LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Asset Allocation Fund completed its first fiscal year on
April 30, 1994. This first annual report covers activities of the Fund from
its inception date, July 1, 1993 through April 30, 1994.
In spite of the sharp drop in the stock and bond markets, the Fund
managed to register a nominal gain in total return.
Until the end of January, the market environment was favorable for equity
and debt securities. The U.S. economy was clearly recovering from recession.
Industrial production and plant utilization were rising, retail sales were
improving and there appeared to be few visible signs of price or wage
inflation. In response to this, stock valuations were increasing and bond
prices strengthened, keeping interest rates low.
Early in February, however, the Federal Reserve Board began raising
interest rates in order to prolong the rise in economic activity. Until then,
the monetary policy had been one of encouraging economic expansion by
favoring low interest rates.
The Fed's new policy was to move toward a position that Federal Reserve
Board Chairman Alan Greenspan described as one of "neutrality" in terms of
the Fed's influence on the economy.
From early February to mid-May, the Fed acted four times to tighten
interest rates. The impact on the markets in February, March and April was a
reduction in stock and bond prices, which directly impacted your Fund's
overall performance due to its stock and bond holdings. The Fed's action in
May was greeted at first with relief by the markets in the belief that the
Fed's latest action, the strongest tightening of the four-month series, was
likely to be the last for a while. However, as time went on in late May, the
markets gave evidence of being unsure whether further moves by the central
bank toward "neutrality" might be scheduled.
As you know, assets of the Fund can be allocated among three principal
types of investments: stocks, U.S. Treasury notes and bonds, and money market
instruments. The stock portion is invested to represent the Standard & Poor's
500 Composite Stock Price Index, a broad measurement of stock market
performance. The U.S. Treasury bonds and notes have maturities ranging from
one to ten years.
When the portfolio was first assembled, about half the assets were
allocated to common stocks. By October 31, 71% of the portfolio was in common
stocks, 6% in U.S. Treasury notes and bonds, and 23% in cash equivalents,
primarily U.S. Treasury bills.
Since January 1, when I assumed responsibility for day-to-day management
of the Fund, the U.S. stock component has been reduced to 60%. The cash and
cash equivalent holdings in Treasury bills were increased to 25%, and the
holdings in Treasury notes increased to 15% by April 30.
Our management viewpoint about the securities markets since the first of
the calendar year has been cautious. Accordingly, we are currently keeping a
fairly high percentage of assets in cash equivalents and a relatively low
percentage in Treasury notes.
Of course, we remain alert to any future need for changes in these
allocations, as market and economic conditions may require.
Sincerely,
(Signature Logo)
Ernest G. Wiggins
Investment Officer
May 27, 1994
New York, N.Y.
PERFORMANCE
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]
$10,227
Standard & Poor's 500
Composite Stock
Price Index*
$10,135
Customized
Blended Index**
$10,099
Dreyfus
Asset Allocation Fund
In Dollars
*Source: Lipper Analytical Services, Inc.
**Source: Lipper Analytical Services, Inc., Lehman Brothers and Bank Rate
Monitor
ACTUAL AGGREGATE TOTAL RETURN
FROM INCEPTION (7/1/93) TO APRIL 30, 1994.............. 0.99%
Past performance is not predictive of future performance.
The above illustration compares a $10,000 investment made in the Dreyfus
Asset Allocation Fund on 7/1/93 (Inception Date) to a $10,000 investment made
in the Standard and Poor's 500 Composite Stock Price Index on that date as
well as to a Customized Blended Index reflecting the nature of the Fund's
portfolio. For comparative purposes the value of each Index on 6/30/93 is
used as the beginning value on 7/1/93. All dividends and capital gain
distributions are reinvested.
The Dreyfus Asset Allocation Fund allocates your money among stocks, U.S.
Treasury notes and bonds, and money market instruments. The Fund's
performance takes into account all applicable fees and expenses. The Standard
and 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 asset class weightings the Fund expects to maintain
under normal circumstances: 55% common stocks, 35% U.S. Treasury notes and
bonds, and 10% money market instruments. The Customized Blended Index
combines returns from the Standard & Poor's 500 Composite Stock Price Index,
the Shearson Lehman Intermediate Treasury Index and the Bank Rate Monitor
Index of money market returns, and is weighted to the aforementioned
proportions. Further information relating to Fund performance, including
expense reimbursements, if applicable, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
DREYFUS ASSET ALLOCATION FUND, INC.
ASSET ALLOCATION AS OF APRIL 30, 1994
[Exhibit B]
Cash Equivalents (25.5%)
Common Stocks (59.9%)
U.S. Treasury Notes (14.6%)
<TABLE>
<CAPTION>
FIVE LARGEST SECTORS
AS OF OCTOBER 31, 1993 AS OF APRIL 30, 1994
---------------------- --------------------
<S> <C> <S> <C>
Consumer Growth Staples... 12.1% U.S. Treasury Notes........ 14.6%
Utilities................. 10.6 Consumer Growth Staples.... 10.0
Capital Goods/Technology.. 9.7 Capital Goods/Technology... 8.4
Energy.................... 9.0 Utilities.................. 7.9
Consumer Cyclical......... 8.7 Energy..................... 7.7
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS AS OF APRIL 30, 1994
<S> <C>
U.S. Treasury Note, 8.50%, 11/15/2000........................... 10.7%
General Electric................................................ 3.1
Exxon........................................................... 2.8
American Telephone & Telegraph.................................. 2.8
Wal-Mart Stores................................................. 2.4
Royal Dutch Petroleum........................................... 2.3
Coca-Cola....................................................... 2.2
Philip Morris Cos............................................... 2.0
U.S. Treasury Note, 7.25%, 8/31/1996............................ 2.0
dupont (EI) de Nemours.......................................... 1.8
All percentages shown above are based on Total Net Assets.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF INVESTMENTS APRIL 30, 1994
COMMON STOCKS--59.9% SHARES VALUE
------------- -------------
<S> <C> <C>
BASIC INDUSTRIES--4.9%
Chemicals--2.5% Dow Chemical...................... 4,500 $ 282,375
dupont (EI) de Nemours............ 16,400 936,850
Eastman Chemical................. 1,200 53,400
-------------
1,272,625
-------------
Metals_.4% Alcan Aluminium................... 1,500 31,312
Aluminum Co. of America.......... 2,900 197,200
-------------
228,512
-------------
Mining_1.1% Minnesota Mining & Manufacturing.. 9,600 469,200
Placer Dome...................... 3,900 79,950
-------------
549,150
-------------
Paper & Forest Products_.5% International Paper............... 1,600 104,400
Rayonier......................... 450 12,713
Weyerhaeuser..................... 3,300 140,663
-------------
257,776
-------------
Photography_.4% Eastman Kodak..................... 4,800 199,200
-------------
TOTAL BASIC INDUSTRIES......... 2,507,263
=============
CAPITAL GOODS--1.5%
Environmental Control--.7% WMX Technologies.................. 14,100 368,363
-------------
Machinery & Industrial_.8% Caterpillar....................... 2,700 296,662
Cooper Industries................ 2,800 106,750
Gardner Denver Machinery......... 112(a) 952
-------------
404,364
-------------
TOTAL CAPITAL GOODS............ 772,727
=============
CAPITAL GOODS/TECHNOLOGY--8.4%
Aerospace/Defense--.4% AlliedSignal...................... 3,400 117,300
United Technologies.............. 1,800 114,750
-------------
232,050
-------------
Electrical Equipment_3.3% General Electric.................. 16,700 1,588,587
Westinghouse Electric............ 6,800 79,050
-------------
1,667,637
-------------
Electronics_2.4% Intel............................. 10,200 622,200
Motorola ........................ 11,600 517,650
Texas Instruments................ 1,400 107,100
-------------
1,246,950
-------------
Information Processing_2.2% Apple Computer.................... 1,500 45,000
Automatic Data Processing........ 2,600 133,900
Hewlett-Packard.................. 1,100 88,275
International Business Machines.. 13,000 744,250
Pitney Bowes..................... 2,900 110,925
-------------
1,122,350
-------------
Telecommunications_.1% Airtouch Communications .......... 1,600(a) 39,400
-------------
TOTAL CAPITAL GOODS/TECHNOLOGY.. 4,308,387
=============
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
CONGLOMERATES--.3%
ITT............................... 1,800 $ 161,550
=============
CONSUMER CYCLICAL--7.6%
Appliances--.2% Corning........................... 2,700 85,050
-------------
Auto Related_3.1% Ford Motor........................ 11,500 671,313
General Motors................... 16,000 908,000
-------------
1,579,313
-------------
Merchandising_4.3% Home Depot........................ 9,800 411,600
K mart........................... 4,800 79,200
May Department Stores............ 3,000 125,625
Penney (J.C.).................... 2,700 146,475
Sears, Roebuck................... 4,700 220,900
Wal-Mart Stores.................. 48,100 1,214,525
-------------
2,198,325
-------------
TOTAL CONSUMER CYCLICAL........ 3,862,688
=============
CONSUMER GROWTH STAPLES--10.0%
Beverages--3.5% Coca-Cola......................... 26,800 1,115,550
PepsiCo.......................... 17,500 638,750
-------------
1,754,300
-------------
Drugs_3.1% American Home Products............ 1,600 92,400
Bristol-Myers Squibb............. 12,000 646,500
Merck & Co....................... 25,000 740,625
Upjohn........................... 3,900 104,325
-------------
1,583,850
-------------
Entertainment_.5% Disney (Walt)..................... 6,100 258,487
-------------
Hospital Supplies_1.5% Abbott Laboratories............... 9,400 266,725
Baxter International............. 3,400 77,775
Johnson & Johnson................ 10,600 438,575
-------------
783,075
-------------
Printing & Publishing_.5% Dun & Bradstreet.................. 2,500 146,875
Gannett.......................... 2,200 115,500
-------------
262,375
-------------
Restaurants_.9% McDonald's........................ 7,800 468,000
-------------
TOTAL CONSUMER GROWTH STAPLES... 5,110,087
=============
CONSUMER STAPLES--4.1%
Foods--.5% Albertson's....................... 3,800 108,775
General Mills.................... 1,800 92,925
Sara Lee......................... 3,500 72,625
-------------
274,325
-------------
Household Products_1.6% Procter & Gamble.................. 14,700 836,063
-------------
Tobacco_2.0% Philip Morris Cos................. 18,500 1,008,250
-------------
TOTAL CONSUMER STAPLES ...... 2,118,638
=============
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED)
APRIL 30, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
ENERGY--7.7%
Oil & Gas Production--7.7% Amoco............................. 3,300 $ 185,212
Atlantic Richfield............... 500 47,687
Chevron.......................... 2,900 258,100
Exxon............................ 22,900 1,439,838
Mobil............................ 8,200 641,650
Royal Dutch Petroleum............ 10,800 1,177,200
Texaco........................... 2,600 167,375
-------------
TOTAL ENERGY ........... 3,917,062
=============
FINANCIAL--6.3%
Banking--3.4% Banc One.......................... 7,287 240,471
BankAmerica...................... 9,600 415,200
Bankers Trust New York........... 1,400 93,625
Chase Manhattan.................. 6,000 204,000
Chemical Banking................. 2,600 90,350
Citicorp......................... 5,300 196,100
Morgan (J.P.).................... 3,100 190,650
NationsBank...................... 5,600 292,600
-------------
1,722,996
-------------
Finance_1.3% American Express.................. 7,800 231,075
Federal National Mortgage Association 5,500 457,875
-------------
688,950
-------------
Insurance_1.6% American General.................. 2,700 68,850
American International Group..... 7,300 622,325
General Re....................... 1,000 111,500
-------------
802,675
-------------
TOTAL FINANCIAL................ 3,214,621
=============
RAILROADS--1.2%
CSX.............................. 1,800 140,175
Norfolk Southern................. 2,200 140,525
Union Pacific.................... 5,400 318,600
-------------
TOTAL RAILROADS................ 599,300
=============
UTILITIES--7.9%
Communication--6.2% American Telephone & Telegraph.... 27,600 1,411,050
Ameritech........................ 4,800 189,000
Bell Atlantic.................... 1,700 87,975
BellSouth........................ 7,200 438,300
GTE.............................. 17,500 553,438
NYNEX............................ 4,400 160,050
Pacific Telesis.................. 1,600 51,200
Southwestern Bell................ 5,100 211,650
U.S. West........................ 2,000 81,500
-------------
3,184,163
-------------
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED)
APRIL 30, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
UTILITIES (CONTINUED)
Electrical--1.7% Duke Power........................ 3,300 $ 120,862
Pacific Gas & Electric........... 10,100 267,650
Public Service Enterprise........ 400 11,550
SCEcorp.......................... 7,400 118,400
Southern Co...................... 10,200 198,900
Texas Utilities.................. 3,700 130,425
-------------
847,787
-------------
TOTAL UTILITIES................ 4,031,950
=============
TOTAL COMMON STOCKS
(cost $31,231,292)........... $30,604,273
=============
PRINCIPAL
U.S. TREASURY NOTES--14.6% AMOUNT
-------------
7.25%, 8/31/1996................. $ 1,000,000 $ 1,027,656
8.50%, 11/15/2000................ 5,000,000 5,440,625
6.375%, 8/15/2002................ 1,000,000 960,625
-------------
TOTAL U.S. TREASURY NOTES
(cost $8,034,531)............. $ 7,428,906
=============
SHORT-TERM INVESTMENTS--24.1%
U.S. Treasury Bills: 3.09%, 5/5/1994................... $ 1,771,000 $ 1,770,379
3%, 5/19/1994.................... 602,000 600,947
3.24%, 5/26/1994................. 5,167,000 5,154,521
3.44%, 6/2/1994.................. 1,805,000 1,799,304
3.23%, 7/7/1994.................. 2,018,000 2,004,742
3.125%, 7/21/1994................ 1,009,000 1,000,918
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $12,330,811)............. $12,330,811
=============
TOTAL INVESTMENTS (cost $51,596,634)........................................ 98.6% $50,363,990
====== =============
CASH AND RECEIVABLES (NET).................................................. 1.4% $ 698,588
====== =============
NET ASSETS.................................................................. 100.0% $51,062,578
====== =============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $51,596,634)_see statement...................................... $50,363,990
Cash.................................................................... 275,901
Dividends and interest receivable....................................... 284,519
Prepaid expenses_Note 1(e).............................................. 113,558
Due from The Dreyfus Corporation........................................ 122,573
-------------
51,160,541
LIABILITIES;
Accrued expenses........................................................ 97,963
-------------
NET ASSETS ................................................................ $51,062,578
=============
REPRESENTED BY:
Paid-in capital......................................................... $51,638,087
Accumulated undistributed investment income_net......................... 462,334
Accumulated undistributed net realized gain on investments.............. 194,801
Accumulated net unrealized (depreciation) on investments_Note 4(b)...... (1,232,644)
-------------
NET ASSETS at value applicable to 4,089,084 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)......... $51,062,578
=============
NET ASSET VALUE, offering and redemption price per share
($51,062,578 / 4,089,084 shares)........................................ $12.49
======
See notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF OPERATIONS
FROM JULY 1, 1993 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1994
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $501,958
Cash dividends (net of $727 foreign taxes withheld at source)......... 482,771
----------
TOTAL INCOME...................................................... $ 984,729
EXPENSES:
Management fee--Note 2(a)............................................. 232,788
Shareholder servicing costs_Note 2(b,c)............................... 275,297
Prospectus and shareholders' reports_Note 2(b)........................ 32,366
Registration fees..................................................... 29,945
Auditing fees......................................................... 27,107
Organization expenses_Note 1(e)....................................... 15,555
Directors fees and expenses_Note 2(d)................................. 14,365
Legal fees............................................................ 12,156
Custodian fees........................................................ 6,849
Miscellaneous......................................................... 2,905
----------
649,333
Less_expense reimbursement from Manager due to
undertakings_Note 2(a)............................................ 588,150
----------
TOTAL EXPENSES.................................................. 61,183
------------
INVESTMENT INCOME--NET.......................................... 923,546
------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments (including option
transactions)_Note 3(a)............................................... $ (21,143)
Net realized gain on financial futures_Note 3(a):
Long transactions..................................................... 114,340
Short transactions.................................................... 142,191
----------
NET REALIZED GAIN..................................................... 235,388
Net unrealized (depreciation) on investments............................ (1,232,644)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (997,256)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (73,710)
============
See notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FROM JULY 1, 1993 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1994
OPERATIONS:
Investment income--net.................................................................... $ 923,546
Net realized gain on investments.......................................................... 235,388
Net unrealized (depreciation) on investments for the period............................... (1,232,644)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................. (73,710)
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net..................................................................... (461,212)
Net realized gain on investments.......................................................... (40,587)
-------------
TOTAL DIVIDENDS......................................................................... (501,799)
-------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................................. 69,747,836
Dividends reinvested...................................................................... 486,322
Cost of shares redeemed................................................................... (18,696,071)
-------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.................................. 51,538,087
-------------
TOTAL INCREASE IN NET ASSETS........................................................ 50,962,578
NET ASSETS:
Beginning of period--Note 1............................................................... 100,000
-------------
End of period (including undistributed investment
income_net of $462,334)................................................................. $51,062,578
=============
CAPITAL SHARE TRANSACTIONS:
SHARES
-------------
Shares sold............................................................................... 5,525,794
Shares issued for dividends reinvested.................................................... 38,293
Shares redeemed........................................................................... (1,483,003)
-------------
NET INCREASE IN SHARES OUTSTANDING...................................................... 4,081,084
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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 the period July 1, 1993 (commencement
of operations) to April 30, 1994. This information has been derived from
information provided in the Fund's financial statements.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period............................................................ $12.50
-------
INVESTMENT OPERATIONS:
Investment income--net.......................................................................... .24
Net realized and unrealized (loss) on investments............................................... (.11)
-------
TOTAL FROM INVESTMENT OPERATIONS.............................................................. .13
-------
DISTRIBUTIONS:
Dividends from investment income-net............................................................ (.13)
Dividends from net realized gain on investments................................................. (.01)
-------
TOTAL DISTRIBUTIONS........................................................................... (.14)
-------
Net asset value, end of period.................................................................. $12.49
=======
TOTAL INVESTMENT RETURN .99%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................................................... .16%*
Ratio of net investment income to average net assets............................................ 2.48%*
Decrease reflected in above expense ratio due to
undertakings by the Manager................................................................... 1.58%*
Portfolio Turnover Rate......................................................................... -_
Net Assets, end of period (000's Omitted)....................................................... $51,063
- - ------------------
* Not annualized.
See notes to financial statements.
</TABLE>
DREYFUS ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") was incorporated on May
12, 1993 and had no operations until July 1, 1993 (commencement of
operations) other than matters relating to its organization and registration
as a non-diversified open-end management investment company under the
Investment Company Act of 1940 ("Act") and the Securities Act of 1933 and the
sale and issuance of 8,000 shares of Common Stock ("Initial Shares") to The
Dreyfus Corporation ("Manager"). Dreyfus Service Corporation ("Distributor")
acts as the distributor of the Fund's shares, which are sold to the public
without a sales load. The Distributor is a wholly-owned subsidiary of the
Manager. As of April 30, 1994, the Manager held 412,386 shares.
(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.
Short-term investments are carried at amortized cost, which approximates
value. Investments traded in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the 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.
(D) 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 provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from all, or substantially all, Federal income
taxes.
(E) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from July 1, 1993, the date
operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At April 30, 1994, the
unamortized balance of such expenses amounted to $84,182. In the event that
any of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of such shares being redeemed bears to
the number of such shares outstanding at the time of such redemption.
DREYFUS ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of distribution expenses and
certain expenses as described above) exceed 2 1/2% of the first $30 million,
2% of the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations. However, the Manager had undertaken from July 1, 1993
through January 11, 1994 to reimburse all fees and expenses of the Fund and
thereafter had undertaken through April 30, 1994 to reduce the management fee
paid by, and reimburse such excess expenses of the Fund, to the extent that
the Fund's aggregate expenses (excluding certain expenses as described above)
exceeded specified annual percentages of the Fund's average daily net assets.
The expense reimbursement, pursuant to the undertakings, amounted to $588,150
for the period ended April 30, 1994.
The Manager may modify the expense limitation percentages from time to
time, provided that the resulting expense reimbursement would not be less
than the amount required pursuant to the Agreement.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule
12b-1 under the Act, the Fund pays the Distributor, at an annual rate of .50
of 1% of the value of the Fund's average daily net assets, for costs and
expenses in connection with advertising, marketing and distributing the
Fund's shares and for servicing shareholder accounts. The Distributor may
make payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the Fund's
shares owned by clients of the Service Agent. The Plan also separately
provides for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average
daily net assets for any full fiscal year. During the period ended April 30,
1994, the Fund was charged $179,099 pursuant to the Plan.
(C) Pursuant to the Fund's 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 servicing shareholder accounts. 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. During the period ended April 30, 1994, the Fund was charged $77,596
pursuant to the Shareholder Services Plan.
(D) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each director
who is not an "affiliated person" receives an annual fee of $1,000 and an
attendance fee of $250 per meeting.
(E) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger providing for the merger of the Manager with a subsidiary of Mellon
Bank Corporation ("Mellon").
DREYFUS ASSET ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of stockholders of the Manager and of Mellon. The merger is
expected to occur in mid-1994, but could occur later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with the Manager under the Investment Company Act of
1940, and thus a termination of such Agreement, the Manager will seek prior
approval from the Fund's Board and shareholders.
NOTE 3--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases of investment securities, excluding
short-term securities and options transactions, during the period ended April
30, 1994 amounted to $39,265,842.
The Fund is engaged in trading financial futures contracts. The Fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. 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 made or received to reflect daily unrealized
gains or losses. When the contracts are closed, the Fund recognizes a
realized gain or loss. These investments require initial margin deposits with
a custodian, which consist of cash or cash equivalents, up to approximately
10% of the contract amount. The amount of these deposits is determined by the
exchange or Board of Trade on which the contract is traded and is subject to
change. At April 30, 1994, there were no financial futures contracts
outstanding.
(B) At April 30, 1994, accumulated net unrealized depreciation on
investments was $1,232,644, consisting of $1,111,802 gross unrealized
appreciation and $2,344,446 gross unrealized depreciation.
At April 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS ASSET ALLOCATION FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Asset Allocation Fund, Inc., including the statement of investments,
as of April 30, 1994, and the related statements of operations and changes in
net assets and financial highlights for the period from July 1, 1993
(commencement of operations) to April 30, 1994. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Asset Allocation Fund, Inc. at April 30, 1994, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from July 1, 1993 to April 30, 1994, in conformity
with generally accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
June 6, 1994
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal Tax purposes the Fund hereby designates $.0110 per share as a
long-term capital gain distribution of the $.1360 per share paid on December
17, 1993.
(Dreyfus Logo)
Asset
Allocation
Fund, Inc.
Annual Report
April 30, 1994
(Dreyfus Lion Logo)
(Dreyfus `D' Logo)
DREYFUS ASSET
ALLOCATION FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 550AR944
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
DREYFUS ASSET ALLOCATION FUND, INC. AND THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX AND THE BLENDED INDEX
EXHIBIT A:
|-----------|-----------------------------------|-----------|
| | | STANDARD | |
| | | & POOR'S 500 | |
| PERIOD | DREYFUS ASSET | COMPOSITE STOCK | BLENDED |
| | ALLOCATION FUND | PRICE INDEX * | INDEX ** |
|-----------|-----------------| ----------------|-----------|
| 7/1/93 | 10,000 | 10,000 | 10,000 |
| 7/31/93 | 9,976 | 9,960 | 9,987 |
| 10/31/93 | 10,200 | 10,470 | 10,349 |
| 1/31/94 | 10,519 | 10,853 | 10,598 |
| 4/30/94 | 10,099 | 10,227 | 10,135 |
|-----------------------------------------------|-----------|
Dreyfus Asset Allocation Fund, Inc.
Asset Allocation as of April 30, 1994
|----------------------------------------------------------------|
|Common Stocks 59.9 % |
|U.S. Treasury Notes 14.6 % |
|Cash Equivalents 25.5 % |
|----------------------------------------------------------------|
