWTH AND INCOME PORTFOLIO OF DREYFUS LIFETIME PORTFOLIOS, INC.

PROSPECTUS/PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, AUGUST 6, 1999

This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of Dreyfus Asset Allocation
Fund, Inc. (the "Acquired Fund") to be used at its Special Meeting of
Shareholders (the "Meeting") to be held on Friday, August 6, 1999 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 June
4, 1999 (each, a "Shareholder" and, collectively, the "Shareholders") are
entitled to receive notice of and to vote at the Meeting.

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

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

This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely information about the Acquiring Fund that
Shareholders should know before voting on the Proposal or receiving Acquiring
Fund Shares.

A Statement of Additional Information dated June __, 1999, relating to
this Prospectus/Proxy Statement, has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated herein by reference in its
entirety. The Commission maintains a Web site (http://www.sec.gov) that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Acquiring Fund and the Acquired Fund. For a free
copy of the Statement of Additional Information, write to the Acquiring Fund at
its principal executive offices located at 200 Park Avenue, New York, New York
10166, or call 1-800-645-6561.

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

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

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

<PAGE>

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

Each Fund is an open-end management investment company with the same
investment adviser, distributor and investment objective. Both Funds also have
similar management policies. The substantive differences between the Acquired
Fund and the Acquiring Fund are set forth in this Prospectus/Proxy Statement.

The DLPI Prospectus dated February 1, 1999 and Annual Report for the
fiscal year ended September 30, 1998 accompany this Prospectus/Proxy Statement
and are incorporated herein by reference. FOR FREE COPIES OF THE ACQUIRED FUND
PROSPECTUS DATED SEPTEMBER 1, 1998, AS REVISED OCTOBER 14, 1998, AND THE
ACQUIRED FUND ANNUAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30, 1998, WRITE TO
THE ACQUIRED FUND AT ITS PRINCIPAL EXECUTIVE OFFICES, LOCATED AT 200 PARK
AVENUE, NEW YORK, NEW YORK 10166, OR CALL 1-800-645-6561.

Shareholders are entitled to one vote for each Acquired Fund share
held and fractional votes for each fractional Acquired Fund share held. Acquired
Fund 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 Acquired Fund, which must indicate the
Shareholder's name and account number. To be effective, such revocation must be
received before the Meeting. Also, any Shareholder who attends the Meeting in
person may vote by ballot at the Meeting, thereby canceling any proxy previously
given. As of April 30, 1999, 4,784,550 Acquired Fund shares were issued and
outstanding.

Proxy materials will be mailed to Shareholders of record on or about
June 11, 1999.

<PAGE>
TABLE OF CONTENTS
PAGE
-----

Summary.................................................................
Reasons for the Exchange................................................
Information about the Exchange..........................................
Additional Information about each Fund..................................
Voting Information......................................................
Financial Statements and Experts........................................
Other Matters...........................................................
Notice to Banks, Broker/Dealers and
Voting Trustees and Their Nominees....................................
Appendix A: Form of Agreement and Plan
of Reorganization..................................................... A-1

<PAGE>

APPROVAL OR DISAPPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION
PROVIDING FOR THE TRANSFER OF ALL OF THE ASSETS OF THE ACQUIRED FUND TO THE
ACQUIRING FUND

SUMMARY

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

PROPOSED TRANSACTION. The Acquired Fund'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 (the "Agreement"). The Agreement provides that,
subject to the requisite approval of Acquired Fund Shareholders, the Acquired
Fund transfer to the Acquiring Fund all of its assets (subject to liabilities)
in exchange for Acquiring Fund Shares having an aggregate net asset value equal
to the aggregate net asset value of Acquired Fund shares. The Acquired Fund will
distribute such Acquiring Fund Shares among its Shareholders. Each Shareholder
of the Acquired Fund will receive Acquiring Fund Shares (or fractions thereof)
having an aggregate net asset value equal to the aggregate net asset value of
the Shareholder's Acquired Fund shares as of the date of the Exchange.
Thereafter, the Acquired Fund will be dissolved.

As a result of the Exchange, each Shareholder will cease to be a
shareholder of the Acquired Fund and will become a shareholder of the Acquiring
Fund as of the close of business on the closing date of the Exchange.

The Acquired Fund's Board has concluded unanimously that the Exchange
would be in the best interests of Shareholders of the Acquired Fund and the
interests of existing Shareholders of the Acquired Fund would not be diluted as
a result of the transactions contemplated by the Exchange. See "Reasons for the
Exchange."

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

COMPARISON OF THE FUNDS. The following discussion is qualified by the
more complete information set forth in the Fund's Prospectuses, which are
incorporated herein by reference.

GENERAL. Each Fund is an open-end, management investment company
advised by The Dreyfus Corporation ("Dreyfus"). Mellon Equity Associates
("Mellon Equity"), an affiliate of Dreyfus, serves as the Acquiring Fund's
sub-investment adviser. Each Fund has the same investment objective, namely to
maximize total return, consisting of capital appreciation and current income.

The management policies of the Funds are similar in that each Fund
seeks to achieve its investment objective by following an asset allocation
strategy. The Acquired Fund follows an asset allocation strategy that
contemplates shifts, which may be frequent, among equity and fixed-income
securities and short-term money market instruments. The following table sets
forth these three asset classes, along with the expected asset mix among the
classes during normal market conditions (benchmark percentages) and expected
variations from the benchmarks (strategy ranges) within which Dreyfus manages
the Acquired Fund's assets:

BENCHMARK STRATEGY
ASSET CLASS PERCENTAGE RANGE

Equity securities 55% 40-80%

Fixed-income securities 35% 20-60%

Short-term money market
instruments 10% 0-40%

The Acquired Fund may invest up to 20% of the value of its total
assets in equity securities of foreign companies which are not publicly traded
in the United States. The Acquired Fund may invest up to 30% of its total assets
in fixed-income securities of foreign issuers. While the Acquired Fund is not
subject to any limit on the percentage of its assets that may be invested in
fixed-income securities having a certain rating, the Acquired Fund intends to
invest less than 35% of its assets in fixed-income securities rated lower than
investment grade ("high yield" or "junk" bonds).

The Acquiring Fund follows an asset allocation strategy that
contemplates shifts between common stocks and fixed-income securities only. The
following table sets forth these two asset classes, benchmark percentages and
strategy ranges within which Mellon Equity manages the Acquiring Fund's assets:

BENCHMARK STRATEGY
ASSET CLASS PERCENTAGE RANGE

Common stocks 50% 35-65%
Fixed-income securities 50% 35-65%

The common stock portion of the Acquiring Fund's portfolio is further
divided into 80% large capitalization stocks (typically with market
capitalizations of more than $1.4 billion) and 20% small capitalization stocks.
The Acquiring Fund may invest up to 15% of its assets in foreign securities. The
Acquiring Fund may not invest in fixed-income securities rated below investment
grade. In addition, in selecting securities for the Acquiring Fund, Mellon
Equity attempts to approximate the investment characteristics of designated
benchmark indices but with expected returns that exceed the benchmark. The
designated benchmark indices and the corresponding asset classes are set forth
in the following table:

BENCHMARK
ASSET CLASS INDEX

Domestic large cap equity Standard & Poor's 500 Index
("S&P 500 Index")*

Domestic small cap equity Russell 2000 Index*

International equity Morgan Stanley Capital International,
Europe, Australasia, Far East (Free)
Index ("EAFE Index")*

Domestic fixed-income Lehman Brothers, Non-U.S. Government
Bond Index-Hedged ("Lehman Gov/
Corporate Index")*

International fixed-income J.P. Morgan, Non-U.S. Government Bond
Index-Hedged ("J.P. Morgan Global
Government Index")*

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

* The S&P 500 Index is a widely recognized unmanaged index of stock market
performance. The Russell 2000 Index is composed of selected common stocks
of small, generally unseasoned U.S. companies. The EAFE Index is a broadly
diversified international index composed of the equity securities of
approximately 1,550 companies located outside the United States. The Lehman
Gov/Corporate Index is composed of approximately 5,000 fixed-income
securities, including U.S. Government securities and investment grade
corporate bonds. The J.P. Morgan Global Government Index is composed of
traded, fixed-rate government bonds from twelve countries with maturities
greater than one year. The twelve countries are Australia, Belgium, Canada,
Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden and
the United Kingdom.

Each Fund may engage in various investment techniques, such as options
and futures transactions, foreign currency transactions, leveraging and lending
portfolios securities. In addition, the Acquired Fund may engage--and the
Acquiring Fund may not engage--in short-selling and interest rate swaps. The
Acquired Fund may invest in convertible securities, warrants, municipal
obligations and mortgage-related securities, while the Acquiring Fund may not
invest in these securities. The Acquiring Fund may invest in securities issued
by other investment companies, while the Acquired Fund may not invest in these
securities. Under the 1940 Act, the Acquiring Fund's investment in securities
issued by other investment companies, subject to certain exceptions, currently
is limited to (i) 3% of the total voting stock of any one investment company,
(ii) 5% of the Acquiring Fund's total assets with respect to any one investment
company, and (iii) 10% of the Acquiring Fund's total assets in the aggregate.
Also, the Acquired Fund's annual portfolio turnover rate is not expected to
exceed 250%, while the Acquiring Fund's portfolio turnover rate is not expected
to exceed 100%.

For more information on either Fund's management policies, see
"Description of the Fund" in the Acquired Fund Prospectus and "The Fund--
Goal/Approach" in the DLPI Prospectus.

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

RISK FACTORS. The investment risks of each Fund are substantially
similar. Because stocks and bonds fluctuate in price, the value of your
investment in either Fund will fluctuate, which means that you could lose money.
The stock and bond markets can perform differently from each other at any given
time (as well as over the long term), so each Fund will be affected by its asset
allocation. If the portfolio manager of either Fund favors an asset class during
a period when the asset class underperforms, the Fund's performance may be hurt.

A Fund's stock investments could cause sudden drops in share price or
contribute to long-term underperformance. Small company stocks tend to be more
volatile than large company stocks and could have a disproportionate effect on
performance. Prices of bonds tend to move inversely with changes in interest
rates. Bond prices also may be hurt by declines in the financial condition of
the issuer. Foreign stocks and bonds involve special risks, such as exposure to
currency fluctuations, economic and political instability, and potentially less
liquidity. In addition, each Fund may invest in certain derivatives, such as
futures and options. Derivatives can be illiquid and highly sensitive to changes
in their underlying security, interest rate or index, and as a result can be
highly volatile. A small investment in certain derivatives could have a
potentially large impact on the Fund's performance.

The Acquiring Fund may invest in securities issued by other investment
companies. These investments may involve duplication of advisory fees and
certain other expenses. The Acquired Fund may invest in convertible securities,
warrants and municipal obligations, and may engage in short-selling and
interest rate swaps. These securities and investment techniques involve added
risks to which the Acquiring Fund is not subject.

See "Description of the Fund--Investment Considerations and Risks" in
the Acquired Fund Prospectus and "Growth and Income Portfolio---Main Risks" in
the DLPI Prospectus for a further description of investment risks.

FEES AND EXPENSES. The following information concerning fees and
expenses of each Fund is derived from information set forth under the caption
"Annual Fund Operating Expenses" in the Acquired Fund Prospectus and "Growth and
Income Portfolio---Expenses" in the DLPI Prospectus. Annual fund operating
expenses set forth below are current as of April 30, 1999 for each Fund. The
"Pro Forma After Exchange" information is based on assets of each Fund as of
April 30, 1999. Annual fund operating expenses are paid out of Fund assets, so
their effect is included in the Fund's share price.

ANNUAL FUND
OPERATING EXPENSES
(as a percentage
of average daily
net assets):

<TABLE>
<CAPTION>
PRO FORMA
AFTER
EXCHANGE
ACQUIRING FUND ACQUIRING FUND
INVESTOR CLASS ACQUIRED FUND INVESTOR CLASS
-------------- ------------- ---------------

<S> <C> <C> <C>
Management Fees .75% .75% .75%
Other Expenses .38% .51% .39%
Total Annual Fund
Operating Expenses 1.13% 1.26% 1.14%

Fee Waiver and Expense
Reimbursement* .00% N/A .01%
Net Expenses* 1.13% 1.26% 1.13%

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

*Reflects a contractual obligation by Dreyfus to reimburse the Acquiring Fund
through December 31, 1999 to the extent Total Annual Fund Operating Expenses,
exclusive of taxes, brokerage commissions, extraordinary expenses, interest
expenses and commitment fees on borrowings, exceed 1.13% of the average daily
net assets of the Acquiring Fund's Investor Class shares.
</TABLE>

EXAMPLE

This example shows what you could pay in expenses over time. It uses
the same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether you sold your shares at the end of a
period or kept them. Because actual return and expenses will be different, the
example is for comparison only.

PRO FORMA
AFTER
EXCHANGE
ACQUIRING FUND ACQUIRED ACQUIRING FUND
INVESTOR CLASS FUND INVESTOR CLASS
-------------- -------- --------------

1 Year $115* $128 $115*
3 Years $359 $400 $362
5 Years $622 $692 $628
10 Years $1,375 $1,523 $1,386

- -----------------------
1 year figure is based on a contractual agreement.

PAST PERFORMANCE. The two tables below show the Acquiring Fund's
annual returns and long-term performance with respect to its Investor Class
shares. The first table shows you how the Acquiring Fund's performance has
varied from year to year. The second compares the Acquiring Fund's performance
over time to that of the S&P 500 Index and the Customized Blended Index prepared
by Dreyfus. Both tables assume reinvestment of dividends and distributions. For
performance information of the Acquired Fund, see that Fund's Prospectus under
the caption of "The Fund -- Past Performance." As with all mutual funds, the
past is not a prediction of the future.

<PAGE>

YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
INVESTOR CLASS SHARES

16.54 20.42 17.47
- -------------------------------------------
'96 '97 '98

Best Quarter: Q4 '98 +12.32%

Worst Quarter: Q3 '98 -2.68%

AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98

1 Year 3 Years Inception
(3/31/95)

Acquiring Fund Investor Class 17.47% 18.13% 19.72%

S&P 500 Index 28.60% 28.23% 29.58%

Customized Blended Index* 15.12% 15.54% 17.13%

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

* 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., the Lehman Brothers
Intermediate Government/Corporate Bond Index and the J.P. Morgan Non-U.S.
Government Bond Index-Hedged, and is weighted to the Acquiring Fund's benchmark
percentages.

INVESTMENT RESTRICTIONS. The 1940 Act requires that certain investment
policies and restrictions be designated as fundamental policies that cannot be
changed without shareholder approval. The Acquiring Fund 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 Acquiring Fund'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. The Acquired Fund is a
non-diversified investment company, meaning that the proportion of its 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 the Funds are identical.

In addition, each Fund has adopted certain non-fundamental policies
which may be changed by vote of a majority of the Fund's Board members at any
time. These non-fundamental policies and restrictions of the Funds are
identical.

INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER. Dreyfus serves as both
the Acquired Fund's and the Acquiring Fund's investment adviser. Dreyfus has
engaged Mellon Equity to serve as the Acquiring Fund'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 April 30, 1999, Mellon Equity managed approximately $ billion in
assets and served as the investment adviser for other investment companies.
Mellon Equity, subject to the supervision and approval of Dreyfus, provides
investment advisory assistance and the day-to-day management of the Acquiring
Fund'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 the Acquiring Fund's average
daily net assets up to $600 million in DLPI assets; .25% of the Acquiring Fund's
average daily net assets when DLPI's assets are between $600 million and $1.2
billion; .20% of the Acquiring Fund's average daily net assets when DLPI's
assets are between $1.2 billion and $1.8 billion; and .15% of the Acquiring
Fund's average daily net assets when DLPI's assets are over $1.8 billion.

Each Fund's primary portfolio manager is Steven A. Falci. He has held
that position with respect to the Acquiring Fund since its inception in March
1995 and with respect to the Acquired Fund since January 1999. He 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.

BOARD MEMBERS. The Funds have the same Board members. For a
description of the Board members, see the relevant Statement of Additional
Information under the caption "Management of the Fund."

CAPITALIZATION. The Acquiring Fund has classified its shares into two
classes--Investor Class and Restricted Class. Restricted Class shares are
offered only to certain institutions and clients of certain financial
institutions. The Acquired Fund's shares are of one class. The following table
sets forth as of April 30, 1999 (1) the capitalization of the Acquired Fund, (2)
the capitalization of the Acquiring Fund's Investor Class shares, and (3) the
pro forma capitalization of the Acquiring Fund's Investor Class shares, as
adjusted showing the effect of the Exchange had it occurred on such date.

PRO FORMA
AFTER
EXCHANGE
ACQUIRED FUND ACQUIRING FUND
INVESTOR CLASS ACQUIRING FUND INVESTOR CLASS
-------------- -------------- ---------------

Total net assets $7,527,069* $64,915,863 $72,442,932*

Net asset value
per share $18.60 $13.57 $18.60

Shares outstanding 404,789 4,784,550 3,895,453

- ------------------------
*As of April 30, 1999, total net assets of the Acquiring Fund (including
both Investor and Restricted Classes) were $218,818,914 and Pro Forma total
net assets of the Acquiring Fund after the Exchange would have been
$283,734,777.

For information as to beneficial or record ownership of shares of the
Acquired Fund and Acquiring Fund, see "Voting Information" below.

PURCHASE PROCEDURES. The purchase procedures of the Acquired Fund and
the Acquiring Fund (with respect to Investor Class shares) are identical. See
"How to Buy Shares" in the Acquired Fund Prospectus and "Account Policies--
Buying Shares" in the DLPI Prospectus for a complete discussion of purchase
procedures.

REDEMPTION PROCEDURES. The redemption procedures of the Acquired Fund
and the Acquiring Fund (with respect to Investor Class shares) are identical.
See "How to Redeem Shares" in the Acquired Fund Prospectus and "Account
Policies--Selling Shares" in the DLPI Prospectus for a complete discussion of
redemption procedures.

DISTRIBUTIONS. The dividend and distribution policies of each Fund are
identical. See "Dividends, Distributions and Taxes" in the Acquired Fund
Prospectus and "Distributions and Taxes" in the DLPI Prospectus for a complete
discussion of such policies.

SHAREHOLDER SERVICES. The shareholder services offered by the Acquired
Fund and the Acquiring Fund (with respect to Investor Class shares) are
identical. See "Shareholder Services" in the Acquired Fund Prospectus and
"Services For Fund Investors" in the DLPI Prospectus for a complete description
of shareholder services.

SHAREHOLDER SERVICES PLAN. The Acquired Fund and DLPI (with respect to
the Acquiring Fund's Investor Class shares) have adopted a Shareholder Services
Plan. The Shareholder Services Plans are identical. See "Shareholder Services
Plan" in the Acquired Fund Prospectus and "Growth and Income Portfolio--
Expenses" in the DLPI Prospectus for a discussion of the Shareholder Services
Plans.

REASONS FOR THE EXCHANGE

The Board of each Fund has concluded that the Exchange is in the best
interests of their respective shareholders. Each Board believes that the
Exchange will permit shareholders to pursue the same investment objective in a
larger fund without diluting shareholders' interests. A larger fund should
enhance the portfolio managers' ability to select a larger number of portfolio
securities on more favorable terms and give portfolio managers greater
investment flexibility. Additionally, the expense ratio of the Acquiring Fund is
lower than that of the Acquired Fund. By combining the Acquired Fund with the
Acquiring Fund and creating one fund with greater aggregate net assets, Acquired
Fund Shareholders should obtain the benefits of economies of scale, which may
result in lower overall expense ratios by spreading the fixed costs of fund
operations over a larger asset base.

In determining whether to recommend approval of the Exchange, each
Board considered the following factors, among others: (1) the compatibility of
each Fund's investment objective, management policies and investment
restrictions, as well as the shareholder services offered by each Fund; (2) the
terms and conditions of the Exchange and their conclusion that the Exchange
would not result in dilution of shareholder interests; (3) expense ratios and
published information regarding the fees and expenses of each Fund, as well as
the expense ratios of similar funds and the estimated expense ratio of the
combined Funds; (4) the performance of each Fund; (5) the tax-free nature of the
Exchange; and (6) the estimated costs incurred by each Fund as a result of the
Exchange.

INFORMATION ABOUT THE EXCHANGE

PLAN OF EXCHANGE. The following summary of the Agreement is qualified
in its entirety by reference to the Agreement attached hereto as Appendix A. The
Agreement provides that the Acquiring Fund will acquire all of the assets of the
Acquired Fund, in exchange for Investor Class shares of the Acquiring Fund, and
assume the Acquired Fund's liabilities on Friday, September 17, 1999 or such
later date as may be agreed upon by the parties (the "Closing Date"). The number
of Acquiring Fund Shares to be issued to the Acquired Fund will be determined on
the basis of the relative net asset values per share and aggregate net assets of
each Fund, 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 such close
of trading) on the Closing Date (the "Valuation Time"). Portfolio securities of
each Fund will be valued in accordance with the valuation practices of DLPI,
which are described under the caption "How to Buy Fund Shares" in the Acquired
Fund Prospectus, "Account Policies" in the DLPI Prospectus, and "Determination
of Net Asset Value" in the Acquired Fund's or DLPI's Statement of Additional
Information.

Prior to the Closing Date, the Acquired Fund will declare a dividend
or dividends which, together with all previous such dividends, will have the
effect of distributing to Acquired Fund Shareholders all of the Acquired Fund's
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, the Acquired
Fund will distribute the Acquiring Fund Shares received by it in the Exchange
pro rata to its shareholders of record as of the Valuation Time, in liquidation
of the Acquired Fund. Such distribution will be accomplished by establishing an
account on the share records of the Acquiring Fund in the name of each Acquired
Fund Shareholder, each account representing the respective pro rata number of
Acquiring Fund Shares due to each Acquired Fund Shareholder. After such
distribution and the winding up of its affairs, the Acquired Fund will be
dissolved. After the Closing Date, any outstanding certificates representing
Acquired Fund shares will represent the Acquiring Fund Shares distributed to the
record holders of the Acquired Fund. Upon presentation to the transfer agent of
the Acquiring Fund, Acquired Fund share certificates will be exchanged for
Acquiring Fund Share certificates at the applicable exchange rate. Certificates
for Acquiring Fund Shares will be issued only upon the investor's written
request.

The Agreement may be amended at any time prior to the Exchange. The
Acquired Fund will provide its Shareholders with information describing any
material amendment to the Agreement prior to the Meeting. The obligations of
each Fund under the Agreement are subject to various conditions, including
approval by the requisite number of Acquired Fund Shareholders and the
continuing accuracy of various representations and warranties of the Acquired
Fund and the Acquiring Fund being confirmed by the respective parties.

The total expenses of the Exchange are expected to be approximately
$40,500, and will be borne pro rata according to the aggregate net assets of
each Fund.

If the Exchange is not approved by Shareholders of the Acquired Fund,
the Acquired Fund's Board will consider other appropriate courses of action.

FEDERAL INCOME TAX CONSEQUENCES. The exchange of the Acquired Fund
assets for Acquiring Fund Shares is intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). As a condition to the closing of
the Exchange, each Fund will receive the opinion of Stroock & Stroock & Lavan
LLP, counsel to each Fund, substantially 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 the Acquired Fund's assets in exchange
for Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Acquired Fund's 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 Acquiring Fund upon the receipt of the Acquired Fund's assets
solely in exchange for Acquiring Fund Shares and the assumption by the Acquiring
Fund of the liabilities of the Acquired Fund; (3) no gain or loss will be
recognized by the Acquired Fund upon the transfer of its assets to the Acquiring
Fund in exchange for Acquiring Fund Shares and the assumption by the Acquiring
Fund of the Acquired Fund's liabilities or upon the distribution (whether actual
or constructive) of Acquiring Fund Shares to Shareholders in exchange for their
the Acquired Fund shares; (4) no gain or loss will be recognized by the Acquired
Fund Shareholders upon the exchange of the Acquired Fund shares for Acquiring
Fund Shares; (5) the aggregate tax basis for Acquiring Fund Shares received by
each Acquired Fund Shareholder pursuant to the Exchange will be the same as the
aggregate tax basis for the Acquired Fund shares held by such Shareholder
immediately prior to the Exchange, and the holding period of Acquiring Fund
Shares to be received by each Acquired Fund Shareholder will include the period
during which the Acquired Fund shares surrendered in exchange therefor were held
by such Shareholder (provided the Acquired Fund shares were held as capital
assets on the date of the Exchange); and (6) the tax basis of the Acquired
Fund's assets acquired by the Acquiring Fund will be the same as the tax basis
of such assets to the Acquired Fund immediately prior to the Exchange, and the
holding period of the Acquired Fund's assets in the hands of the Acquiring Fund
will include the period during which those assets were held by the Acquired
Fund.

No opinion will be expressed as to the effect of the reorganization on
(i) the Acquired Fund or the Acquiring Fund with respect to any asset as to
which any unrealized gain or loss is required to be recognized for Federal
income tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting, and (ii) any
Acquired Fund Shareholder that is required to recognize unrealized gains and
losses for Federal income tax purposes under a mark-to-market system of
accounting.

NEITHER FUND HAS SOUGHT A TAX RULING FROM THE INTERNAL REVENUE SERVICE
("IRS"). THE OPINION OF COUNSEL IS NOT BINDING ON THE IRS NOR DOES IT PRECLUDE
THE IRS FROM ADOPTING A CONTRARY POSITION. Acquired Fund 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,
Acquired Fund 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

The Acquired Fund's Board has approved the Agreement and the Exchange
and has determined that (i) participation in the Exchange is in the Acquired
Fund's best interests and (ii) the interests of the Acquired Fund Shareholders
will not be diluted as a result of the Exchange. An affirmative vote of a
majority of the Acquired Fund's outstanding shares is required to approve the
Agreement and the Exchange.

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

ADDITIONAL INFORMATION ABOUT EACH FUND

Information about the Acquiring Fund is incorporated by reference into
this Prospectus/Proxy Statement from the DLPI Prospectus and Statement of
Additional Information, each dated February 1, 1999, forming a part of its
Registration Statement on Form N-1A (File No. 33-66088). Information about the
Acquired Fund is incorporated by reference into this Prospectus/Proxy Statement
from the Acquired Fund Prospectus, dated September 1, 1998, as revised October
14, 1998, and Statement of Additional Information, dated September 1, 1998,
forming a part of its Registration Statement on Form N-1A (File No. 33-62626).

Each Fund is subject to the requirements of the 1940 Act, and files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by each Fund 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 also
can 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 the Acquired Fund may pay persons
holding its Shares in their names or those of their nominees for their expenses
in sending soliciting materials to their principals. The Acquired Fund may
retain an outside firm to assist in the solicitation of proxies primarily by
contacting shareholders by telephone and telegram, which would cost
approximately $19,000 and would be borne pro rata between the Funds.
Authorizations to execute proxies may be obtained by telephonic or
electronically transmitted instructions in accordance with procedures designed
to authenticate the shareholder's identity. In all cases where a telephonic
proxy is solicited, the shareholder will be asked to provide his or her address,
social security number (in the case of an individual) or taxpayer identification
number (in the case of a non-individual) and the number of shares owned and to
confirm that the shareholder has received the Prospectus/Proxy Statement and
proxy card in the mail. Within 72 hours of receiving a shareholder's telephonic
or electronically transmitted voting instructions, a confirmation will be sent
to the shareholder to ensure that the vote has been taken in accordance with the
shareholder's instructions and to provide a telephone number to call immediately
if the shareholder's instructions are not correctly reflected in the
confirmation. Shareholders requiring further information with respect to
telephonic or electronically transmitted voting instructions or the proxy
generally should contact the Acquired Fund toll free at 1-800-645-6561. Any
shareholder giving a proxy may revoke it at any time before it is exercised by
submitting to the Acquired Fund a written notice of revocation or a subsequently
executed proxy or by attending the Meeting and voting in person.

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
the Acquired Fund 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 Acquired Fund 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.

If 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 the Acquired Fund by the
presence in person or by proxy of the holders of more than one-third of the
outstanding Acquired Fund Shares entitled to vote at the Meeting.

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

As of April 30, 1999, no Shareholders were known to own of record or
beneficially 5% or more of the outstanding voting securities of the Acquired
Fund.

As of April 30, 1999, the following Shareholders were known to own of
record or beneficially 5% or more of the outstanding voting securities of the
Acquiring Fund:

% of
Boston Safe Deposit & Trust Co Ttee % of Class Acquiring Fund
as Agent-omnibus Account
1 Cabot Rd
Medford, MA 02155-5141 44.37% Restriced Class [ ]

Mac & Co A/c Mlcf8548712
Mutual Funds Operations
Po Box 3198
Pittsburgh, PA 15230-3198 40.35% Restricted Class [ ]

Mac & Co A/c 195-860
Fbo Easy 401(K) Plan
Mellon Bank Na
Mutual Funds
Po Box 320
Pittsburgh, PA 15230-0320 6.28% Restricted Class [ ]

Fidelity Investments Institutional
Operations Co (Fiioc) as Agent for
Certain Employee Benefit Plans
100 Magellan Way
Covington, KY 41015-1987 6.17% Restriced Class [ ]

As of April 30, 1999, Board members and officers of DLPI, as a group,
owned less than 1% of the Acquiring Fund's outstanding shares and Board members
and officers of the Acquired Fund, as a group, owned less than 1% of the
Acquired Fund's outstanding shares.

FINANCIAL STATEMENTS AND EXPERTS

The audited financial statements of the Acquired Fund for the fiscal
year ended April 30, 1998 and the audited financial statements of the Acquiring
Fund for the fiscal year ended September 30, 1998, have been incorporated herein
by reference in reliance upon the authority of the reports given by Ernst &
Young LLP, each Fund's independent auditors, as experts in accounting and
auditing. In addition, the unaudited financial statements of the Acquired Fund
for the semi-annual period ended October 31, 1998 and of the Acquiring Fund for
the semi-annual period ended March 31, 1999, also have been incorporated herein
by reference.

OTHER MATTERS

The Acquired Fund'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 the Acquired Fund, 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 the
Acquired Fund Shares for which proxies are being solicited from you, and, if so,
the number of copies of the Prospectus/Proxy Statement and other soliciting
material you wish to receive in order to supply copies to the beneficial owners
of the Acquired Fund 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 THE PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.

<PAGE>

EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION dated __________, 1999 (the
"Agreement"), between DREYFUS ASSET ALLOCATION FUND, INC., a Maryland
corporation (the "Acquired Fund") and DREYFUS LIFETIME PORTFOLIOS, INC., a
Maryland corporation ("DLPI"), on behalf of its Growth and Income Portfolio (the
"Acquiring Fund").

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 Acquired Fund in exchange solely for
Investor Class shares (the "Acquiring Fund Shares") of common stock, par value
$.001 per share, of the Acquiring Fund and the assumption by the Acquiring Fund
of the liabilities of the Acquired Fund and the distribution, after the Closing
Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders
of the Acquired Fund in liquidation of the Acquired Fund as provided herein, all
upon the terms and conditions hereinafter set forth in this Agreement.

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

WHEREAS, both the Acquiring Fund and the Acquired Fund are authorized
to issue their shares of common stock;

WHEREAS, the Board of DLPI has determined that the exchange of all of
the assets and the liabilities of the Acquired Fund for Acquiring Fund Shares is
in the best interests of the Acquiring Fund's shareholders and that the
interests of the Acquiring Fund's existing shareholders would not be diluted as
a result of this transaction; and

WHEREAS, the Board of the Acquired Fund has determined that the
exchange of all of the assets and the liabilities of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquired Fund's
shareholders and that the interests of the Acquired Fund's 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 ACQUIRED FUND IN EXCHANGE FOR PORTFOLIO
SHARES AND ASSUMPTION OF THE ACQUIRED FUND LIABILITIES AND LIQUIDATION
OF THE ACQUIRED FUND.

1.1. Subject to the terms and conditions contained herein, the
Acquired Fund agrees to assign, transfer and convey to the Acquiring Fund all of
the assets of the Acquired Fund, including all securities and cash (subject to
liabilities), and the Acquiring Fund agrees in exchange therefor (i) to deliver
to the Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, determined as set forth in paragraph 2.3; and (ii) to
assume the liabilities of the Acquired Fund, 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 Acquiring Fund Shares, the Acquiring Fund shall credit the
Acquiring Fund Shares to the Acquired Fund's account on the books of the
Acquiring Fund and shall deliver a confirmation thereof to the Acquired Fund.

1.2. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume all liabilities, expenses, costs, charges and reserves reflected on an
unaudited statement of assets and liabilities of the Acquired Fund 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 Acquiring Fund shall assume only those
liabilities of the Acquired Fund 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 Acquired Fund 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 Acquiring Fund, 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 Acquiring Fund 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
Acquiring Fund.

1.4. The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any interest received on or after the Closing Date with respect to assets
transferred to the Acquiring Fund hereunder. The Acquired Fund will transfer to
the Acquiring Fund any distributions, rights or other assets received by the
Acquired Fund 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 Acquiring Fund 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 Acquired Fund will liquidate and distribute pro
rata to the Acquired Fund's shareholders of record, determined as of the close
of business on the Closing Date (the "Acquired Fund Shareholders"), Acquiring
Fund Shares received by the Acquired Fund pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
applicable Acquiring Fund Shares then credited to the account of the Acquired
Fund on the books of the Acquiring Fund to open accounts on the share records of
the Acquiring Fund in the names of the Acquired Fund Shareholders and
representing the respective pro rata number of the applicable Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund simultaneously will be canceled on the books of the Acquired Fund.

1.6. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund 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 Acquiring Fund
Shares in a name other than the registered holder of the Acquiring Fund Shares
on the books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.

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

2. VALUATION.

2.1. The value of the Acquired Fund's assets to be acquired by the
Acquiring Fund 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 an Acquiring Fund 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 Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's net assets shall
be determined by dividing the value of the net assets of the Acquired Fund
determined using the same valuation procedures referred to in paragraph 2.1 by
the net asset value of one Acquiring Fund 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 Acquiring Fund.

3. CLOSING AND CLOSING DATE.

3.1. The Closing Date shall be Friday, September 17, 1999 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 Acquired Fund's portfolio securities, cash
and any other assets have been delivered in proper form to the Acquiring Fund
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 Acquiring Fund or
the Acquired Fund 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 Acquiring Fund or the Acquired Fund 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 Acquired Fund shall deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding Acquired Fund shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
Closing Date to the Secretary of the Acquired Fund, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. 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 Acquired Fund represents and warrants to the Acquiring Fund
as follows:

(a) The Acquired Fund is a corporation duly organized, 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 Acquired Fund 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 Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of the
Acquired Fund's Articles of Incorporation, 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 Acquired Fund is a party or by
which it is bound.

(d) The Acquired Fund 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 Acquired Fund 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 Acquired Fund 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 Acquired Fund
for the fiscal year ended April 30, 1999 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 Acquiring Fund) fairly reflects the financial condition of the
Acquired Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date not disclosed therein.

(g) Since April 30, 1999, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund 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 Acquired Fund 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 Acquired Fund's 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 Acquired Fund 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 Acquired Fund 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
Acquired Fund 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 Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares, nor is
there outstanding any security convertible into any of the Acquired Fund shares.

(k) On the Closing Date, the Acquired Fund 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 the Acquired Fund's Board and, subject to the approval of the
Acquired Fund Shareholders, this Agreement will constitute the valid and legally
binding obligation of the Acquired Fund, 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 the Acquired Fund (the "Proxy
Statement") included in the Registration Statement referred to in paragraph 5.5
(other than information therein that has been furnished by the Acquiring Fund)
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 Acquiring Fund represents and warrants to the Acquired Fund
as follows:

(a) The Acquiring Fund 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 Acquiring Fund 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 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 Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of DLPI's
Articles of Incorporation, as the same may have been amended, or Bylaws or of
any agreement, indenture, instrument, contract, lease or other undertaking to
which the Acquiring Fund 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 Acquiring Fund 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 Acquiring Fund 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 Acquiring Fund
for the fiscal year ended September 30, 1998, 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 Acquired Fund) fairly reflects the financial
condition of the Acquiring Fund as of such date, and there are no known
contingent liabilities of the Acquiring Fund as of such date not disclosed
therein.

(g) Since September 30, 1998, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund 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 Acquiring Fund 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 Acquiring Fund 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 Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of the
Acquiring Fund Shares, nor is there outstanding any security convertible into
any Acquiring Fund Shares.

(k) 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 DLPI's Directors, and this Agreement will constitute the valid
and legally binding obligation of the Acquiring Fund 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 Acquiring Fund and is based on information
furnished by the Acquiring Fund) 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 ACQUIRING FUND AND THE ACQUIRED FUND.

5.1. The Acquiring Fund and the Acquired Fund 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 Acquired Fund will call a meeting of the Acquired Fund
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 Acquiring Fund
and the Acquired Fund 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 Acquired Fund shall furnish the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a statement of
the earnings and profits of the Acquired Fund for Federal income tax purposes
which will be carried over to the Acquiring Fund as a result of Section 381 of
the Code and which will be certified by the Acquired Fund's President or its
Vice President and Treasurer.

5.5. The Acquired Fund will provide the Acquiring Fund 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 Acquired Fund Shareholders to consider approval of this Agreement
and the transactions contemplated herein.

5.6. The Acquiring Fund 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 ACQUIRING FUND.

The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund 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 Acquired Fund 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 Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's 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 the Acquired Fund.

6.3. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by the Acquired Fund's
President or Vice President and its Treasurer, in form and substance
satisfactory to the Acquiring Fund, to the effect that the representations and
warranties of the Acquired Fund 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 Acquiring
Fund shall reasonably request.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.

The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund 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 Acquiring Fund
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 Acquiring Fund shall have delivered to the Acquired Fund 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 Acquired Fund, to the effect that the representations and warranties of the
Acquiring Fund 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 Acquired Fund shall
reasonably request.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE ACQUIRED FUND.

If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, 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 Acquired Fund in accordance with the provisions of the Acquired
Fund'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 Acquiring Fund or the Acquired Fund 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 Acquiring Fund or the Acquired Fund, provided
that either party hereto may for itself waive any of such conditions.

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

8.5. The Acquired Fund shall have declared a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to the Acquired Fund Shareholders all of the Acquired Fund's
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 LLP substantially to the effect that for Federal income tax purposes:

(a) The transfer of all of the Acquired Fund's assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
certain identified liabilities of the Acquired Fund 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 the Acquired Fund solely in exchange for the Acquiring Fund Shares and
the assumption by the Acquiring Fund of certain identified liabilities of the
Acquired Fund; (c) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund's assets to the Acquiring Fund in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of certain
identified liabilities of the Acquired Fund or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their shares of the Acquired Fund; (d) No gain or
loss will be recognized by the Acquired Fund Shareholders upon the exchange of
their Acquired Fund shares for Acquiring Fund Shares; (e) The aggregate tax
basis for the Acquiring Fund Shares received by each of the Acquired Fund
Shareholders pursuant to the Reorganization will be the same as the aggregate
tax basis of the Acquired Fund shares held by such shareholder immediately prior
to the Reorganization, and the holding period of the Acquiring Fund Shares to be
received by each Acquired Fund Shareholder will include the period during which
the Acquired Fund shares exchanged therefor were held by such shareholder
(provided the Acquired Fund shares were held as capital assets on the date of
the Reorganization); and (f) The tax basis of the Acquired Fund assets acquired
by the Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund will include
the period during which those assets were held by the Acquired Fund.

9. TERMINATION OF AGREEMENT.

9.1. This Agreement and the transaction contemplated hereby may be
terminated and abandoned by resolution of the Board of the Acquired Fund or of
DLPI, as the case may be, at any time prior to the Closing Date (and
notwithstanding any vote of the Acquired Fund 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, the Acquiring
Fund or the Acquired Fund, 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 the Acquired Fund 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 Acquiring Fund or of
the Acquired Fund, 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 Acquiring Fund and the Acquired
Fund 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.

11.6. Any references in this Agreement to actions taken, deliveries by
or to, or representations and warranties made by or to, the Acquiring Fund shall
be deemed references to actions taken, deliveries by or to, representations and
warranties made by or to, DLPI on behalf of the Acquiring Fund.

<PAGE>

IN WITNESS WHEREOF, the Acquiring Fund and the Acquired Fund have
caused this Agreement and Agreement 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 GROWTH AND INCOME
PORTFOLIO

By:
------------------------------
Marie E. Connolly,
President

ATTEST:
------------------------
Stephanie D. Pierce,
Assistant Secretary

DREYFUS ASSET ALLOCATION FUND, INC.,

By:
------------------------------
Marie E. Connolly,
President

ATTEST:
------------------------
Stephanie D. Pierce,
Assistant Secretary

<PAGE>

Preliminary Copy

DREYFUS ASSET ALLOCATION FUND, INC.

The undersigned shareholder of Dreyfus Asset Allocation Fund, Inc.
(the "Fund") hereby appoints and __________ and __________, 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 Fund
standing in the name of the undersigned at the close of business on June 4,
1999, 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 Friday, August 6, 1999, 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 Proxy Statement/Prospectus for the meeting.

Please mark boxes in blue or black ink.

1. To approve or disapprove an Agreement and Agreement of
Reorganization between the Fund and Dreyfus LifeTime Portfolios, Inc., on behalf
of its Growth and Income Portfolio (the "Acquiring Fund"), providing for the
transfer of all of the assets, subject to the liabilities, of the Fund in
exchange solely for Investor Class shares of the Acquiring Fund, and the pro
rata distribution of those shares to Fund shareholders and subsequent
dissolution of the Fund.

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 THE FUND'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: ______ __, 1999

--------------------------------
Signature(s)

Sign, Date and Return the Proxy
Card Promptly Using the
Enclosed Envelope

<PAGE>

PRELIMINARY COPY

DREYFUS LIFETIME PORTFOLIOS, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June __, 1999
Transfer of the Assets of
DREYFUS ASSET ALLOCATION FUND, INC.

200 Park Avenue
New York, New York 10166
1-800-654-6561
To and in Exchange for Investor Class Shares of
GROWTH AND INCOME PORTFOLIO OF
DREYFUS LIFETIME PORTFOLIOS, INC.

200 Park Avenue
New York, New York 10166
1-800-654-6561

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus/Proxy
Statement dated June __, 1999, relating specifically to the proposed transfer of
all of the assets and liabilities of Dreyfus Asset Allocation Fund, Inc. in
exchange for Investor Class shares of the Growth and Income Portfolio of Dreyfus
LifeTime Portfolios, Inc. The 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 February 1, 1999.

2. The Statement of Additional Information of Dreyfus Asset Allocation
Fund, Inc. dated September 1, 1998.

3. Annual Report of Dreyfus LifeTime Portfolios, Inc. for the fiscal
year ended September 30, 1998.

4. Semi-Annual Report of Dreyfus LifeTime Portfolios, Inc. for the six
month period ended March 31, 1999.*

5. Annual Report of Dreyfus Asset Allocation Fund, Inc. for the fiscal
year ended April 30, 1998.

6. Semi-Annual Report of Dreyfus Asset Allocation Fund, Inc. for the
six month period ended October 31, 1998.

7. Pro forma Financial Statements.*

- ------------------------
* To be filed by amendment.

The Prospectus/Proxy Statement dated June __, 1999 may be obtained by
writing to Dreyfus LifeTime Portfolios, Inc., 200 Park Avenue, New York, New
York 10166.

<PAGE>

DREYFUS LIFETIME PORTFOLIOS, INC.
INCOME PORTFOLIO
GROWTH AND INCOME PORTFOLIO
GROWTH PORTFOLIO
INVESTOR CLASS SHARES AND RESTRICTED CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1999

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 February 1, 1999, 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. -- Call 516-794-5452

The Fund's most recent Annual Report and Semi-Annual Report to Shareholders
are separate documents supplied with this Statement of Additional Information,
and the financial statements, accompanying notes and report of independent
auditors appearing in the Annual Report are incorporated by reference into this
Statement of Additional Information.

TABLE OF CONTENTS

Page

Description of the Fund and Portfolios B-2
Management of the Fund B-17
Management Arrangements B-23
How to Buy Shares B-27
Shareholder Services Plan B-29
How to Redeem Shares B-30
Shareholder Services B-32
Determination of Net Asset Value B-36
Dividends, Distributions and Taxes B-37
Portfolio Transactions B-39
Performance Information B-41
Information About the Fund and Portfolios B-42
Counsel and Independent Auditors B-44
Appendix B-45

DESCRIPTION OF THE FUND AND PORTFOLIOS

The Fund is a Maryland corporation formed on July 15, 1993. Each Portfolio
is a separate portfolio of the Fund, an open-end management investment company,
known as a mutual fund. Each Portfolio is a diversified portfolio, which means
that, with respect to 75% of the Portfolio's total assets, the Portfolio will
not invest more than 5% of its assets in the securities of any single issuer.

The Dreyfus Corporation ("Dreyfus") serves as each Portfolio's investment
adviser. Dreyfus has engaged its affiliate, 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 each Portfolio's shares.

Investment Approach

The following information supplements and should be read in conjunction
with the Fund's Prospectus.

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>
Level One Level Two Level Three
Total Assets International 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:

Portfolio Portfolio Overlay One Portfolio Overlay Two

Range for Relative Range for Relative
Weighing of Weighing of Domestic
International and Assets Between Equity
Domestic Assets Assets and Fixed-
Income Assets

Growth and Income +/- 5% of Portfolio +/- 15% of Portfolio
Baseline Baseline

Growth +/- 10% of Portfolio +20%/-15% of
Baseline Portfolio Baseline

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"). A brief description of
each Asset Class Benchmark listed in the table below is contained in Section VI.
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:

Asset Class Portfolios Asset Class Benchmark

Domestic Large Cap Income, Growth and Standard & Poor's 500
Equity Income and Growth Index ("S&P 500 Index")

Domestic Small Cap Growth and Income and Russell 2000((reg.tm)) Index
Equity Growth

International Growth and Income and Morgan Stanley Capital
Equity Growth International Europe,
Australia, Far East
(Free) Index ("EAFE
Index")*

Domestic Fixed- Income, Growth and Lehman Brothers
Income Income and Growth Government/Corporate
Intermediate Bond Index
("Lehman Government/
Corporate Index")

International Growth and Income and J.P. Morgan Non-US
Fixed-Income Growth Government Bond Index -
Hedged ("J.P. Morgan
Global Index")
____________________________

* In U.S. dollars

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 being actively managed in the other
Portfolios.

Mellon Equity may choose to combine Asset Class Benchmarks proportionately
if the amount of investable assets in a Portfolio is deemed low in the judgment
of Mellon Equity. For example, the domestic equity large cap and small cap Asset
Class Benchmarks could be combined proportionately according to the Portfolio
Baseline in order to create more efficient portfolio management as deemed
appropriate by Mellon Equity. Mellon Equity would continue to provide investment
management services as described above, but would manage to the combined Asset
Class Benchmark.

VI. Description of Asset Class Benchmarks.

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&P 500 Index are based on each stock's relative total market capitalization;
that is, its market price per share times the number of shares outstanding.

The Russell 2000((reg.tm)) Index is an unmanaged index and is composed of
the smallest companies in the Russell 3000((reg.tm)) Index. The Russell 3000
((reg.tm)) Index is composed of 3,000 of the largest U.S. companies by market
capitalization.

The EAFE Index is a broadly diversified international index composed of the
equity securities of approximately 1,548 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.

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, with an average outstanding
market value of more than $600 million and maturities of less than ten years and
greater than one year.

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.

Certain Portfolio Securities

The following information supplements and should be read in conjunction
with the Fund's Prospectus.

Depositary Receipts. (Growth and Income Portfolio and Growth Portfolio
only) Each of these Portfolios may invest in the securities of foreign issuers
in the form of American Depositary Receipts and American Depositary Shares
(collectively, "ADRs") and Global Depositary Receipts and Global Depositary
Shares (collectively, "GDRs") and other forms of depositary receipts. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company which evidence ownership of underlying
securities issued by a foreign corporation. GDRs are receipts issued outside the
United States 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
GDRs in bearer form are designed for use outside the United States.

These securities may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depositary, whereas a depositary may establish an
unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored depositary receipts generally bear all the
costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.

Money Market Instruments. The short-term money market instruments in which
a Portfolio may invest 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. The Income Portfolio
will purchase only money market instruments having remaining maturities of 13
months or less.

The Income Portfolio generally invests up to 10% of its assets in money
market instruments. When the Advisers determine that adverse market conditions
exist, a Portfolio may adopt a temporary defensive position and invest without
limitation in money market instruments.

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.
(Growth and Income Portfolio and Growth Portfolio only) Each of these Portfolios
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. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.

Investment Companies. Each Portfolio may invest in securities issued by
other investment companies to the extent consistent with its investment
objective. Under the Investment Company Act of 1940, as amended (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 total assets with respect to any
one investment company and (iii) 10% of the Portfolio's total 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. These 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, the 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 Portfolio deems
representative of their value, the value of the Portfolio's net assets could be
adversely affected.

Investment Techniques

The following information supplements and should be read in conjunction
with the Fund's Prospectus.

Foreign Currency Transactions. (Growth and Income Portfolio and Growth
Portfolio only) Each of these Portfolios may enter into foreign currency
transactions 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; 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.

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.

Leverage. Leveraging (that is, buying securities using borrowed money)
exaggerates the effect on net asset value of any increase or decrease in the
market value of a Portfolio's portfolio. These borrowings will be subject to
interest costs which may or may not be recovered by appreciation of the
securities purchased; in certain cases, interest costs may exceed the return
received on the securities purchased. For borrowings for investment purposes,
the 1940 Act requires a Portfolio to maintain continuous asset coverage (that
is, total assets including borrowings, less liabilities exclusive of borrowings)
of 300% of the amount borrowed. If the required coverage should decline as a
result of market fluctuations or other reasons, the Portfolio may be required to
sell some of its portfolio holdings within three days to reduce the amount of
its borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that time.
The Portfolio also may be required to maintain minimum average balances in
connection with such borrowing or pay a commitment or other fee to maintain a
line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.

A Portfolio may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves the transfer by the
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. Except for these transactions, a Portfolio's borrowings generally will
be unsecured.

Derivatives. Each Portfolio may invest in, or enter into, derivatives, such
as options and futures, for a variety of reasons, primarily to provide a
substitute for purchasing or selling particular securities, but also to hedge
certain market risks, or to increase potential income gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Fund 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 or decrease
the level of risk, or change the character of the risk, to which its portfolio
is exposed in much the same way as the Portfolio can increase or decrease the
level of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.

Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in derivatives could have a
large potential impact on the Portfolio's performance.

If a Portfolio invests in derivatives at inopportune 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 if 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 and unpredictable changes in the
prices for derivatives.

Although neither the Fund nor any Portfolio will be a commodity pool,
certain derivatives subject the Portfolios to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Portfolio can invest in
such derivatives. Each Portfolio may invest in futures contracts and options
with respect thereto for hedging purposes without limit. However, no Portfolio
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 for bona fide hedging purposes, exceeds 5%
of the liquidation value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.

Each Portfolio may invest up to 5% of its assets, 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, the
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 be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter derivatives.
Therefore, each party to an over-the-counter derivative bears the risk that the
counterparty will default. Accordingly, the 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 the Growth and Income Portfolio and Growth Portfolio, on exchanges
located outside the United States, such as the London International Financial
Futures Exchange, the Deutsche Termine Borse 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 permissible liquid
assets in connection with its commodities transactions in an amount generally
equal to the value of the underlying commodity. The segregation of such assets
will have the effect of limiting a 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.

The Growth and Income Portfolio and Growth Portfolio 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, or at a specific date.

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 premiums, 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.

The Growth and Income Portfolio and Growth Portfolio 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. Each Portfolio may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Portfolio continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities which affords the Portfolio an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33 1/3% of
the value of the Portfolio's total assets, and 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.

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.

Forward Commitments. A 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 receivable on a forward commitment or
when-issued security are fixed when the Portfolio enters into the commitment,
but the Portfolio does not make payment until it receives delivery from the
counterparty. The Portfolio will commit 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. The
Portfolio will set aside in a segregated account permissible liquid assets at
least equal at all times to the amount of the Portfolio's purchase 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 Considerations and Risks

General. Because each Portfolio will have at 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.

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, seizure or
nationalization of foreign deposits or adoption of governmental restrictions
which might adversely affect or restrict the payment of principal, interest and
dividends on the foreign securities 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.

Simultaneous Investments. Investment decisions for each Portfolio are made
independently from those of other investment companies or accounts advised by
the Advisers. If, however, such other investment companies or accounts desire to
invest in, or dispose of, the same securities as a Portfolio, 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.

Investment Restrictions

Each Portfolio's investment objective is a fundamental policy, which cannot
be changed without approval by the holders of a majority (as defined in the 1940
Act) of the Portfolio's outstanding voting shares. In addition, the Portfolios
have adopted certain investment restrictions as fundamental policies and certain
other investment restrictions as non-fundamental policies, as described below.

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 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.

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.

MANAGEMENT OF THE FUND

The Fund's Board is responsible for the management and supervision of each
Portfolio. The Board approves all significant agreements with those companies
that furnish services to the Portfolio. These companies are as follows:

The Dreyfus Corporation Investment Adviser
Mellon Equity Associates Sub-Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
Mellon Bank, N.A. Custodian

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

Board Members of the Fund

JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He is a director of
The Noel Group, Inc., a venture capital company (for which, from February
1995 until November 1997, he was Chairman of the Board), The Muscular
Dystrophy Association, HealthPlan Services Corporation, a provider of
marketing, administrative and risk management services to health and other
benefit programs, Carlyle Industries, Inc. (formerly, Belding Heminway,
Inc.), a button packager and distributor, Century Business Services, Inc.
(formerly, International Alliance Services, Inc.), a provider of various
outsourcing functions for small and medium sized companies, and Career
Blazers Inc. (formerly, Staffing Resources, Inc.), a temporary placement
agency. For more than five years prior to January 1995, 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 until December 31, 1994, he was a director of
Mellon Bank Corporation. He is 55 years old and his address is 200 Park
Avenue, New York, New York 10106.

LUCY WILSON BENSON, Board Member. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of COMSAT
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 of
the Atlantic Council of the U.S. and a member of the Council on Foreign
Relations. From 1980 to 1994, Mrs. Benson was a director of the Grumman
Corporation and of the General RE Corporation from 1990 to 1998. 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 71
years old and her address is 46 Sunset Avenue, Amherst, Massachusetts
01002.

DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of Governors,
an independent board within the United States Information Agency, since
August 1995. From August 1994 to December 1994, Mr. Burke was a Consultant
to Dreyfus, and from October 1990 to August 1994, he was Vice President and
Chief Administrative Officer of Dreyfus. From 1977 to 1990, Mr. Burke was
involved in the management of national television news, as Vice President
and Executive Vice President of ABC News, and subsequently as President of
CBS News. He is 62 years old and his address is 197 Eighth Street,
Charleston, Massachusetts 02109.

MARTIN D. FIFE, Board Member. Chairman of the Board of Magar Inc., a company
specializing in financial products and developing early stage companies. In
addition, Mr. Fife is Chairman of the Board and Chief Executive Officer of
Skysat Communications Network Corporation, a company developing
telecommunications systems. Mr. Fife also serves on the boards of various
other companies. He is 71 years old and his address is The Chrysler
Building, 405 Lexington Avenue, New York, New York 10174.

WHITNEY I. GERARD, Board Member. Partner of the New York City law firm of
Chadbourne & Parke. Mr. Gerard is 64 years old and his address is 30
Rockefeller Plaza, New York, New York 10112.

ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard University,
since January 1992. 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 a chairman
of The Measurisk Group, a risk measurement advisory and software
development firm, co-chairman of the Investment Committee, Massachusetts
State Retirement Fund, and is also a director of The Dun & Bradstreet Corp,
Exel Limited, a Bermuda based insurance company, Cooke and Bieler, Inc.,
investment counselors, National Association of Securities Dealers, Inc.,
NASD Regulation, Inc. and the Federal Reserve Bank of Boston. He is 59
years old and his address is 79 John F. Kennedy Street, Cambridge,
Massachusetts 02138.

ARTHUR A. HARTMAN, Board Member. Senior consultant with APCO Associates Inc.
From 1981 to 1987, he was United States Ambassador to the former Soviet
Union. He sits on the Boards of Ford Meter Box Corporation and Lawter
International and is a member of the advisory councils of several other
companies, research institutes and foundations. Ambassador Hartman is
Chairman of First NIS Regional Funds (ING/Barings Management) and former
President of the Harvard Board of Overseers. He is 72 years old and his
address is 2738 McKinley Street, N.W., Washington, D.C. 20015.

GEORGE L. PERRY, Board Member. 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 and State
Farm Life Insurance Company and a trustee of Federal Realty Investment
Trust. He is 65 years old and his address is 1775 Massachusetts Avenue,
N.W., Washington, D.C. 20015.

PAUL WOLFOWITZ, Board Member. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to 1993, he
was 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 of the
Department of State. He is 53 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 aggregate amount of compensation
payable by the Fund to each Board member for the fiscal year ended September 30,
1998, and by all other funds in the Dreyfus Family of Funds for which such
person is a Board member (the number of which is set forth in parenthesis next
to each Board member's total compensation) for the year ended December 31, 1997,
were as follows:

Total
Aggregate Compensation
Name of Board Compensation From Fund and
Member from Fund Complex Paid
Fund* to Board Members

Joseph S. DiMartino $2,813 $597,128 (99)

Lucy Wilson Benson $2,250 $ 74,055 (17)

David W. Burke $2,250 $239,000 (49)

Martin D. Fife $2,250 $ 60,500 (12)

Whitney I. Gerard $2,250 $ 60,500 (12)

Robert R. Glauber $2,000 $102,500 (20)

Arthur A. Hartman $2,000 $ 55,750 (12)

George L. Perry $2,000 $ 60,500 (12)

Paul Wolfowitz $2,000 $ 52,750 (11)
______________________________

* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $982 for the Growth & Income Portfolio,
$805 for the Income Portfolio and $503 for the Growth Portfolio for all
Board members as a group.

Officers of the Company

MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive Officer,
Chief Compliance Officer and a director of the Distributor and Funds
Distributor, Inc., the ultimate parent of which is Boston Institutional
Group, Inc., and an officer of other investment companies advised or
administered by Dreyfus. She is 41 years old.

MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President and
General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by Dreyfus. From August 1996
to March 1998, she was Vice President and Assistant General Counsel for
Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was an
associate with the law firm of Ropes & Gray. She is 38 years old.

MICHAEL S. PETRUCELLI, Vice President, Assistant Secretary and Assistant
Treasurer. Senior Vice President of Funds Distributor, Inc., and an officer
of other investment companies advised or administered by Dreyfus. From
December 1989 through November 1996, he was employed by GE Investments
where he held various financial, business development and compliance
positions. He also served as Treasurer of the GE Funds and as a Director of
GE Investment Services. He is 37 years old.

STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised or
administered by Dreyfus. From April 1997 to March 1998, she was employed as
a Relationship Manager with Citibank, N.A. From August 1995 to April 1997,
she was an Assistant Vice President with Hudson Valley Bank, and from
September 1990 to August 1995, she was Second Vice President with Chase
Manhattan Bank. She is 30 years old.

MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by Dreyfus. From September 1989 to July
1994, she was an Assistant Vice President and Client Manager for The Boston
Company, Inc. She is 34 years old.

GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice President
and Client Service Director of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by Dreyfus. From June
1995 to March 1998, he was Senior Vice President and Senior Key Account
Manager for Putnam Mutual Funds. From May 1994 to June 1995, he was
Director of Business Development for First Data Corporation. From September
1983 to May 1994, he was Senior Vice President and Manager of Client
Services and Director of Internal Audit at The Boston Company, Inc. He is
43 years old.

JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by 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 36
years old.

DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other investment
companies advised or administered by Dreyfus. From April 1993 to January
1995, he was a Senior Fund Accountant for Investors Bank & Trust Company.
He is 29 years old.

CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice President
and Senior Associate General Counsel of the Distributor and Funds
Distributor, Inc., and an officer of other investment companies advised or
administered by Dreyfus. From April 1994 to July 1996, he was Assistant
Counsel at Forum Financial Group. From October 1992 to March 1994, he was
employed by Putnam Investments in legal and compliance capacities. He is 33
years old.

KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an officer
of other investment companies advised or administered by Dreyfus. From July
1994 to November 1995, she was a Fund Accountant for Investors Bank & Trust
Company. She is 26 years old.

ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice President
of Funds Distributor, Inc., and an officer of other investment companies
advised or administered by Dreyfus. From March 1990 to May 1996, she was
employed by U.S. Trust Company of New York, where she held various sales
and marketing positions. She is 37 years old.

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

The Fund's Board members and officers, as a group, owned less than 1% of
the shares outstanding of each Portfolio on January 5, 1999.

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 as of January 5, 1999: Fund 555: Apt Holdings
Corporation, Attention Michael Botsford, 4500 New Linden Hill Road, Wilmington,
DE 19808 - 72.68%; Bank of New York, Trustee for various Retirement Plans, The
Centre at Purchase, Attention Louis Stewart, 3 Manhattanville Road, Purchase, NY
10577-2116 - 6.50%; Bank of New York, Trustee for various Retirement Plans, The
Centre at Purchase, Attention Louis Stewart, 3 Manhattanville Road, Purchase, NY
10577-2116 - 50.85%; Union Bank of California, Select Benefit Omnibus, Attention
Mutual Fund, P.O. Box 109, San Diego, California 92112-4103 - 16.69%; Fund 552:
Bank of New York, Trustee for various Retirement Plans, The Centre at Purchase,
Attention Louis Stewart, 3 Manhattanville Road, Purchase, NY 10577-2116 -
61.54%; Union Bank of California, Select Benefit Omnibus, Attention Mutual Fund,
P.O. Box 109, San Diego, California 92112-4103 - 14.85%; Fund 755: Boston Safe
Deposit & Trust Co., Trustee as Agent-Omnibus Account, 1 Cabot Road, Medford,
Massachusetts, 02155-5141 - 51.63%; Apt Holdings Corporation, Attention Michael
Botsford, 4500 New Linden Hill Road, Wilmington, DE 19808 - 14.26%; MAC & Co.,
A/C MLCF8548702, Mutual Funds Operations, P.O. Box 3198, Pittsburgh,
Pennsylvania, 15230-3198 - 11.12%; MAC & Co., A/C 195-859, FBO EASY 401(K) Plan,
A/C DEPF1958592, Attention Mutual Fund Operations, P.O. Box 3198, Pittsburgh,
Pennsylvania, 15230-3198 - 10.22%; Fidelity Investments Institutional Operations
Co. (FIIOC), as agent for certain employee benefit plans, 100 Magellan Way,
Covington, Kentucky 41015-1987 - 8.16%; MAC & Co., A/C MLCF8548722, Mutual Funds
Operations, P.O. Box 3198, Pittsburgh, Pennsylvania, 15230-3198 - 28.35%;
Fidelity Investments Institutional Operations Co. (FIIOC), as agent for certain
employee benefit plans, 100 Magellan Way, Covington, Kentucky 41015-1987 -
25.64%; Boston Safe Deposit & Trust Co., Trustee as Agent-Omnibus Account, 1
Cabot Road, Medford, Massachusetts, 02155-5141 - 23.24%; MAC & Co., A/C 195-861,
FBO EASY 401(K) Plan, A/C DEPF1958612, Attention Mutual Fund Operations, P.O.
Box 3198, Pittsburgh, Pennsylvania, 15230-3198 - 12.64%; Boston Safe Deposit &
Trust Co., Trustee as Agent-Omnibus Account, 1 Cabot Road, Medford,
Massachusetts, 02155-5141 - 44.35%; MAC & Co., A/C MLCF8548712, Mutual Funds
Operations, P.O. Box 3198, Pittsburgh, Pennsylvania, 15230-3198 - 40.87%; MAC &
Co., A/C 195-860, FBO EASY 401(K) Plan, Mellon Bank, NA, Mutual Funds, P.O. Box
320, Pittsburgh, Pennsylvania, 15230-0320 - 6.03%; Fidelity Investments
Institutional Operations Co. (FIIOC), as agent for certain employee benefit
plans, 100 Magellan Way, Covington, Kentucky 41015-1987 - 5.74%

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

Investment Adviser. Dreyfus is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
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.

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 such 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. The Management Agreement was last approved by the Board, including a
majority of the Board members who are not "interested persons" of any party to
the Agreement, at a meeting held on November 5, 1998. 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 Dreyfus: Christopher
M. Condron, Chairman of the Board and Chief Executive Officer; Stephen E.
Canter, President, Chief Operating Officer, Chief Investment Officer and a
director; Thomas F. Eggers, Vice Chairman-Institutional; Lawrence S. Kash, Vice
Chairman and a director; Ronald P. O'Hanley III, Vice Chairman; J. David
Officer, Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice
President; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Patrice M. Kozlowski, Vice President--Corporate Communications; Mary Beth
Leibig, Vice President--Human Resources; Andrew S. Wasser, Vice
President--Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliot, Martin C.
McGuinn, Richard W. Sabo and Richard F. Syron, 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 may pay the Distributor for shareholder services from Dreyfus's
own assets, including past profits but not including the management fee paid by
the Fund. The Distributor may use part or all of such payments to pay Service
Agents (as defined below) in respect of these services. Dreyfus also may make
such advertising and promotional expenditures using its own resources, as it
from time to time deems appropriate.

Sub-Investment Adviser. 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. The
Sub-Advisory Agreement was last approved by the Board, including a majority of
the Board members who are not "interested persons" of any party to the
Sub-Advisory Agreement, at a meeting held on November 5, 1998. 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 entities/persons are partners, officers and/or directors of
Mellon Equity: MMIP, Inc. as General Partner, an affiliate of Mellon Equity
Associates; Mellon Bank, N.A. as Limited Partner, an affiliate of Mellon Equity
Associates; Christopher M. Condron, Executive Committee Member; James M.
Gockley, Executive Committee Member; Ronald P. O'Hanley, Chairman and Executive
Committee Member; William P. Rydell, Executive Committee Member, President and
Chief Executive Officer; Joan A. Greene, Treasurer; Patricia K. Nichols,
Executive Vice President and Chief Operations Officer; and Barbara J. Parrish,
Secretary.

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 and for other
funds advised by Dreyfus and Mellon Equity.

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. 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 .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 fiscal years ended September 30, 1996, 1997 and 1998, the
management fees payable by each Portfolio, the amounts waived by Dreyfus and the
net fees paid to Dreyfus were as follows:
<TABLE>

Management Fee Payable Reduction In Fee Net Fees Paid by Portfolio

Portfolio 1996 1997 1998 1996 1997 1998 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Portfolio $106,953 $164,651 $241,264 $106,953 $39,831 $ 0 0 $124,820 $241,264

Growth and Income $363,726 $1,114,168 $1,403,976 $186,888 $88,813 $ 0 $176,838 $1,025,355 $1,403,976
Portfolio

Growth Portfolio $222,888 $392,656 $447,108 $156,678 $115,735 $ 0 $66,210 $276,921 $447,108

</TABLE>

As compensation for Mellon Equity's services, Dreyfus 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. For the fiscal years ended September 30, 1996, 1997 and 1998, the
sub-investment advisory fee payable by Dreyfus was as follows:

Portfolio Sub-Investment Advisory Fee Payable by Dreyfus
1996 1997 1998

Income Portfolio $62,430 $95,953 $140,738

Growth and
Income Portfolio $169,780 $519,418 $655,189

Growth Portfolio $104,256 $183,033 $208,651

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.

Distributor. Premier Mutual Fund Services, Inc., located at 60 State
Street, Boston, Massachusetts 02109, serves as the Fund's distributor on a best
efforts basis pursuant to an agreement which is renewable annually.

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 a Fund, including past profits or any other
source available to it.

Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of Dreyfus, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by each Portfolio. For these
services, the Transfer Agent receives a monthly fee computed on the basis of the
number of shareholder accounts it maintains for the Fund during the month, and
is reimbursed for certain out-of-pocket expenses.

Mellon Bank, N.A. (the "Custodian"), One Mellon Center, Pittsburgh,
Pennsylvania 15258, acts as custodian of the Fund's investments. Under a custody
agreement with the Fund, the Custodian holds each Portfolio's securities and
keeps all necessary accounts and records. For its custody services, the
Custodian receives a monthly fee based on the market value of each Portfolio's
assets held in custody and receives certain securities transaction charges.

HOW TO BUY SHARES

General. 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 Fund shares may charge their clients direct fees in connection with such
transactions.

Investor Class shares are offered to any investor. Restricted Class shares
are offered only to clients of Service Agents that have entered into a selling
agreement with the Distributor, and omnibus accounts maintained by institutions
that provide sub-accounting or recordkeeping services to their clients.
Restricted Class shares also may be purchased by investors who held Restricted
Class shares (formerly, Retail Class shares) in a Fund account on August 31,
1997 and who are purchasing the shares for such account. Otherwise, Restricted
Class shares may not be purchased directly by individuals, although institutions
may purchase Restricted Class shares for accounts maintained by individuals.

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 for each Class is $2,500, or $1,000 if you
are a client of a Service Agent which maintains an omnibus account in the Fund
and has made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investment must be at least $100. However, the minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including regular
IRAs, spousal IRAs for a non-working spouse, Roth IRAs, IRAs set up under a
Simplified Employee Pension Plan ("SEP-IRAs"), and rollover IRAs) and 403(b)(7)
Plans with only one participant and $500 for Dreyfus-sponsored Education IRAs,
with no minimum for subsequent purchases. The initial investment must be
accompanied by the Account Application. For full-time or part-time employees of
Dreyfus or any of its affiliates or subsidiaries, directors of Dreyfus, Board
members of a fund advised by Dreyfus, 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 Dreyfus or any of
its affiliates or subsidiaries who elect to have a portion of their pay directly
deposited into their Fund accounts, 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 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. Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builderr, 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.

Service Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Service Agents may
impose certain conditions on their clients which are different from those
described in the Fund's Prospectus and this Statement of Additional Information,
and, to the extent permitted by applicable regulatory authority, may charge
their clients direct fees. You should consult your Service Agent in this regard.

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 entity authorized to receive orders on behalf of the Fund. 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 computing net asset value
per share, options 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
Portfolio 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 market value as determined in good faith by the Fund's
Board. For further information regarding the methods employed in valuing the
Portfolios' investments, see "Determination of Net Asset Value."

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.

Dreyfus TeleTransfer Privilege. You may purchase shares by telephone if you
have checked the appropriate box and supplied the necessary information on the
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.

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 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 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 "How to Redeem Shares--Dreyfus TeleTransfer
Privilege."

Reopening an Account. You 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 SHARES ONLY)

The Fund has adopted a Shareholder Services Plan pursuant to which each
Portfolio pays the Distributor for the provision of certain services to holders
of its Investor Class shares 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. Under the Shareholder Services Plan, the Distributor
may make payments to 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 material amendments of the Plan must be approved by 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. As to each
Portfolio, 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 last
so approved at a meeting held on November 5, 1998. 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.

For the fiscal year ended September 30, 1998, the amounts charged Investor
Class shares (formerly, Institutional Shares) of each Portfolio pursuant to the
Shareholder Services Plan were as follows:

Amount Charged
Portfolio Pursuant
to the Plan

Income Portfolio $27,990

Growth and Income $ 7,498
Portfolio

Growth Portfolio $14,741

HOW TO REDEEM SHARES

Wire Redemption Privilege. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions from
any person representing himself or herself to be you or a representative of your
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
a 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 you on the Account Application or Shareholder Services Form, or to
a correspondent bank if your bank is not a member of the Federal Reserve System.
Fees ordinarily are imposed by such bank and borne by the investor. Immediate
notification by the correspondent bank to your bank is necessary to avoid a
delay in crediting the funds to your bank account.

If you have access to telegraphic equipment, you 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

If you do not have direct access to telegraphic equipment, you may have the
wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. You 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."

Telephone Redemption Privilege. You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. The Telephone Redemption Privilege is granted automatically unless
you refuse it.

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 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. You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. 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. You should be aware that if you
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 your
account at an ACH member bank ordinarily two business days after receipt of the
redemption request. See "How to Buy Shares--Dreyfus TeleTransfer Privilege."

Redemption Commitment. The Fund has committed to pay in cash all redemption
requests by any shareholder of record of a 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
and is a fundamental policy of the Fund, which may not be changed without
shareholder approval. In the case of requests for redemption in excess of such
amount, the 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

Fund Exchanges. You may purchase, in exchange for shares of a Class of a
Portfolio, shares of the same Class of another Portfolio or shares of certain
other funds managed or administered by Dreyfus, to the extent such shares are
offered for sale in your state of residence. Shares of other funds 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, you must notify the Transfer
Agent of your prior ownership of fund shares and your account number.

To request an exchange, you 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 you check the
applicable "No" box on the Account Application, indicating that you specifically
refuse this Privilege. By using the Telephone Exchange Privilege, you authorize
the Transfer Agent to act on telephonic instructions (including over The Dreyfus
Touchr automated telephone system) from any person representing himself or
herself to be you, 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. 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 administrative fee in accordance with rules promulgated by the
Securities and Exchange Commission.

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.

Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
you to purchase, in exchange for shares of a Portfolio, shares of the same Class
of another Portfolio or shares of certain other funds in the Dreyfus Family of
Funds. This Privilege is available only for existing accounts. 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 you. You
will be notified if your account falls below the amount designated to be
exchanged under this Privilege. In this case, your 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.

Dreyfus-Automatic Asset Builderr. 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. Portfolio shares are
purchased by transferring funds from the bank account designated by you.

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.

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. It is the sole
responsibility of your employer, not the Distributor, the Advisers, the Fund,
the Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan.

Dreyfus Step Program. The Dreyfus Step Program enables you to purchase
Portfolio shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builderr, 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 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.

Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you to invest
automatically on the payment date your dividends or dividends and capital gain
distributions, if any, from a Portfolio in shares of the same Class of another
Portfolio or shares of certain other funds in the Dreyfus Family of Funds of
which you are a shareholder. Shares 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 that 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.

Dreyfus Dividend ACH permits you 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.

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 $5000 minimum account. Withdrawal
payments are the proceeds from sales of Portfolio shares, not the yield on the
shares. If withdrawal payments exceed reinvested dividends and distributions,
your shares will be reduced and eventually may be depleted. Automatic Withdrawal
may be terminated 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.

Certain 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.

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 regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs) 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 (except SEP-IRAs), please
call 1-800-554-4611; or for SEP-IRAs, 401(k) Salary Reduction Plans and
403(b)(7) Plans, please call 1-800-322-7880.

If you wish to purchase Portfolio shares in conjunction with a Keogh Plan,
a 403(b)(7) Plan or an IRA, including an SEP-IRA, you 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 for subsequent purchases. The minimum initial investment is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant and $500 for Dreyfus-sponsored Education IRAs, with no
minimum for subsequent purchases.

You 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

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 each of the Growth and Income Portfolio and
Growth Portfolio 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 Investor
Class shares, 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, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Management of the Fund believes that each Portfolio qualified for the
fiscal year ended September 30, 1998 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 tax to the extent its
earnings are distributed in accordance with the applicable provisions of the
Code. If a Portfolio did not qualify as a regulated investment company, it would
be treated for tax purposes as an ordinary corporation subject to Federal income
tax. The term "regulated investment company" does not imply the supervision of
management or investment practices or policies by any government agency.

If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividend or distribution and all future dividends and distributions payable to
you in additional Fund shares at net asset value. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.

Any dividend or distribution paid shortly after your purchase may have the
effect of reducing the net asset value of the shares below the cost of your
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, override or modify 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 related 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 gain on straddle positions may be
treated as short-term capital gain or ordinary income.

The Taxpayer Relief Act of 1997 included constructive sale provisions that
generally apply if the Fund either (1) holds an appreciated financial position
with respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale, futures,
forward, or offsetting notional principal contract (collectively, a "Contract")
respecting the same or substantially identical property or (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as, or substantially identical to, the underlying property. In
each instance, with certain exceptions, the Fund generally will be taxed as if
the appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.

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 and, with respect to PFIC securities that are marked-to-market, under
Section 1296 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 the Advisers in serving both the Fund and
other funds which either 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 by a broker of
shares of a Portfolio or other funds advised by Dreyfus or its affiliates 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 years ended September 30, 1996, 1997 and 1998 each Portfolio
paid total brokerage commissions, none of which was paid to the Distributor, as
follows:

Portfolio Brokerage Commissions Paid
1996 1997 1998

Income Portfolio $ 1,070 $ 9,640 $ 2,424

Growth and Income Portfolio $69,824 $136,654 $105,184

Growth Portfolio $48,621 $ 66,374 $ 54,683

The above figures for brokerage commissions do not include gross spreads
and concessions on principal transactions, which, where determinable for the
fiscal years ended September 30, 1996, 1997 and 1998 amounted to $7,620, $9,695
and $8,013, respectively, for the Growth and Income Portfolio and $13,246,
$5,755 and $10,099, respectively, for the Growth Portfolio, none of which was
paid to the Distributor.

PERFORMANCE INFORMATION

The total return and average annual total return for each Portfolio for the
indicated period ended September 30, 1998 were as follows:
<TABLE>

Average Annual Total Average Annual Total
Aggregate Total Return Return Since Return for
Portfolio Since March 31, 1995* March 31, 1995* One-Year Period

Restricted Investor Restricted Investor Restriced Investor
Class Class Class Class Class Class
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C>
Income 43.88% 42.68% 10.95% 10.69% 9.14% 8.92%
Portfolio

Growth and Income
Portfolio 73.94% 75.19% 17.38% 17.13% 6.28% 6.04%

Growth Portfolio 97.52% 96.10% 21.47% 21.22% 3.17% 2.97%

______________________

* Commencement of operations.
</TABLE>

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.

From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer to, or
include commentary by a portfolio manager relating to investment strategy, asset
growth, current or past business, political, economic or financial conditions
and other matters of general interest to investors.

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., S&P 500 Index, EAFE Index, Lehman Government/Corporate
Index, J.P. Morgan Global Index, Russell 2000 Index, the Dow Jones Industrial
Average, Money Magazine, Wilshire 5000 Index and other industry publications.
From time to time, the Fund may compare its performance against inflation with
the performance of other instruments against inflation, such as short-term
Treasury Bills (which are direct obligations of the U.S. Government) and
FDIC-insured bank money market accounts. In addition, advertising for the Fund
may indicate that investors may consider diversifying their investment
portfolios in order to seek protection of the value of their assets against
inflation. From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events.

From time to time, advertising materials for the Fund may refer to
Morningstar ratings and related analyses supporting such ratings.

INFORMATION ABOUT THE FUND AND PORTFOLIOS

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.

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 Board members or
the appointment of auditors. However, 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 Board member from office. Fund
shareholders may remove a Board member by the affirmative vote of a majority of
the Fund's outstanding voting shares. In addition, the Fund's Board will call a
meeting of shareholders for the purpose of electing Board members if, at any
time, less than a majority of the Board members 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
shareholders vote together as a group; as to others they vote separately by
Portfolio.

To date, the 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.

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.

Each Portfolio is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Portfolio's performance and its shareholders. Accordingly, if the Fund's
management determines that an investor is following a market-timing strategy or
is otherwise engaging in excessive trading, the Fund, with or without prior
notice, may temporarily or permanently terminate the availability of Fund
Exchanges, or reject in whole or part any purchase or exchange request, with
respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of a Portfolio during any calendar year
or who makes exchanges that appear to coincide with an active market-timing
strategy may be deemed to be engaged in excessive trading. Accounts under common
ownership or control will be considered as one account for purposes of
determining a pattern of excessive trading. In addition, with respect to each
Portfolio, the Fund may refuse or restrict purchase or exchange requests by any
person or group if, in the judgment of the Fund's management, the Portfolio
would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the Portfolio receives or anticipates receiving simultaneous orders that may
significantly affect the Portfolio (e.g., amounts equal to 1% or more of the
Portfolio's total assets). If an exchange request is refused, the Fund will take
no other action with respect to the shares until it receives further
instructions from the investor. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the
Portfolio. The Fund's policy on excessive trading applies to investors who
invest in a Portfolio directly or through financial intermediaries, but does not
apply to the Dreyfus Auto-Exchange Privilege, to any automatic investment or
withdrawal privilege described herein, or to participants in employer-sponsored
retirement plans.

During times of drastic economic or market conditions, the Fund may suspend
Fund Exchanges temporarily without notice and treat exchange requests based on
their separate components--redemption orders with a simultaneous request to
purchase the other fund's shares. In such a case, the redemption request would
be processed at the relevant Portfolio's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.

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

COUNSEL AND INDEPENDENT AUDITORS

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

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

APPENDIX

Description of certain ratings assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc. ("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.

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

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

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

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

Baa

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

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

Commercial Paper Rating

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

Fitch

Bond Ratings

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

AAA

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

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

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

BBB

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

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

Short-Term Ratings

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

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

F-1+

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

F-1

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

Duff

Bond Ratings

AAA

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

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

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

BBB

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

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

Commercial Paper Rating

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

<PAGE>

DREYFUS ASSET ALLOCATION FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)

SEPTEMBER 1, 1998

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Asset Allocation Fund, Inc. (the "Fund"), dated September 1, 1998, 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
11566-0144, 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. -- Call 516-794-5452

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

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

TABLE OF CONTENTS

Page

Investment Objective and Management Policies............ B-2
Management of the Fund.................................. B-17
Management Agreement.................................... B-21
Purchase of Shares...................................... B-23
Shareholder Services Plan............................... B-24
Redemption of Shares.................................... B-25
Shareholder Services.................................... B-26
Determination of Net Asset Value........................ B-29
Dividends, Distributions and Taxes...................... B-30
Portfolio Transactions.................................. B-32
Performance Information................................. B-33
Information About the Fund.............................. B-34
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors...................... B-34

Financial Statements and Report of Independent

Auditors................................................ B-35

Appendix................................................ B-36

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

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

Portfolio Securities

Repurchase Agreements. The Fund's custodian or subcustodian will have
custody of, and will hold in a segregated account, securities acquired by the
Fund under a repurchase agreement. Repurchase agreements are considered by the
staff of the Securities and Exchange Commission to be loans by the Fund that
enters into them. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, the Fund 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 Fund may invest, and will require
that additional securities be deposited with it if the value of the securities
purchased should decrease below resale price.

Commercial Paper and Other Short-Term Corporate Obligations. These
instruments include variable amount master demand notes, which are obligations
that permit the Fund to invest fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the Fund, 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 Fund may
invest in them only if at the time of an investment the borrower meets the
criteria set forth in the Fund's Prospectus for other commercial paper issuers.

Convertible Securities. Although to a lesser extent than with fixed-income
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market value of
the underlying common stock. A unique feature of convertible securities is that
as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock. While no securities investments are without
risk, investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.

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

The Fund may invest in convertible preferred stocks that offer enhanced
yield features, such as Preferred Equity Redemption Cumulative Stock ("PERCS"),
and higher dividend income than is available on a company's common stock. PERCS
are preferred stock which generally feature a mandatory conversion date, as well
as a capital appreciation limit that is usually expressed in terms of a stated
price. The Fund also may invest in other classes of enhanced convertible
securities, such as ACES (Automatically Convertible Equity Securities), PEPS
(Participating Equity Preferred Stock), PRIDES (Preferred Redeemable Increased
Dividend Equity Securities), SAILS (Stock Appreciation Income Linked
Securities), TECONS (Term Convertible Notes), QICS (Quarterly Income Cumulative
Securities) and DECS (Dividend Enhanced Convertible Securities). These
securities are company issued convertible preferred stock. Unlike PERCS, they do
not have a capital appreciation limit. They are designed to provide the investor
with high current income with some prospect of future capital appreciation,
issued with three or four-year maturities, and typically have some built-in call
protection. Investors have the right to convert them into shares of common stock
at a preset conversion ratio or hold them until maturity. Upon maturity they
will convert mandatorily into either cash or a specified number of shares of
common stock.

Zero Coupon Securities. Zero coupon U.S. Treasury securities 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. Receipts include "Treasury Receipts"
("TRs") "Treasury Investment Growth Receipts" ("TIGRs"), "Liquid Yield Option
Notes" ("LYONs"), and "Certificates of Accrual on Treasury Securities" ("CATS").
TIGRs, LYONs and CATS are interests in private proprietary accounts while TRs
are interests in accounts sponsored by the U.S. Treasury.

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

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

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

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

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

Private Entity Securities--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers. Timely payment
of principal and interest on mortgage-related securities backed by pools created
by non-governmental issuers often is supported partially by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. There can be no assurance that the
private insurers or mortgage poolers can meet their obligations under the
policies, so that if the issuers default on their obligations the holders of the
security could sustain a loss. No insurance or guarantee covers the Fund or the
price of the Fund's shares. Mortgage- related securities issued by
non-governmental issuers generally offer a higher rate of interest than
government agency and government-related securities because there are no direct
or indirect government guarantees of payment.

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

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

The market for commercial mortgage-related securities developed more
recently and in terms of total outstanding principal amount of issues is
relatively small compared to the market for residential single-family
mortgage-related securities. In addition, commercial lending generally is viewed
as exposing the lender to a greater risk of loss than one- to four-family
residential lending. Commercial lending, for example, typically involves larger
loans to single borrowers or groups of related borrowers than residential one-
to four-family mortgage loans. In addition the repayment of loans secured by
income producing properties typically is dependent upon the successful operation
of the related real estate project and the cash flow generated therefrom.
Consequently, adverse changes in economic conditions and circumstances are more
likely to have an adverse impact on mortgage-related securities secured by loans
on commercial properties than on those secured by loans on residential
properties.

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

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

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

Real Estate Investment Trusts--A REIT is a corporation, or a business trust that
would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
Code permits a qualifying REIT to deduct dividends paid, thereby effectively
eliminating corporate level Federal Income tax and making the REIT a
pass-through vehicle for Federal income tax purposes. To meet the definitional
requirements of the Code, a REIT must, among other things, invest substantially
all of its assets in interests in real estate (including mortgages and other
REITs) or cash and government securities, derive most of its income from rents
from real property or interest on loans secured by mortgages on real property,
and distribute to shareholders annually a substantial portion of its otherwise
taxable income.

REITs are characterized as equity REITs, mortgage REITs and hybrid REITs.
Equity REITs, which may include operating or finance companies, own real estate
directly and the value of, and income earned by, the REITs depends upon the
income of the underlying properties and the rental income they earn. Equity
REITs also can realize capital gains (or losses) by selling properties that have
appreciated (or depreciated) in value. Mortgage REITs can make construction,
development or long-term mortgage loans and are sensitive to the credit quality
of the borrower. Mortgage REITs derive their income from interest payments on
such loans. Hybrid REITs combine the characteristics of both equity and mortgage
REITs, generally by holding both ownership interests and mortgage interests in
real estate. The value of securities issued by REITs are affected by tax and
regulatory requirements and by perceptions of management skill. They also are
subject to heavy cash flow dependency, defaults by borrowers or tenants,
self-liquidation and the possibility of failing to qualify for tax-free status
under the Code or to maintain exemption from the Investment Company Act of 1940,
as amended (the "1940 Act").

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

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

Foreign Government Obligations; Securities of Supranational Entities. The
Fund 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 Manager to be of comparable quality
to the other obligations in which the Fund 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. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.

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 develops for certain unregistered securities purchased by
the Fund 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 Manager to monitor carefully the
Fund'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, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity during such period.

Management Policies

The Fund may engage in the following investment practices in furtherance of
its objective.

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

Short-Selling. Until the Fund closes its short position or replaces the
borrowed security, it will: (a) maintain a segregated account, containing
permissible liquid assets, at such a level that the amount deposited in the
account plus the amount deposited with the broker as collateral always equals
the current value of the security sold short; or (b) otherwise cover its short
position.

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

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 that
is the issuer or counterparty to such Derivatives. This guarantee usually is
supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, the Manager 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
the Fund. 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. The Fund 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, 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 the Fund might realize in trading could be eliminated by adverse
changes in the exchange rate, or the Fund could incur losses as a result of
those changes. Transactions on foreign exchanges may include both commodities
which are traded on domestic exchanges and those which are not. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.

Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets. Although the Fund
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 Fund to substantial losses.

Successful use of futures by the Fund also is subject to the Manager's
ability 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 the Fund 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 Fund 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 Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund 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, the Fund may be required to segregate permissible liquid
assets in connection with its commodities transactions in an amount generally
equal to the value of the underlying commodity. The segregation of such assets
will have the effect of limiting the Fund's ability otherwise to invest those
assets.

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

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

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

The Fund may purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.

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

A covered call option written by the Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by the Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are placed in a segregated
account with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize, through
the receipt of premiums, a greater return than would be realized on the
underlying securities alone. The Fund 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 Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.

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

The Fund 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.

The Fund may purchase cash-settled options on interest rate swaps, interest
rate swaps denominated in foreign currency and equity index swaps in pursuit of
its investment objective. Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest
(for example, an exchange of floating-rate payments for fixed-rate payments)
denominated in U.S. dollars or foreign currency. Equity index swaps involve the
exchange by the Fund with another party of cash flows based upon the performance
of an index or a portion of an index of securities which usually includes
dividends. A cash-settled option on a swap gives the purchaser the right, but
not the obligation, in return for the premium paid, to receive an amount of cash
equal to the value of the underlying swap as of the exercise date. These options
typically are purchased in privately negotiated transactions from financial
institutions, including securities brokerage firms.

Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in the prices of individual stocks, the
stock market generally, foreign currencies or interest rates. To the extent the
Manager's predictions are incorrect, the Fund may incur losses.

Future Developments. The Fund 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 Fund or
which are not currently available but which may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions or
making any such investment, the Fund will provide appropriate disclosure in its
Prospectus or Statement of Additional Information.

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 the
Fund 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 the Fund
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.

Investment Company Securities. The Fund may invest in securities issued by
other investment companies which principally invest in securities of the type in
which the Fund invests. Under the 1940 Act, the Fund's total investments in such
securities, subject to certain exceptions, currently are limited to (i) 3% of
the total voting stock of any one investment company, (ii) 5% of the Fund's
total assets with respect to any one investment company and (iii) 10% of the
Fund's total assets in the aggregate. Investments in the securities of other
investment companies may involve duplication of advisory fees and certain other
expenses.

Lending Portfolio Securities. In connection with its securities lending
transactions, the Fund 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 Fund 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 Fund must be able
to terminate the loan at any time; (4) the Fund 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 Fund 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.

Investment Considerations and Risks

Lower Rated Securities. The Fund is permitted to invest in securities rated
Ba by Moody's Investors Service, Inc. ("Moody's") or BB by Standard & Poor's
Ratings Group ("S&P"), Fitch IBCA, Inc. ("Fitch") or Duff & Phelps Credit
Ratings Co. ("Duff" and with Moody's, S&P and Fitch, the "Rating Agencies") and
as low as the lowest rating assigned by the Rating Agencies. Such securities,
though higher yielding, are characterized by risk. See "Description of the
Fund--Investment Considerations and Risks--Lower Rated Securities" in the
Prospectus for a discussion of certain risks and the "Appendix" for a general
description of the Rating Agencies' ratings. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not evaluate
the market value risk of these securities. The Fund will rely on the Manager's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer.

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

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

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

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

The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund has
no arrangement with any persons concerning the acquisition of such securities,
and the Manager will review carefully the credit and other characteristics
pertinent to such new issues.

The credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon securities and pay-in-kind bonds, in which the Fund may
invest up to 5% of its total assets. Pay-in-kind bonds pay interest through the
issuance of additional securities. Zero coupon securities and pay-in-kind bonds
carry an additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Fund will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Fund may obtain no return at all on its investment.

Investment Restrictions

The Fund has adopted investment restrictions numbered 1 through 8 as
fundamental policies, which cannot be changed without approval by the holders of
a majority (as defined in the 1940 Act) of the Fund's outstanding voting shares.
Investment restrictions numbered 9 through 14 are not fundamental policies and
may be changed by vote of a majority of the Fund's Board members at any time.
The Fund may not:

1. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.

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

3. Borrow money, except to the extent permitted under the 1940 Act (which
currently limits borrowing to no more than 33-1/3% of the value of the Fund'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.

4. Make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements. However, the Fund 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.

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

6. 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.

7. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 1, 3, 10 and 11 may be deemed to give rise to a senior
security.

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

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

10. 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.

11. 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.

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

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

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

The Fund 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 Fund.

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 Fund shares in certain states. Should the Fund
determine that a commitment is no longer in the best interest of the Fund and
its shareholders, the Fund reserves the right to revoke the commitment by
terminating the sale of Fund shares in the state involved.

MANAGEMENT OF THE FUND

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

Board Members of the Fund

LUCY WILSON BENSON, Board Member. 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. She is 70 years old and her address is
46 Sunset Avenue, Amherst, Massachusetts 01002.

DAVID W. BURKE, Board Member. 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 a 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 61 years old and his address is 197 Eighth
Street, Charleston, Massachusetts 02109.

JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He also is a
director of The Noel Group, Inc., a venture capital company (for which,
from February 1995 until November 1997, he was Chairman of the Board), The
Muscular Dystrophy Association, HealthPlan Services Corporation, a provider
of marketing, administrative and risk management services to health and
other benefit programs, Carlyle Industries, Inc. (formerly Belding Heminway
Company, Inc.), a button packager and distributor, Century Business
Services, Inc., a provider of various outsourcing functions for small and
medium sized companies, and Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement firm. For more than five years
prior to January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President and a
director of Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager and, until August 24, 1994, the Fund's distributor. From August
1994 to December 31, 1994, he was a director of Mellon Bank Corporation. He
is 54 years old and his address is 200 Park Avenue, New York, New York
10166.

MARTIN D. FIFE, Board Member. Chairman of the Board of Magar, Inc., a company
specializing in financial products and developing early stage companies. In
addition, Mr. Fife is Chairman of the Board and Chief Executive Officer of
Skysat Communications Network Corporation, a company developing
telecommunications systems. Mr. Fife also serves on the boards of various
other companies. He is 69 years old and his address is 405 Lexington
Avenue, New York, New York 10174.

WHITNEY I. GERARD, Board Member. Partner of the New York City law firm of
Chadbourne & Parke. He is 62 years old and his address is 30 Rockefeller
Plaza, New York, New York 10112.

ROBERT R. GLAUBER, Board Member. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard University,
since January 1992. 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 5 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 Bieler, Inc.,
investment counselors, NASD Regulations, Inc. and the Federal Reserve Bank
of Boston. He is 57 years old and his address is 79 John F. Kennedy Street,
Cambridge, Massachusetts 02138.

ARTHUR A. HARTMAN, Board Member. 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 and Lawter International and a member of the advisory councils
of several other companies, research institutes and foundations. Ambassador
Hartman is Chairman of the First NIS Regional Fund (ING/Barings
Management). He is a former President of the Harvard Board of Overseers. He
is 71 years old and his address is 2738 McKinley Street, N.W., Washington,
D.C. 20015.

GEORGE L. PERRY, Board Member. 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. He is 62 years
old and his address is 1775 Massachusetts Avenue, N.W., Washington, D.C.
20036.

PAUL D. WOLFOWITZ, Board Member. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to 1993, he
was 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 of the
Department of State. He is 52 years old and his address is 1740
Massachusetts Avenue, N.W., Washington, D.C. 20036.

For so long as the Fund 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 of the
amount paid to them as Board members. The aggregate amount of compensation paid
to each Board member by the Fund for the fiscal year ended April 30, 1998, and
by all other funds in the Dreyfus Family of Funds for which such person is a
Board member (the numbers of which is set forth in parenthesis next to each
Board member's total compensation) for the year ended December 31, 1997, were as
follows:

Total Compensation
Aggregate from Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members

Lucy Wilson Benson $2,250 $ 74,055 (14)

David W. Burke $2,250 $239,000 (51)

Joseph S. DiMartino $2,813 $597,128 (96)

Martin D. Fife $2,250 $ 60,500 (12)

Whitney I. Gerard $2,250 $ 60,500 (12)

Robert R. Glauber $2,250 $102,500 (20)

Arthur A. Hartman $2,000 $ 55,750 (12)

George L. Perry $2,250 $ 60,500 (12)

Paul D. Wolfowitz $2,000 $ 52,750 (10)

______________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $924 for all Board members as a group.

Officers of the Fund

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

MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President and
General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From August
1996 to March 1998, she was Vice President and Assistant General Counsel
for Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was
an associate with the law firm of Ropes & Gray. She is 38 years old.

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

MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of the
Distributor and Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From September 1989 to
July 1994, she was an Assistant Vice President and Client Manager for The
Boston Company, Inc. She is 34 years old.

GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice President
and Client Service Director of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by the Manager. From
June 1995 to March 1998, he was Senior Vice President and Senior Key
Account Manager for Putnam Mutual Funds. From May 1994 to June 1995, he was
Director of Business Development for First Data Corporation. From September
1983 to May 1994, he was Senior Vice President & Manager of Client Services
and Director of Internal Audit at The Boston Company. He is 43 years old.

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

DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From April 1993 to
January 1995, he was a Senior Fund Accountant for Investors Bank & Trust
Company. From December 1991 to March 1993, he was employed as a Fund
Accountant at The Boston Company, Inc. He is 29 years old.

CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice President
and Senior Associate General Counsel of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From April 1994 to July 1996, he was Assistant Counsel at Forum
Financial Group. From October 1992 to March 1994, he was employed by Putnam
Investments in legal and compliance capacities. He is 33 years old.

KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an officer
of other investment companies advised or administered by the Manager. From
July 1994 to November 1995, she was a Fund Accountant for Investors Bank &
Trust Company. She is 25 years old.

ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice President
of Funds Distributor, Inc., and an officer of other investment companies
advised or administered by the Manager. From March 1990 to May 1996, she
was employed by U.S. Trust Company of New York where she held various sales
and marketing positions. She is 36 years old.

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

The Fund's Board members and officers, as a group, owned less than 1% of
the Fund's shares outstanding on August 10, 1998.

MANAGEMENT AGREEMENT

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

The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which 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 Fund'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 Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Agreement was approved by shareholders
on August 4, 1994, and was last approved by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party to
the Agreement, at a meeting held on August 6, 1998. The Agreement is terminable
without penalty, on 60 days' notice, by the Fund's Board or by vote of the
holders of a majority of the Fund's shares, or, on not less than 90 days'
notice, by the Manager. The Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act).

The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E. Canter,
Vice Chairman, Chief Investment Officer and a director; Lawrence S. Kash, Vice
Chairman-Distribution and a director; Ronald P. O'Hanley III, Vice Chairman; J.
David Officer, Vice Chairman and a director; William T. Sandalls, Jr., Senior
Vice President and Chief Financial Officer; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Patrice M. Kozlowski, Vice President-Corporate
Communications; Mary Beth Leibig, Vice President-Human Resources; Andrew S.
Wasser, Vice President-Information Systems; James Bitetto, Assistant Secretary;
Steven F. Newman, Assistant Secretary; and Mandell L. Berman, Burton C., Frank
V. Cahouet and Richard F. Syron, directors.

The Manager manages the Fund's investments in accordance with the stated
policies of the Fund, subject to the approval of the Fund's Board. The Manager
is responsible for investment decisions, and provides the Fund with portfolio
managers who are authorized by the Board to execute purchases and sales of
securities. The Fund's portfolio managers are Timothy Ghriskey and Kevin
McClintock. The Manager also maintains a research department with a professional
staff of portfolio managers and securities analysts who provide research
services for the Fund and for other funds advised by the Manager.

All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by the Manager. 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
Manager, 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. In
addition, Fund shares are subject to an annual service fee. See "Shareholder
Services Plan."

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

As compensation for its services, the Fund has agreed to pay the Manager a
monthly management fee at the annual rate of .75 of 1% of the value of the
Fund's average daily net assets. For the fiscal years ended April 30, 1996, 1997
and 1998, the management fees payable to the Manager amounted to $469,019,
$451,732 and $586,043, respectively. The management fee for the fiscal year
ended April 30, 1996 was reduced by $170,503 pursuant to an undertaking by the
Manager, resulting in a net fee of $298,516.

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

The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.

PURCHASE OF SHARES

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

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

Dreyfus TeleTransfer Privilege. 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 Fund 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
Shares--Dreyfus TeleTransfer Privilege."

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, provided the information on the old Account Application is still
applicable.

SHAREHOLDER SERVICES PLAN

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 the Fund'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 Board for its review. In addition, the Shareholder Services Plan provides
that material amendments of the Shareholder Services Plan must be approved by
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 last so approved by the Board
at a meeting held on August 6, 1998. The Shareholder Services Plan is terminable
at any time 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.

For the fiscal year ended April 30, 1998, the Fund was charged $195,348
pursuant to the Shareholder Services Plan.

REDEMPTION OF SHARES

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

Wire Redemption Privilege. By using this Privilege, the investor authorizes
the Transfer Agent to act on wire, telephone or letter 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 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.

Dreyfus TeleTransfer Privilege. 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 Shares--Dreyfus TeleTransfer Privilege."

Stock Certificates; Signatures. Any certificates representing Fund 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.

Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record of the Fund, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such amount, the
Board 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 Fund to the detriment of the existing shareholders.
In such event, the securities would be valued in the same manner as the Fund's
securities 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 Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.

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 of other funds 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 (including over The Dreyfus Touchr automated
telephone system) 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.

To establish a personal 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.

Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits an
investor to purchase, in exchange for shares of a Portfolio, shares of one of
the other Portfolios of the Fund or shares of another fund in the Dreyfus Family
of Funds. This Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as set forth under "Fund
Exchanges" above. 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 his 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.

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 Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.

Automatic Withdrawal Plan. 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 Fund 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. 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
automatically their dividends or dividends and capital gain distributions, if
any, from the Fund in shares of another fund in the Dreyfus Family of Funds of
which the investor is a shareholder. Shares 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 and the applicable contingent deferred sales charge, 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 regular IRAs, spousal IRAs for a non-
working spouse, IRAs set up under a Simplified Employee Pension Plan ("SEP-
IRAs"), Roth IRAs, Education IRAs and IRA "Rollover Accounts") and 403(b)(7)
Plans. Plan support services also are available.

Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adopting such plans.

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 is $750 for
Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a
non-working spouse, Roth IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans
with only one participant and $500 for Dreyfus - sponsored Education IRAs, with
no minimum on subsequent purchases.

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 Shares."

Valuation of Portfolio Securities. The Fund's securities, including covered
call options written by the Fund, are valued at the last sale price on the
securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the average of the most recent bid and asked prices, except in the case of
open short positions where the asked price is used for valuation purposes. Bid
price is used when no asked price is available. Short-term investments are
carried at amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the Fund's Board. Expenses and fees
of the Fund, including the management fee paid by the Fund and 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 Fund shares.

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

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 the Fund qualified as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), for the fiscal year ended April 30, 1998. The Fund intends to continue
to so qualify, as long as such qualification is in the best interests of its
shareholders. Qualification as a regulated investment company relieves the Fund
from any liability for Federal income taxes to the extent its earnings are
distributed in accordance with 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 in the Prospectus under
"Dividends, Distributions and Taxes." 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 the gain realized from the
disposition of certain market discount bonds will be treated as ordinary income
under Section 1276. Finally, all or a portion of the gain realized from engaging
in "conversion transactions" may be treated as ordinary income under Section
1258. "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 Fund from
certain forward contracts and options transactions (other than those taxed under
Section 988 of the Code) will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon 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
Fund's taxable year will be treated as sold for its then fair market value,
resulting in additional gain or loss characterized in the manner described
above.

Offsetting positions held by the Fund involving certain forward contracts
or options transactions may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is governed
by Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Sections 1256 and 988 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 Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such "straddles"
could 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 Fund may make one or more elections with respect to "mixed
straddles." If no election is made, to the extent the "straddle" rules apply to
positions established by the Fund, losses realized by the Fund will be deferred
to the extent of unrealized gain in the offsetting position. Moreover, as a
result of the "straddle" and conversion transaction rules, short-term capital
loss on "straddle" positions may be recharacterized as long-term capital loss,
and long-term capital gains may be treated as short-term capital gains or
ordinary income.

The Taxpayer Relief Act of 1997 included constructive sale provisions that
generally will apply if the Fund either (1) holds an appreciated financial
position with respect to stock, certain debt obligations, or partnership
interests ("appreciated financial position") and then enters into a short sale,
futures, forward, or offsetting notional principal contract (collectively, a
"Contract") respecting the same or substantially identical property (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as, or substantially identical to, the underlying property. In
each instance, with certain exceptions, the Fund generally will be taxed as if
the appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.

Investment by the Fund 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 Fund to recognize
income prior to the receipt of cash payments. For example, the Fund 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 Fund may have
to dispose of securities which it might otherwise have continued to hold in
order to generate cash to satisfy these distribution requirements.

PORTFOLIO TRANSACTIONS

The Manager supervises the placement of orders on behalf of the Fund for
the purchase or sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in the Manager's 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 Manager's 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 Manager and the
fee of the Manager is not reduced as a consequence of the receipt of such
supplemental information. Such information may be useful to the Manager in
serving both the Fund and other clients which it advises and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to the Manager in carrying out its obligation to the Fund. Brokers
are also 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 clients the Manager might advise being engaged simultaneously in the
purchase or sale of the same security. Certain 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.

For the fiscal years ended April 30, 1996, 1997 and 1998, the Fund paid
total brokerage commissions of $500,390, $241,623 and $429,140, respectively,
none of which was paid to the Distributor. The Fund paid no gross spreads and
concessions on principal transactions for the fiscal year ended April 30, 1996.
For the fiscal years ended April 30, 1997 and 1998, the Fund paid $232,985 and
$100,796, respectively, in concessions.

The aggregate amount of transactions during the last fiscal year in
securities effected on an agency basis through a broker for, among other things,
research services, and the commissions and concessions related to such
transactions were as follows:

Transaction Commissions and
Amount Concessions

$59,294,645 $59,867

PERFORMANCE INFORMATION

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

The Fund's average annual total return for the 1 and 4.84 year periods
ended April 30, 1998 was 34.33% and 16.46%, respectively. 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.

The Fund's total return for the period July 1, 1993 (commencement of
operations) through April 30, 1998 was 108.78%. Total return is calculated by
subtracting the amount of the Fund's net asset value per share at the beginning
of a stated period from the net asset value per share at the end of the period
(after giving effect to the reinvestment of dividends and distributions during
the period), and dividing the result by the net asset value per share at the
beginning of the period.

Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical Services,
Inc., Morningstar, Inc., Standard & Poor's 500 Stock Index, the Dow Jones
Industrial Average, Money Magazine, Wilshire 5000 Index and other industry
publications. From time to time, the Fund may compare its performance against
inflation with the performance of other instruments against inflation, such as
short-term Treasury Bills (which are direct obligations of the U.S. Government)
and FDIC-insured bank money market accounts. In addition, advertising for the
Fund may indicate that investors may consider diversifying their investment
portfolios in order to seek protection of the value of their assets against
inflation. From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic or financial conditions, developments
and/or events.

From time to time, 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 share has one vote and, when issued and paid for in accordance with
the terms of the offering, is fully paid and non-assessable. Fund shares are of
one class and have equal rights as to dividends and in liquidation. Shares have
no preemptive, subscription or conversion rights and are freely transferable.

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

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

Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for the Fund,
the handling of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by the Fund. For these services,
the Transfer Agent receives a monthly fee computed on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of-pocket expenses. For the fiscal year ended April
30, 1998, the Fund paid the Transfer Agent $41,063.

Mellon Bank, N.A. (the "Custodian"), the Manager's parent, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258, serves as custodian of the Fund's
investments. Under a custody agreement with the Fund, the Custodian holds the
Fund's securities and keeps all necessary accounts and records. For its custody
services, the Custodian receives a monthly fee based on the market value of the
Fund's assets held in custody and receives certain securities transactions
charges. For the fiscal year ended April 30, 1998, the Fund paid the Custodian
$24,037.

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

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS

The Fund's Annual Report to Shareholders for the fiscal year ended April
30, 1998 is a separate document supplied with this Statement of Additional
Information, and the financial statements, accompanying notes, and report of
independent auditors appearing therein are incorporated by reference into this
Statement of Additional Information.

APPENDIX

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.

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.

BBB

BB, B, CCC, CC, C

Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

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

CCC

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

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

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

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

Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.

Commercial Paper Rating

Moody's Bond Ratings

Aaa

Baa

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

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

Caa

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

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

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

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category and in
categories below B. 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

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

Fitch Bond Ratings

AAA

BBB

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

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

CCC

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

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

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

DDD, DD and D

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

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA category covering 12-36 months or the DDD, DD
or D categories.

Short-Term Ratings

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+.

F-2

Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payments, but the margin of safety is not as great as
the F-1+ and F-1 categories.

Duff

AAA

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

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

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

BBB

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

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

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

CCC

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

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

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

Commercial Paper Rating

Dreyfus lion "d" logo (reg.tm)

Dreyfus logo (reg.tm)

DREYFUS LIFETIME PORTFOLIOS, INC.

200 Park Avenue

New York, NY 10166

MANAGER

The Dreyfus Corporation

200 Park Avenue

New York, NY 10166

CUSTODIAN

Mellon Bank, N.A.

One Mellon Bank Center

Pittsburgh, PA 15258

TRANSFER AGENT &

DIVIDEND DISBURSING AGENT

Dreyfus Transfer, Inc.

P.O. Box 9671

Providence, RI 02940

Printed in U.S.A. 552AR989

LifeTime

Portfolios, Inc.

Annual Report

September 30, 1998

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------

LETTER TO SHAREHOLDERS

Dear Shareholder:

We are pleased to report the following performance figures for the various
classes of shares in Dreyfus LifeTime Portfolios, Inc. These results were
achieved in spite of the major correction that affected the equity markets in
the past few months.

DREYFUS LIFETIME PORTFOLIOS, INC.

TOTAL RETURN, 12 MONTHS ENDED SEPTEMBER 30, 1998.
<TABLE>
<CAPTION>

Lehman Brothers

Standard & Poor's 500 Intermediate

Customized Composite Stock Government/Corporate
Portfolio Portfolio Blended Index Price Index Bond Index
(Class) Total Return* Total Return** Total Return* Total Return*
________ _____________ _______________ _________________________ __________________________

Growth and Income
<S> <C> <C> <C> <C>
Investor Shares 6.04% 6.53% 9.08% 10.43%

Restricted Shares 6.28%

Income

Investor Shares 8.92% 9.59%

Restricted Shares 9.14%

Growth

Investor Shares 2.97% 3.52%

Restricted Shares 3.17%
</TABLE>

ECONOMIC REVIEW

So far in 1998, the main regions of the world have had very different
economic fundamentals. The U.S. entered the year with a strong economy near full
employment, and unemployment only slightly above 4%. The tight labor market led
the Federal Reserve to contemplate a rise in interest rates early in the year.
The U.S. economy cooled enough that the Fed decided to stand pat for a number of
months before cutting the Federal Funds rate in September and October. Evidence
of economic cooling continued to accumulate and worries about the world economy
intensified. World economic weakness then shifted expectations towards monetary
easing. After many years of subpar economic growth, continental Europe moved
into a better economic expansion. Unlike the U.S., Europe has a substantial
excess capacity of productive plant and labor. In Asia, weak economies were
everywhere as a result of the Asian financial crisis. The Latin American
economies weakened as the financial stresses spread throughout that region.

A main influence on the U.S. economy this year was the foreign financial
crisis and cooling of the world economy. The positive effects hit first. Actual
inflation and expected inflation dropped, causing a decline in long-term
Treasury bond yields and mortgage rates. This caused a boom in housing. The fall
in inflation helped the consumer sector as more of the growth in consumer income
was left over after inflation to buy goods and services. Consumers benefited
from a combination of good growth in income after inflation, a strong labor
market and past increases in the prices of assets they owned.

The negative effect of Asian weakness was directed towards the industrial
sector more than the consumer sector. Corporate profits weakened, especially in
sectors sensitive to Asia such as world-traded commodities (oil, metals and
paper) and exporters. One result of the industrial weakness was to cool off a
U.S. economy that had been growing rapidly.

The major change in the economic outlook over recent months has been a
downward shift in expectations for world economic growth. A credit crunch
developed in emerging countries and former communist countries, sharply reducing
the economic outlook for Asia and Latin America as well as for
commodity-exporting countries throughout the world. The effect on Europe and the
U.S. has been to lower expectations of profit growth and drive down bond yields.

Market sentiment now anticipates further monetary ease in the U.S. and
other industrial countries as the evidence of a weaker world economy has
accumulated. There appears to be a shift in the priorities of key policymakers
from fighting potential inflation to restimulating future world economic growth.

MARKET OVERVIEW

The 12 months ended September 30, 1998 encompassed some very different
market phases, with stock market strength during much of the period followed by
a sharp decline towards the end of the period. Over the 12 months, the total
return on the Standard & Poor' s 500 Composite Stock Price Index was 9.08%.
Returns on mid-cap and small-cap stock indices were weaker, with a negative
total return on small-cap indices.

Three key trends influenced stock market behavior during the fiscal year.
First, the Federal Reserve kept the Federal funds rate flat at 5.5% for most of
the fiscal year, before 25 basis point cuts in both September and October.
Sentiment changed from expectations of a possible Fed Funds rate increase to
widespread expectations of lower interest rates, especially after the Fed easing
in late September. Second, weakness in the economies of emerging countries
contributed to declining commodity prices and a drop in long-term Treasury bond
yields to multidecade lows. Third, expectations for corporate profits dropped,
first in the sectors sensitive to Asian developments such as oil, basic
materials and exporters and then for a broader list of stocks.

The trigger for the sharp decline in stocks at the end of the period
appeared to be the Russian default in the summer of 1998. This resulted in
deepening concerns about weaker economic growth and corporate profits. There was
also a global margin call on risky assets held by hedge funds and financial
institutions. This raised the cost of debt financing for many corporations and
many emerging countries. Expectations for economic activity in emerging
countries in Asia and Latin America shifted down sharply while expectations for
U.S. corporate profits weakened somewhat. Despite the fall in Treasury bond
yields, financial stocks led the summer sell-off due to concerns about financial
contagion from emerging countries and potential loan losses by financial
institutions.

The erosion of expectations about corporate profit growth over the last
year contributed to an outperformance by a small group of super-cap growth
stocks until late in the fiscal year. Investors had more confidence in the
prospect for strong, persistent earnings growth for this small group of stocks
than for the broad market. Value stocks, which often have greater cyclical
sensitivity to earnings fluctuations, lagged behind these super-growth stocks.
In addition, many of the financial stocks which fall into the value category
fell sharply following the Russian default.

The fiscal year ended September 1998 was characterized by very different
performances of the various market sectors. The largest cap growth stocks did
best, followed by large-cap stocks in general, with mid-cap and small-cap stocks
lagging behind. For example, the total return for the fiscal year on the Russell
1000 Index with a heavy large-cap representation was 7.36%, with the Russell
1000 Growth Index returning 11.11% while the Russell 1000 Value Index returned
3.59%. The return on the Russell Midcap Index was -6.01% while the small-cap
Russell 2000 Index return was -19.02%.***

PORTFOLIO FOCUS

As you know, the Dreyfus LifeTime Portfolios, Inc. provide the opportunity
to invest in three distinct portfolios that are specifically designed for
investors with differing time horizons and tolerances for risk.

The Growth Portfolio is designed for the investor with the highest risk
tolerance and/or the longest time horizon. This portfolio has the highest
baseline allocation to the equity markets, with the ability to shift
considerably from that structure in line with Mellon Equity's disciplined asset
allocation process. For most of the last year, the Growth Portfolio was at its
minimum equity allocation, with an overweight to bonds. As stock prices
continued to rise and corporate earnings ebbed, the equity market consistently
appeared overvalued. The portfolio's underweight to equities proved beneficial
when the stock market corrected severely in July and August. After the selloff,
Mellon Equity's asset allocation process evaluated price levels and deemed them
more in line with a fair valuation. In early September, the Growth Portfolio
moved back to its normal allocation to stocks as the market recovered some of
its losses from the prior months. Performance over longer time periods remained
strong. As of the end of September, domestic allocations remained in line with
the benchmark allocation. The portfolio contained 18% domestic fixed-income
securities versus the benchmark allocation of 17%. The domestic equity
allocation consisted of 55% in large capitalization equities (versus neutral
allocation of 54%) and 15% in small capitalization equities (versus neutral
allocation of 14%). The international equity allocation ended the period at 10%,
versus its baseline allocation of 12%.

The Growth and Income Portfolio is designed for an investor with a moderate
tolerance for risk and/or an intermediate time horizon. Like the Growth
Portfolio, it was at its minimum equity allocation for most of the last year and
benefited from the underweight when the market corrected. It too moved back to
its neutral allocation in September and remained there at month-end. At the end
of September, domestic bonds made up 47% of the Portfolio, compared to a neutral
allocation of 45%. Domestic equities were also in line with their neutral
position; large capitalization equities were approximately 38% (versus 36%
neutral allocation) of the Portfolio and small capitalization equities were 10%
(versus 9% neutral allocation) of the Portfolio. The international equity
allocation was 4%, generally in line with its benchmark allocation of 5%.

The Income Portfolio is designed for the more conservative investor. Its
asset allocation is bond-dominated, and does not vary from its long-term
targets. The bond and stock components are both passively managed. The
bond-dominated allocation provided the intended protection when the stock market
corrected in August.

The large-capitalization equity components of both the Growth and Growth
and Income Portfolios are actively managed using Mellon Equity's quantitative
equity discipline. Sector allocations mirror those of the S&P 500, with
Portfolio performance relative to the benchmark dependent on stock selection.
During the past year, the large capitalization equity Portfolio modestly
underperformed the S&P 500. Stocks that contributed positively to performance
included Schering-Plough, Lexmark International Group Cl. A., EMC, and Cisco
Systems, while Tellabs, Chase Manhattan Corp., HEALTHSOUTH, and Adaptec
detracted from performance.

Thank you for your investment in Dreyfus LifeTime Portfolios, Inc. We are
carefully monitoring market developments in order to continue bringing you
competitive returns.

Sincerely,

[Steven A. Falci signature logo]

Steven A. Falci

Portfolio Manager

October 20, 1998

New York, N.Y.

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

**For the GROWTH PORTFOLIO, 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 percentage 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 Standard & Poor's 500 Composite Stock Price Index
("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 S&P 500 Index is a widely accepted, unmanaged index of overall
stock market performance. 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 3,000 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 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 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.

For the GROWTH AND INCOME PORTFOLIO, 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%; and Foreign Bonds--5%. The
Customized Blended Index combines returns from the S&P 500 Index, the Russell
2000 Index, the EAFE Index, the Lehman Index and the J.P. Morgan Global Index
and is weighted to the aforementioned baseline percentages. The indices are
described above.

For the INCOME PORTFOLIO 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 S&P 500 Index (both described above) and the
90-day Treasury Bill rate, as it changes from time to time, and is weighted to
the aforementioned baseline percentages.

***SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Russell 1000 Index measures the
performance of the 1,000 largest companies in the Russell 3000 Index, which
represents approximately 89% of the total market capitalization of the Russell
3000 Index. The Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. The Russell Midcap Index consists of the bottom 800 securities in
the Russell 1000 Index as ranked by total market capitalization and is a widely
accepted measure of medium-cap stock market performance. The Russell 2000 Index
is composed of the 2,000 smallest companies in the Russell 3000 Index. The
Russell 3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. All indices are unmanaged and include reinvested dividends.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO SEPTEMBER 30,
1998
- -----------------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INVESTOR SHARES AND
RESTRICTED 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

Dollars

$21,791
Standard & Poor's 500 Composite Stock Price Index*

$17,519
Dreyfus LifeTime Portfolios--Growth and Income Portfolio (Investor Shares)

$17,394
Dreyfus LifeTime Portfolios--Growth and Income Portfolio (Restricted Shares)

$16,533
Customized Blended Index**

* Source: Lipper Analytical Services, Inc.

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

Average Annual Total Returns
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>

Investor Shares Restricted Shares
_______________________________________________________ _________________________________________________________
Period Ended 9/30/98 Period Ended 9/30/98
___________________ ________________
<S> <C> <C> <C>
1 Year 6.04% 1 Year 6.28%

From Inception (3/31/95) 17.38 From Inception (3/31/95) 17.13
- ------------------------
</TABLE>

Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor
shares and Restricted shares of the Growth and Income Portfolio on 3/31/95
(Inception Date) to a $10,000 investment made on that date in the Standard &
Poor' s 500 Composite Stock Price Index ("S&P 500 Index") 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.
The Customized Blended Index is calculated on a year-to-year basis. 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. 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 3,000 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 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
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 Financial Highlights section of the Prospectus
and elsewhere in this report.

DREYFUS LIFETIME PORTFOLIOS, INC., INCOME PORTFOLIO SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------

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

Dollars

$14,921
Customized Blended Index**

$14,388
Dreyfus LifeTime Portfolios--Income Portfolio (Restricted Shares)

$14,268
Dreyfus LifeTime Portfolios--Income Portfolio (Investor Shares)

$13,407
Lehman Brothers Intermediate Government/Corporate Bond Index*

* Source: Lehman Brothers

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

Average Annual Total Returns
- -----------------------------------------------------------------------------

From Inception (3/31/95) 10.69 From Inception (3/31/95) 10.95
- ------------------------
</TABLE>
Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor
shares and Restricted shares of the Income Portfolio on 3/31/95 (Inception Date)
to a $10,000 investment made on that date in the Lehman Brothers Intermediate
Government/Corporate Bond Index 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. The Customized Blended
Index is calculated on a year-to-year basis. 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 Financial Highlights section of the Prospectus
and elsewhere in this Report.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------

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

Dollars

$21,791
Standard & Poor's 500 Composite Stock Price Index*

$19,752
Dreyfus LifeTime Portfolios-- Growth Portfolio (Restricted Shares)

$19,610
Dreyfus LifeTime Portfolios-- Growth Portfolio (Investor Shares)

$18,169
Customized Blended Index**

* Source: Lipper Analytical Services, Inc.

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

Average Annual Total Returns
- -----------------------------------------------------------------------------
Investor Shares Restricted Shares
_______________________________________________________ _________________________________________________________
Period Ended 9/30/98 Period Ended 9/30/98
___________________ ________________
<S> <C> <C> <C>
1 Year 2.97% 1 Year 3.17%

From Inception (3/31/95) 21.22 From Inception (3/31/95) 21.47
- ------------------------
</TABLE>
Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in each of the Investor
shares and Restricted shares of the Growth Portfolio on 3/31/95 (Inception Date)
to a $10,000 investment made on that date in the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index") 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. The Customized Blended
Index is calculated on a year-to-year basis. 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. 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 3,000 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 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 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 Financial Highlights section of the Prospectus and elsewhere in
this Report.
<TABLE>
<CAPTION>

DREYFUS LIFETIME PORTFOLIOS, INC., INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Principal
Bonds and Notes--65.0% Amount Value
- -------------------------------------------------------
______________ _______________
Financial--11.1% American Express Credit Account Master Trust,
<S> <C> <C>
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 . . . . . . . . . . . . . . . . . $ 1,000,000 $ 1,048,529

Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 . . . . . . . . . . . . . . . . . 1,000,000 1,042,515

Chase Manhattan, Sub. Notes,
7.125%, 6/15/2009 . . . . . . . . . . . . . . . . 1,000,000 1,079,609

Federal Farm Credit Bank, Notes,
5.84%, 6/8/2005 . . . . . . . . . . . . . . . . . 1,000,000 1,053,574

Southern New England, Bonds,
6.50%, 2/15/2002 . . . . . . . . . . . . . . . . . 1,000,000 1,048,040

Worldcom, Bonds,
6.40%, 8/15/2005 . . . . . . . . . . . . . . . . . 500,000 525,412

______________
5,797,679
______________
Industrial--7.1% Allied-Signal, Notes,
6.20%, 2/01/2008 . . . . . . . . . . . . . . . . . 500,000 524,554
Campbell Soup, Bonds,
6.15%, 12/01/2002 . . . . . . . . . . . . . . . . 1,000,000 1,045,987
duPont (E.I.) de Nemours & Co., Deb.,
6.50%, 9/01/2002 . . . . . . . . . . . . . . . . . 1,000,000 1,060,649
Mobil, Deb.,
8.375%, 2/12/2001 . . . . . . . . . . . . . . . . 1,000,000 1,077,091
______________
3,708,281
______________
U.S. Government Securities--46.8% U.S. Treasury Notes:
6%, 8/15/1999 . . . . . . . . . . . . . . . . . . 1,000,000 1,011,680
6.375%, 1/15/2000 . . . . . . . . . . . . . . . . 1,300,000 1,329,887
6.875%, 3/31/2000 . . . . . . . . . . . . . . . . 2,000,000 2,069,200
5.875%, 6/30/2000 . . . . . . . . . . . . . . . . 2,000,000 2,048,920
5.25%, 1/31/2001 . . . . . . . . . . . . . . . . . 1,200,000 1,223,892
7.75%, 2/15/2001 . . . . . . . . . . . . . . . . . 1,400,000 1,505,098
6.375%, 3/31/2001 . . . . . . . . . . . . . . . . 2,000,000 2,093,400
8%, 5/15/2001 . . . . . . . . . . . . . . . . . . 1,000,000 1,088,940
7.50%, 11/15/2001 . . . . . . . . . . . . . . . . 835,000 910,442
6.625%, 3/31/2002 . . . . . . . . . . . . . . . . 1,350,000 1,447,281
6.25%, 6/30/2002 . . . . . . . . . . . . . . . . . 1,080,000 1,149,001
6.375%, 8/15/2002 . . . . . . . . . . . . . . . . 1,150,000 1,230,822
6.25%, 2/15/2003 . . . . . . . . . . . . . . . . . 1,800,000 1,935,468
7.875%, 11/15/2004 . . . . . . . . . . . . . . . . 1,360,000 1,611,940
7.50%, 2/15/2005 . . . . . . . . . . . . . . . . . 500,000 585,585
6.50%, 5/15/2005 . . . . . . . . . . . . . . . . . 725,000 813,363
6.875%, 5/15/2006 . . . . . . . . . . . . . . . . 200,000 231,046

DREYFUS LIFETIME PORTFOLIOS, INC., INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Bonds and Notes--continued Amount Value
- ------------------------------------------------------- ______________ _______________
U.S. Government
Securities (continued) U.S. Treasury Notes (continued):

7%, 7/15/2006 . . . . . . . . . . . . . . . . . . $ 1,085,000 $ 1,263,765
6.125%, 8/15/2007 . . . . . . . . . . . . . . . . 400,000 447,712
5.625%, 5/15/2008 . . . . . . . . . . . . . . . . 500,000 547,600
______________
24,545,042
______________
TOTAL BONDS AND NOTES
(cost $32,899,829) . . . . . . . . . . . . . . . . $34,051,002
______________
______________

Short-Term Investments--34.8%
- -------------------------------------------------------
U.S. Treasury Bills: 4.91%, 10/1/1998 . . . . . . . . . . . . . . . . . . . (a) $ 1,535,000 $ 1,535,000
4.88%, 10/15/1998 . . . . . . . . . . . . . . . . . . 7,547,000 7,534,321
4.92%, 10/22/1998 . . . . . . . . . . . . . . . . . . 1,396,000 1,393,362
4.81%, 10/29/1998 . . . . . . . . . . . . . . . . . . 705,000 702,631
4.90%, 11/12/1998 . . . . . . . . . . . . . . . . . . 303,000 301,579
4.90%, 11/19/1998 . . . . . . . . . . . . . . . . . . 596,000 592,746
4.89%, 11/27/1998 . . . . . . . . . . . . . . . . . . 19,000 18,877
4.61%, 12/17/1998 . . . . . . . . . . . . . . . . . . 4,739,000 4,696,728
4.56%, 12/24/1998 . . . . . . . . . . . . . . . . . . 1,368,000 1,354,553
4.20%, 12/31/1998 . . . . . . . . . . . . . . . . . . 143,000 141,460

______________
TOTAL SHORT-TERM INVESTMENTS
(cost $18,261,308) . . . . . . . . . . . . . . . . $18,271,257

______________

TOTAL INVESTMENTS (cost $51,161,137) . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.8% $52,322,259
_______ ______________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2% $ 122,006
_______ ______________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $52,444,265
_______ ______________
</TABLE>

<TABLE>
<CAPTION>
Notes to Statement of Investments:
- -----------------------------------------------------------------------------

(a) Partially held by the custodian in a segregated account as collateral for
open financial futures positions.

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1998
Market Value Unrealized

Covered Depreciation
Financial Futures Purchased: Contracts by Contracts Expiration at 9/30/98
_________________________ ________ ___________ _________ ____________
<S> <C> <C> <C> <C>
Standard & Poor's 500. . . . . . . . . . . . . . . . . . 49 $12,568,500 December '98 $(124,567)
___________
</TABLE>
<TABLE>
<CAPTION>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Common Stocks--37.4% Shares Value
- -------------------------------------------------------
______________ ________________
<S> <C> <C>
Basic Industries--1.2% Dow Chemical . . . . . . . . . . . . . . . . . . . . . 7,300 $ 623,694
Fort James . . . . . . . . . . . . . . . . . . . . . . 14,500 475,781
PPG Industries . . . . . . . . . . . . . . . . . . . . 9,600 523,800
Rohm & Haas . . . . . . . . . . . . . . . . . . . . . 12,500 347,656
Southdown . . . . . . . . . . . . . . . . . . . . . . 3,100 139,500
USG . . . . . . . . . . . . . . . . . . . . . . . . . 4,200 181,650

_____________
2,292,081
_____________
Capital Spending--9.3% AlliedSignal . . . . . . . . . . . . . . . . . . . . . 11,200 396,200
America Online . . . . . . . . . . . . . . . . . . . . (a) 4,300 478,375
Caterpillar . . . . . . . . . . . . . . . . . . . . . 16,000 713,000
Cisco Systems . . . . . . . . . . . . . . . . . . . . (a) 13,500 834,469
Dell Computer . . . . . . . . . . . . . . . . . . . . (a) 16,800 1,104,600
EMC . . . . . . . . . . . . . . . . . . . . . . . . . (a) 17,100 977,906
General Electric . . . . . . . . . . . . . . . . . . . 9,300 739,931
HBO & Co . . . . . . . . . . . . . . . . . . . . . . . 10,500 303,187
Honeywell . . . . . . . . . . . . . . . . . . . . . . 3,100 198,594
Ingersoll-Rand . . . . . . . . . . . . . . . . . . . . 23,000 872,563
Intel . . . . . . . . . . . . . . . . . . . . . . . . 21,700 1,860,775
International Business Machines . . . . . . . . . . . 10,900 1,395,200
Lexmark International Group, Cl. A . . . . . . . . . . (a) 9,900 686,194
Lucent Technologies . . . . . . . . . . . . . . . . . 11,500 794,219
Microsoft . . . . . . . . . . . . . . . . . . . . . . (a) 22,200 2,443,387
Oracle . . . . . . . . . . . . . . . . . . . . . . . . (a) 46,600 1,357,225
Sun Microsystems . . . . . . . . . . . . . . . . . . . (a) 13,300 662,506
Tellabs . . . . . . . . . . . . . . . . . . . . . . . (a) 13,100 521,544
Tyco International . . . . . . . . . . . . . . . . . . 13,000 718,250
United Technologies . . . . . . . . . . . . . . . . . 9,300 710,869
_____________
17,768,994
_____________

Consumer Cyclical--4.5% American Greetings, Cl. A . . . . . . . . . . . . . . 4,700 185,944
Carnival . . . . . . . . . . . . . . . . . . . . . . . 8,900 283,131
Chrysler . . . . . . . . . . . . . . . . . . . . . . . 12,000 574,500
Clear Channel Communications . . . . . . . . . . . . . (a) 11,100 527,250
Federal-Mogul . . . . . . . . . . . . . . . . . . . . 5,400 252,450
Federated Department Stores . . . . . . . . . . . . . (a) 16,800 611,100
Ford Motor . . . . . . . . . . . . . . . . . . . . . . 16,700 783,856
Gannett . . . . . . . . . . . . . . . . . . . . . . . 3,500 187,469
Gap . . . . . . . . . . . . . . . . . . . . . . . . . 10,600 559,150
K mart . . . . . . . . . . . . . . . . . . . . . . . . (a) 18,300 218,456
Philips Electronics, N.V . . . . . . . . . . . . . . . 7,000 373,625
Promus Hotel . . . . . . . . . . . . . . . . . . . . . 5,700 157,106
Safeway . . . . . . . . . . . . . . . . . . . . . . . (a) 17,600 816,200
Sears, Roebuck & Co . . . . . . . . . . . . . . . . . 8,100 357,919
TJX . . . . . . . . . . . . . . . . . . . . . . . . 30,400 541,500
Time Warner . . . . . . . . . . . . . . . . . . . . . 5,900 516,619
Tommy Hilfiger . . . . . . . . . . . . . . . . . . . . (a) 5,500 225,500
Wal-Mart Stores . . . . . . . . . . . . . . . . . . . 24,300 1,327,388
_____________
8,499,163

_____________
DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Common Stocks (continued) Shares Value
- ------------------------------------------------------- ______________ ______________

Consumer Staples--3.7% Coca-Cola . . . . . . . . . . . . . . . . . . . . . . 15,300 $ 881,662
Dial . . . . . . . . . . . . . . . . . . . . . . . . . 13,000 268,125
Eastman Kodak . . . . . . . . . . . . . . . . . . . . 9,500 734,469
General Mills . . . . . . . . . . . . . . . . . . . . 10,500 735,000
Interstate Bakeries . . . . . . . . . . . . . . . . . 5,000 155,000
Newell . . . . . . . . . . . . . . . . . . . . . . . . 12,600 580,388
PepsiCo . . . . . . . . . . . . . . . . . . . . . . . 16,400 482,775
Philip Morris . . . . . . . . . . . . . . . . . . . . 20,900 962,706
Procter & Gamble . . . . . . . . . . . . . . . . . . . 9,700 688,094
Ralston-Ralston Purina Group . . . . . . . . . . . . . 19,200 561,600
Sara Lee . . . . . . . . . . . . . . . . . . . . . . . 5,300 286,200
Unilever, N.V . . . . . . . . . . . . . . . . . . . . 7,700 471,625
Wrigley, (Wm.) Jr . . . . . . . . . . . . . . . . . . 2,300 174,656
_____________

6,982,300

_____________
Energy--3.1% Amoco . . . . . . . . . . . . . . . . . . . . . . . . 4,700 253,212
Ashland . . . . . . . . . . . . . . . . . . . . . . . 5,400 249,750
Coastal . . . . . . . . . . . . . . . . . . . . . . . 15,200 513,000
Columbia Energy Group . . . . . . . . . . . . . . . . 7,200 422,100
Diamond Offshore Drilling . . . . . . . . . . . . . . 6,800 176,800
El Paso Energy . . . . . . . . . . . . . . . . . . . . 5,500 178,406
Exxon . . . . . . . . . . . . . . . . . . . . . . . . 22,200 1,558,163
Mobil . . . . . . . . . . . . . . . . . . . . . . . . 13,800 1,047,938
Phillips Petroleum . . . . . . . . . . . . . . . . . . 13,600 613,700
Sun . . . . . . . . . . . . . . . . . . . . . . . . . 9,500 304,000
Texaco . . . . . . . . . . . . . . . . . . . . . . . . 9,500 595,531
_____________

5,912,600

_____________
Health Care--5.1% Abbott Laboratories . . . . . . . . . . . . . . . . . 34,600 1,502,937
American Home Products . . . . . . . . . . . . . . . . 6,700 350,912
Amgen . . . . . . . . . . . . . . . . . . . . . . . . (a) 11,200 846,300
Biomet . . . . . . . . . . . . . . . . . . . . . . . . 9,800 339,937
Bristol-Myers Squibb . . . . . . . . . . . . . . . . . 10,700 1,111,463
Guidant . . . . . . . . . . . . . . . . . . . . . . . 6,500 482,625
HEALTHSOUTH . . . . . . . . . . . . . . . . . . . . . (a) 24,200 255,613
Johnson & Johnson . . . . . . . . . . . . . . . . . . 16,900 1,322,425
Lilly (Eli) . . . . . . . . . . . . . . . . . . . . . 6,700 524,694
Schering-Plough . . . . . . . . . . . . . . . . . . . 14,900 1,543,081
Warner-Lambert . . . . . . . . . . . . . . . . . . . . 17,800 1,343,900
Wellpoint Health Networks . . . . . . . . . . . . . . (a) 700 39,244

_____________
9,663,131
_____________

Interest Sensitive--5.9% Allstate . . . . . . . . . . . . . . . . . . . . . . . 17,200 717,025
Ambac Financial Group . . . . . . . . . . . . . . . . 8,600 412,800
American Express . . . . . . . . . . . . . . . . . . . 6,500 504,563
BankAmerica . . . . . . . . . . . . . . . . . . . . . 6,300 378,788
Bear Stearns . . . . . . . . . . . . . . . . . . . . . 12,800 396,000

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998

Common Stocks (continued) Shares Value
- -------------------------------------------------------
__________ ______________
Interest Sensitive (continued) Chase Manhattan . . . . . . . . . . . . . . . . . . . 23,200 $ 1,003,400
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . 4,900 324,012
Citicorp . . . . . . . . . . . . . . . . . . . . . . . 1,400 130,113
Comerica . . . . . . . . . . . . . . . . . . . . . . . 11,600 635,825
Edwards (A.G.) . . . . . . . . . . . . . . . . . . . . 5,700 172,781
EXEL, Cl. A . . . . . . . . . . . . . . . . . . . . . 11,300 711,900
Fannie Mae . . . . . . . . . . . . . . . . . . . . . . 9,300 597,525
First Chicago NBD . . . . . . . . . . . . . . . . . . 11,200 767,200
Fleet Financial Group . . . . . . . . . . . . . . . . 10,800 793,125
Golden West Financial . . . . . . . . . . . . . . . . 4,100 335,431
Lehman Brothers Holdings . . . . . . . . . . . . . . . 3,100 87,575
MGIC Investment . . . . . . . . . . . . . . . . . . . 6,300 232,313
NationsBank . . . . . . . . . . . . . . . . . . . . . (a) 18,300 979,050
SLM Holding . . . . . . . . . . . . . . . . . . . . . 17,400 564,412
SunAmerica . . . . . . . . . . . . . . . . . . . . . . 11,300 689,300
SunTrust Banks . . . . . . . . . . . . . . . . . . . . 8,800 545,600
Travelers Group . . . . . . . . . . . . . . . . . . . (a) 8,500 318,750
_____________

11,297,488
_____________
Mining & Metals--.3% Aluminum Company of America . . . . . . . . . . . . . 4,900 347,900
USX-U.S. Steel Group . . . . . . . . . . . . . . . . . 7,900 188,612
_____________

536,512

_____________
Transportation--.4% AMR . . . . . . . . . . . . . . . . . . . . . . . . . (a) 7,000 388,062
Burlington Northern Santa Fe . . . . . . . . . . . . . 14,900 476,800
_____________
864,862
_____________

Utilities--3.9% AT&T . . . . . . . . . . . . . . . . . . . . . . . . . 17,100 999,281
AirTouch Communications . . . . . . . . . . . . . . . (a) 10,600 604,200
Ameritech . . . . . . . . . . . . . . . . . . . . . . 31,100 1,473,362
Bell Atlantic . . . . . . . . . . . . . . . . . . . . 9,500 460,156
BellSouth . . . . . . . . . . . . . . . . . . . . . . 16,500 1,241,625
Consolidated Edison . . . . . . . . . . . . . . . . . 11,100 578,588
FPL Group . . . . . . . . . . . . . . . . . . . . . . 12,400 864,125
FirstEnergy . . . . . . . . . . . . . . . . . . . . . 9,500 295,094
MCI WorldCom . . . . . . . . . . . . . . . . . . . . . (a) 14,500 708,688
Pinnacle West Capital . . . . . . . . . . . . . . . . 5,300 237,506
_____________
7,462,625
_____________
TOTAL COMMON STOCKS
(cost $64,579,607) . . . . . . . . . . . . . . . . $ 71,279,756

_____________

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998

Principal
Bonds and Notes--46.7% Amount Value
________________________________________________________________________________ _____________ ____________
Finance--6.6% American Express Credit Account Master Trust,
Asset Backed Ctfs., Ser. 1997-1, Cl. A,
6.40%, 4/15/2005 . . . . . . . . . . . . . . . . . $ 3,000,000 $ 3,145,587
American General, Notes,
7.75%, 4/1/2005 . . . . . . . . . . . . . . . . . 500,000 558,055
Associates N.A., Sr. Notes,
6%, 6/15/2000 . . . . . . . . . . . . . . . . . . 1,000,000 1,012,334
BankAmerica, Sub. Notes,
7.875%, 12/1/2002 . . . . . . . . . . . . . . . . 1,000,000 1,092,185
Chase Manhattan, Sub. Notes,
7.125%, 6/15/2009 . . . . . . . . . . . . . . . . 2,000,000 2,159,218
Citibank Credit Card Master Trust,
Asset Backed Ctfs., Ser. 1998-1, Cl. A,
5.75%, 1/15/2003 . . . . . . . . . . . . . . . . . 3,500,000 3,552,500
Citicorp, Sr. Notes,
6.60%, 8/1/2000 . . . . . . . . . . . . . . . . . 1,000,000 1,020,184

_____________
12,540,063
_____________
Industrial--8.2% American Home Products, Notes,
7.70%, 2/15/2000 . . . . . . . . . . . . . . . . . 1,000,000 1,035,817
Amoco, Notes,
6.25%, 10/15/2004 . . . . . . . . . . . . . . . . 2,000,000 2,148,610
Campbell Soup, Bonds,
6.15%, 12/1/2002 . . . . . . . . . . . . . . . . . 4,000,000 4,183,948
duPont (E.I.) de Nemours & Co., Notes,
6.50%, 9/1/2002 . . . . . . . . . . . . . . . . . 3,000,000 3,181,947
Penney (J.C.), Deb.:
6.95%, 4/1/2000 . . . . . . . . . . . . . . . . . 800,000 821,426
9.05%, 3/1/2001 . . . . . . . . . . . . . . . . . 1,000,000 1,089,292
Philip Morris, Notes,
7.625%, 5/15/2002 . . . . . . . . . . . . . . . . 1,000,000 1,076,699
Norfolk Southern, Notes,
6.70%, 5/1/2000 . . . . . . . . . . . . . . . . . 2,000,000 2,046,156

_____________
15,583,895
_____________
Utilities--.8% MCI WorldCom, Sr. Notes,
6.40%, 8/15/2005 . . . . . . . . . . . . . . . . . 1,500,000 1,576,236
_____________

U.S. Government & Agencies--31.1% Federal National Mortgage Association, Deb.,
8.50%, 2/1/2005 . . . . . . . . . . . . . . . . . 500,000 525,085
Federal National Mortgage Association,
Med. Term Notes,
5.73%, 10/14/1999 . . . . . . . . . . . . . . . . 3,000,000 3,020,250
Tennessee Valley Authority,
6.375%, 6/15/2005 . . . . . . . . . . . . . . . . 1,950,000 2,090,472
U.S. Treasury Notes:
7.125%, 9/30/1999 . . . . . . . . . . . . . . . . 2,000,000 2,049,640
7.875%, 11/15/1999 . . . . . . . . . . . . . . . . 3,000,000 3,109,680
7.75%, 1/31/2000 . . . . . . . . . . . . . . . . . 2,250,000 2,343,555

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Bonds and Notes (continued) Amount Value
- ------------------------------------------------------- ______________ _______________

U.S. Government &

Agencies (continued) U.S. Treasury Notes (continued):
8.5%, 2/15/2000 . . . . . . . . . . . . . . . . . $ 1,150,000 $ 1,211,077
6.75%, 4/30/2000 . . . . . . . . . . . . . . . . . 2,300,000 2,379,097
5.75%, 10/31/2000 . . . . . . . . . . . . . . . . 1,400,000 1,438,262
5.625%, 11/30/2000 . . . . . . . . . . . . . . . . 1,100,000 1,127,907
5.25%, 1/31/2001 . . . . . . . . . . . . . . . . . 4,400,000 4,487,604
5.375%, 2/15/2001 . . . . . . . . . . . . . . . . 250,000 255,532
6.375%, 3/31/2001 . . . . . . . . . . . . . . . . 2,300,000 2,407,410
8%, 5/15/2001 . . . . . . . . . . . . . . . . . . 4,300,000 4,682,442
6.125%, 12/31/2001 . . . . . . . . . . . . . . . . 3,000,000 3,156,600
7.50%, 5/15/2002 . . . . . . . . . . . . . . . . . 1,850,000 2,041,253
5.75%, 8/15/2003 . . . . . . . . . . . . . . . . . 930,000 986,972
5.875%, 2/15/2004 . . . . . . . . . . . . . . . . 1,000,000 1,072,790
7.25%, 5/15/2004 . . . . . . . . . . . . . . . . . 2,000,000 2,283,180
7.25%, 8/15/2004 . . . . . . . . . . . . . . . . . 2,600,000 2,982,512
7.875%, 11/15/2004 . . . . . . . . . . . . . . . . 1,660,000 1,967,515
7.50%, 2/15/2005 . . . . . . . . . . . . . . . . . 1,050,000 1,229,729
5.875%, 11/15/2005 . . . . . . . . . . . . . . . . 3,050,000 3,324,286
7%, 7/15/2006 . . . . . . . . . . . . . . . . . . 2,000,000 2,329,520
6.50%, 10/15/2006 . . . . . . . . . . . . . . . . 2,500,000 2,837,675
6.25%, 2/15/2007 . . . . . . . . . . . . . . . . . 3,400,000 3,818,608

_____________
59,158,653
_____________
TOTAL BONDS and NOTES
(cost $85,383,231) . . . . . . . . . . . . . . . . $ 88,858,847

_____________

Short-Term Investments--15.3%
- -------------------------------------------------------

U.S. Treasury Bills: 4.87%, 10/15/1998 . . . . . . . . . . . . . . . . . . (b) $20,630,000 $ 20,595,342
4.85%, 10/29/1998 . . . . . . . . . . . . . . . . . . 101,000 100,661
4.89%, 11/12/1998 . . . . . . . . . . . . . . . . . . 118,000 117,447
4.90%, 11/19/1998 . . . . . . . . . . . . . . . . . . 164,000 163,104
4.58%, 12/17/1998 . . . . . . . . . . . . . . . . . . (b) 6,567,000 6,508,422
4.43%, 12/24/1998 . . . . . . . . . . . . . . . . . . 1,683,000 1,666,456
_____________

TOTAL SHORT-TERM INVESTMENTS
(cost $29,139,929) . . . . . . . . . . . . . . . . $ 29,151,432
_____________
TOTAL INVESTMENTS (cost $179,102,767). . . . . . . . . . . . . . . . . . . . . . . . . . . 99.4% $189,290,035

_______ _____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6% $ 1,083,435
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $190,373,470
_______ _____________
</TABLE>
<TABLE>
<CAPTION>
Notes to Statement of Investments:
- -----------------------------------------------------------------------------

(a) Non-income producing.

(b) Partially held by the custodian in a segregated account as collateral for
open financial futures positions.

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1998
Unrealized
Market Value Appreciation/
Covered (Depreciation)
Financial Futures Purchased: Contracts by Contracts Expiration at 9/30/98
_________________________ ________ ___________ _________ ____________
<S> <C> <C> <C> <C>
Australian All Ordinaries. . . . . . . . . . . . . . . . 8 $ 306,993 December '98 $ (2,100)
CAC 40 . . . . . . . . . . . . . . . . . . . . . . . . . 44 1,218,504 December '98 (230,289)
Deutsche Akteinindex . . . . . . . . . . . . . . . . . . 6 1,535,571 December '98 (248,288)
Financial Times. . . . . . . . . . . . . . . . . . . . . 30 2,552,177 December '98 (116,772)
Hang Seng. . . . . . . . . . . . . . . . . . . . . . . . 12 598,474 October '98 (13,178)
Nikkei 300 . . . . . . . . . . . . . . . . . . . . . . . 146 2,254,806 December '98 (138,963)
Russell 2000 . . . . . . . . . . . . . . . . . . . . . . 101 18,445,125 December '98 235,865
Standard & Poor's 500. . . . . . . . . . . . . . . . . . 2 513,000 December '98 (3,566)

__________
$ (517,291)
__________
</TABLE>
<TABLE>
<CAPTION>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998

Common Stocks--54.4% Shares Value
- ------------------------------------------------------- ______________ _______________
<S> <C> <C>
Basic Industries--1.7% Dow Chemical . . . . . . . . . . . . . . . . . . . . . 3,300 $ 281,944
Fort James . . . . . . . . . . . . . . . . . . . . . . 6,600 216,563
PPG Industries . . . . . . . . . . . . . . . . . . . . 4,400 240,075
Rohm & Haas . . . . . . . . . . . . . . . . . . . . . 5,700 158,531
Southdown . . . . . . . . . . . . . . . . . . . . . . 1,400 63,000
USG . . . . . . . . . . . . . . . . . . . . . . . . . 1,900 82,175
______________
1,042,288

______________
Capital Spending--13.5% AlliedSignal . . . . . . . . . . . . . . . . . . . . . 5,100 180,412
America Online . . . . . . . . . . . . . . . . . . . . (a) 2,000 222,500
Caterpillar . . . . . . . . . . . . . . . . . . . . . 7,300 325,306
Cisco Systems . . . . . . . . . . . . . . . . . . . . (a) 6,150 380,147
Dell Computer . . . . . . . . . . . . . . . . . . . . (a) 7,800 512,850
EMC . . . . . . . . . . . . . . . . . . . . . . . . . (a) 7,800 446,063
General Electric . . . . . . . . . . . . . . . . . . . 4,300 342,119
HBO & Co . . . . . . . . . . . . . . . . . . . . . . . 4,800 138,600
Honeywell . . . . . . . . . . . . . . . . . . . . . . 1,200 76,875
Ingersoll-Rand . . . . . . . . . . . . . . . . . . . . 10,500 398,344
Intel . . . . . . . . . . . . . . . . . . . . . . . . 10,000 857,500
International Business Machines . . . . . . . . . . . 5,000 640,000
Lexmark International Group, Cl. A . . . . . . . . . . (a) 4,500 311,906
Lucent Technologies . . . . . . . . . . . . . . . . . 5,300 366,031
Microsoft . . . . . . . . . . . . . . . . . . . . . . (a) 10,200 1,122,638
Oracle . . . . . . . . . . . . . . . . . . . . . . . . (a) 21,400 623,275
Sun Microsystems . . . . . . . . . . . . . . . . . . . (a) 6,100 303,856
Tellabs . . . . . . . . . . . . . . . . . . . . . . . (a) 6,000 238,875
Tyco International . . . . . . . . . . . . . . . . . . 6,000 331,500
United Technologies . . . . . . . . . . . . . . . . . 4,300 328,681
______________

8,147,478
______________
Consumer Cyclical--6.5% American Greetings, Cl. A . . . . . . . . . . . . . . 2,200 87,037
Carnival . . . . . . . . . . . . . . . . . . . . . . . 4,100 130,431
Chrysler . . . . . . . . . . . . . . . . . . . . . . . 5,500 263,313
Clear Channel Communications . . . . . . . . . . . . . (a) 5,100 242,250
Federal-Mogul . . . . . . . . . . . . . . . . . . . . 2,500 116,875
Federated Department Stores . . . . . . . . . . . . . (a) 7,700 280,087
Ford Motor . . . . . . . . . . . . . . . . . . . . . . 7,700 361,419
Gannett . . . . . . . . . . . . . . . . . . . . . . . 1,600 85,700
Gap . . . . . . . . . . . . . . . . . . . . . . . . . 4,800 253,200
K mart . . . . . . . . . . . . . . . . . . . . . . . . (a) 8,400 100,275
Philips Electronics, N.V . . . . . . . . . . . . . . . 3,200 170,800
Promus Hotel . . . . . . . . . . . . . . . . . . . . . 2,600 71,663
Safeway . . . . . . . . . . . . . . . . . . . . . . . (a) 8,100 375,637
Sears, Roebuck & Co . . . . . . . . . . . . . . . . . 3,700 163,494
TJX . . . . . . . . . . . . . . . . . . . . . . . . 13,900 247,594
Time Warner . . . . . . . . . . . . . . . . . . . . . 2,700 236,419
Tommy Hilfiger . . . . . . . . . . . . . . . . . . . . (a) 2,500 102,500
Wal-Mart Stores . . . . . . . . . . . . . . . . . . . 11,200 611,800
______________
3,900,494

______________
DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998

Common Stocks (continued) Shares Value
- ------------------------------------------------------- ______________ _______________
Consumer Staples--5.4% Coca-Cola . . . . . . . . . . . . . . . . . . . . . . 7,000 $ 403,375
Dial . . . . . . . . . . . . . . . . . . . . . . . . . 5,900 121,688
Eastman Kodak . . . . . . . . . . . . . . . . . . . . 4,400 340,175
General Mills . . . . . . . . . . . . . . . . . . . . 4,800 336,000
Interstate Bakeries . . . . . . . . . . . . . . . . . 2,300 71,300
Newell . . . . . . . . . . . . . . . . . . . . . . . . 5,800 267,162
PepsiCo . . . . . . . . . . . . . . . . . . . . . . . 8,700 256,106
Philip Morris . . . . . . . . . . . . . . . . . . . . 9,600 442,200
Procter & Gamble . . . . . . . . . . . . . . . . . . . 4,400 312,125
Ralston-Ralston Purina Group . . . . . . . . . . . . . 8,800 257,400
Sara Lee . . . . . . . . . . . . . . . . . . . . . . . 2,500 135,000
Unilever, N.V . . . . . . . . . . . . . . . . . . . . 3,500 214,375
Wrigley, (Wm.) Jr . . . . . . . . . . . . . . . . . . 1,100 83,531
______________
3,240,437
______________
Energy--4.5% Amoco . . . . . . . . . . . . . . . . . . . . . . . . 2,200 118,525
Ashland . . . . . . . . . . . . . . . . . . . . . . . 2,500 115,625
Coastal . . . . . . . . . . . . . . . . . . . . . . . 7,000 236,250
Columbia Energy Group . . . . . . . . . . . . . . . . 3,300 193,463
Diamond Offshore Drilling . . . . . . . . . . . . . . 3,100 80,600
El Paso Energy . . . . . . . . . . . . . . . . . . . . 2,500 81,094
Exxon . . . . . . . . . . . . . . . . . . . . . . . . 10,200 715,912
Mobil . . . . . . . . . . . . . . . . . . . . . . . . 6,400 486,000
Phillips Petroleum . . . . . . . . . . . . . . . . . . 6,200 279,775
Sun . . . . . . . . . . . . . . . . . . . . . . . . . 4,400 140,800
Texaco . . . . . . . . . . . . . . . . . . . . . . . . 4,400 275,825
______________

2,723,869
______________
Health Care--7.4% Abbott Laboratories . . . . . . . . . . . . . . . . . 15,900 690,656
American Home Products . . . . . . . . . . . . . . . . 3,100 162,363
Amgen . . . . . . . . . . . . . . . . . . . . . . . . (a) 5,100 385,369
Biomet . . . . . . . . . . . . . . . . . . . . . . . . 4,500 156,094
Bristol-Myers Squibb . . . . . . . . . . . . . . . . . 4,900 508,987
Guidant . . . . . . . . . . . . . . . . . . . . . . . 3,000 222,750
HEALTHSOUTH . . . . . . . . . . . . . . . . . . . . . (a) 11,100 117,244
Johnson & Johnson . . . . . . . . . . . . . . . . . . 7,700 602,525
Lilly (Eli) . . . . . . . . . . . . . . . . . . . . . 3,100 242,769
Schering-Plough . . . . . . . . . . . . . . . . . . . 6,800 704,225
Warner-Lambert . . . . . . . . . . . . . . . . . . . . 8,200 619,100
Wellpoint Health Networks . . . . . . . . . . . . . . (a) 300 16,819
______________

4,428,901

______________
Interest Sensitive--8.6% Allstate . . . . . . . . . . . . . . . . . . . . . . . 7,900 329,331
Ambac Financial Group . . . . . . . . . . . . . . . . 4,000 192,000
American Express . . . . . . . . . . . . . . . . . . . 3,000 232,875
BankAmerica . . . . . . . . . . . . . . . . . . . . . 2,900 174,363

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998

Common Stocks (continued) Shares Value
- ------------------------------------------------------- ______________ _______________
Interest Sensitive (continued) Bear Stearns . . . . . . . . . . . . . . . . . . . . . 5,900 $ 182,531
Chase Manhattan . . . . . . . . . . . . . . . . . . . 10,600 458,450
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . 2,300 152,088
Citicorp . . . . . . . . . . . . . . . . . . . . . . . 600 55,763
Comerica . . . . . . . . . . . . . . . . . . . . . . . 5,300 290,506
Edwards (A.G.) . . . . . . . . . . . . . . . . . . . . 2,600 78,812
EXEL, Cl. A . . . . . . . . . . . . . . . . . . . . . 5,200 327,600
Fannie Mae . . . . . . . . . . . . . . . . . . . . . . 4,300 276,275
First Chicago NBD . . . . . . . . . . . . . . . . . . 5,100 349,350
Fleet Financial Group . . . . . . . . . . . . . . . . 5,000 367,187
Golden West Financial . . . . . . . . . . . . . . . . 1,900 155,444
Lehman Brothers Holdings . . . . . . . . . . . . . . . 1,400 39,550
MGIC Investment . . . . . . . . . . . . . . . . . . . 2,900 106,937
NationsBank . . . . . . . . . . . . . . . . . . . . . (a) 8,400 449,400
SLM Holding . . . . . . . . . . . . . . . . . . . . . 8,000 259,500
SunAmerica . . . . . . . . . . . . . . . . . . . . . . 5,200 317,200
SunTrust Banks . . . . . . . . . . . . . . . . . . . . 4,100 254,200
Travelers Group . . . . . . . . . . . . . . . . . . . (a) 3,900 146,250
______________
5,195,612

______________
Mining & Metals--.4% Aluminum Company of America . . . . . . . . . . . . . 2,200 156,200
USX-U.S. Steel Group . . . . . . . . . . . . . . . . . 3,600 85,950
______________

242,150
______________
Transportation--.7% AMR . . . . . . . . . . . . . . . . . . . . . . . . . (a) 3,200 177,400
Burlington Northern Santa Fe . . . . . . . . . . . . . 6,800 217,600
______________
395,000
______________
Utilities--5.7% AT&T . . . . . . . . . . . . . . . . . . . . . . . . . 7,900 461,656
AirTouch Communications . . . . . . . . . . . . . . . (a) 4,900 279,300
Ameritech . . . . . . . . . . . . . . . . . . . . . . 14,300 677,462
Bell Atlantic . . . . . . . . . . . . . . . . . . . . 4,400 213,125
BellSouth . . . . . . . . . . . . . . . . . . . . . . 7,600 571,900
Consolidated Edison . . . . . . . . . . . . . . . . . 5,100 265,838
FPL Group . . . . . . . . . . . . . . . . . . . . . . 5,700 397,219
FirstEnergy . . . . . . . . . . . . . . . . . . . . . 4,400 136,675
MCI WorldCom . . . . . . . . . . . . . . . . . . . . . (a) 6,700 327,462
Pinnacle West Capital . . . . . . . . . . . . . . . . 2,400 107,550
______________

3,438,187
______________
TOTAL COMMON STOCKS
(cost $28,962,506) . . . . . . . . . . . . . . . . $32,754,416
______________
______________
DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1998
Principal
Bonds and Notes--17.8% Amount Value
- ------------------------------------------------------- ______________ ______________
U.S. Treasury Notes: 6.75%, 4/30/2000 . . . . . . . . . . . . . . . . . . . $ 1,000,000 $ 1,034,390
6.25%, 8/31/2000 . . . . . . . . . . . . . . . . . . . 1,000,000 1,034,120
7.75%, 2/15/2001 . . . . . . . . . . . . . . . . . . . 1,350,000 1,451,344
6.25%, 4/30/2001 . . . . . . . . . . . . . . . . . . . 500,000 522,690
7.50%, 11/15/2001 . . . . . . . . . . . . . . . . . . 500,000 545,175
6.125%, 12/31/2001 . . . . . . . . . . . . . . . . . . 850,000 894,370
7.50%, 5/15/2002 . . . . . . . . . . . . . . . . . . . 750,000 827,535
6.375%, 8/15/2002 . . . . . . . . . . . . . . . . . . 1,150,000 1,230,822
6.25%, 2/15/2003 . . . . . . . . . . . . . . . . . . . 300,000 322,578
5.75%, 8/15/2003 . . . . . . . . . . . . . . . . . . . 500,000 530,630
7.25%, 5/15/2004 . . . . . . . . . . . . . . . . . . . 750,000 856,193
6.25%, 2/15/2007 . . . . . . . . . . . . . . . . . . . 600,000 673,872
5.625%, 5/15/2008 . . . . . . . . . . . . . . . . . . 700,000 766,640
____________

TOTAL BONDS AND NOTES
(cost $10,306,024) . . . . . . . . . . . . . . . . $10,690,359
____________

Short-Term Investments--27.7%
- -------------------------------------------------------

U.S. Treasury Bills: 4.90%, 10/8/1998 . . . . . . . . . . . . . . . . . . . $ 49,000 $ 48,959
4.94%, 10/15/1998 . . . . . . . . . . . . . . . . . . (b) 7,027,000 7,015,195
4.91%, 10/22/1998 . . . . . . . . . . . . . . . . . . 620,000 618,828
4.89%, 11/12/1998 . . . . . . . . . . . . . . . . . . 634,000 631,026
4.90%, 11/19/1998 . . . . . . . . . . . . . . . . . . 167,000 166,088
4.81%, 11/27/1998 . . . . . . . . . . . . . . . . . . 2,134,000 2,120,236
4.56%, 12/17/1998 . . . . . . . . . . . . . . . . . . (b) 4,512,000 4,471,753
4.51%, 12/24/1998 . . . . . . . . . . . . . . . . . . 1,638,000 1,621,898
____________

TOTAL SHORT-TERM INVESTMENTS
(cost $16,683,380) . . . . . . . . . . . . . . . . $16,693,983
____________

TOTAL INVESTMENTS (cost $55,951,910) . . . . . . . . . . . . . . . . . . . . . . . . . 99.9% $60,138,758
_______ ____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1% $ 38,232
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $60,176,990
_______ ____________
</TABLE>
<TABLE>
<CAPTION>

Notes to Statement of Investments:
- -----------------------------------------------------------------------------

(a) Non-income producing.

(b) Partially held by the custodian in a segregated account as collateral for
open financial futures positions.

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF FINANCIAL FUTURES SEPTEMBER 30, 1998

Unrealized
Market Value Appreciation/
Covered (Depreciation)
Financial Futures Purchased: Contracts by Contracts Expiration at 9/30/98
_________________________ ________ ___________ _________ ____________
<S> <C> <C> <C> <C>
Australian All Ordinaries. . . . . . . . . . . . . . . . 4 $ 153,496 December '98 $ (1,050)
CAC 40 . . . . . . . . . . . . . . . . . . . . . . . . . 30 842,007 December '98 (112,044)
Deutsche Akteinindex . . . . . . . . . . . . . . . . . . 5 1,289,846 December '98 (170,683)
Financial Times. . . . . . . . . . . . . . . . . . . . . 23 1,956,669 December '98 (89,525)
Hang Seng. . . . . . . . . . . . . . . . . . . . . . . . 7 349,110 October '98 (7,687)
Nikkei 300 . . . . . . . . . . . . . . . . . . . . . . . 85 1,312,729 December '98 (80,903)
Russell 2000 . . . . . . . . . . . . . . . . . . . . . . 48 8,766,000 December '98 104,570
Standard & Poor's 500. . . . . . . . . . . . . . . . . . 2 513,000 December '98 (3,566)
__________
$ (360,888)
</TABLE>
<TABLE>
<CAPTION>
__________

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1998

Income Growth and Income Growth
Portfolio Portfolio Portfolio
____________ _____________ ____________
ASSETS:
Investments in securities--See Statement of Investments
<S> <C> <C> <C>
[cost--Note 5(b)] . . . . . . . . . . . . . . . . . . . . . . . . $52,322,259 $189,290,035 $60,138,758

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,675 -- --
Receivable for investment securities sold . . . . . . . . . . . . . . -- 2,405,889 108,750
Receivable for shares of Common Stock subscribed . . . . . . . . . . 2,500 -- --
Dividends and interest receivable . . . . . . . . . . . . . . . . . . 383,206 1,532,053 196,818
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 22,354 40,153 29,582
____________ _____________ ____________
52,895,994 193,268,130 60,473,908
____________ _____________ ____________

LIABILITIES:
Due to The Dreyfus Corporation and affiliates . . . . . . . . . . . . 27,435 125,866 42,184
Due to Distributor . . . . . . . . . . . . . . . . . . . . . . . . . 2,450 812 758
Cash overdraft due to Custodian . . . . . . . . . . . . . . . . . . . -- 118,642 8,977
Payable for investment securities purchased . . . . . . . . . . . . . -- 2,312,717 79,115
Payable for futures variation margin--Note 5(a) . . . . . . . . . . . 385,875 297,238 140,018
Payable for shares of Common Stock redeemed . . . . . . . . . . . . . -- 2,605 2,637
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 35,969 36,780 23,229
____________ _____________ ____________
451,729 2,894,660 296,918
____________ _____________ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,444,265 $190,373,470 $60,176,990
____________ _____________ ____________

REPRESENTED BY:

Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,551,219 $171,148,087 $53,004,305
Accumulated undistributed investment income--net . . . . . . . . . . 1,621,177 5,777,243 1,252,028
Accumulated net realized gain (loss) on investments, forward
currency exchange contracts and foreign currency transactions . . 235,314 3,778,163 2,094,697
Accumulated net unrealized appreciation (depreciation) on
investments [including ($124,567), ($517,291) and ($360,888)
net unrealized (depreciation) on financial futures for
the Income Portfolio, the Growth and Income Portfolio and
the Growth Portfolio, respectively]--Note 5(b) . . . . . . . . . 1,036,555 9,669,977 3,825,960
____________ _____________ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,444,265 $190,373,470 $60,176,990
____________ _____________ ____________
NET ASSET VALUE PER SHARE
--------------------
Income Growth and Income Growth
Portfolio Portfolio Portfolio
____________ _____________ ____________
Restricted Class Shares
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,582,382 $186,397,355 $56,431,015
Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 2,945,465 11,321,069 3,550,520

NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . $13.78 $16.46 $15.89
______ ______ ______

Investor Class Shares
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,861,883 $3,976,115 $3,745,975
Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 863,585 232,458 235,180

NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . $13.74 $17.10 $15.93
______ ______ ______

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------

STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998

Income Growth and Income Growth
Portfolio Portfolio Portfolio
__________ __________ __________

INVESTMENT INCOME:
Income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,428,332 $ 8,451,034 $ 1,871,374
Cash dividends (net of $2,438 and $1,284 foreign taxes withheld
at source for the Growth and Income Portfolio and the
Growth Portfolio, respectively) . . . . . . . . . . . . . . . -- 733,358 385,593
____________ ____________ ____________
Total Income . . . . . . . . . . . . . . . . . . . . . . . . 2,428,332 9,184,392 2,256,967
____________ ____________ ____________
Expenses--Note 2(d):
Management fee--Note 4(a) . . . . . . . . . . . . . . . . . . . . $ 241,264 $ 1,403,976 $ 447,108
Shareholder servicing costs--Note 4(b) . . . . . . . . . . . . . 39,187 22,822 33,372
Auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . . 35,352 25,378 16,845
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . 34,700 34,701 32,399
Custodian fees--Note 4(b) . . . . . . . . . . . . . . . . . . . . 6,167 26,901 17,580
Prospectus and shareholders' reports . . . . . . . . . . . . . . 5,888 12,176 9,589
Directors' fees and expenses--Note 4(c) . . . . . . . . . . . . . 3,345 14,037 4,846
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,283 24,439 7,195
Loan commitment fees--Note 3 . . . . . . . . . . . . . . . . . . 215 1,131 372
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 14,789 22,170 6,284
____________ ____________ ____________
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . 383,190 1,587,731 575,590
____________ ____________ ____________

INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . 2,045,142 7,596,661 1,681,377

____________ ____________ ____________

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 5:

Net realized gain (loss) on investments . . . . . . . . . . . . . . . 70,844 7,218,241 3,955,027
Net realized gain (loss) on forward currency exchange contracts
Short transactions . . . . . . . . . . . . . . . . . . . . . . . -- 4,296 3, 974
Net realized gain (loss) on financial futures . . . . . . . . . . . . 295,981 (2,752,512) (1,460,745)
____________ ____________ ____________
Net Realized Gain (Loss) . . . . . . . . . . . . . . . . . . 366,825 4,470,025 2,498,256
____________ ____________ ____________
Net unrealized appreciation (depreciation) on investments
[including ($249,207), ($1,154,257) and ($706,538)
net unrealized (depreciation) on financial futures for the
Income Portfolio, the Growth and Income Portfolio and
the Growth Portfolio, respectively] . . . . . . . . . . . . . . . 955,546 (872,552) (2,255,918)
____________ ____________ ____________

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . 1,322,371 3,597,473 242,338

____________ ____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS. . . . . . . . . . $ 3,367,513 $11,194,134 $ 1,923,715

____________ ____________ ____________
</TABLE>
<TABLE>
<CAPTION>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., INCOME PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS

Year Ended Year Ended
September 30, 1998 September 30, 1997*
______________ _______________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,045,142 $ 1,577,563
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . 366,825 1,684,862
Net unrealized appreciation (depreciation) on investments . . . . . . . . 955,546 203,272
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations . 3,367,513 3,465,697
____________ ____________

DIVIDENDS TO SHAREHOLDERS FROM:

Investment income--net:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (1,195,123) (683,757)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (503,416) (402,914)
Net realized gain on investments:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (1,162,380) (452,331)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (510,607) (279,441)
____________ ____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . (3,371,526) (1,818,443)
____________ ____________

CAPITAL STOCK TRANSACTIONS:

Net proceeds from shares sold:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 26,320,416 14,554,251
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 1,337,588 285,941
Dividends reinvested:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 2,347,119 1,128,662
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 1,013,674 682,355
Cost of shares redeemed:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (10,884,363) (7,019,957)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (549,851) (4,952)
____________ ____________
Increase (Decrease) in Net Assets from Capital Stock Transactions . 19,584,583 9,626,300
____________ ____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . 19,580,570 11,273,554

NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,863,695 21,590,141
____________ ____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,444,265 $32,863,695
____________ ____________

UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . $ 1,621,177 $ 1,234,286

____________ ____________

CAPITAL SHARE TRANSACTIONS:

Restricted Class Shares Shares Shares*
____________ ____________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,946,584 1,084,972
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 182,513 88,731
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (802,212) (515,657)

____________ ____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . 1,326,885 658,046
____________ ____________

Investor Class Shares
__________________

Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,421 20,560
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 78,947 53,686
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,536) (353)
____________ ____________

Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . 139,832 73,893
____________ ____________

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

* Effective August 7, 1997, Retail shares were redesignated as Restricted Class
shares and Institutional shares were redesignated as Investor Class shares.

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

Year Ended Year Ended
September 30, 1998 September 30, 1997*
______________ _______________

OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,596,661 $ 5,236,005
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . 4,470,025 21,316,664
Net unrealized appreciation (depreciation) on investments . . . . . . . . (872,552) 8,099,227
_____________ _____________

Net Increase (Decrease) in Net Assets Resulting from Operations . 11,194,134 34,651,896
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:

Investment income--net:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (5,849,219) (2,784,722)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (32,948) --
Net realized gain on investments:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (21,725,669) (2,498,058)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (126,391) (2,967)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . (27,734,227) (5,285,747)
_____________ _____________

CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 90,798,976 70,834,047
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 3,980,556 576,089
Dividends reinvested:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 27,548,779 5,281,509
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 136,621 2,791
Cost of shares redeemed:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (88,118,244) (57,422,338)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (821,513) (86,232)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions . 33,525,175 19,185,866
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . 16,985,082 48,552,015

NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,388,388 124,836,373
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $190,373,470 $173,388,388
============= =============

UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . $ 5,777,243 $ 4,000,039
_____________ _____________

CAPITAL SHARE TRANSACTIONS:

Restricted Class Shares Shares Shares*
_____________ _____________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,567,273 4,256,585
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 1,762,559 345,875
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,379,862) (3,358,250)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . 1,949,970 1,244,210
============= =============

Investor Class Shares
__________________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,425 30,519
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 8,397 177
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,209) (5,235)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . 196,613 25,461
============= =============

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

* Effective August 7, 1997, Retail shares were redesignated as Restricted Class
shares and Institutional shares were redesignated as Investor Class shares.

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

Year Ended Year Ended
September 30, 1998 September 30, 1997*
______________ _______________

OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,681,377 $ 1,204,683
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . 2,498,256 11,600,750
Net unrealized appreciation (depreciation) on investments . . . . . . . . (2,255,918) 1,930,461
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . 1,923,715 14,735,894
_____________ _____________

DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (1,250,906) (560,123)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (138,717) (222,676)
Net realized gain on investments:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (10,416,640) (2,126,569)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (1,381,134) (978,027)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . (13,187,397) (3,887,395)
_____________ _____________

CAPITAL STOCK TRANSACTIONS:

Net proceeds from shares sold:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 31,959,042 26,560,356
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 2,944,441 753,257
Dividends reinvested:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . 11,662,994 2,685,803
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . 1,519,851 1,200,579
Cost of shares redeemed:
Restricted Class shares . . . . . . . . . . . . . . . . . . . . . . . (23,893,043) (18,995,072)
Investor Class shares . . . . . . . . . . . . . . . . . . . . . . . . (8,374,798) (10,031,917)
_____________ _____________
Increase (Decrease) in Net Assets from Capital Stock Transactions . 15,818,487 2,173,006
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . 4,554,805 13,021,505

NET ASSETS:

Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,622,185 42,600,680
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,176,990 $ 55,622,185
_____________ _____________
_____________ _____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . $ 1,252,028 $ 931,029
_____________ _____________

CAPITAL SHARE TRANSACTIONS:

Restricted Class Shares Shares Shares*
_____________ _____________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,910,064 1,467,413
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 755,375 168,919
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,403,323) (1,044,750)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . 1,262,116 591,582
============= =============

Investor Class Shares
__________________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,691 38,429
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . 98,055 75,413
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (469,015) (563,616)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . (187,269) (449,774)
============== =============
</TABLE>

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

* Effective August 7, 1997, Retail shares were redesignated as Restricted Class
shares and Institutional shares were redesignated as Investor Class shares.

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., INCOME PORTFOLIO
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>

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 Portfolios' financial statements.

Restricted Class Shares Investor Class Shares
____________________________________ _____________________________________
Year Ended September 30, Year Ended September 30,
____________________________________ __________________________________
PER SHARE DATA: 1998 1997(1) 1996(2) 1995(3) 1998 1997(1) 1996(2) 1995(3)
_______ _______ _______ ______ ______ _______ ______ ______
Net asset value, beginning of
<S> <C> <C> <C> <C> <C> <C> <C> <C>
period . . . . . . . . . . $14.04 $13.42 $13.52 $12.50 $14.01 $13.39 $13.51 $12.50
______ _______ _______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . .61 .71 .64 .40 .65 .72 .73 .39
Net realized and unrealized gain
(loss) on investments . . . . .57 .99 .31 .62 .49 .95 .18 .62
______ _______ _______ ______ ______ ______ ______ ______
Total from Investment Operations . 1.18 1.70 .95 1.02 1.14 1.67 .91 1.01
______ _______ _______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment
income--net . . . . . . . . . (.73) (.65) (.62) -- (.70) (.62) (.60) --
Dividends from net realized gain
on investments . . . . . . . (.71) (.43) (.43) -- (.71) (.43) (.43) --
______ _______ _______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . (1.44) (1.08) (1.05) -- (1.41) (1.05) (1.03) --
______ _______ _______ ______ ______ ______ ______ ______
Net asset value, end of period . $13.78 $14.04 $13.42 $13.52 $13.74 $14.01 $13.39 $13.51
______ _______ _______ ______ ______ ______ ______ ______

TOTAL INVESTMENT RETURN. . . . . . . 9.14% 13.50% 7.30% 8.24%(4) 8.92% 13.19% 7.07% 8.08%(4)

RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets . . . . . . . . . .88% .68% .60% .30%(4) 1.13% .97% .85% .43%(4)
Ratio of net investment income to
average net assets . . . . . 5.15% 5.87% 5.75% 3.08%(4) 4.92% 5.52% 5.50% 2.95%(4)
Decrease reflected in above expense
ratios due to undertakings by
the Manager . . . . . . . . . -- .14% .61% .26%(4) -- .15% .61% .26%(4)
Portfolio Turnover Rate . . . . . 64.58% 72.08% 32.95% 5.66%(4) 64.58% 72.08% 32.95% 5.66%(4)
Net Assets, end of period
(000's Omitted) . . . . . . . $40,582 $22,727 $12,889 $8,141 $11,862 $10,136 $8,701 $8,122

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

(1) Effective August 7, 1997, Retail shares were redesignated as Restricted
Class shares and Institutional shares were redesignated as Investor Class
shares.

(2) Effective July 15, 1996, Class R shares were redesignated as Retail shares
and Investor Class shares were redesignated as Institutional shares.

(3) From March 31, 1995 (commencement of operations) to September 30, 1995.

(4) Not annualized.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH AND INCOME PORTFOLIO
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS (CONTINUED)

Net asset value, beginning of
<S> <C> <C> <C> <C> <C> <C> <C> <C>
period . . . . . . . . . . $18.43 $15.34 $14.31 $12.50 $19.05 $15.43 $14.29 $12.50
_______ _______ _______ ______ ______ _______ ______ ______
Investment Operations:
Investment income--net . . . . . .70 .58 .33 .27 .72(4) .57(4) .90(4) .27
Net realized and unrealized gain
(loss) on investments . . . . .30 3.16 1.60 1.54 .28 3.36 1.12 1.52
_______ _______ _______ ______ ______ _______ ______ ______
Total from Investment Operations . 1.00 3.74 1.93 1.81 1.00 3.93 2.02 1.79
_______ _______ _______ ______ ______ _______ ______ ______

Distributions:
Dividends from investment
income--net . . . . . . . . . (.63) (.34) (.42) -- (.61) -- (.40) --
Dividends from net realized gain
on investments . . . . . . . (2.34) (.31) (.48) -- (2.34) (.31) (.48) --
_______ _______ _______ ______ ______ _______ ______ ______
Total Distributions . . . . . . . (2.97) (.65) (.90) -- (2.95) (.31) (.88) --
_______ _______ _______ ______ ______ _______ ______ ______
Net asset value, end of period . $16.46 $18.43 $15.34 $14.31 $17.10 $19.05 $15.43 $14.29
====== ====== ====== ====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN. . . . . . . 6.28% 25.22% 14.17% 14.48%(5) 6.04% 25.85% 14.84% 14.32%(5)

RATIOS/SUPPLEMENTAL DATA:

Ratio of expenses to average
net assets . . . . . . . . . .84% .78% .75% .38%(5) 1.08% 1.00% 1.00% .51%(5)
Ratio of net investment income to
average net assets . . . . . 4.06% 3.52% 3.60% 2.10%(5) 3.81% 3.58% 3.35% 1.98%(5)
Decrease reflected in above expense
ratios due to undertakings by
the Manager . . . . . . . . . -- .06% .39% .33%(5) -- .05% .39% .33%(5)
Portfolio Turnover Rate . . . . . 76.78% 107.85% 122.52% 33.55%(5) 76.78% 107.85% 122.52% 33.55%(5)
Net Assets, end of period
(000's Omitted) . . . . . . . $186,397 $172,705 $124,677 $9,248 $3,976 $683 $160 $8,602

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

(1) Effective August 7, 1997, Retail shares were redesignated as Restricted
Class shares and Institutional shares were redesignated as Investor Class
shares.

(2) Effective July 15, 1996, Class R shares were redesignated as Retail shares
and Investor Class shares were redesignated as Institutional shares.

(3) From March 31, 1995 (commencement of operations) to September 30, 1995.

(4) Based on average shares outstanding at each month end.

(5) Not annualized.

</TABLE>
<TABLE>
<CAPTION>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC., GROWTH PORTFOLIO
- -----------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (CONTINUED)

Net asset value, beginning of
<S> <C> <C> <C> <C> <C> <C> <C> <C>
period . . . . . . . . . . $20.52 $16.59 $14.84 $12.50 $20.50 $16.58 $14.82 $12.50
_______ _______ _______ ______ ______ _______ ______ ______
Investment Operations:
Investment income--net . . . . . .52 .41 .28 .21 .44(4) .62 .32 .19
Net realized and unrealized gain
(loss) on investments . . . . (.02) 4.94 2.48 2.13 .03 4.68 2.42 2.13
_______ _______ _______ ______ ______ _______ ______ ______
Total from Investment Operations . .50 5.35 2.76 2.34 .47 5.30 2.74 2.32
_______ _______ _______ ______ ______ _______ ______ ______
Distributions:
Dividends from investment
income--net . . . . . . . . . (.55) (.30) (.31) -- (.46) (.26) (.28) --
Dividends from net realized gain
on investments . . . . . . . (4.58) (1.12) (.70) -- (4.58) (1.12) (.70) --
_______ _______ _______ ______ ______ _______ ______ ______
Total Distributions . . . . . . . (5.13) (1.42) (1.01) -- (5.04) (1.38) (.98) --
_______ _______ _______ ______ ______ _______ ______ ______
Net asset value, end of period . $15.89 $20.52 $16.59 $14.84 $15.93 $20.50 $16.58 $14.82
====== ====== ====== ====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN. . . . . . . 3.17% 34.70% 19.73% 18.72%(5) 2.97% 34.32% 19.58% 18.56%(5)

RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets . . . . . . . . . .94% .83% .75% .38%(5) 1.18% 1.06% 1.00% .51%(5)
Ratio of net investment income to
average net assets . . . . . 2.84% 2.38% 2.38% 1.51%(5) 2.65% 2.05% 2.08% 1.39%(5)
Decrease reflected in above expense
ratios due to undertakings by
the Manager . . . . . . . . . -- .20% .53% .26%(5) -- .27% .53% .26%(5)
Portfolio Turnover Rate . . . . . 89.23% 118.49% 77.83% 52.86%(5) 89.23% 118.49% 77.83% 52.86%(5)
Net Assets, end of period
(000's Omitted) . . . . . . . $56,431 $46,960 $28,143 $11,898 $3,746 $8,662 $14,458 $11,939

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

(1) Effective August 7, 1997, Retail shares were redesignated as Restricted
Class shares and Institutional shares were redesignated as Investor Class
shares.

(2) Effective July 15, 1996, Class R shares were redesignated as Retail shares
and Investor Class shares were redesignated as Institutional shares.

(3) From March 31, 1995 (commencement of operations) to September 30, 1995.

(4) Based on average shares outstanding at each month end.

(5) Not annualized.

</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS

NOTE 1--GENERAL:

Dreyfus LifeTime Portfolios, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act") as a diversified open-end
management investment company and operates as a series company currently
offering three Portfolios: the Income Portfolio, the primary investment
objective of which is to maximize current income and the secondary investment
objective of which is capital appreciation, the Growth and Income Portfolio, the
investment objective of which is to maximize total return, consisting of capital
appreciation and current income and the Growth Portfolio, the investment
objective of which is capital appreciation. The Fund accounts separately for the
assets, liabilities and operations of each series. The Dreyfus Corporation (the
"Manager") serves as each Portfolio' s investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned
subsidiary of Mellon Bank Corporation. Mellon Equity Associates ("Mellon
Equity"), an indirect wholly-owned subsidiary of Mellon Bank Corporation, serves
as each Portfolio's sub-investment adviser.

As of September 30, 1998, APT Holdings Corporation, an indirect subsidiary
of Mellon Bank Corporation, held the following shares:

Income Portfolio
___________

Investor Class . . . . .778,816 Restricted Class . . . . . . .783,071

Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund' s shares. The Fund is authorized to issue 50 million shares of
$.001 par value Common Stock in each of the following classes of shares:
Restricted and Investor. Investor Class shares are offered to any investor and
Restricted Class shares are offered only to clients of certain banks, securities
brokers or dealers and other financial institutions (collectively, Service
Agents) that have entered into selling agreements with the Distributor. Other
differences between the classes include the services offered to and the expenses
borne by each class.

The Fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:

(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sales price on the
national securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. 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.

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 the market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.

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

Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized on securities transactions and the difference between the
amount of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in exchange rates. Such gains and losses are included with net
realized and unrealized gain or 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. Under the terms of the custody agreement, each Portfolio receives
net earnings credits based on available cash balances left on deposit. During
the period ended September 30, 1998, each portfolio received the following:

Income Portfolio . . . . . . . . . . . . . . . . . . . . . . . . $ 498

Growth and Income Portfolio . . . . . . . . . . . . . . . . . . 1,232

Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 282

Income earned under this arrangement is included in interest income.

(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 of 1986, as amended (the "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 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 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.

During the period ended September 30, 1998, each Portfolio reclassified the
following amounts from paid-in capital to investment income-net. Net assets were
not affected by these reclassifications.

Income Portfolio . . . . . . . . . . . . . . . $40,288

Growth and Income Portfolio . . . . . . . . . 62,710

Growth Portfolio . . . . . . . . . . . . . . . 29,245

NOTE 3--BANK LINE OF CREDIT:

The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
September 30, 1998, the Fund did not borrow under the Facility.

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--MANAGEMENT FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH
AFFILIATES:

(A) Pursuant to a management agreement with the Manager, the management fee
is computed on the value of each Portfolio' s average daily 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.

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 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 each
Portfolio' s Investor Class shares 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 (a
securities dealer, financial institution, or other industry professional) in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents.

During the period ended September 30, 1998, each Portfolio was charged the
following pursuant to the Shareholder Services Plan:

Income Portfolio . . . . . . . . . . . . . . . . . . . . . . . . $27,990

Growth and Income Portfolio . . . . . . . . . . . . . . . . . . 7,498

Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 14,741

Each Portfolio compensates Dreyfus Transfer, Inc., a wholly-owned
subsidiary of the Manager, under a transfer agency agreement for providing
personnel and facilities to perform transfer agency services for each Portfolio.
During the period ended September 30, 1998, each Portfolio was charged the
following pursuant to the transfer agency agreement:

Income Portfolio . . . . . . . . . . . . . . . . . . . . . . . . $2,340

Growth and Income Portfolio . . . . . . . . . . . . . . . . . . 3,173

Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 4,332

The Fund compensates Mellon under a custody agreement to provide custodial
services for each Portfolio. During the period ended September 30, 1998, each
Portfolio was charged the following pursuant to the custody agreement:

Income Portfolio . . . . . . . . . . . . . . . . . . . . . . . . $ 6,167

Growth and Income Portfolio . . . . . . . . . . . . . . . . . . 26,901

Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . . . 17,580

(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--SECURITIES TRANSACTIONS:

(A) The following summarizes the aggregate amount of purchases and sales of
investment securities, excluding short-term securities, financial futures and
forward currency exchange contracts during the period ended September 30, 1998:

Purchases Sales
______________ ______________

Income Portfolio. . . . . . . . . . $ 28,303,690 $ 17,086,183

Growth and Income Portfolio . . . . 127,541,685 121,946,589

Growth Portfolio. . . . . . . . . . 38,970,738 38,925,129

The Fund enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. When executing forward currency exchange contracts, the Fund
is obligated to buy or sell a foreign currency at a specified rate on a certain
date in the future. With respect to sales of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. At September 30, 1998, there were no open forward currency exchange
contracts.

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. 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 received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at
September 30, 1998 are set forth in the Statements of Financial Futures.

(B) The following summarizes accumulated net unrealized appreciation on
investments and financial futures for each Portfolio at September 30, 1998:
<TABLE>
<CAPTION>

Gross Gross

Appreciation (Depreciation) Net
___________ __________ ___________
<S> <C> <C> <C>
Income Portfolio . . . . . . . . . . $ 1,161,144 $ (124,589) $1,036,555

Growth and Income Portfolio . . . . . 13,054,522 (3,384,545) 9,669,977

Growth Portfolio . . . . . . . . . . 5,618,623 (1,792,663) 3,825,960
</TABLE>

At September 30, 1998, 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 each Portfolio for financial
reporting purposes as of September 30, 1998 was as follows:

Income Portfolio . . . . . . . . . . . . . . . . . . . . . . $ 51,161,137

Growth and Income Portfolio . . . . . . . . . . . . . . . . 179,102,767

Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . 55,951,910

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, 1998, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the years indicated therein. 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 audits.

We conducted our audits 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 and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of September 30, 1998 and
confirmation of securities not held by the custodian by correspondence with
others. 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 audits provide 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 Dreyfus LifeTime Portfolios, Inc.
at September 30, 1998, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the indicated years, in
conformity with generally accepted accounting principles.

New York, New York

November 5, 1998

DREYFUS LIFETIME PORTFOLIOS, INC.
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)

In accordance with Federal and State (where applicable) tax law, Dreyfus
LifeTime Portfolios, Inc. (Income Portfolio, Growth and Income Portfolio and
Growth Portfolio) hereby make the following designations of dividends and
distributions paid during the fiscal year ended September 30, 1998:

Long-Term
Capital Gains Qualifying Interest From
Distribution Payable Ordinary U.S. Government
Per Share Date Dividends Obligations
___________ _________ ______________ ______________
<S> <C> <C> <C> <C>
Income Portfolio. . . . . . . . . . . . . . . . $ .45 12/16/97 Not Applicable 67.037%

Growth and Income Portfolio . . . . . . . . . . $1.02 12/16/97 4.030% Not Applicable

Growth Portfolio. . . . . . . . . . . . . . . . $2.94 12/16/97 4.362% Not Applicable
</TABLE>

The percentage of qualifying ordinary dividends shown qualify for the
corporate dividends received deduction. Shareholders will receive notification
in January 1999 of the percentage applicable to the preparation of their 1998
income tax returns.

The percentage shown for interest from U.S. Government Obligations
represents the percentage of ordinary dividends attributable to interest income
from direct obligations of the United States. Such portion of the dividend is
currently exempt from taxation for individual income tax purposes in most
states, including New York, California and the District of Columbia.

<PAGE>

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE INVESTOR SHARES
AND RESTRICTED 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

EXHIBIT A:
DREYFUS DREYFUS
LIFETIME LIFETIME
PORTFOLIOS PORTFOLIOS STANDARD
-GROWTH AND -GROWTH AND & POOR'S 500
INCOME INCOME COMPOSITE
PORTFOLIO PORTFOLIO STOCK CUSTOMIZED
PERIOD (INVESTOR (RESTRICTED PRICE BLENDED
SHARES) SHARES) INDEX * INDEX **

3/31/95 10,000 10,000 10,000 10,000
9/30/95 11,432 11,448 11,823 11,241
9/30/96 13,128 13,070 14,226 12,619
9/30/97 16,521 16,366 19,976 15,520
9/30/98 17,519 17,394 21,791 16,533

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

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

EXHIBIT A:

DREYFUS DREYFUS LEHMAN
LIFETIME LIFETIME BROTHERS
PORTFOLIOS PORTFOLIOS INTERMEDIATE
-INCOME -INCOME GOVERNMENT /
PORTFOLIO PORTFOLIO CORPORATE CUSTOMIZED
(INVESTOR (RESTRICTED BOND BLENDED
PERIOD SHARES) SHARES) INDEX * INDEX **

3/31/95 10,000 10,000 10,000 10,000
9/30/95 10,808 10,824 10,673 10,893
9/30/96 11,573 11,615 11,221 11,824
9/30/97 13,099 13,183 12,140 13,615
9/30/98 14,268 14,388 13,407 14,921

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

<PAGE>

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

EXHIBIT A:

DREYFUS DREYFUS
LIFETIME LIFETIME STANDARD
PORTFOLIOS PORTFOLIOS & POOR'S 500
-GROWTH -GROWTH COMPOSITE
PORTFOLIO PORTFOLIO STOCK CUSTOMIZED
PERIOD (INVESTOR (RESTRICTED PRICE BLENDED
SHARES) SHARES) INDEX * INDEX **

3/31/95 10,000 10,000 10,000 10,000
9/30/95 11,856 11,872 11,823 11,545
9/30/96 14,177 14,214 14,226 13,399
9/30/97 19,043 19,146 19,976 17,551
9/30/98 19,610 19,752 21,791 18,169

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

<PAGE>

Dreyfus
Asset Allocation
Fund, Inc.
Annual Report

April 30, 1998

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Letter to Shareholders

Dear Shareholder:

We are pleased to provide you with this report for Dreyfus Asset Allocation
Fund, Inc. for the 12-month period ended April 30, 1998. Your Fund produced a
total return of 34.33%,* which compares to a total return of 41.06% for the
Standard & Poor's 500 Composite Stock Price Index (the S&P 500),** which is made
up entirely of common stocks, and 10.91% for the Lehman Brothers Aggregate Bond
Index.*** A more accurate measure of the performance of the Fund is against a
special customized blended index which, like the Fund, is composed of bonds and
cash equivalents as well as stocks. This benchmark index had a total return of
26.66% during the same period.+

ECONOMIC REVIEW

Although real Gross Domestic Product (GDP) sustained a growth trend
approaching 4% into the first quarter, incoming evidence suggests a shift to
somewhat slower economic growth in coming months. Aggregate profit margins
already have begun to narrow in some sectors. The conflicting pressures of a
softening economy and a still tightening labor market have kept the Federal
Reserve Board in neutral, although a bias favoring higher policy rates was
resumed recently. Market interest rates have likewise stayed within a narrow
range in recent months.

While manufacturing has turned appreciably sluggish since year-end, this
was overshadowed in the first quarter by a strong rebound in domestic demand.
The industrial sector has been slowed by the strong dollar and by weak exports.
However, with Asian economies still in turmoil, competition from Asian-made
imports has emerged only gradually. The first quarter rebound in domestic demand
was fueled primarily by strong housing market conditions and rising real
household incomes, but additionally by several short-lived influences.

Rising real wages that have been such a boon to consumers in recent months
may also be taking a toll on corporate profit margins. The first sign of profit
pressure was seen last year as the dollar strengthened. This year, profit
margins have eroded further due to weak exports and falling prices in some
sectors. Accelerating wage growth that is apparent alongside limited pricing
power may also prove a harbinger of profit margin erosion. Hence, a shift to
slower economic growth that coexists with rising wage pressures creates a
further risk to overall profit growth.

The above pressures have kept Fed policy unchanged until now. However, we
believe that policy makers are more concerned about wage growth than economic
strains, as evidenced by a recent shift towards a tightening bias. Although
long-term bond yields were below year-ago levels at the end of April,
substantially lower yields have proven difficult to attain in the absence of
lower short-term rates. This too could restrain the economic growth rate.

MARKET OVERVIEW--STOCKS

Equity prices during recent months continued to display considerable
volatility, most of the time on the upside. Last November, the markets were
still trying to recover from the financial crisis in Asia. As the months went
by, however, the U.S. equity markets rebounded from that severe blow.

Early in the New Year, there were temporary setbacks due to worries about
inflation and concern about the corporate profit outlook. By midwinter, however,
the markets resumed their upward surge, which continued almost unbroken until
interest rate jitters struck again in late April. This time the cause was a
press report that the Fed was going to tilt its policy toward tightening credit.

As it turned out, even that scare was short-lived and, as the month of May
began, stock prices set new records once again, especially the stocks of the
large-capitalized corporations.

<PAGE>
Despite the impressive gains in the broad market averages, it was not a
market that would allow investors simply to sit back and relax. Some
commentators had begun to refer to it as the "bubble market," a market that
could inflate to record heights one week, yet the next week could be deflated
just as quickly by unexpected national, international and corporate news.

Now that most first-quarter corporate profits have been reported, it is
apparent that the quarter saw a slowdown in total profits. While some analysts
believe there could be an increase in the growth of earnings in the second
quarter and beyond, many skeptics believe such possible increases to be
overoptimistic. The skeptics have cited several factors:

* possible delayed reaction to the collapse of Asian markets;

* the ever-present possibility that the Fed could still raise interest rates;

* the approaching shadow of the midterm elections next fall, with all the
political acrimony they could bring.

There was also the risk that Fed Chairman Greenspan might once again warn
against excessive enthusiasm in the equity markets, as he did in late 1996 when
he spoke of "irrational exuberance."

In this atmosphere, wary investors were as quick to sell as to buy,
depending on the ebb and flow of economic and political news. Volatility, it
appeared, was a condition the markets would need to live with for some time to
come, in rising as well as in falling markets.

MARKET OVERVIEW--BONDS

Last fall, the U.S. bond market experienced a "flight to quality" as global
equity markets attempted to stabilize after sharp corrections caused by the
troubles in Asia. Investors in search of a safe haven bid the yield on the
10-year Treasury note down to 5.375% by mid-January. It was about this time that
equity markets around the world began to stabilize and the bond market moved
into a trading range, with the 10-year Treasury note trading between 5.40% and
5.80% for the remainder of the reporting period.

Continued good news on the inflation front has enabled investors to shake
off strong employment reports and support the market. Even though labor markets
are perceived as being tight and overall economic growth remains strong, the
yield curve flattened slightly during the reporting period. This suggested that
investors expect the Federal Reserve to hold off any credit tightening for now,
in spite of the recent pressures.

PORTFOLIO FOCUS

There are basically three decision levels for the Dreyfus Asset Allocation
Fund: the asset allocation, the equity holdings, and the fixed income holdings:

Asset Allocation

The Fund generally maintained an equity allocation close to the top of the
permitted range during most of the past year. We believed that the investment
environment for the stock market remained positive and wanted to maximize the
Fund's participation in this asset class. In October and again in March, we
reduced the equity allocation to a more neutral exposure based primarily on a
view that stock market valuations are extended along with a less favorable
outlook for corporate profits. We do not believe an equity bear market is
imminent, but merely that the return on equities going forward is more likely to
be in line with historical averages and comparable to that of fixed-income
investments. We increased the allocation to bonds and cash to a neutral weight
from an underweight position when we reduced our equity exposure. This asset
allocation strategy was a positive addition to performance results.

<PAGE>
Equity Holdings

Equity investment results benefited from being overweight in industries
such as oil services, cement, retail drug stores and railroads. Specific
holdings that added to results are Cooper Cameron, Coflexip SA, Lone Star
Industries, Southdown, CVS, Rite Aid and Kansas City Southern Industries.
Relative performance results were penalized by holdings including Fruit of the
Loom Cl.A, La Quinta Inns, and OMI Corp.

Fixed Income Holdings

The fixed income portfolio was positioned with duration at times moderately
longer than the Lehman Brothers Aggregate Bond Index benchmark and at times
moderately shorter. The timing of these moves on balance added to the Fund's
returns. The Fund also benefited from an allocation to several convertible
bonds, high yield securities, and mortgage related securities. The allocation to
corporate bonds had a near neutral impact on performance.

As always, our objective is to maximize total return of the Fund through
asset allocation and management of the equity, fixed income, and cash portions
of the Fund. It is both an honor and a pleasure to be managing your investment
assets.

Sincerely,

/s/ Kevin M. McClintock

Kevin M. McClintock
Senior Portfolio Manager
Dreyfus Asset Allocation Fund, Inc.

May 18, 1998
New York, N.Y.

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

** SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.

*** SOURCE: LEHMAN BROTHERS--The Lehman Brothers Aggregate Bond Index is a
widely accepted unmanaged index of corporate, government and government
agency debt instruments, mortgage-backed securities and asset-backed
securities. Reflects reinvestment of dividends and capital gains.

+ The Customized Blended Index has been prepared by the Fund and is intended
to be a more accurate comparison to its general portfolio composition than
the Standard & Poor's 500 Composite Stock Price Index alone. We have
combined the performance of unmanaged indices that reflect benchmark
percentages with respect to each asset class in which the Fund invests as
described in its Prospectus: 55% equity securities, 35% fixed-income
securities, and 10% short-term money market instruments. The Customized
Blended Index combines returns from the Standard & Poor's 500 Composite
Stock Price Index, the Lehman Brothers Aggregate Bond Index, and the Bank
Rate Monitor Index of money market returns and is weighted to the benchmark
percentages.

<PAGE>
Dreyfus Asset Allocation Fund, Inc. April 30, 1998
- -------------------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS ASSET ALLOCATION
FUND, INC. WITH THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX AND A
CUSTOMIZED BLENDED INDEX

Dollars

$27,598
Standard & Poor's 500
Composite Stock
Price Index*

$20,878
Dreyfus Asset Allocation
Fund, Inc.

$20,113
Customized
Blended Index**

* Source: Lipper Analytical Services, Inc.

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

Average Annual Total Returns
- -----------------------------------------------------------------------------

One Year Ended From Inception (7/1/93)
April 30, 1998 to April 30, 1998
-------------- -----------------------
34.33% 16.46%
- --------------
Past performance is not predictive of future performance.

The above graph compares a $10,000 investment made in Dreyfus Asset
Allocation Fund, Inc. on 7/1/93 (Inception Date) to a $10,000 investment made on
that date in the Standard & Poor's 500 Composite Stock Price Index, as well as
to a Customized Blended Index reflecting the Portfolio's benchmark percentage
allocations. For comparative purposes, the value of each Index on 6/30/93 is
used as the beginning value on 7/1/93. The Customized Blended Index is
calculated on a year to year basis. All dividends and capital gain distributions
are reinvested.

The Fund allocates your money among stocks, fixed-income securities and
money market instruments. The Fund's performance shown in the line graph takes
into account all applicable fees and expenses. The Standard & Poor's 500
Composite Stock Price Index is a widely accepted, unmanaged index of overall
stock market performance which does not take into account charges, fees and
other expenses. The Customized Blended Index has been prepared by the Fund for
purposes of more accurate comparison to the Fund's general portfolio
composition. We have combined the performance of unmanaged indices reflecting
the benchmark percentages set forth in the Prospectus: 55% common stocks, 35%
fixed-income securities 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 Standard &
Poor's 500 Composite Stock Price Index, the Lehman Brothers Aggregate Bond Index
and the Bank Rate Monitor Index of money market returns, and is weighted to the
aforementioned benchmark percentages. Further information relating to Fund
performance, including expense reimbursements, if applicable, is contained in
the Financial Highlights section of the Prospectus and elsewhere in this report.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Investments April 30, 1998
<TABLE>
<CAPTION>
Principal
Bond and Notes--19.5% Amount Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Commercial Mortgage--3.1% GMAC Commercial Mortgage Securities,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1996-C1, Cl. E, 7.86%, 2006........... $ 1,000,000 $ 1,000,938
Nomura Asset Securities,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1998-D6, Cl. A4, 7.349%, 2028......... 2,000,000 1,979,688
-----------
2,980,626
-----------
Financial--5.6% Hyatt Equities, Notes,
6.80%, 2000................................ 500,000 (b) 507,263
IBJ Preferred Capital, Bonds,
8.79%, 2049................................ 2,000,000 (b) 1,899,654
Presidential Life, Sr. Notes,
9.50%, 2000................................ 850,000 873,405
Sumitomo Bank Treasury, Bonds,
9.40%, 2049................................ 2,000,000 (b) 2,033,958
-----------
5,314,280
-----------

Industrial--2.3% Dual Drilling, Sr. Sub. Notes,
9.875%, 2004............................... 500,000 535,000
Philip Morris Cos., Notes,
6.95%, 2006................................ 500,000 515,090
Xerox, Sub Deb.,
Zero Coupon, 2018.......................... 1,800,000 (b) 1,080,000
-----------
2,130,090
-----------

Residential Mortgage--2.2% Norwest Asset Securities,
Mortgage Pass-Through Ctfs.:
Ser. 1997-11, B-2, 7%, 2027............. 523,411 515,233
Ser. 1997-11, B-3, 7%, 2027............. 747,872 (b) 695,287
Ser. 1998-13, B-4, 6.25%, 2028.......... 750,000 (d) 676,640
Ser. 1998-13, B-5, 6.25%, 2028.......... 250,000 (b,d) 188,750
-----------
2,075,910
-----------

Utilities--1.7% Indiantown Cogeneration, L.P., First Mortgage,
Ser. A-10, 9.77%, 2020..................... 1,000,000 1,214,761
Korea Electric Power, Deb.,
7.75%, 2013................................ 500,000 431,985
-----------
1,646,746
-----------

U.S. Government &
Agencies--4.6% Federal Home Loan Mortgage,
6.50%, 3/1/2028............................ 2,000,000 (d) 1,980,000
Federal Home Loan Mortgage, REMIC,
Multiclass Mortgage Participation Ctfs.,
Ser. 1999, Cl. PW, 7%, 8/15/2026........... 3,755,714 (a) 881,419
Federal National Mortgage Association,
9%, 8/1/2026............................... 589,588 624,964
</TABLE>

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998
<TABLE>
<CAPTION>
Principal
Bond and Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
U.S. Government &
Agencies (continued) Federal National Mortgage Association REMIC Trust,
Gtd. Pass-Through Ctfs.:
Ser. 1993-86, Cl. HA, 9.64%, 6/25/2008.. $ 1,000,000 (a) $ 473,224
Ser. 1997-40, Cl. PF, 7%, 12/18/2026.... 1,000,000 (a) 410,090
-----------
4,369,697
-----------
TOTAL BONDS AND NOTES
(cost $18,398,894)......................... $18,517,349
-----------
-----------

Common Stocks--71.1% Shares
- ------------------------------------------------------------------------------ -----------
Consumer Non-durables--6.2% Dreyer's Grand Ice Cream...................... 85,600 $ 2,161,400
Philip Morris Cos............................. 29,900 1,115,644
Ralcorp Holdings.............................. 50,000 (e) 993,750
Ralston-Purina Group.......................... 15,000 1,590,000
-----------
5,860,794
-----------

Consumer Services--2.1% Scandinavian Broadcasting System.............. 55,000 (e) 1,746,250
Spanish Broadcasting System (Warrants)........ 1,000 (b) 205,000
-----------
1,951,250
-----------

Electronic Technology--11.9% Intel......................................... 16,300 1,317,244
Novellus Systems.............................. 55,000 (e) 2,633,125
PRI Automation................................ 78,000 (e) 2,086,500
Quantum....................................... 95,000 (e) 2,232,500
Texas Instruments............................. 47,000 (c) 3,010,937
-----------
11,280,306
-----------

Finance--4.9% BankBoston.................................... 8,000 863,500
Bankers Trust NY.............................. 7,000 903,875
Fleet Financial Group......................... 10,500 906,937
Wells Fargo................................... 5,300 1,953,050
-----------
4,627,362
-----------

Health Services--1.1% IDX Systems................................... 25,000 (e) 1,089,063
-----------

Health Technology--11.7% American Home Products........................ 20,000 1,862,500
Biogen........................................ 33,000 (e) 1,464,375
Genzyme--General Division..................... 75,000 (e) 2,320,313
Gilead Sciences............................... 65,000 (e) 2,470,000
Pharmacyclics................................. 45,000 (e) 1,220,625
SmithKline Beecham A.D.S...................... 30,000 1,786,875
-----------
11,124,688
-----------

</TABLE>

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Industrial Services--8.1% Cooper Cameron................................ 36,000 (e) $ 2,391,750
ENSCO International........................... 60,000 1,695,000
U.S.A. Waste Service.......................... 35,000 (e) 1,717,187
Waste Management.............................. 55,000 1,842,500
-----------
7,646,437
-----------

Non-Energy Minerals--3.6% Aluminum Co. of America....................... 23,000 1,782,500
Phelps Dodge.................................. 25,000 1,678,125
-----------
3,460,625
-----------

Producer Manufacturing--5.9% Harsco........................................ 40,000 1,840,000
MagneTek...................................... 95,000 (e) 1,870,313
Xerox......................................... 17,000 1,929,500
-----------
5,639,813
-----------

Retail Trade--4.2% American Stores............................... 70,000 1,680,000
Rite Aid...................................... 72,000 2,313,000
-----------
3,993,000
-----------

Transportation--9.3% Kansas City Southern Industries............... 89,000 4,021,688
OMI........................................... 145,000 (e) 1,395,625
Teekay Shipping............................... 47,000 1,445,250
Union Pacific................................. 35,000 1,916,250
-----------
8,778,813
-----------

Utilities--2.1% AES........................................... 36,600 (e) 2,019,862
-----------
TOTAL COMMON STOCKS
(cost $60,068,451)......................... 36,600 $67,472,013
-----------
-----------

Convertible Preferred Stocks--6.3%
- -------------------------------------------------------------------------------
Energy Minerals: Sanwa Fin., 1.25% (Units).................... 130 (b) $ 2,845,430
Union Pacific Cap. Trust, 6.25%.............. 60,000 (b) 3,142,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $6,104,848).......................... $ 5,987,930
-----------
-----------
Preferred Stocks--1.9%
- -------------------------------------------------------------------------------
Consumer Services; Spanish Broadcasting System
(cost $1,600,418).......................... 1,677 (b) $ 1,761,457
-----------
-----------
</TABLE>

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Investments (continued) April 30, 1998
<TABLE>
<CAPTION>
Principal
Short-Term Investments--5.6% Amount Value
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
U.S. Treasury Bills: 4.95%, 5/28/98................................ $ 170,000 (f) $ 169,419
4.89%, 7/2/98................................. 416,000 (f) 412,531
4.87%, 7/23/98................................ 4,553,000 4,502,188
4.90%, 7/30/98................................ 273,000 269,688
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $5,353,166).......................... $ 5,353,826
-----------
-----------

TOTAL INVESTMENTS (cost $91,525,777)........................................... 104.4% $99,092,575
------ -----------
------ -----------

LIABILITIES, LESS CASH AND RECEIVABLES......................................... (4.4%) $(4,196,247)
------ -----------
------ -----------

NET ASSETS..................................................................... 100.0% $94,896,328
------ -----------
------ -----------
</TABLE>

Notes to Statement of Investments:
- ------------------------------------------------------------------------------

(a) Notional face amount shown. Interest only obligation.

(b) Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1998,
these securities amounted to $14,359,299 or approximately 15.1% of net
assets.

(d) Purchased on a forward commitment basis.

(e) Non-income producing.

(f) Held by the custodian in a segregated account as collateral for open
financial futures positions.

Statement of Financial Futures April 30, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value Unrealized
Covered (Depreciation)
Contracts by Contracts Expiration at 4/30/98
-------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
30 Year U.S. Treasury Bond (long)................ 14 $ 1,683,063 June '98 $ (12,359)
S & P 500 (short)................................ 36 10,072,800 June '98 (331,176)
5 Year U.S. Treasury Notes (short)............... 7 762,234 June '98 (984)
---------
$(344,519)
---------
---------
</TABLE>
See notes to financial statements.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998
<TABLE>
<CAPTION>
Cost Value
----------- -----------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments................................... $91,525,777 $99,092,575
Cash............................................. 492,830
Dividends and interest receivable................ 306,654
Net unrealized appreciation on forward currency
exchange contracts--Note 4(a).................. 120,705
Receivable for shares of Common Stock
subscribed.................................... 1,500
Prepaid expenses................................. 6,476
-----------
100,020,740
-----------

LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 77,422
Due to Distributor............................... 19,274
Payable for investment securities purchased...... 4,768,081
Payable for futures variation margin--Note 4(a).. 183,991
Payable for shares of Common Stock redeemed...... 15,297
Accrued expenses................................. 60,347
-----------
5,124,412
-----------

NET ASSETS..................................................................... $94,896,328
-----------
-----------

REPRESENTED BY: Paid-in capital.................................. $80,807,483
Accumulated undistributed investment income--net. 432,228
Accumulated net realized gain (loss) on
investments.................................... 6,313,633
Accumulated net unrealized appreciation
(depreciation) on investments [including
($344,519) net unrealized (depreciation) on
financial futures]--Note 4(b).................. 7,342,984
-----------

NET ASSETS..................................................................... $94,896,328
-----------
-----------
SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized)................ 6,124,861

NET ASSET VALUE, offering and redemption price per share....................... $15.49
------
------
</TABLE>

See notes to financial statements.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Operations Year Ended April 30, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME

INCOME: Interest.......................................... $ 1,337,380
Cash dividends (net of $4,536 foreign taxes
withheld at source)............................. 880,095
-----------
Total Income.................................... $ 2,217,475

EXPENSES: Management fee--Note 3(a)......................... 586,043
Shareholder servicing costs--Note 3(b)............ 249,120
Registration fees................................. 43,201
Professional fees................................. 40,197
Custodian fees--Note 3(b)......................... 24,037
Directors' fees and expenses--Note 3(c)........... 21,768
Prospectus and shareholders' reports.............. 12,043
Loan commitment fees--Note 2...................... 633
Miscellaneous..................................... 17,238
-----------
Total Expenses.................................. 994,280
-----------

INVESTMENT INCOME--NET.......................................................... 1,223,195
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and
foreign currency transactions:
Long transactions........................... $18,276,397
Short sale transactions..................... (196,174)
Net realized gain (loss) on forward currency
exchange contracts............................. 118,438
Net realized gain (loss) on financial futures:
Long transactions........................... 450,229
Short transactions.......................... (10,901)
-----------
Net Realized Gain (Loss)................. 18,637,989
Net unrealized appreciation (depreciation) on
investments [including ($344,144) net unrealized
(depreciation) on financial futures]........... 2,093,613
-----------

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 20,731,602
-----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $21,954,797
-----------
-----------
</TABLE>

See notes to financial statements.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................. $ 1,223,195 $ 1,278,329
Net realized gain (loss) on investments................................ 18,637,989 3,602,948
Net unrealized appreciation (depreciation) on investments.............. 2,093,613 4,067,820
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 21,954,797 8,949,097
------------ ------------

DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.................................................. (1,063,176) (1,364,500)
Net realized gain on investments....................................... (15,907,775) (2,536,364)
------------ ------------
Total Dividends.................................................. (16,970,951) (3,900,864)
------------ ------------

CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 48,997,788 37,388,539
Dividends reinvested................................................... 16,384,058 3,751,463
Cost of shares redeemed................................................ (36,325,090) (48,272,464)
------------ ------------
Increase (Decrease) in Net Assets from Capital Stock Transactions 29,056,756 (7,132,462)
------------ ------------
Total Increase (Decrease) in Net Assets....................... 34,040,602 (2,084,229)

NET ASSETS:
Beginning of Period.................................................... 60,855,726 62,939,955
------------ ------------
End of Period.......................................................... $ 94,896,328 $ 60,855,726
------------ ------------
------------ ------------
Undistributed investment income--net....................................... $ 432,228 $ 272,209
------------ ------------

Shares Shares
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 3,100,069 2,577,794
Shares issued for dividends reinvested................................. 1,167,787 272,042
Shares redeemed........................................................ (2,287,416) (3,370,046)
------------ ------------
Net Increase (Decrease) in Shares Outstanding....................... 1,980,440 (520,210)
------------ ------------
------------ ------------

</TABLE>
See notes to financial statements.

<PAGE>
Dreyfus Asset Allocation Fund, 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 period indicated. This information has been
derived from the Fund's financial statements.

<TABLE>
<CAPTION>
Year Ended April 30,
------------------------------------------------------
PER SHARE DATA: 1998 1997 1996 1995 1994(1)
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $14.68 $13.49 $13.81 $12.49 $12.50
------ ------ ------ ------ ------
Investment Operations:
Investment income--net............................ .24 .33 .32 .39 .24
Net realized and unrealized gain (loss) on
investments..................................... 4.40 1.83 1.70 1.35 (.11)
------ ------ ------ ------ ------
Total from Investment Operations.................. 4.64 2.16 2.02 1.74 .13
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net............. (.24) (.34) (.38) (.37) (.13)
Dividends from net realized gain on investments... (3.59) (.63) (1.96) (.05) (.01)
------ ------ ------ ------ ------
Total Distributions............................... (3.83) (.97) (2.34) (.42) (.14)
------ ------ ------ ------ ------
Net asset value, end of period.................... $15.49 $14.68 $13.49 $13.81 $12.49
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN.............................. 34.33% 16.49% 15.67% 14.22% .99%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 1.27% 1.31% 1.25% .67% .16%(2)
Ratio of net investment income to average net
assets.......................................... 1.57% 2.12% 2.16% 3.00% 2.48%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager............. -- -- .27% 1.27% 1.58%(2)
Portfolio Turnover Rate........................... 262.74% 223.50% 370.06% 160.11% --
Net Assets, end of period (000's Omitted)......... $94,896 $60,856 $62,940 $56,639 $51,063
<FN>
- ------------------
(1) From July 1, 1993 (commencement of operations) to April 30, 1994.
(2) Not annualized.
</FN>
</TABLE>

See notes to financial statements.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS

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. The Fund's investment objective is to maximize total return,
consisting of capital appreciation and current income. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"). Premier Mutual Fund Services, Inc.
(the "Distributor") is the distributor of the Fund's shares, which are sold to
the public without a sales charge.

The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.

(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.
Forward currency exchange contracts are valued at the forward rate.

(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, currency gains
or losses realized on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in exchange rates. Such gains and losses are included with net
realized and unrealized gain or 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) 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 Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the policy
of the Fund not to distribute such gain.

(e) Federal income taxes: It is the policy of the Fund 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.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 2--Bank Line of Credit:

The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") primarily to be utilized for temporary
or emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended April
30, 1998, the Fund did not borrow under the Facility.

NOTE 3--Management Fee and Other Transactions With Affiliates:

(a) Pursuant to a management agreement with the Manager, the management fee
is computed at the annual rate of .75 of 1% of the value of the Fund's average
daily net assets and is payable monthly.

(b) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund'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 Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents (a securities dealer,
financial institution, or other industry professional) in respect of these
services. The Distributor determines the amounts to be paid to Service Agents.
During the period ended April 30, 1998, the Fund was charged $195,348 pursuant
to the Shareholder Services Plan.

The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended April 30, 1998, the Fund was charged $41,063 pursuant to the transfer
agency agreement.

The Fund compensates Mellon under a custody agreement to provide custodial
services for the Fund. During the period ended April 30, 1998, the Fund was
charged $24,037 pursuant to the custody agreement.

(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 and securities sold short, excluding short-term
securities, forward currency exchange contracts and financial futures, during
the period ended April 30, 1998:

<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Long transactions....................................... $217,387,986 $205,010,205
Short sale transactions................................. 1,588,777 1,392,603
------------ ------------
Total............................................... $218,976,763 $206,402,808
============ ============
</TABLE>

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)

The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at current market value. The
Fund would incur a loss if the price of the security increases between the date
of the short sale and the date on which the Fund replaces the borrowed security.
The Fund would realize a gain if the price of the security declines between
those dates. Until the Fund replaces the borrowed security, the Fund will
maintain daily, a segregated account with a broker and custodian, of cash and/or
U.S. Government securities sufficient to cover its short position. At April 30,
1998, there were no securities sold short outstanding.

The following summarizes open forward currency exchange contracts at April
30, 1998:

<TABLE>
<CAPTION>
Foreign Currency Unrealized
Forward Currency Exchange Contracts Amount Proceeds Value Appreciation
- --------------------------------- --------------- ----------- ----------- -------------
Sales:
- -----
<S> <C> <C> <C> <C>
Japanese Yen, expiring 5/18/98.............. 390,000,000 $3,064,712 $2,944,007 $ 120,705
---------
---------
</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. 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. Accordingly, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the Fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. Contracts open at April
30, 1998 are set forth in the Statement of Financial Futures.

(b) At April 30, 1998, accumulated net unrealized appreciation on
investments, forward currency exchange contracts and financial futures was
$7,342,984, consisting of $8,977,338 gross unrealized appreciation and
$1,634,354 gross unrealized depreciation.

At April 30, 1998, 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.
- ------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors

Shareholders and Board of Directors
Dreyfus Asset Allocation Fund, Inc.

We have audited the accompanying statement of assets and liabilities,
including the statements of investments and financial futures, of Dreyfus Asset
Allocation Fund, Inc., as of April 30, 1998, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and financial highlights for
each of the years indicated therein. 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 audits.

We conducted our audits 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 and financial highlights. Our procedures included verification by
examination of securities held as of April 30, 1998 and confirmation of
securities not held by the custodian by correspondence with others. 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 audits provide 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. at April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

New York, New York
June 3, 1998

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
- ------------------------------------------------------------------------------
Important Tax Information (Unaudited)

For Federal tax purposes the Fund hereby designates $.7620 per share as a
long-term capital gain distribution (of which 25.39% is subject to the 20%
maximum Federal tax rate) of the $3.831 per share paid on December 11, 1997.

The Fund also designates 5.80% of the ordinary dividends paid during the
fiscal year ended April 30, 1998 as qualifying for the corporate dividends
received deduction. Shareholders will receive notification in January 1999 of
the percentage applicable to the preparation of their 1998 income tax returns.

<PAGE>
Dreyfus Asset Allocation Fund, Inc.
200 Park Avenue
New York, NY 10166

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

Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258

Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940

Printed in U.S.A. 550AR984

<PAGE>

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS
ASSET ALLOCATION FUND, INC. WITH THE STANDARD & POOR'S 500
COMPOSITE STOCK PRICE INDEX AND A CUSTOMIZED BLENDED INDEX

EXHIBIT A:

STANDARD
& POOR'S
DREYFUS 500
ASSET COMPOSITE
PERIOD ALLOCATION STOCK CUSTOMIZED
FUND, PRICE BLENDED
INC. INDEX * INDEX **

7/1/93 10,000 10,000 10,000
4/30/94 10,099 10,227 10,107
4/30/95 11,535 12,010 11,362
4/30/96 13,342 15,636 13,623
4/30/97 15,542 19,564 15,879
4/30/98 20,878 27,598 20,113

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

<PAGE>

Dreyfus
Asset Allocation
Fund, Inc.
Annual Report

April 30, 1998

DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

LETTER TO SHAREHOLDERS

Dear Shareholder:

We are pleased to provide you with this report for Dreyfus Asset Allocation
Fund, Inc. for the six-month period ended October 31, 1998. This period was
marked by unusual volatility in the stock and bond markets. Your Fund produced a
total return of -9.94%,* which compares with a total return of -0.40% for the
Standard & Poor' s 500 Composite Stock Price Index,** which is made up entirely
of common stocks, and a total return of 5.55% for the Lehman Brothers Aggregate
Bond Index.*** We believe that a more accurate measure of the performance of the
Fund is against a special customized blended index, which, like the Fund, is
composed of bonds and cash equivalents as well as stocks. This benchmark index
had a total return of 1.85% during the same period.(+)

Economic Review

So far in 1998, the main regions of the world have had very different
economic fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year. The U.S. economy cooled enough over the months that the Fed decided to
stand pat. Evidence of economic cooling continued to accumulate and worries
about the world economy intensified. Financial stresses pushed the Fed to ease
credit in both late September and mid-October. After many years of subpar
economic growth, continental Europe moved into a sustained economic expansion.
The overall European economy benefited as interest rates in peripheral countries
such as Spain and Italy fell, approaching the lower levels established by
Germany, on the eve of currency unification. Unlike the U.S., Europe has
substantial excess capacity of productive plant and labor. In Asia, weak
economies were pervasive as a result of the Asian financial crisis. The Latin
American economies weakened as the financial stresses spread throughout that
region.

The negative effect of Asian weakness was felt in the industrial sector
more than in the consumer sector. Corporate profits weakened, especially in
sectors affected by the Asian crisis such as world-traded commodities (oil,
metals and paper) and exports. One result of this industrial weakness was to
cool off a U.S. economy that had been growing rapidly.

Evidence of a weaker world economy accumulated as the financial stresses
continued. A worsened financial crisis occurred between the Russian default in
mid-August and the fallout from the Long-Term Capital Management (hedge fund)
crisis through early October. However, proactive steps were taken to stabilize
the Japanese banks, design a support package for Brazil and ease monetary
policy. The prospects for world economic weakness and monetary ease in the major
countries will be powerfully influenced by whether foreign financial stresses
calm down or intensify in the coming months. There appears to be a shift in the
priorities of key policymakers from fighting potential inflation to
restimulating future world economic growth.

Market Overview

The six months ended October 31, 1998, encompassed some very different
market phases. There was stock market strength during the early part of the
period. Then small-cap indices started to erode in the spring and were joined by
large-cap indices by midsummer. A sharp decline until the end of August was
followed by a brief rebound and then a renewed decline amid financial fears
until early October. The last few weeks of the fiscal year saw a strong rally in
response to the easing of monetary policy. Returns on mid-cap and small-cap
stock indices tended to be weaker than on large-caps, with a negative total
return on small-cap indices.

Three key trends influenced stock market behavior during the reporting
period. First, the Federal Reserve kept the Federal Funds rate flat at 5.5%
early in the half year, but then eased policy twice. Second, weakness in
emerging country economies contributed to declining commodity prices and a drop
in long-term Treasury bond yields to multidecade lows. Third, expectations for
corporate profits dropped, first in the sectors sensitive to Asian developments
such as oil, basic materials and exports and then for a broader list of stocks.

The trigger for the sharp decline in stocks in August appeared to be the
Russian default in the summer of 1998. This resulted in deepening concerns about
weaker economic growth and corporate profits. There was also a global margin
call on risky assets held by hedge funds and financial institutions. This raised
the cost of debt financing for many corporations and many emerging countries.
Expectations for economic activity in emerging countries in Asia and Latin
America shifted down sharply while expectations for U.S. corporate profits
weakened somewhat. Despite the fall in Treasury bond yields, financial stocks
led the summer selloff due to concerns about financial contagion among emerging
countries and potential loan losses by financial institutions. However, in the
last few weeks of the fiscal year, these fears began to ebb and the stock market
rebounded.

The erosion of expectations about average corporate profit growth over the
last year contributed to an outperformance by a small group of super-cap growth
stocks. Investors had more confidence in the prospect for strong persistent
earnings growth for this small group of stocks than for the broad market. Value
stocks, which often have greater cyclical sensitivity to earnings fluctuations,
lagged behind these super-growth stocks. In addition, many of the financial
stocks that fall into the value category fell sharply following the Russian
default and global margin call concerns.

Portfolio Focus

There are basically three decision levels for the Dreyfus Asset Allocation
Fund: the asset allocation, the equity holdings and the fixed-income holdings.

Asset Allocation

The Fund generally reduced the equity allocation over the past six months
from close to the top of the permitted range to a more neutral weighting. While
we believe that the longer-term investment environment for the stock market
remains positive, there are several aforementioned uncertainties on the horizon
that we think may have a dampening effect on corporate earnings in 1999. We
believe that these uncertainties, while unlikely to produce an equity bear
market, may bring the return on equities more in line with historical averages.
We increased the allocation to bonds and cash to an overweight position from an
underweight position when we reduced our equity exposure. This asset allocation
strategy was a positive addition to performance results up until mid-October
when the Federal Reserve triggered an equity rally by lowering the Fed Funds
interest rate between normally scheduled Federal Reserve Board meetings.

Equity Holdings

Equity investment results benefited from being overweight in industries
such as retail drug stores and pharmaceuticals. Specific holdings that added to
results are CVS, Rite Aid, Biogen and American Stores. Relative performance
results were penalized by holdings including Perkin-Elmer, Sealed Air and OMI.

Fixed Income Holdings

The fixed-income portfolio was positioned with duration moderately longer
than the Lehman Brothers Aggregate Bond Index benchmark during most of the
period. On balance, this added to the Fund's relative returns. The Fund's
performance was negatively impacted by an allocation to corporate and mortgage
bonds. These securities' spreads to Treasuries widened substantially, causing
their prices to decline, in the months of August, September and October. Large
liquidations by hedge funds and concerns about global economic conditions were
the primary causes of this widening spread.

We appreciate your investment in the Dreyfus Asset Allocation Fund.

Sincerely,

[Kevin M. McClintock signature]

Kevin M. McClintock

Senior Portfolio Manager

Dreyfus Asset Allocation Fund, Inc.

November 27, 1998

New York, N.Y.

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

**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor' s 500 Composite Stock Price Index is a widely accepted, unmanaged index of
U.S. stock market performance.

***SOURCE: LEHMAN BROTHERS--The Lehman Brothers Aggregate Bond Index is a widely
accepted, unmanaged index of corporate, government and government agency debt
instruments, mortgage-backed securities and asset-backed securities. It reflects
reinvestment of dividends and capital gain distributions.

(+)The customized blended index has been prepared by the Fund and is intended to
be a more accurate comparison to the general portfolio composition than the
Standard & Poor' s 500 Composite Stock Price Index alone. We have combined the
performance of unmanaged indices that reflect benchmark percentages with respect
to each asset class in which the Fund invests, as described in its Prospectus:
55% equity securities, 35% fixed-income securities and 10% short-term money
market instruments. The customized blended index combines returns from the
Standard & Poor's 500 Composite Stock Price Index, the Lehman Brothers Aggregate
Bond Index and the Bank Rate Monitor Index of money market returns, and is
weighted to the benchmark percentages.

DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS OCTOBER 31, 1998 (UNAUDITED)
Principal
Bonds and Notes--17.0% Amount Value
- ------------------------------------------------------- ____________ ___________
<S> <C> <C>
Commercial Mortgage--1.2% GMAC Commercial Mortgage Securities,
Commercial Mortgage Pass-Through Ctfs.,
Ser. 1996-C1, Cl. E, 7.86%, 2006 . . . . . . . . . $ 1,000,000 $ 917,188

____________
Financial--1.8% Hyatt Equities, Notes,
6.80%, 2000 . . . . . . . . . . . . . . . . . . . 500,000 (b) 509,430
Presidential Life, Sr. Notes,
9.50%, 2000 . . . . . . . . . . . . . . . . . . . 850,000 862,443
____________
1,371,873
____________
Industrial--1.3% Dual Drilling, Sr. Sub. Notes,
9.875%, 2004 . . . . . . . . . . . . . . . . . . . 500,000 520,000
Philip Morris Cos., Notes,
6.95%, 2006 . . . . . . . . . . . . . . . . . . . 500,000 526,962
____________
1,046,962
____________
Residential Mortgage--5.1% Norwest Asset Securities,
Mortgage Pass-Through Ctfs.:
Ser. 1997-11, B-2, 7%, 2027 . . . . . . . . . . 520,891 496,555
Ser. 1997-11, B-3, 7%, 2027 . . . . . . . . . . 744,271 (b) 701,476
Ser. 1998-13, B-4, 6.25%, 2028 . . . . . . . . 747,779 672,121
Ser. 1998-13, B-5, 6.25%, 2028 . . . . . . . . 248,927 (b) 180,501
Ser. 1998-D6, A-4, 7.595%, 2028 . . . . . . . . 2,000,000 1,901,875
____________
3,952,528
____________
U.S. Governments &
Agencies--7.6% Federal Home Loan Mortgage, REMIC,
Multiclass Mortgage Participation Ctfs.:
Ser. 1999, Cl. PW, 7%, 8/15/2026 . . . . . . . 3,755,714 (a) 563,357
Ser. 2068, Cl. IA, 6.50%, 10/15/2023 . . . . . 9,063,907 (a) 1,458,723
Federal National Mortgage Association,
9%, 8/1/2026 . . . . . . . . . . . . . . . . . . . 424,398 448,665
Federal National Mortgage Association REMIC Trust,
Gtd. Pass-Through Ctfs.:
Ser. 1993-86, Cl. HA, 9.64%, 6/25/2008 . . . . 1,000,000 (a) 371,344
Ser. 1997-40, Cl. PF, 7%, 12/18/2026 . . . . . 1,000,000 (a) 197,656
U.S. Treasury Bonds,
8.75%, 5/15/2017 . . . . . . . . . . . . . . . . . 2,000,000 2,796,200
____________
5,835,945
____________
TOTAL BONDS AND NOTES
(cost $14,359,044) . . . . . . . . . . . . . . . . $13,124,496

____________
Common Stocks--47.8% Shares
- ------------------------------------------------------------------------------------------ ____________ ____________
Consumer Non-durables--7.5% Philip Morris Cos. . . . . . . . . . . . . . . . . . . 64,900 $ 3,318,013
Ralston-Purina Group . . . . . . . . . . . . . . . . . 75,000 2,503,125
____________
5,821,138
____________

DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998 (UNAUDITED)

Common Stocks (continued) Shares Value
- ------------------------------------------------------- ____________ ____________
Consumer Services--1.4% Clear Channel Communications . . . . . . . . . . . . . 20,000 (c) $ 911,250
Spanish Broadcasting System (Warrants) . . . . . . . . 1,000 (b,c) 205,000
____________
1,116,250
____________
Electronic Technology--9.0% Applied Materials. . . . . . . . . . . . . . . . . . . 70,000 (c) 2,428,125
Intel . . . . . . . . . . . . . . . . . . . . . . . . 16,300 1,453,756
Perkin-Elmer . . . . . . . . . . . . . . . . . . . . . 36,000 3,035,250
____________
6,917,131
____________
Finance--4.6% Everest Reinsurance Holdings . . . . . . . . . . . . . 55,000 1,894,063
NAC Re . . . . . . . . . . . . . . . . . . . . . . . . 35,000 1,695,312
____________
3,589,375
____________
Health Technology--5.7% Biogen . . . . . . . . . . . . . . . . . . . . . . . . 33,000 (c) 2,293,500
Medtronic . . . . . . . . . . . . . . . . . . . . . . 33,000 2,145,000
____________
4,438,500
____________
Industrial Services--3.8% Waste Management . . . . . . . . . . . . . . . . . . . 65,000 2,933,125
____________
Non-Energy Minerals--.3% Aluminum Co. of America. . . . . . . . . . . . . . . . 3,000 237,750
____________
Process Industries--3.3% Sealed Air . . . . . . . . . . . . . . . . . . . . . . 71,000 (c) 2,516,063
____________
Retail Trade--7.5% American Stores. . . . . . . . . . . . . . . . . . . . 70,000 2,279,375
CVS . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 1,142,187
Rite Aid . . . . . . . . . . . . . . . . . . . . . . . 60,000 2,381,250
____________
5,802,812
____________
Transportation--.6% Marine Transport . . . . . . . . . . . . . . . . . . . 14,490 (c) 29,433
OMI . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 (c) 450,000
____________
479,433
____________
Utilities--4.1% Niagara Mohawk Power . . . . . . . . . . . . . . . . . 65,000 (c) 950,625
Pinnacle West Capital . . . . . . . . . . . . . . . . 50,000 2,190,625
____________
3,141,250
____________
TOTAL COMMON STOCKS
(cost $33,307,996) . . . . . . . . . . . . . . . . $36,992,827
____________
Convertible Preferred Stocks--3.6%
- -------------------------------------------------------
Energy Minerals; Union Pacific Cap. Trust, 6.25%
(cost $3,000,000) . . . . . . . . . . . . . . . . 60,000 (b) $ 2,760,000
____________
Preferred Stocks--2.3%
- -------------------------------------------------------
Consumer Services; Spanish Broadcasting System
(cost $1,728,815) . . . . . . . . . . . . . . . . 1,797 (b) $ 1,770,045
____________
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1998 (UNAUDITED)
Principal
Short-Term Investments--29.4% Amount Value
- ------------------------------------------------------ ____________ ____________
U.S. Treasury Bills: 3.80%, 12/31/98. . . . . . . . . . . . . . . . . . . . $ 725,000 (d) $ 720,128
3.88%, 1/14/99 . . . . . . . . . . . . . . . . . . . . 654,000 648,467
4.30%, 1/21/99 . . . . . . . . . . . . . . . . . . . . 21,541,000 21,324,082
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $22,723,294) . . . . . . . . . . . . . . . . $22,692,677

____________
TOTAL INVESTMENTS (cost $75,119,149) . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.1% $77,340,045
_______ ____________

LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . (.1%) $ (63,326)
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $77,276,719
_______ ____________
</TABLE>
Notes to Statement of Investments:
- -----------------------------------------------------------------------------

(a) Notional face amount shown. Interest only obligation.

(b)Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At October 31, 1998, these
securities amounted to $6,126,452 or approximately 7.9% of net assets.

(d)Partially held by custodian in a segregated account as collateral for open
financial futures positions.

SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF FINANCIAL FUTURES OCTOBER 31, 1998 (UNAUDITED)

Unrealized
Market Value Appreciation
Covered (Depreciation)
Contracts by Contracts Expiration at 10/31/98
____________ _______________ ______________ ______________
<S> <C> <C> <C> <C>
5 Year U.S. Treasury Notes (long). . . . . . . . . . . . 401 $45,970,893 December '98 $31,658
30 Year U.S. Treasury Bonds (short). . . . . . . . . . . 15 1,933,594 December '98 (938)
________
$30,720
________

SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998 (UNAUDITED)
Cost Value
____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $75,119,149 $77,340,045
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 128,498
Dividends and interest receivable . . . . . . . . . . . . 325,679
Receivable for shares of Common Stock subscribed . . . . 308
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 9,770
____________
77,804,300
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 65,411
Due to Distributor . . . . . . . . . . . . . . . . . . . 16,092
Payable for futures variation margin--Note 4(a) . . . . . 262,094
Payable for shares of Common Stock redeemed . . . . . . . 153,115
Accrued expenses . . . . . . . . . . . . . . . . . . . . 30,869
____________
527,581
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $77,276,719
____________

REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $72,645,472
Accumulated undistributed investment income--net . . . . 1,252,275
Accumulated net realized gain (loss) on investments . . . 1,127,356
Accumulated net unrealized appreciation (depreciation)
on investments (including $30,720 net unrealized
appreciation on financial futures)--Note 4(b) . . . . . 2,251,616
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $77,276,719
____________
SHARES OUTSTANDING
(300 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED). . . . . . . . . . . . . . 5,541,026

NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $13.95
_______

SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)

INVESTMENT INCOME
<S> <C> <C> <C>
INCOME: Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 790,811
Cash dividends . . . . . . . . . . . . . . . . . . . . . 553,580
____________
Total Income . . . . . . . . . . . . . . . . . . . $ 1,344,391
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . 318,193
Shareholder servicing costs--Note 3(b) . . . . . . . . . 144,139
Professional fees . . . . . . . . . . . . . . . . . . . . 27,120
Registration fees . . . . . . . . . . . . . . . . . . . . 15,201
Directors' fees and expenses--Note 3(c) . . . . . . . . . 8,949
Prospectus and shareholders' reports . . . . . . . . . . 7,205
Custodian fees--Note 3(b) . . . . . . . . . . . . . . . . 2,550
Loan commitment fees --Note 2 . . . . . . . . . . . . . . 287
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 700
____________

Total Expenses . . . . . . . . . . . . . . . . . . . . 524,344
____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 820,047

____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and foreign
currency transactions . . . . . . . . . . . . . . . . $ (5,584,538)
Net realized gain (loss) on forward currency
exchange contracts . . . . . . . . . . . . . . . . . . 201,788
Net realized gain (loss) on financial futures:
Long Transacations . . . . . . . . . . . . . . . . . . 526,458
Short Transactions . . . . . . . . . . . . . . . . . . (329,985)
____________
Net Realized Gain (Loss) . . . . . . . . . . . . . (5,186,277)
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions (including $375,239
net unrealized appreciation on financial futures) . . (5,091,368)

____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . $(10,277,645)
____________
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $ (9,457,598)
____________

SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
October 31, 1998 Year Ended
(Unaudited) April 30, 1998
__________ ____________
<S> <C> <C>
OPERATIONS:

Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 820,047 $ 1,223,195
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . (5,186,277) 18,637,989
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . (5,091,368) 2,093,613
____________ ____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . (9,457,598) 21,954,797
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:

Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---- (1,063,176)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . ---- (15,907,775)
____________ ____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- (16,970,951)
____________ ____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,823,780 48,997,788
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- 16,384,058
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,985,791) (36,325,090)
____________ ____________

Increase (Decrease) in Net Assets from Capital Stock Transactions . . . . . . . . (8,162,011) 29,056,756
____________ ____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . . . . (17,619,609) 34,040,602
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,896,328 60,855,726
____________ ____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,276,719 $ 94,896,328
____________ ____________

UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,252,275 $ 432,228
____________ ____________
Shares Shares
____________ ____________

CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685,854 3,100,069
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . --- 1,167,787
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,269,689) (2,287,416)
____________ ____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . . . . (583,835) 1,980,440
____________ ____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

Six Months Ended
October 31, 1998 Year Ended April 30,
_____________________________________________
PER SHARE DATA: (Unaudited) 1998 1997 1996 1995 1994 (1)
__________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $15.49 $14.68 $13.49 $13.81 $12.49 $12.50
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .16 .24 .33 .32 .39 .24
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . (1.70) 4.40 1.83 1.70 1.35 (.11)
______ ______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . (1.54) 4.64 2.16 2.02 1.74 .13
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . -- (.24) (.34) (.38) (.37) (.13)
Dividends from net realized gain on investments . . -- (3.59) (.63) (1.96) (.05) (.01)
______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . -- (3.83) (.97) (2.34) (.42) (.14)
______ ______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $13.95 $15.49 $14.68 $13.49 $13.81 $12.49
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . (9.94%)(2) 34.33% 16.49% 15.67% 14.22% .99%(2)

RATIOS/SUPPLEMENTAL DATA:

Ratio of expenses to average net assets . . . . . .62%(2) 1.27% 1.31% 1.25% .67% .16%(2)
Ratio of net investment income
to average net assets . . . . . . . . . . . . .97%(2) 1.57% 2.12% 2.16% 3.00% 2.48%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager . . . . . -- -- -- .27% 1.27% 1.58%(2)
Portfolio Turnover Rate . . . . . . . . . . . . . 118.19%(2) 262.74% 223.50% 370.06% 160.11% --
Net Assets, end of period (000's Omitted) . . . . $ 77,277 $ 94,896 $ 60,856 $ 62,940 $ 56,639 $ 51,063
- -----------------------------

(1) From July 1, 1993 (commencement of operations) to April 30, 1994.

(2) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------
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, as amended (the "Act") as a non-diversified
open-end management investment company. The Fund's investment objective is to
maximize total return, consisting of capital appreciation and current income.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A. ("Mellon"). Premier
Mutual Fund Services, Inc. (the "Distributor") is the distributor of the Fund's
shares, which are sold to the public without a sales charge.

Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized on securities transactions and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities, resulting
from changes in exchange rates. Such gains and losses are included with net
realized and unrealized gain or loss on investments.

(d) 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 Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.

(e) Federal income taxes: It is the policy of the Fund 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 Code, and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes.

DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE 2--BANK LINE OF CREDIT:

The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") primarily to be utilized for temporary
or emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
October 31, 1998, the Fund did not borrow under the Facility.

NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:

(a) Pursuant to a management agreement with the Manager, the management fee
is computed at the annual rate of .75 of 1% of the value of the Fund's average
daily net assets and is payable monthly.

(b) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the Fund'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 Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
The Distributor may make payments to Service Agents (a securities dealer,
financial institution, or other industry professional) in respect of these
services. The Distributor determines the amounts to be paid to Service Agents.
During the period ended October 31, 1998, the Fund was charged $106,064 pursuant
to the Shareholder Services Plan.

The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended October 31, 1998, the Fund was charged $24,042 pursuant to the transfer
agency agreement.

The Fund compensates Mellon under a custody agreement for providing
custodial services for the Fund. During the period ended October 31, 1998, the
Fund was charged $2,550 pursuant to the custody agreement.

NOTE 4--SECURITIES TRANSACTIONS:

(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, forward currency exchange contracts and
financial futures, during the period ended October 31, 1998, amounted to
$92,701,326 and $120,528,468, respectively.

The Fund enters into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. When executing forward currency exchange contracts, the Fund
is obligated to buy or sell a foreign currency at a specified rate on a certain
date in the future. With respect to sales of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract increases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
decreases between those dates. With respect to purchases of forward currency
exchange contracts, the Fund would incur a loss if the value of the contract
decreases between the date the forward contract is opened and the date the
forward contract is closed. The Fund realizes a gain if the value of the
contract increases between those dates. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract. At October 31, 1998, there were no open forward currency exchange
contracts.

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. Investments DREYFUS ASSET ALLOCATION FUND, INC.
- -----------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

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. Accordingly, variation margin payments are received or made
to reflect daily unrealized gains or losses. When the contracts are closed, the
Fund recognizes a realized gain or loss. These investments require initial
margin deposits with a custodian, which consist of cash or cash equivalents, up
to approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded and
is subject to change. Contracts open at October 31, 1998, are set forth in the
Statement of Financial Futures.

(b) At October 31, 1998, accumulated net unrealized appreciation on
investments and financial futures was $2,251,616, consisting of $6,452,658 gross
unrealized appreciation and $4,201,042 gross unrealized depreciation.

At October 31, 1998, 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).

[reg.tm logo]

(reg.tm)

DREYFUS ASSET ALLOCATION FUND, INC.

200 Park Avenue

New York, NY 10166

MANAGER

The Dreyfus Corporation

200 Park Avenue

New York, NY 10166

CUSTODIAN

Mellon Bank, N.A.

One Mellon Bank Center

Pittsburgh, PA 15258

TRANSFER AGENT &

DIVIDEND DISBURSING AGENT

Dreyfus Transfer, Inc.

P.O. Box 9671

Providence, RI 02940

Printed in U.S.A. 550SA9810

Asset Allocation

Fund, Inc.

Semi-Annual

Report

October 31, 1998

<PAGE>

DREYFUS LIFETIME PORTFOLIOS, INC.
PART C

OTHER INFORMATION

ITEM 15. INDEMNIFICATION.

The response to this item is incorporated by reference to Item 25 of
Part C of Post-Effective Amendment No. 4 to the Registrant's Registration
Statement on Form N-1A, filed on March 30, 1995.

ITEM 16. Exhibits - All references are to Post-Effective Amendment No. 4
to the Registrant's Registration Statement on Form N-1A, filed on
March 30, 1995 (File No. 33-66088) (the "Registration Statement")
unless otherwise noted.

(1) Registrant's Articles of Incorporation and Articles of Amendment
are incorporated by reference to Exhibit (1) of Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
on July 23, 1993 and Exhibit (1)(b) of the Registration
Statement.

(2) Registrant's Bylaws, as amended, are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 23, 1993.

(3) Not Applicable.

*(4) Form of Agreement and Plan of Reorganization.

(5) Not Applicable.

(6)(a) Management Agreement is incorporated by reference to Exhibit
(5)(a) of the Registration Statement.

(6)(b) Sub-Investment Advisory Agreement is incorporated by reference to
Exhibit (5)(b) of the Registration Statement.

(7) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of the Registration Statement.

(8) Not Applicable.

(9)(a) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit (8)(a) of Post-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on July 23, 1993.

(9)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
(8)(b) of Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 23, 1993.

(10) Not Applicable.

(11)(a) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, filed on July 23, 1993.

(11)(b) Consent of Stroock & Stroock & Lavan LLP.

(12) Opinion and consent of Stroock & Stroock & Lavan LLP regarding
tax matters.

(13) Not Applicable.

(14) Consent of Independent Auditors.

(15) Not Applicable.

**(16) Powers of Attorney.

***(17)(a) Form of Proxy.

(17)(b) Registrant's Prospectus dated February 1, 1999.

(17)(c) Dreyfus Asset Allocation Fund, Inc.'s Prospectus dated September
1, 1998, as revised October 14, 1998.

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.

- --------

* Filed herewith as Exhibit A to the Prospectus/Proxy Statement.

* Incorporated by reference to the signature page hereto.

** Filed herewith as part of the Prospectus/Proxy Statement.

<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 7th day of May, 1999.

DREYFUS LIFETIME PORTFOLIOS, INC.

By:/S/MARIE E. CONNOLLY
-----------------------------
Marie E. Connolly, President

Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints Margaret W. Chambers, Marie E.
Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Stephanie Pierce and Elba
Vasquez, 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 May 7, 1999
- ---------------------------- Treasurer (Principal
Marie E. Connolly Executive and Financial
Officer)

/S/JOHN F. TOWER, III Vice President May 7, 1999
- ---------------------------- Assistant Treasurer
John F. Tower, III (Principal Accounting
Officer)

/S/JOSEPH S. DIMARTINO Chairman of the Board May 7, 1999
- ----------------------------- of Directors
Joseph S. DiMartino

/S/DAVID W. BURKE Board Member May 7, 1999
- -----------------------------
David W. Burke

/S/LUCY WILSON BENSON Board Member May 7, 1999
- -----------------------------
Lucy Wilson Benson

/S/MARTIN D. FIFE Board Member May 7, 1999
- -----------------------------
Martin D. Fife

/S/WHITNEY I. GERARD Board Member May 7, 1999
- -----------------------------
Whitney I. Gerard

/S/ROBERT R. GLAUBER Board Member May 7, 1999
- -----------------------------
Robert R. Glauber

/S/ARTHUR A. HARTMAN Board Member May 7, 1999
- -----------------------------
Arthur A. Hartman

/S/GEORGE L. PERRY Board Member May 7, 1999
- -----------------------------
George L. Perry

/S/PAUL WOLFOWITZ Board Member May 7, 1999
- --------------------------
Paul Wolfowitz

<PAGE>
EXHIBIT INDEX

Exhibit 11(b) Consent of Stroock & Stroock & Lavan LLP

Exhibit 12 Opinion and Consent of Stroock & Stroock & Lavan LLP regarding
tax matters

Exhibit 14 Consent of Independent Auditors

Exhibit 17(b) Registrant's Prospectus dated February 1, 1999

Exhibit 17(c) Dreyfus Asset Allocation Fund, Inc.'s Prospectus dated September
1, 1998 as revised October 14, 1998

EXHIBIT (11)(b)

STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038

May 7, 1999

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 Post-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 LLP

EXHIBIT (12)

_____________, 1999

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

Dreyfus Asset Allocation Fund, Inc.
200 Park Avenue
New York, New York 10166

Re: Registration Statement on Form N-14
(REGISTRATION NO. 333- )

Ladies and 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., a Maryland corporation (the
"Company")(Reg. No. 333-_____) (the "Registration Statement"), between the
Company, on behalf of its Growth and Income Portfolio (the "Acquiring Fund"),
and Dreyfus Asset Allocation Fund, Inc., a Maryland corporation (the "Acquired
Fund"). You have advised us that each 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 Company's Articles of
Incorporation, as amended from time to time (the "Company's Charter"), the
Acquired Fund's Articles of Incorporation, as amended from time to time (the
"Acquired Fund's Charter"), the Company's Prospectus and Statement of Additional
Information, incorporated by reference in the Registration Statement, the
Acquired Fund's Prospectus and Statement of Additional Information 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 the
Acquired Fund that the Acquired Fund's Charter 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
the Company, on behalf of the Acquiring Fund, that the Company's Charter 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 the Company. 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 of the Acquired Fund's assets in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of certain
identified liabilities of the Acquired Fund 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 the Acquired Fund solely in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Fund;

c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's 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 Fund or upon the distribution of the
Acquiring Fund Shares to Acquired Fund Shareholders in exchange for their shares
of the Acquired Fund;

d) No gain or loss will be recognized by Acquired Fund Shareholders upon
the exchange of their Acquired Fund shares for the Acquiring Fund Shares;

e) The aggregate tax basis for the Acquiring Fund Shares received by an
Acquired Fund Shareholder pursuant to the reorganization will be the same as the
aggregate tax basis of the Acquired Fund 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 Fund Shareholder will include the
period during which the Acquired Fund shares exchanged therefor were held by
such shareholder (provided the Acquired Fund shares were held as capital assets
on the date of the reorganization); and

f) The tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the reorganization, and the holding period of the assets of
the Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus/Proxy
Statement included in the Registration Statement, and to the filing of this
opinion as an exhibit to the Registration Statement, and to the filing of this
opinion as an exhibit to any application made by or on behalf of the Company or
any distributor or dealer in connection with the registration and qualification
of the Company, on behalf of the Acquiring Fund, 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 LLP

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Financial Statements
and Experts" and to the use of our reports dated November 5, 1998 with respect
to Dreyfus LifeTime Portfolios, Inc. and June 3, 1998 with respect to Dreyfus
Asset Allocation Fund, Inc., which are incorporated by reference, in this
Registration Statement on Form N-14 of Dreyfus LifeTime Portfolios, Inc.

/s/ Ernst and Young LLP
Ernst & Young LLP
New York, New York
May 7, 1999

Exhibit 17(b)

Dreyfus LifeTime Portfolios, Inc.

A series of asset management portfolios for a range of investor needs

PROSPECTUS February 1, 1999

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

Contents
THE PORTFOLIOS
- -----------------------------------------------------------------
1 Introduction

2 Income Portfolio

6 Growth and Income Portfolio

10 Growth Portfolio

14 Management

16 Financial Highlights

YOUR INVESTMENT
- --------------------------------------------------------------------

22 Account Policies

25 Distributions and Taxes

26 Services for Fund Investors

28 Instructions for Regular Accounts

30 Instructions for IRAs

FOR MORE INFORMATION
- ----------------------------------------------------------------------------

INFORMATION ON EACH PORTFOLIO'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN THE CURRENT ANNUAL/SEMIANNUAL REPORT (SEE BACK COVER).

Each portfolio's investment approach, risks, performance, expenses and
related information

Information for managing your fund account

Where to learn more about this and other Dreyfus funds

The Portfolios

Dreyfus LifeTime Portfolios, Inc., consists of three separate portfolios
offering a range of investment approaches: from more conservative to moderate to
more aggressive.

While all of the portfolios typically invest in stocks and bonds, each one
allocates its assets among those investments in a distinct way. The portfolios
use the allocations below as a point of reference in making their management
decisions. The actual makeup of each portfolio will vary over time, as the
portfolio manager adjusts the asset mix in an effort to take advantage of
misvaluations.

In deciding when and how much of a portfolio's assets to shift among asset
classes, the portfolio manager uses proprietary computer models to assess the
relative value of stock and bond prices across different markets.

In selecting securities for each portfolio, the manager attempts to approximate
the investment characteristics of designated benchmark indexes with respect to
each asset class, but with expected returns that exceed the benchmark. The
portfolio manager may actively select stocks or bonds after considering
variables including price/earnings ratios, interest rate levels and the yield
curve slope. To efficiently maintain exposure to selected asset class
benchmarks, the portfolios also may use futures contracts as a substitute for
holding the securities that make up the relevant benchmark index.

In choosing among the portfolios, your decision may depend on your goals, time
frame and risk tolerance. All portfolios offer a diversified investment mix and
the asset allocation expertise of a professional portfolio manager.

Typical portfolio allocations

MORE CONSERVATIVE

Cash 10.0%

Bonds 67.5%

Stocks 22.5%

INCOME PORTFOLIO

Stocks 50%

Bonds 50%

GROWTH AND INCOME PORTFOLIO

Stocks 80%

Bonds 20%

GROWTH PORTFOLIO

MORE AGGRESSIVE

Introduction

Income Portfolio
----------------------------------

Ticker Symbols: Investor shares DLIXX
Restricted shares DLIRX

GOAL/APPROACH

The portfolio seeks maximum current income. Capital appreciation is a secondary
goal. To pursue these goals, it typically invests in a mix of bonds, stocks and
money market instruments, all of which are U.S. securities. Normally, the
portfolio's asset mix is approximately 67.5% in investment grade bonds (or the
unrated equivalent as determined by Dreyfus), 22.5% in stocks of large companies
(those whose total market value is more than $1.4 billion) and 10% in cash.

The portfolio manager selects securities from each asset class for the portfolio
which, in the aggregate, have approximately the same investment characteristics
as those of the Lehman Brothers Government/Corporate Intermediate Bond Index for
the portfolio's bond investments and the S&P 500 Index for its stock
investments, with expected returns equal to or better than that of the benchmark
index. The Lehman Brothers Government/Corporate Intermediate Index is composed
of approximately 5,000 fixed-income securities, including investment grade
corporate bonds and U.S. government securities, with average outstanding market
value of more than $600 million and maturities of less than 10 years and greater
than one year. The S&P 500 Index is composed of 500 stocks, most of which are
large-cap stocks listed on the New York Stock Exchange. The portfolio may
invest directly in securities comprising the relevant index or use derivatives
whose performance is tied to the benchmark index.

Concepts to understand

INVESTMENT GRADE BONDS:
independent rating organizations analyze and evaluate a bond issuer's credit
history and ability to repay debts. Based on their assessment, they assign
letter grades that reflect the issuer's creditworthiness. AAA or Aaa represents
the highest credit rating, AA/Aa the second highest, and so on down to D, for
defaulted debt. Bonds rated BBB or Baa and above are considered investment
grade.

MAIN RISKS

Because bonds and stocks fluctuate in price, the value of your investment in the
portfolio will go up and down, and you could lose money. Prices of bonds tend to
move inversely with changes in interest rates. Bond prices also may be hurt by
declines in the financial condition of the issuer. Stocks, while typically a
smaller portion of the portfolio, tend to be more volatile than bonds, and could
cause sudden drops in share price or contribute to long-term underperformance.

The stock and bond markets can perform differently from each other at any given
time (as well as over the long term), so the portfolio will be affected by its
asset allocation. If the manager favors an asset class during a period when that
asset class underperforms, the portfolio's performance may be hurt. The
portfolio's performance may be lower than that of stock-oriented investments
during periods when stocks outperform bonds.

Under adverse market conditions, the portfolio could invest more than 10% of net
assets in money market securities. Although the portfolio would do this only in
seeking to avoid losses, it could reduce the benefit from any upswing in the
market.

Other potential risks

The portfolio may invest some assets in derivative securities, such as options
and futures, primarily to provide an efficient means of achieving the
portfolio's target exposure to an asset class; however, such practices sometimes
may reduce returns or increase volatility. Derivatives can be illiquid, and a
small investment in certain derivatives could have a potentially large impact on
the portfolio's performance.

The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.

Income Portfolio

INCOME PORTFOLIO (CONTINUED)

PAST PERFORMANCE

The two tables below show the portfolio's annual returns and its long-term
performance. The first table shows you how the performance of the portfolio's
Investor shares has varied from year to year. The second compares the
performance of each of the portfolio's share classes over time to that of the
Lehman Brothers Intermediate Government/Corporate Bond Index, a widely
recognized unmanaged index of bond market performance. Both tables assume
reinvestment of dividends and distributions. As with all mutual funds, the past
is not a prediction of the future.
- -------------------------------------------------------

Year-by-year total return AS OF 12/31 EACH YEAR (%)

INVESTOR SHARES
6.84 11.85 11.74
89 90 91 92 93 94 95 96 97 98

BEST QUARTER: Q2 '97 5.78%

WORST QUARTER: Q1 '97 0.31%

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

Average annual total return AS OF 12/31/98

Inception
1 Year 3 Years (3/31/95)
- ----------------------------------------------------------------------

INVESTOR SHARES 11.74% 10.12% 11.25%

RESTRICTED SHARES 12.04% 10.37% 11.52%

LEHMAN BROTHERS
INTERMEDIATE
GOVERNMENT/CORPORATE
BOND INDEX 8.44% 6.77% 8.22%

CUSTOMIZED
BLENDED INDEX 12.66% 11.45% 12.68%

What this portfolio is --
and isn't

This portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.

An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.

EXPENSES

Fee table

Investor Investor Restricted
shares shares
--------------------------------------------------------

Maximum account fee $12 $12

CHARGED ONLY TO REGULAR ACCOUNTS
WITH BALANCES BELOW $2,000
(SEE "ACCOUNT POLICIES")
--------------------------------------------------------

ANNUAL PORTFOLIO OPERATING EXPENSES

% OF AVERAGE DAILY NET ASSETS

Management fee 0.60% 0.60%

Shareholder services fee 0.25% none

Other expenses 0.28% 0.28%
--------------------------------------------------------
TOTAL 1.13% 0.88%
--------------------------------------------------------

Expense example

1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------
INVESTOR SHARES $115 $359 $622 $1,375

RESTRICTED SHARES $90 $281 $488 $1,084

This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.

Concepts to understand

MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of its operations.

SHAREHOLDER SERVICES FEE: the fee paid to the fund's distributor for shareholder
account service and maintenance.

OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.

Income Portfolio

Growth and Income Portfolio
----------------------------------
Ticker Symbols: Investor shares DGIIX
Restricted shares DGIRX

GOAL/APPROACH

The portfolio seeks maximum total return (capital appreciation plus current
income). To pursue this goal,it typically invests in a mix of stocks and bonds.
The portfolio's typical asset mix is 50% in stocks and 50% in investment grade
bonds (or the unrated equivalent as determined by Dreyfus). Depending on market
and economic conditions, the actual mix of stocks to bonds may range from
35%/65% to 65%/35%. The portfolio may invest up to 15% of net assets in foreign
securities.

The portfolio typically invests approximately 80% of its stock allocation in
stocks of large-capitalization companies (those whose total market value is more
than $1.4 billion) and the remaining 20% in stocks of small-capitalization
companies.

The large-cap equity component of the portfolio is actively managed. In choosing
these stocks, the manager seeks those that appear likely to show above-average,
long-term appreciation, as well as those that appear undervalued. Sector
allocations for large-cap investments will generally mirror the allocations of
the S&P 500. The small-cap and foreign equity components and the bond components
of the portfolio are not actively managed and are constructed to approximate the
investment characterstics of the specified indices as follows:

o small-cap equity -- Russell 2000 Index

o foreign equity -- Morgan Stanley EAFE Index

o domestic bond -- Lehman Brothers
Government/Corporate Intermediate Bond Index

o foreign bond -- J.P. Morgan Global Bond Index

Concepts to understand

GROWTH AND INCOME INVESTING:
a management style that seeks some long-term growth, but also includes
income-producing investments such as bonds. These tend to reduce the portfolio's
volatility in several ways: their market movements can at times offset those of
stocks, their income stream adds to performance throughout the market cycle, and
they tend to be less risky than stocks.

MAIN RISKS

Because stocks and bonds fluctuate in price, the value of your investment in the
portfolio will go up and down, and you could lose money.

The portfolio's stock investments could cause sudden drops in share price or
contribute to long-term underperformance. Small company stocks tend to be more
volatile than large company stocks and could have a disproportionate effect on
performance. Prices of bonds tend to move inversely with changes in interest
rates. Bond prices also may be hurt by declines in the financial condition of
the issuer. Foreign stocks and bonds involve special risks, such as exposure to
currency fluctuations, economic and political instability, and potentially less
liquidity.

Under adverse market conditions, the portfolio could invest some or all of its
assets in money market securities. The portfolio would do this only in seeking
to avoid losses, but it could reduce the benefit from any market upswing.

Other potential risks

The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.

Growth and Income Portfolio

GROWTH AND INCOME PORTFOLIO (CONTINUED)

PAST PERFORMANCE

The two tables below show the portfolio's annual returns and its long-term
performance. The first table shows you how the performance of the portfolio's
Investor shares has varied from year to year. The second compares the
performance of each of the portfolio's share classes over time to that of the
S&P 500((reg.tm)), a widely recognized unmanaged index of stock market
performance. Both tables assume reinvestment of dividends and distributions. As
with all mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------

Year-by-year total return AS OF 12/31 EACH YEAR (%)

INVESTOR SHARES
16.54 20.42 17.47
89 90 91 92 93 94 95 96 97 98

BEST QUARTER: Q4 '98 12.32%

WORST QUARTER: Q3 '98 -2.68%

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

Average annual total return AS OF 12/31/98

Inception
1 Year 3 Years (3/31/95)
- ---------------------------------------------------------------------------

INVESTOR SHARES 17.47% 18.13% 19.72%

RESTRICTED SHARES 17.74% 17.81% 19.51%

S&P 500 INDEX 28.60% 28.23% 29.58%

CUSTOMIZED
BLENDED INDEX 15.12% 15.54% 17.13%

What this portfolio is --
and isn't

EXPENSES

As an investor, you pay certain fees and expenses in connection with the
portfolio, which are described in the table below. Annual portfolio operating
expenses are paid out of fund assets, so their effect is included in the share
price. The portfolio has no sales charge (load) or 12b-1 distribution fees.
- -------------------------------------------------------------------------------
Fee table
Investor Restricted
shares shares
- --------------------------------------------------------------------------------
Maximum account fee $12 $12

CHARGED ONLY TO REGULAR ACCOUNTS
WITH BALANCES BELOW $2,000
(SEE "ACCOUNT POLICIES")
- ---------------------------------------------------------------------

ANNUAL PORTFOLIO OPERATING EXPENSES

% OF AVERAGE DAILY NET ASSETS

Management fee 0.75% 0.75%

Shareholder services fee 0.25% none

Other expenses 0.08% 0.09%
- --------------------------------------------------------------------
TOTAL 1.08% 0.84%
- --------------------------------------------------------------------
Expense example

1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------

INVESTOR SHARES $110 $343 $595 $1,317

RESTRICTED SHARES $86 $268 $466 $1,037

This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.

Concepts to understand

MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of its operations.

SHAREHOLDER SERVICES FEE: the fee paid to the fund's distributor for shareholder
account service and maintenance.

OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.

Growth and Income Portfolio
Growth Portfolio
----------------------------------

Ticker Symbols: Investor shares DLGIX
Restricted shares DLGRX

GOAL/APPROACH

The portfolio seeks capital appreciation. To pursue this goal, it typically
invests in a mix of stocks and bonds. The portfolio's typical asset mix is 80%
in stocks and 20% in investment grade bonds (or the unrated equivalent as
determined by Dreyfus). Depending on market and economic conditions, the actual
mix of stocks to bonds may range from 65%/35% to 100% in stocks. The portfolio
may invest up to 25% of net assets in foreign securities.

o small-cap equity -- Russell 2000 Index

o foreign equity -- Morgan Stanley EAFE Index

o domestic bond -- Lehman Brothers
Government/Corporate Intermediate Bond Index

o foreign bond -- J.P. Morgan Global Bond Index

Concepts to understand

LARGE COMPANIES: established companies that are considered "known quantities."
Large companies often have the resources to weather economic shifts, though they
can be slower to innovate than small companies.

MAIN RISKS

Because stocks and bonds fluctuate in price, the value of your investment in the
portfolio will go up and down, and you could lose money.

The stock and bond markets can perform differently, so the portfolio's
performance will be affected by its asset allocation. If the manager favors an
asset class during a period when that asset class underperforms, the portfolio's
performance may be hurt. The portfolio's performance may be lower than that of
more bond-oriented investments during periods when bonds outperform stocks.

The portfolio's stock investments could cause sudden drops in share price or
contribute to long-term underperformance. Compared to larger and midsize
companies, small companies carry additional risks because their earnings tend to
be less predictable and their stocks less liquid and more volatile. Prices of
bonds tend to move inversely with changes in interest rates. Bond prices also
may be hurt by declines in the financial condition of the issuer. Foreign stocks
and bonds involve special risks, such as exposure to currency fluctuations,
economic and political instability, and potentially less liquidity.

Other potential risks

The portfolio may invest some assets in derivative securities, such as options
and futures, primarily to provide an efficient means of achieving the
portfolio's target exposure to an asset class; however, such practices
sometimesmay reduce returns or increase volatility. Derivatives can be illiquid,
and a small investment in certain derivatives could have a potentially large
impact on the portfolio's performance.

The portfolio can buy securities with borrowed money (a form of leverage), which
could have the effect of magnifying the portfolio's gains or losses.

Growth Portfolio

GROWTH PORTFOLIO (CONTINUED)

PAST PERFORMANCE

The two tables below show the portfolio's annual returns and its long-term
performance. The first table shows you how the performance of the portfolio's
Investor shares has varied from year to year. The second compares the
performance of each of the portfolio's share classes over time to that of the
S&P 500 ((reg.tm)), a widely recognized unmanaged index of stock market
performance. Both tables assume reinvestment of dividends and distributions. As
with all mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)

INVESTOR SHARES

21.30 26.98 20.94
89 90 91 92 93 94 95 96 97 98

BEST QUARTER: Q4 '98 18.43%

WORST QUARTER: Q3 '98 -7.44%
- --------------------------------------------------------

Average annual total return AS OF 12/31/98

Inception
Year 3 Years (3/31/95)
- -------------------------------------------------------------------------
INVESTOR SHARES 20.94% 23.04% 25.12%

RESTRICTED SHARES 21.23% 23.30% 25.40%

S&P 500 INDEX 28.60% 28.23% 29.58%

CUSTOMIZED
BLENDED INDEX 18.53% 20.03% 21.79%

What this portfolio is --
and isn't

This portfolio is a mutual fund:
a pooled investment that is professionally managed and gives you the
opportunity to participate in financial markets. It strives to reach its
stated goal, although as with all mutual funds, it cannot offer guaranteed
results.

EXPENSES

CHARGED ONLY TO REGULAR ACCOUNTS
WITH BALANCES BELOW $2,000
(SEE "ACCOUNT POLICIES")
- -------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES

% OF AVERAGE DAILY NET ASSETS

Management fee 0.75% 0.75%

Shareholder services fee 0.25% none

Other expenses 0.18% 0.19%
- -------------------------------------------------------------------------------
TOTAL 1.18% 0.94%
- -------------------------------------------------------------------------------
Expense example

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------
INVESTOR SHARES $120 $375 $649 $1,432

RESTRICTED SHARES $96 $300 $520 $1,155

This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.

Concepts to understand

MANAGEMENT FEE: the fee paid to the investment adviser for managing the
portfolio and assisting in all aspects of its operations.

SHAREHOLDER SERVICES FEE: the fee paid to the fund's distributor for shareholder
account service and maintenance.

OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.

Growth Portfolio

MANAGEMENT

The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $117 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.

Dreyfus has engaged Mellon Equity Associates, 500 Grant Street, Pittsburgh,
Pennsylvania 15258, to serve as each portfolio's sub-investment adviser. Mellon
Equity provides advisory assistance and research and the day-to-day management
of each portfolio's investments. As of September 30, 1998, Mellon Equity managed
approximately $334 billion of assets and served as investment adviser for 17
other investment companies.

Concepts to understand

YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.

Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.

Management philosophy

The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.

Portfolio manager

Steven A. Falci is the primary portfolio manager for each portfolio, a position
he has held since the fund's inception. Since April 1994, Mr. Falci has been
employed by Mellon Equity Associates, the fund's sub-investment adviser and an
affiliate of Dreyfus. Previously, he was a managing director for pension
investments at NYNEX Corporation.

Management

FINANCIAL HIGHLIGHTS

Income portfolio

The following two tables describe the performance of each share class of the
Income portfolio for the fiscal periods indicated. "Total return" shows how much
your investment in the portfolio would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been independently audited by Ernst & Young LLP, whose report,
along with the fund's financial statements, is included in the annual report.

YEAR ENDED SEPTEMBER 30,

INVESTOR SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------
PER-SHARE DATA ($)

Net asset value, beginning of period
14.01 13.39 13.51 12.50

Investment operations:

Investment income -- net .65 .72 .73 .39

Net realized and unrealized gain
(loss) on investments .49 .95 .18 .62

Total from investment operations 1.14 1.67 .91 1.01

Distributions:

Dividends from investment income--net (.70) (.62) (.60) --

Dividends from net realized gain
on investments (.71) (.43) (.43) --

Total distributions (1.41) (1.05) (1.03) --

Net asset value, end of period 13.74 14.01 13.39 13.51

Total return (%) 8.92 13.19 7.07 8.08(2)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average
net assets (%) 1.13 .97 .85 .43(2)

Ratio of net investment income to
average net assets (%) 4.92 5.52 5.50 2.95(2)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .15 .61 .26(2)

Portfolio turnover rate (%) 64.58 72.08 32.95 5.66(2)
- ----------------------------------------------------------------------------

Net assets, end of period
($ x 1,000) 11,862 10,136 8,701 8,122

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) NOT ANNUALIZED.

YEAR ENDED SEPTEMBER 30,
RESTRICTED SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------

PER-SHARE DATA ($)

Net asset value, beginning of period 14.04 13.42 13.52 12.50

Investment operations:
Investment income -- net .61 .71 .64 .40
Net realized and unrealized gain
(loss) on investments .57 .99 .31 .62

Total from investment operations 1.18 1.70 .95 1.02

Distributions:

Dividends from investment income -- net (.73) (.65) (.62) --
Dividends from net realized gain
on investments (.71) (.43) (.43) --

Total distributions (1.44) (1.08) (1.05) --

Net asset value, end of period 13.78 14.04 13.42 13.52

Total return (%) 9.14 13.50 7.30 8.24(2)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average
net assets (%) .88 .68 .60 .30(2)

Ratio of net investment income to
average net assets (%) 5.15 5.87 5.75 3.08(2)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .14 .61 .26(2)

Portfolio turnover rate (%) 64.58 72.08 32.95 5.66(2)
- ----------------------------------------------------------------------------

Net assets, end of period ($ x 1,000) 40,582 22,727 12,889 8,141

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) NOT ANNUALIZED.

Financial Highlights

FINANCIAL HIGHLIGHTS

Growth and Income portfolio

The following two tables describe the performance of each share class of the
Growth and Income portfolio for the fiscal periods indicated. "Total return"
shows how much your investment in the portfolio would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been independently audited by Ernst & Young
LLP, whose report, along with the fund's financial statements, is included in
the annual report.

YEAR ENDED SEPTEMBER 30,
INVESTOR SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------

PER-SHARE DATA ($)

Net asset value, beginning of period 19.05 15.43 14.29 12.50

Investment operations:

Investment income -- net .72(2) .57(2) .90(2) .27
Net realized and unrealized gain
(loss) on investments .28 3.36 1.12 1.52

Total from investment operations 1.00 3.93 2.02 1.79

Distributions:

Dividends from investment income -- net (.61) -- (.40) --
Dividends from net realized gain
on investments (2.34) (.31) (.48) --

Total distributions (2.95) (.31) (.88) --

Net asset value, end of period 17.10 19.05 15.43 14.29

Total return (%) 6.04 25.85 14.84 14.32(3)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average net
assets (%) 1.08 1.00 1.00 .51(3)

Ratio of net investment income to
average net assets (%) 3.81 3.85 3.35 1.98(3)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .05 .39 .33(3)

Portfolio turnover rate (%) 76.78 107.85 122.52 33.55(3)
- ----------------------------------------------------------------------------

Net assets, end of period ($ x 1,000) 3,976 683 160 8,602

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) BASED ON AVERAGE SHARES OUTSTANDING.

(3) NOT ANNUALIZED.

YEAR ENDED SEPTEMBER 30,
RESTRICTED SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------

PER-SHARE DATA ($)

Net asset value, beginning of period 18.43 15.34 14.31 12.50

Investment operations:

Investment income -- net .70 .58 .33 .27
Net realized and unrealized gain
(loss) on investments .30 3.16 1.60 1.54

Total from investment operations 1.00 3.74 1.93 1.81

Distributions:

Dividends from investment income -- net (.63) (.34) (.42) --
Dividends from net realized gain
on investments (2.34) (.31) (.48) --

Total distributions (2.97) (.65) (.90) --

Net asset value, end of period 16.46 18.43 15.34 14.31

Total return (%) 6.28 25.22 14.17 14.48(2)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average
net assets (%) .84 .78 .75 .38(2)

Ratio of net investment income to
average net assets (%) .06 3.52 3.60 2.10(2)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .06 .39 .33(2)

Portfolio turnover rate (%) 76.78 107.85 122.52 33.55(2)
- ----------------------------------------------------------------------------

Net assets, end of period ($ x 1,000) 186,397 172,705 124,677 9,248

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) NOT ANNUALIZED.

Financial Highlights

FINANCIAL HIGHLIGHTS

Growth portfolio

The following two tables describe the performance of each share class of the
Growth portfolio for the fiscal periods indicated. "Total return" shows how much
your investment in the portfolio would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been independently audited by Ernst & Young LLP, whose report,
along with the fund's financial statements, is included in the annual report.

YEAR ENDED SEPTEMBER 30,
INVESTOR SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------

PER-SHARE DATA ($)

Net asset value, beginning of period 20.50 16.58 14.82 12.50

Investment operations:
Investment income -- net .44(2) .62 .32 .19
Net realized and unrealized gain
(loss) on investments .03 4.68 2.42 2.13

Total from investment operations .47 5.30 2.74 2.32

Distributions:

Dividends from investment income -- net (.46) (.26) (.28) --
Dividends from net realized gain
on investments (4.58) (1.12) (.70) --

Total distributions (5.04) (1.38) (.98) --

Net asset value, end of period 15.93 20.50 16.58 14.82

Total return (%) 2.97 34.32 19.58 18.56(3)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average
net assets (%) 1.18 1.06 1.00 .51(3)

Ratio of net investment income to
average net assets (%) 2.65 2.05 2.08 1.39(3)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .27 .53 .26(3)

Portfolio turnover rate (%) 89.23 118.49 77.83 52.86(3)
- ----------------------------------------------------------------------------

Net assets, end of period ($ x 1,000) 3,746 8,662 14,458 11,939

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END.

(3) NOT ANNUALIZED.

YEAR ENDED SEPTEMBER 30,
RESTRICTED SHARES 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------

PER-SHARE DATA ($)

Net asset value, beginning of period 20.52 16.59 14.84 12.50

Investment operations:
Investment income -- net .52 .41 .28 .21
Net realized and unrealized gain
(loss) on investments (.02) 4.94 2.48 2.13

Total from investment operations .50 5.35 2.76 2.34

Distributions:

Dividends from investment income -- net (.55) (.30) (.31) --
Dividends from net realized gain
on investments (4.58) (1.12) (.70) --

Total distributions (5.13) (1.42) (1.01) --

Net asset value, end of period 15.89 20.52 16.59 14.84

Total return (%) 3.17 34.70 19.73 18.72(2)
- ----------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Ratio of expenses to average
net assets (%) .94 .83 .75 .38(2)

Ratio of net investment income to
average net assets (%) 2.84 2.38 2.38 1.51(2)

Decrease reflected in above expense
ratios due to actions by Dreyfus (%) -- .20 .53 .26(2)

Portfolio turnover rate (%) 89.23 118.49 77.83 52.86(2)
- ----------------------------------------------------------------------------

Net assets, end of period ($ x 1,000) 56,431 46,960 28,143 11,898

(1) FROM MARCH 31, 1995 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1995.

(2) NOT ANNUALIZED.

Financial Highlights

Your Investment

ACCOUNT POLICIES

Buying shares

EACH PORTFOLIO OFFERS TWO SHARE CLASSES -- Investor shares and Restricted
shares. Investor shares are offered to any investor. Restricted shares are sold
primarily to clients of certain financial institutions that have selling
agreements with the fund's distributor or that provide sub-accounting or
recordkeeping. YOU PAY NO SALES CHARGES to invest in this fund. Your price for
fund shares is the fund's net asset value per share (NAV), which is generally
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Your order will be
priced at the next NAV calculated after your order is accepted by the fund's
transfer agent or other entity authorized to accept orders on behalf of the
fund. The fund's investments are

Third-party investments

If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
401(k) plans, financial advisers and financial supermarkets may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. Consult a representative of your plan or financial
institution if in doubt.

Minimum investments

Initial Additional
- ----------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER INVESTMENTS

TRADITIONAL IRAS $750 NO MINIMUM

SPOUSAL IRAS $750 NO MINIMUM

ROTH IRAS $750 NO MINIMUM

EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR

DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS

All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.

generally valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith by the fund's
board.

Selling shares

YOU MAY SELL SHARES AT ANY TIME. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
entity authorized to accept orders on behalf of the fund. Any certificates
representing fund shares being sold must be returned with your redemption
request. Your order will be processed promptly and you will generally receive
the proceeds within a week.

BEFORE SELLING RECENTLY PURCHASED SHARES, please note that if the fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to eight business days or until it has collected payment.

- ------------------------------------------------------------------------------
Limitations on selling shares by phone

Proceeds sent by Minimum Maximum
- ------------------------------------------------------------------------------

CHECK NO MINIMUM $150,000 PER DAY

WIRE $1,000 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS

TELETRANSFER $500 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS

Written sell orders

Some circumstances require written sell orders along with signature guarantees.
These include:

o amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days

o requests to send the proceeds to a different payee or address

Written sell orders of $100,000 or more must also be signature guaranteed.

A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.

Your Investment

ACCOUNT POLICIES (CONTINUED)

General policies

UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.

THE FUND RESERVES THE RIGHT TO:

o refuse any purchase or exchange request that could
adversely affect the fund or its operations, including
those from any individual or group who, in the fund's view,
is likely to engage in excessive trading (usually defined
as more than four exchanges out of the fund within a
calendar year)

o refuse any purchase or exchange request in excess of 1% of
the fund's total assets

o change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions

o change its minimum investment amounts

o delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)

The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).

Small account policies

To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.

The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; accounts opened through a financial institution.

If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 45 days, the fund may close your account and
send you the proceeds.

DISTRIBUTIONS AND TAXES

THE FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income,
and distributes any net capital gains that it has realized once a year. Your
distributions will be reinvested in the fund unless you instruct the fund
otherwise. There are no fees or sales charges on reinvestments.

FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most investors (unless your
investment is in an IRA or other tax-advantaged account). The tax status of any
distribution is the same regardless of how long you have been in the fund and
whether you reinvest your distributions or take them in cash. In general,
distributions are taxable as follows:
- --------------------------------------------------------

Taxability of distributions

Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
--------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE

SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE

LONG-TERM
CAPITAL GAINS 10% 20%

The tax status of your dividends and distributions will be detailed in your
annual tax statement from the fund.

Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.

Taxes on transactions

Except in tax-advantaged accounts, any sale or exchange of fund shares may
generate a tax liability.

The table at right also can provide a guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains" applies to
fund shares sold up to 12 months after buying them. "Long-term capital gains"
applies to shares sold after 12 months.

Your Investment

SERVICES FOR FUND INVESTORS

Automatic services

BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You can set up most of these services with your
application or by calling 1-800-645-6561.
- --------------------------------------------------------

For investing

DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.

DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.

DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.

DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another (not available
for IRAs).
- --------------------------------------------------------
For exchanging shares

DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into another.
- --------------------------------------------------------

For selling shares

DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.

Dreyfus Financial Centers

Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.

Our experienced financial consultants can help you make informed choices and
provide you with personalized attention in handling account transactions. The
Financial Centers also offer informative seminars and events. To find the
Financial Center nearest you, call 1-800-499-3327.

Exchange privilege

YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.

Dreyfus TeleTransfer privilege

TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.

The Dreyfus Touch((reg.tm))

FOR 24-HOUR AUTOMATED ACCOUNT ACCESS, use Dreyfus Touch. With a touch-tone
phone, you can easily manage your Dreyfus accounts, obtain information on other
Dreyfus mutual funds and get current stock market quotes.

Retirement plans

Dreyfus offers a variety of retirement plans, including traditional, Roth and
Education IRAs. Here's where you call for information:

o for traditional, rollover, Roth and Education IRAs, call
1-800-645-656

o for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts,
call 1-800-358-0910

Your Investment

INSTRUCTIONS FOR REGULAR ACCOUNTS

TO OPEN AN ACCOUNT

In Writing

Complete the application.

Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387

TO ADD TO AN ACCOUNT

Fill out an investment slip, and write your account number on your check.

Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105

By Telephone

WIRE Have your bank send your investment to The Bank of New York, with
these instructions:

* ABA# 021000018

* DDA# 8900251786 Income Portfolio

* DDA# 8900118253 Growth and Income Portfolio

* DDA# 8900251794 Growth Portfolio

* your Social Security or tax ID number

* name(s) of investor(s)

Call us to obtain an account number. Return your application.

WIRE Have your bank send your investment to The Bank of New York, with
these instructions:

* ABA# 021000018

* DDA# 8900251786 Income Portfolio

* DDA# 8900118253 Growth and Income Portfolio

* DDA# 8900251794 Growth Portfolio

* your account number

* name(s) of investor(s)

ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.

TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.

Automatically

WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.

WITHOUT ANY INITIAL INVESTMENT Check the Dreyfus Step Program option on
your application. Return your application, then complete the additional
materials when they are sent to you.

ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.

Via the Internet

COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow
the instructions to download an account application.

TO SELL SHARES

Write a letter of instruction that includes:

* your name(s) and signature(s)

* your account number

* the fund name

* the dollar amount you want to sell

* how and where to send the proceeds

Obtain a signature guarantee or other documentation, if required (see
"Account Policies -- Selling Shares").

Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671, Providence,
RI 02940-9671

WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.

TELETRANSFER Be sure the fund has your bank account information on file. Call us
to request your transaction. Proceeds will be sent to your bank by electronic
check.

CHECK Call us to request your transaction. A check will be sent to the address
of record.

DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.

Be sure to maintain an account balance of $5,000 or more.

To reach Dreyfus, call toll free in the U.S.

1-800-645-6561

Outside the U.S. 516-794-5452

Make checks payable to:

THE DREYFUS FAMILY OF FUNDS

You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account
will be credited or debited.

Concepts to understand

WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.

ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.

Your Investment

INSTRUCTIONS FOR IRAS

TO OPEN AN ACCOUNT

In Writing

Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.

Mail your application and a check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427

TO ADD TO AN ACCOUNT

Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.

Mail in the slip and the check (see "To Open an Account" at left).

By Telephone

WIRE Have your bank send your investment to The Bank of New York, with these
instructions:

* ABA# 021000018

* DDA# 8900251786 Income Portfolio

* DDA# 8900118253 Growth and Income Portfolio

* DDA# 8900251794 Growth Portfolio

* your account number

* name of investor

* the contribution year

ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.

TELEPHONE CONTRIBUTION Call to request us to move money from a regular Dreyfus
account to an IRA (both accounts must be held in the same shareholder name).

Automatically

WITHOUT ANY INITIAL INVESTMENT Call us to request a Dreyfus Step Program form.
Complete and return the form along with your application.

ALL SERVICES Call us to request a form to add an automatic investing service
(see "Services for Fund Investors"). Complete and return the form along with any
other required materials.

All contributions will count as current year.

Via the Internet

COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow
the instructions to download an account application.

TO SELL SHARES

Write a letter of instruction that includes:

* your name and signature

* your account number

* the fund name

* the dollar amount you want to sell

* how and where to send the proceeds

* whether the distribution is qualified or premature

* whether the 10% TEFRA should be withheld

Obtain a signature guarantee or other documentation, if required.

Mail in your request (see "To Open an Account" at left).

DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request instructions to establish
the plan.

To reach Dreyfus, call toll free in the U.S.

1-800-645-6561

Outside the U.S. 516-794-5452

Make checks payable to:

THE DREYFUS TRUST CO., CUSTODIAN

You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account
will be credited or debited.

Concepts to understand

Your Investment

NOTES

For More Information

Dreyfus LifeTime Portfolios, Inc.
-----------------------------

SEC file number: 811-7878

More information on this fund is available free
upon request, including the following:

Annual/Semiannual Report

Describes each portfolio's performance, lists
portfolio holdings and contains a letter from the
fund's manager discussing recent market conditions,
economic trends and fund strategies that
significantly affected each portfolio's performance
during the last fiscal year.

Statement of Additional Information (SAI)

Provides more details about each portfolio and its
policies. A current SAI is on file with the
Securities and Exchange Commission (SEC) and is
incorporated by reference (is legally considered
part of this prospectus).

To obtain information:

BY TELEPHONE Call 1-800-645-6561

BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144

BY E-MAIL Send your request to [email protected]

ON THE INTERNET Text-only versions of fund documents can be viewed online
or downloaded from:

SEC
http://www.sec.gov

DREYFUS
http://www.dreyfus.com

You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.

Exhibit 17(c)

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

PROSPECTUS SEPTEMBER 1, 1998

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's INVESTMENT OBJECTIVE IS TO MAXIMIZE TOTAL RETURN, CONSISTING OF CAPITAL
APPRECIATION AND CURRENT INCOME. THE FUND FOLLOWS AN INVESTMENT STRATEGY THAT
ACTIVELY ALLOCATES THE FUND'S ASSETS AMONG EQUITY AND FIXED-INCOME SECURITIES
AND SHORT-TERM MONEY MARKET INSTRUMENTS. IN ADDITION TO USUAL INVESTMENT
PRACTICES, THE FUND 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 TELETRANSFER.

THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S 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, 1998, WHICH MAY BE
REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN
THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED
HEREIN BY REFERENCE. THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A WEB SITE
(HTTP: //WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION,
MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE FUND.
FOR A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. 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 5

MANAGEMENT OF THE FUND 8

HOW TO BUY SHARES 9

SHAREHOLDER SERVICES 12

HOW TO REDEEM SHARES 15

SHAREHOLDER SERVICES PLAN 17

DIVIDENDS, DISTRIBUTIONS AND TAXES 17

PERFORMANCE INFORMATION 18

GENERAL INFORMATION 19

APPENDIX 20
- --------------------------------------------------------------------------------

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]

[Page 2]

ANNUAL FUND OPERATING EXPENSES

(as a percentage of average daily net assets)

Management Fees .75%

Other Expenses .52%

Total Fund Operating Expenses 1.27%

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 $ 13

3 YEARS $ 40

5 YEARS $ 70

10 YEARS $ 153

- --------------------------------------------------------------------------------
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, THE FUND'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 you in understanding the
costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. 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. See "Management of the Fund," "How to
Buy 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. Further financial data, related notes and
the report of independent auditors accompany the Statement of Additional
Information, available upon request.

FINANCIAL HIGHLIGHTS

Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each year indicated. This information has been
derived from the Fund's financial statements.

YEAR ENDED APRIL 30,
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994(1) 1995 1996 1997 1998
------- ------ ------ ------ -----
PER SHARE DATA:

Net asset value, beginning of year $12.50 $12.49 $13.81 $13.49 $14.68
------- ------ ------ ------ ------
INVESTMENT OPERATIONS:

Investment income-net .24 .39 .32 .33 .24

Net realized and unrealized gain (loss) on investments (.11) 1.35 1.70 1.83 4.40
------- ------ ------ ------ -----

TOTAL FROM INVESTMENT OPERATIONS .13 1.74 2.02 2.16 4.64
------- ------ ------ ------ ------

DISTRIBUTIONS:

Dividends from investment income-net (.13) (.37) (.38) (.34) (.24)

Dividends from net realized gain on investments (.01) (.05) (1.96) (.63) (3.59)
------- ------ ------ ------ ------

TOTAL DISTRIBUTIONS (.14) (.42) (2.34) (.97) (3.83)
------- ------ ------ ------ ------
Net asset value, end of year $12.49 $13.81 $13.49 $14.68 $15.49
====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN .99%(2) 14.22% 15.67% 16.49% 34.33%

RATIOS / SUPPLEMENTAL DATA:

Ratio of expenses to average net assets .16%(2) .67% 1.25% 1.31% 1.27%

Ratio of net investment income to average net assets 2.48%(2) 3.00% 2.16% 2.12% 1.57%

Decrease reflected in above expense ratios due to

undertakings by The Dreyfus Corporation 1.58%(2) 1.27% .27% -- --

Portfolio Turnover Rate -- 160.11% 370.06% 223.50% 262.74%

Average Commission Rate Paid (3) -- -- -- $.0538 $.0633

Net Assets, end of year (000's omitted) $51,063 $56,639 $62,940 $60,856 $94,896
- ------------------

(1) From July 1, 1993 (commencement of operations) through April 30, 1994.

(2) Not annualized.

(3) For fiscal years beginning May 1, 1996, the Fund is required to disclose
its average commission rate paid per share for purchases and sales of
investment securities.

</TABLE>

Further information about the Fund's performance 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.

DEBT OUTSTANDING

YEAR ENDED APRIL 30, 1998
-----------------------------
PER SHARE DATA:

Amount of debt outstanding at
end of year (in thousands) --

Average amount of debt outstanding
throughout year (in thousands)(1) --

Average number of shares outstanding
throughout year (in thousands)(2) --

Average amount of debt per
share throughout year --
- ----------------------------------------------

(1)Based upon daily outstanding borrowings.

(2)Based upon month-end balances.

DESCRIPTION OF THE FUND

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return, consisting of
capital appreciation and current income. It 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 the Fund's outstanding voting shares. There can
be no assurance that the Fund's investment objective will be achieved.

MANAGEMENT POLICIES

The Fund seeks to achieve its investment objective by following an asset
allocation strategy that contemplates shifts, which may be frequent, among
equity and fixed-income securities and short-term money market instruments.

The following table sets forth the asset classes, benchmark percentages and
asset class strategy ranges within which The Dreyfus Corporation intends to
manage the Fund's assets:

ASSET BENCHMARK STRATEGY

CLASS PERCENTAGE RANGE
- ------ ------------- --------

Equity Securities 55% 40-80%

Fixed-Income Securities 35% 20-60%

Short-Term Money Market Instruments 10% 0-40%

" Benchmark percentage" represents the asset mix The Dreyfus Corporation
expects to maintain when its assessment of economic conditions and investment
opportunities indicate that the financial markets are fairly valued relative to
each other. The asset class "strategy range" indicates ordinarily expected
variations from this benchmark and reflects that The Dreyfus Corporation expects
to make policy weight shifts within specific asset classes.

The Dreyfus Corporation has broad latitude in selecting the class of
investments and market sectors in which the Fund 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. The Fund will not be
managed as a balanced portfolio. The asset allocation mix 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 the 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 Fund 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 the Fund's investment
performance. Under certain market conditions, limiting the Fund's asset
allocation among these asset classes may inhibit its ability to achieve its
investment objective.

The equity securities in which the Fund may invest include, common stocks,
preferred stocks and convertible securities of domestic and foreign issuers. The
Fund is particularly alert to companies, both domestic and foreign, which it
considers undervalued by the stock market in terms of current earnings, assets
or overall growth prospects. The Fund may invest up to 25% of the value of its
total assets in equity securities of foreign companies which are not publicly
traded in the United States.

The fixed-income securities in which the Fund may invest include U.S.
dollar-denominated bonds, debentures, notes, mortgage-related securities,
asset-backed securities, municipal obligations, warrants, convertible debt
obligations and convertible preferred stocks. The issuers of these obligations
may include domestic and foreign corporations, partnerships or trusts, and
governments, their political subdivisions, agencies or municipalities, and
corporations. The Fund may invest up to 30% of its total assets in fixed-income
securities of foreign issuers, including securities of issuers whose principal
activities are in, or which are governments of, emerging markets. The Fund is
not subject to any limit on the percentage of its assets that may be invested in
fixed-income securities having a certain rating. Thus, it is possible that a
substantial portion of the Fund's assets may be invested in fixed-income
securities that are unrated or rated in the lowest categories of the recognized
rating services (i.e., securities rated C by Moody's Investors Service, Inc. ("
Moody's" ) or D by Standard & Poor's Ratings Group ("S&P"), Fitch IBCA, Inc. ("
Fitch" ) or Duff & Phelps Credit Rating Co. ("Duff")). Low-rated and unrated
securities have special risks relating to the ability of the Fund to receive
timely, or perhaps ultimate, payment of principal and interest. They are
considered to have speculative characteristics and to be of poor quality; some
obligations in which the Fund may invest, such as debt securities rated D by S&
P, Fitch and Duff, may be in default. The Fund intends to invest less than 35%
of its assets in debt securities rated Ba or lower by Moody's and BB or lower by
S& P, Fitch and Duff. See "Investment Considerations and Risks -- Fixed-Income
Securities" and "-- Lower Rated Securities" below for a discussion of certain
risks.

The money market instruments in which the Fund may invest include U.S.
Government securities, certificates of deposit, time deposits, bankers'
acceptances, short-term investment grade corporate bonds and other short-term
debt instruments, and repurchase agreements, as set forth under "
Appendix--Certain Portfolio Securities--Money Market Instruments." When The
Dreyfus Corporation determines that adverse market conditions exist, the Fund
may adopt a temporary defensive posture and invest without limitation in money
market instruments.

The Fund's annual portfolio turnover rate for the current fiscal year is
not expected to exceed 250% . A turnover rate of 100% is equivalent to the Fund
buying and selling all of the securities in its portfolio once in the course of
a year. Higher portfolio turnover rates usually generate additional brokerage
commissions and expenses and the short term gains realized from these
transactions are taxable to shareholders as ordinary income. The Fund may engage
in various investment techniques, such as foreign currency transactions, lending
portfolio securities, short-selling, leveraging, interest rate swaps and options
and futures transactions. For a discussion of the investment techniques and
their related risks, see "Investment Considerations and Risks" and
"Appendix--Investment Techniques" below and "Investment Objective and Management
Policies--Management Policies" in the Statement of Additional Information.

INVESTMENT CONSIDERATIONS AND RISKS

GENERAL -- The Fund's net asset value per share should be expected to fluctuate.
Investors should consider the Fund as a supplement to an overall investment
program and should invest only if they are willing to undertake the risks
involved. See "Investment Objective and 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 the value of the Fund's investments
will result in changes in the value of its shares and thus the Fund's total
return to investors.

The Fund may purchase securities of smaller capitalization companies, the
prices of which 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.

FIXED-INCOME SECURITIES -- 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. The values of fixed-income
securities also may be affected by changes in the credit rating or financial
condition of the issuer. Certain securities purchased by the Fund, such as those
rated Baa or lower by Moody's and BBB or lower by S&P, Fitch and Duff, may be
subject to such risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income securities.
Once the rating of a portfolio security has been changed, the Fund will consider
all circumstances deemed relevant in determining whether to continue to hold the
security. Mortgage-related securities in which the Fund may invest are complex
derivative instruments, subject to both credit and prepayment risk, and may be
more volatile and less liquid than more traditional debt securities. Some
mortgage-related securities have structures that make their reactions to
interest rate changes and other factors difficult to predict, making their value
highly volatile. See "Lower Rated Securities" and "Appendix -- Certain Portfolio
Securities -- Mortgage-Related Securities and Ratings" below and "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 evidences of ownership of such securities usually are held outside
the United States, the Fund will be subject to additional risks which include
possible: adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions
which might adversely affect or restrict the payment of principal and interest
on the foreign securities to investors located outside the country of the
issuer, whether from currency blockage or otherwise.

Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Fund have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continued to have adverse
effects on the economies and securities markets of certain of these countries.

LOWER RATED SECURITIES -- The Fund may invest up to 35% of its net assets in
higher yielding (and, therefore, higher risk) debt securities such as those
rated Ba by Moody's or BB by S&P, Fitch or Duff or as low as the lowest rating
assigned by Moody's, S&P, Fitch or Duff (commonly known as junk bonds). They may
be subject to certain risks with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-income
securities. The retail secondary market for these securities may be less liquid
than that of higher rated securities; adverse conditions could make it difficult
at times for the Fund to sell certain securities or could result in lower prices
than those used in calculating the Fund's net asset value. See "Appendix --
Certain Portfolio Securities--Ratings."

USE OF DERIVATIVES -- The Fund may invest in, or enter into, derivatives
("Derivatives"). These are financial instruments which derive their performance,
at least in part, from the performance of an underlying asset, index or interest
rate. The Derivatives the Fund may use include options and futures,
mortgage-related securities, asset-backed securities and interest rate swaps.
While Derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase the
volatility of the Fund's net asset value, decrease the liquidity of the Fund's
portfolio and make more difficult the accurate pricing of the Fund's portfolio.
See "Appendix--Investment Techniques--Use of Derivatives" below and "Investment
Objective and Management Policies--Management Policies--Derivatives" in the
Statement of Additional Information.

NON-DIVERSIFIED STATUS -- The classification of the Fund as a "non-diversified"
investment company means that the proportion of the Fund'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. Because a relatively high percentage of the
Fund's assets may be invested in the securities of a limited number of issuers,
some of which may be within the same industry, the Fund's portfolio may be more
sensitive to changes in the market value of a single issuer or industry.
However, to meet Federal tax requirements, at the close of each quarter the Fund
may not have more than 25% of its total assets invested in any one issuer and,
with respect to 50% of total assets, not more than 5% of its total assets
invested in any one issuer. These limitations do not apply to U.S. Government
securities.

SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest in,
or dispose of, the same securities as the Fund, 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 Fund or the price paid or received by the
Fund.

YEAR 2000 RISKS -- Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by The Dreyfus Corporation and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Dreyfus Corporation is taking steps to address the Year 2000
Problem with respect to the computer systems that it uses and to obtain
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon").
As of July 31, 1998, The Dreyfus Corporation managed or administered
approximately $110 billion in assets for approximately 1.7 million investor
accounts nationwide.

The Dreyfus Corporation supervises and assists in the overall management of
the Fund's affairs under a Management Agreement with the Fund, subject to the
authority of the Fund's Board in accordance with Maryland law. The Fund's
primary portfolio manager is Kevin M. McClintock. He has held that position
since May 1996, and has been employed by The Dreyfus Corporation since November
1995. From 1993 through October 1995, Mr. McClintock was Managing Director,
Fixed Income Investments, for Aeltus Investment Management, Inc., a subsidiary
of the Aetna Corporation. Prior thereto, he was employed in various capacities
by Aetna Corporation and its subsidiaries, including head of Separate Account
Portfolio Management for Aetna.The Fund's other portfolio managers are
identified in the Statement of Additional Information. The Dreyfus Corporation
also provides research services for the Fund and 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 $350 billion in assets as of June 30,
1998, including approximately $125 billion in proprietary mutual fund assets. As
of June 30, 1998, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for more than $1.791
trillion in assets, including approximately $54 billion in mutual fund assets.

For the fiscal year ended April 30, 1998, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .75 of 1% of the
value of the Fund's average daily net assets. 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 expense ratio
of the Fund and increasing yield to investors. 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.

In allocating brokerage transactions, The Dreyfus Corporation seeks to
obtain the best execution of orders at the most favorable net price. Subject to
this determination, The Dreyfus Corporation may consider, among other things,
the receipt of research services and/or the sale of shares of the Fund or other
funds managed, advised or administered by The Dreyfus Corporation as factors in
the selection of broker-dealers to execute portfolio transactions for the Fund.
See "Portfolio Transactions" in the Statement of Additional Information.

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 in respect of these
services.

DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc. (the
" Distributor" ), located at 60 State Street, Boston, Massachusetts 02109. The
Distributor's ultimate parent is Boston Institutional Group, Inc.

TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671, Providence,
Rhode Island 02940-9671, is the Fund's Transfer and Dividend Disbursing Agent
(the "Transfer Agent"). Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, is the Fund's Custodian.

HOW TO BUY SHARES

Fund shares are sold without a sales charge. You may be charged a fee if
you effect transactions in Fund shares through a securities dealer, bank or
other financial institution. 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. See "Appendix -- Additional
Information About Purchases, Exchanges and Redemptions."

The minimum initial investment is $2,500, or $1,000 if you are a client of
a securities dealer, bank or other financial institution which maintains an
omnibus account in the Fund and 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 is $750 for Dreyfus-sponsored Keogh
Plans, IRAs (including regular IRAs, spousal IRAs for a non-working spouse, Roth
IRAs, SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and $500 for Dreyfus-sponsored Education IRAs, with no minimum for subsequent
purchases. The initial investment must be accompanied by the 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 accounts, the
minimum initial investment is $50. The Fund reserves the right to offer 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. Fund shares
also are offered without regard to the minimum initial investment requirements
through Dreyfus-Automatic Asset Builder(reg.tm) , 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 Fund 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, DDA#8900118202/Dreyfus Asset
Allocation Fund, Inc. 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 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."

Fund 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 entity authorized to receive orders on behalf of the Fund. 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 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 Fund's net assets (i.e., the value of its
assets less liabilities) by the total number of Fund shares outstanding. The
Fund'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 Fund's Board. Certain securities may be valued by an independent pricing
service approved by the Fund's Board and are valued at fair value as determined
by the pricing service. For further information regarding the methods employed
in valuing the Fund'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 Fund 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.

The Distributor may pay dealers a fee of up to .5% of the amount invested
through such dealers in 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.

Federal regulations require that you provide a certified TIN upon opening
or reopening an account. See "Dividends, Distributions and Taxes" and the
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 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 calling 1-800-645-6561 or, if you are
calling from overseas, call 516-794-5452.

SHAREHOLDER SERVICES

FUND EXCHANGES

You may purchase, in exchange for shares of the Fund, 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. If you are calling from overseas, call 516-794-5452

To request an exchange, you must give exchange instructions to the Transfer
Agent in writing or by telephone. Before any exchange, 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, by a separate signed
Shareholder Services Form, or by oral request from any of the authorized
signatories on the account. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions (including over The Dreyfus
Touch(reg.tm) automated telephone system) by calling one of the telephone
numbers set forth above. See "How to Redeem 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 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 the 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 administrative 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. See "Appendix -- Additional Information
About Purchases, Exchanges and Redemptions." 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 you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of the
Fund, in shares of certain other funds in the Dreyfus Family of Funds of which
you a shareholder. 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. 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. See "Dividends, Distributions and Taxes."

DREYFUS-AUTOMATIC ASSET BUILDER(reg.tm)

Dreyfus-Automatic Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular intervals
selected by you. Fund shares are purchased by transferring funds from the bank
account designated by you. 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 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.

DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE

Dreyfus Government Direct Deposit Privilege enables you to purchase Fund
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. The Fund may terminate your
participation upon 30 days' notice to you.

DREYFUS PAYROLL SAVINGS PLAN

Dreyfus Payroll Savings Plan permits you to purchase Fund 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 Fund shares without regard to
the Fund's minimum initial investment requirements through Dreyfus-Automatic
Asset Builder(reg.tm) , 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 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 the Fund in 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. If you are investing in a fund that charges
a contingent deferred sales charge, the shares purchased will be subject on
redemption to the contingent deferred sales charge, if any, applicable to the
purchased shares. See "Shareholder Services" in the Statement of Additional
Information. Dreyfus Dividend ACH permits you 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, IRAs or other retirement plans are not eligible for Dreyfus Dividend
Sweep.

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 Automatic Withdrawal Plan may be
established by filing an Automatic Withdrawal Plan application with the Transfer
Agent or by oral request from any of the authorized signatories on the account
by calling 1-800-645-6561. 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 (including regular IRAs, spousal IRAs for a non-working
spouse, Roth IRAs, SEP-IRAs, rollover IRAs and Education IRAs), 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 (except
SEP-IRAs) , please call 1-800-645-6561; or for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.

HOW TO REDEEM 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 by the Transfer Agent or other entity authorized to
receive orders on behalf of the Fund, the Fund will redeem the shares at the
next determined net asset value. See "Appendix -- Additional Information About
Purchases, Exchanges and Redemptions."

The Fund imposes no charges when shares are redeemed. Securities dealers,
banks and other financial institutions may charge their clients a fee for
effecting redemptions of Fund shares. Any certificates representing Fund 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
Fund' 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(reg.tm) 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, or through the Telephone Redemption Privilege, which is granted
automatically unless you specifically refuse it by checking the applicable "No"
box on the Account Application. The Telephone Redemption Privilege may be
established for an existing account by a separate signed Shareholder Services
Form or by oral request from any of the authorized signatories on the account by
calling 1-800-645-6561. You also may redeem shares through the Wire Redemption
Privilege or the Dreyfus TELETRANSFER Privilege, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer Agent.
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 currently is contemplated. Shares held under Keogh
Plans, IRAs or other retirement plans, and shares for which certificates have
been issued, are not eligible for the Wire Redemption, Telephone Redemption or
Dreyfus TELETRANSFER Privilege.

The Telephone Redemption Privilege or Telephone Exchange Privilege
authorizes the Transfer Agent to act on telephone instructions (including over
The Dreyfus Touch((reg.tm)) automated telephone system) 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 Fund 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
Fund'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, 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. 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, telephone or letter 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. 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 1-800-645-6561 or, if you are
calling from overseas, call 516-794-5452. The Statement of Additional
Information sets forth instructions for transmitting redemption requests by
wire.

TELEPHONE REDEMPTION PRIVILEGE--You may request by telephone that redemption
proceeds (maximum $150,000 per day) be paid by check and mailed to your address.
You may telephone redemption instructions by calling 1-800-645-6561 or, if you
are calling from overseas, call 516-794-5452. The Telephone Redemption Privilege
is granted automatically unless you refuse it.

DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that redemption
proceeds (minimum $500 per day) be transferred between your Fund account and
your 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 your account at an Automated Clearing
House member bank ordinarily two days after receipt of the redemption request.
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 you have selected the Dreyfus TELETRANSFER Privilege, you may request a
Dreyfus TELETRANSFER redemption of shares by calling 1-800-645-6561 or, if you
are calling from overseas, call 516-794-5452.

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 shareholders a fee at
the annual rate of .25 of 1% of the value of the Fund'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

The Fund ordinarily pays dividends from 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 Internal Revenue Code of 1986, as amended (the "Code"), in
all events in a manner consistent with the provisions of the 1940 Act. The Fund
will not 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. If you elect to receive dividends and
distributions in cash and your dividend or distribution check is returned to the
Fund as undeliverable or remains uncashed for six months, the Fund reserves the
right to reinvest such dividend or distribution and all future dividends and
distributions payable to you in additional Fund shares at net asset value. No
interest will accrue on amounts represented by uncashed distribution or
redemption checks. 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 Fund will be taxable to U.S. shareholders as ordinary income whether
received in cash or reinvested in additional shares. Distributions from net
realized long-term securities gains of the Fund 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 shares and whether such
distributions are received in cash or reinvested in Fund shares. The Code
provides that an individual generally will be taxed on his or her net capital
gain at a maximum rate of 20% with respect to capital gains from securities held
for more than one year. 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 Fund 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 Fund 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.

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.

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, IRS individual taxpayer 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 the Fund has qualified for the fiscal
year ended April 30, 1998 as a "regulated investment company" under the Code.
The Fund 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 Fund of any liability for Federal income taxes to the extent its
earnings are distributed in accordance with applicable provisions of the Code.
The Fund 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 the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of a
stated period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, or for shorter periods depending upon the length of time
the Fund 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 Fund's 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. The Fund is authorized to issue 300 million shares
of Common Stock, par value $.001 per share. Each share has one vote.

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 Board members 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 Board member from office or for any other purpose. Fund shareholders
may remove a Board member by the affirmative vote of a majority of the Fund's
outstanding voting shares. In addition, the Fund's Board will call a meeting of
shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.

The Transfer Agent maintains a record of your ownership and sends you
confirmation and statements of account.

Shareholder inquiries 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., call 516-794-5452.

APPENDIX

INVESTMENT TECHNIQUES

FOREIGN CURRENCY TRANSACTIONS -- 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 Fund has agreed to buy or sell;
to hedge the U.S. dollar value of securities the Fund 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 Fund's purchase
of foreign currencies for U.S. dollars or the maintenance of short positions in
foreign currencies, which would involve the Fund agreeing to exchange an amount
of a currency it did not currently own for another currency at a future date in
anticipation of a decline in the value of the currency sold relative to the
currency the Fund contracted to receive in the exchange. The Fund's success in
these transactions will depend principally on The Dreyfus Corporation's ability
to predict accurately the future exchange rates between foreign currencies and
the U.S. dollar.

LEVERAGE -- Leveraging exaggerates the effect on net asset value of any increase
or decrease in the market value of the Fund's portfolio. Money borrowed for
leveraging is limited to 33-1/3% of the value of the Fund's total assets. These
borrowings will be subject to interest costs which may or may not be recovered
by appreciation of the securities purchased; in certain cases, interest costs
may exceed the return received on the securities purchased.

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

SHORT-SELLING -- In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement. The price at
such time may be more or less than the price at which the security was sold by
the Fund, which would result in a loss or gain, respectively.

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

The Fund also may make short sales "against the box," in which the Fund
enters into a short sale of a security it owns in order to hedge an unrealized
gain on the security. At no time will more than 15% of the value of the Fund's
net assets be in deposits on short sales against the box.

USE OF DERIVATIVES -- The Fund may invest in, or enter into, the types of
Derivatives enumerated under "Description of the Fund -- Investment
Considerations and Risks -- Use of Derivatives."

These instruments and certain related risks are described more specifically
under "Investment Objective and Management Policies -- Management Policies --
Derivatives" in the Statement of Additional Information.

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

Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Fund's performance.

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

Although the Fund will not be a commodity pool, certain Derivatives subject
the Fund to the rules of the Commodity Futures Trading Commission which limit
the extent to which the Fund can invest in such Derivatives. The Fund may invest
in futures contracts and options with respect thereto for hedging purposes
without limit. However, the Fund may not invest in such contracts and options
for other purposes if the sum of the amount of initial margin deposits and
premiums paid for unexpired options with respect to such contracts, other than
for bona fide hedging purposes, exceeds 5% of the liquidation value of the
Fund's assets, after taking into account unrealized profits and unrealized
losses in such contracts and options; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5% limitation.

The Fund may invest up to 5% of its assets, represented by the premium
paid, in the purchase of call and put options. The Fund may write (i.e., sell)
covered call and put options contracts to the extent of 20% of the value of its
net assets at the time such options contracts are written. When required by the
Securities and Exchange Commission, the Fund will set aside permissible liquid
assets in a segregated account to cover its obligations relating to its
transactions in Derivatives. To maintain this required cover, the Fund may have
to sell portfolio securities at disadvantageous prices or times since it may not
be possible to liquidate a Derivative position at a reasonable price.

LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its portfolio
to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities which affords the Fund an opportunity to earn
interest on the amount of the loan and on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33(1)/3% of the value of the Fund's
total assets, and the Fund 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 Fund at any time upon
specified notice. The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund.

FORWARD COMMITMENTS -- The Fund may purchase or sell securities on a forward
commitment, when-issued or delayed delivery basis, which means that delivery and
payment take place a number of days after the date of the commitment to purchase
or sell the securities at a predetermined price and/or yield. Typically, no
interest accrues to the purchaser until the security is delivered. When
purchasing a security on a forward commitment basis, the Fund assumes the rights
and risks of ownership of the security, including the risk of price
fluctuations, and takes such fluctuations into account when determining its net
asset value. Because the Fund is not required to pay for these securities until
the delivery date, these risks are in addition to the risks associated with the
Fund's other investments. If the Fund is fully or almost fully invested when
forward commitment purchases are outstanding, such purchases may result in a
form of leverage. The Fund intends to engage in forward commitments to increase
its portfolio's financial exposure to the types of securities in which it
invests. Leveraging the portfolio in this manner will increase the Fund's
exposure to changes in interest rates and will increase the volatility of its
returns. The Fund will set aside in a segregated account permissible liquid
assets at least equal at all times to the amount of the commitments. At no time
will the Fund have more than 33 1/3% of its assets committed to purchase
securities on a forward commitment basis.

FORWARD ROLL TRANSACTIONS -- To enhance current income, the Fund may enter into
forward roll transactions with respect to mortgage-related securities. In a
forward roll transaction, the Fund sells a mortgage-related security to a
financial institution, such as a bank or broker-dealer, and simultaneously
agrees to purchase a similar security from the institution at a later date at an
agreed upon price. The securities that are purchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools of
mortgages with different pre-payment histories than those sold. During the
period between the sale and purchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the sale
typically will be invested in short-term investments, particularly repurchase
agreements, and the income from these investments, together with any additional
fee income received on the sale, will be expected to generate income for the
Fund exceeding the yield on the securities sold. Forward roll transactions
involve the risk that the market value of the securities sold by the Fund may
decline below the purchase price of those securities. A segregated account of
the Fund consisting of cash, U.S. Government securities or other high quality
liquid debt securities at least equal to the amount of the repurchase price
(including accrued interest) will be established and maintained at the Fund's
custodian bank.

CERTAIN PORTFOLIO SECURITIES

CONVERTIBLE SECURITIES -- Convertible securities may be converted at either a
stated price or stated rate into underlying shares of common stock. Convertible
securities have characteristics similar to both fixed-income and equity
securities. Convertible securities generally are subordinated to other similar
but non-convertible securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
The Fund also may invest in convertible preferred stocks that offer enhanced
yield features and higher dividend income than is available from an issuer's
common stock.

MORTGAGE-RELATED SECURITIES -- Mortgage-related securities are a form of
Derivative collateralized by pools of commercial or residential mortgages. Pools
of mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations. These securities may
include complex instruments such as collateralized mortgage obligations,
stripped mortgage-backed securities, mortgage pass-through securities, interests
in real estate mortgage investment conduits (" REMICs" ), adjustable rate
mortgages, real estate investment trusts ("REITs"), including debt and preferred
stock issued by REITs, as well as other real estate-related securities. The
mortgage-related securities in which the Fund may invest include those with
fixed, floating or variable interest rates, those with interest rates that
change based on multiples of changes in a specified index of interest rates and
those with interest rates that change inversely to changes in interest rates, as
well as those that do not bear interest. Mortgage-related securities are subject
to credit risks associated with the performance of the underlying mortgage
properties.

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

ASSET-BACKED SECURITIES -- Asset-backed securities are a form of Derivative. The
securitization techniques used for asset-backed securities are similar to those
used for mortgage-related securities. The collateral for these securities has
included home equity loans, automobile and credit card receivables, boat loans,
computer leases, airplane leases, mobile home loans, recreational vehicle loans
and hospital account receivables. The Fund may invest in these and other types
of asset-backed securities that may be developed in the future.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may provide the Fund
with a less effective security interest in the related collateral than do
mortgage-backed securities. Therefore, there is the possibility that recoveries
on the underlying collateral may not, in some cases, be available to support
payments on these securities.

WARRANTS -- A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the corporation's capital
stock at a set price for a specified period of time. The Fund may invest up to
5% of its net assets in warrants, except that this limitation does not apply to
warrants purchased by the Fund that are sold in units with, or attached to,
other securities.

MUNICIPAL OBLIGATIONS -- Municipal obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities. Municipal obligations bear fixed, floating
or variable rates of interest. Certain municipal obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related municipal obligations and
purchased and sold separately. The Fund also may acquire call options on
specific municipal obligations. The Fund generally would purchase these call
options to protect the Fund from the issuer of the related municipal obligation
redeeming, or other holder of the call option from calling away, the municipal
obligation before maturity.

While, in general, municipal obligations are tax exempt securities having
relatively low yields as compared to taxable, non-municipal obligations of
similar quality, certain municipal obligations are taxable obligations, offering
yields comparable to, and in some cases greater than, the yields available on
other permissible Fund investments. Dividends received by shareholders on Fund
shares which are attributable to interest income received by the Fund from
municipal obligations generally will be subject to Federal income tax. The Fund
may invest in municipal obligations, the ratings of which correspond with the
ratings of other permissible Fund investments. The Fund currently intends to
invest no more than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.

AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS -- The Fund 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.

MONEY MARKET INSTRUMENTS -- The Fund may invest in the following types of money
market instruments.

U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that differ in their interest rates, maturities and times of issuance. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury; others
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates of interest. While the U.S. Government provides financial support to such
U.S. Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law

REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys, and the seller
agrees to repurchase, a security at a mutually agreed upon time and price
(usually within seven days) . The repurchase agreement thereby determines the
yield during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. Repurchase
agreements could involve risks in the event of a default or insolvency of the
other party to the agreement, including possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities. The Fund may enter into
repurchase agreements with certain banks or non-bank dealers.

BANK OBLIGATIONS. The Fund may purchase certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations issued by domestic banks,
foreign subsidiaries or foreign branches of domestic banks, domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. With respect to such securities issued by foreign
subsidiaries or foreign branches of domestic banks, and domestic and foreign
branches of foreign banks, the 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. See "Description of
the Fund -- Investment Considerations and Risks -- Foreign Securities."

Certificates of deposit are negotiable certificates evidencing the obligation of
a bank to repay funds deposited with it for a specified period of time.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time (in no event longer than seven days) at a stated
interest rate.

Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.

COMMERCIAL PAPER. Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial paper purchased
by the Fund will consist only of direct obligations which, at the time of their
purchase, are (a) rated not lower than Prime-1 by Moody's, A-1 by S&P, F-1 by
Fitch or Duff-1 by Duff, (b) issued by companies having an outstanding unsecured
debt issue currently rated at least A3 by Moody's or A- by S&P, Fitch or Duff,
or (c) if unrated, determined by The Dreyfus Corporation to be of comparable
quality to those rated obligations which may be purchased by the Fund.

ZERO COUPON SECURITIES -- The Fund 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. Zero
coupon securities also are 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
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.

ILLIQUID SECURITIES -- The Fund 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 Fund'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, the Fund 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 Fund's net assets could be adversely affected.

RATINGS -- Securities rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Securities
rated BB by S&P, Fitch or Duff, are regarded as having predominately speculative
characteristics and, while such obligations have less near-term vulnerability to
default than other speculative grade debt, they face major ongoing uncertainties
or exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
Securities rated C by Moody's are regarded as having extremely poor prospects of
ever attaining any real investment standing. Securities rated D by S&P or Fitch
or DD by Duff are in default, and payment of interest and/or repayment of
principal is in arrears. Such securities, though high yielding, are
characterized by great risk. See "Appendix" in the Statement of Additional
Information for a general description of securities ratings.

The ratings of Moody's, S&P, Fitch and Duff represent their opinions as to
the quality of the obligations which they undertake to rate. Ratings are
relative and subjective and, although ratings may be useful in evaluating the
safety of interest and principal payments, they do not evaluate the market value
risk of such obligations. Although these ratings may be an initial criterion for
selection of portfolio investments, The Dreyfus Corporation also will evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. The Fund's ability to achieve its investment objective
may be more dependent on The Dreyfus Corporation's credit analysis than might be
the case for a fund that invested in higher rated securities.

ADDITIONAL INFORMATION ABOUT PURCHASES, EXCHANGES AND REDEMPTIONS. The Fund is
intended to be a long-term investment vehicle and is not designed to provide
investors with a means of speculation on short-term market movements. A pattern
of frequent purchases and exchanges can be disruptive to efficient portfolio
management and, consequently, can be detrimental to the Fund's performance and
its shareholders. Accordingly, if the Fund's management determines that an
investor is engaged in excessive trading, the Fund, with or without prior
notice, may temporarily or permanently terminate the availability of Fund
Exchanges, or reject in whole or part any purchase or exchange request, with
respect to such investor's account. Such investors also may be barred from
purchasing other funds in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year (for
calendar year 1998, beginning on January 15th) or who makes exchanges that
appear to coincide with an active market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control will be
considered as one account for purposes of determining a pattern of excessive
trading. In addition, the Fund may refuse or restrict purchase or exchange
requests by any person or group if, in the judgment of the Fund's management,
the Fund would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the Fund receives or anticipates receiving simultaneous orders that may
significantly affect the Fund (e.g., amounts equal to 1% or more of the Fund's
total assets) . If an exchange request is refused, the Fund will take no other
action with respect to the shares until it receives further instructions from
the investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if the
amount of the redemption request otherwise would be disruptive to efficient
portfolio management or would adversely affect the Fund. The Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.

During times of drastic economic or market conditions, the Fund may suspend
Fund Exchanges temporarily without notice and treat exchange requests based on
their separate components -- redemption orders with a simultaneous request to
purchase the other fund's shares. In such a case, the redemption request would
be processed at the Fund's next determined net asset value but the purchase
order would be effective only at the net asset value next determined after the
fund being purchased receives the proceeds of the redemption, which may result
in the purchase being delayed.

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

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>

[This Page Intentionally Left Blank]
<PAGE>

Dreyfus

Asset Allocation Fund, Inc.

PROSPECTUS