LETTER TO SHAREHOLDERS
- ------------------------------------------------------------------------------
Dear Shareholder:
It is a pleasure to send you this first annual report of the Dreyfus Income
Portfolio of the Dreyfus Asset Allocation Fund, Inc. The Portfolio commenced
operations October 18, 1994. This report covers developments from that date
through April 30, 1995, the Fund's fiscal year-end.
Dreyfus Income Portfolio, in its six-and-a-half months of existence,
benefited in no small measure from a large position in 30-year Treasury bonds
that was established at the onset of operations of this Portfolio, and that has
been retained to date. The move in interest rates that has taken place since
October from above 8% (based on the 30-year Treasury benchmark) to present
levels below 7% has been a major factor in the Income Portfolio's performance.
From the Portfolio's inception date through April 30, it has provided a total
return of 11.14%.* This compares with a total return of 6.65% for the
Customized Blended Index, which, like the Portfolio, is composed of a defined
weighting of Treasury obligations, common stocks and cash equivalents that is
more fully described below.** The Shearson Lehman Intermediate Treasury Bond
Index, which the Portfolio has selected as a benchmark, posted a total return
of 5.19% from October 31, 1994 through April 30, 1995.***
The equity portion of the Portfolio benefited from a number of selections
of industry sectors, with technology, health care, certain process industries,
energy, and producer manufacturing contributing the most to performance.
Technology almost across the board has been strong, starting with
semiconductors such as Intel and Texas Instruments, communications with
Motorola and DSC Communications, and of course software via Microsoft.
In health care, gains came largely from drugs, where the Portfolio
benefited from significant positions in American Home Products, Schering-Plough
and Merck & Co., as well as from more diverse health care companies such as
Johnson & Johnson, Abbott Laboratories, and Baxter International.
In process industries, there has been a lot of corporate restructuring.
Holdings that were of particular benefit to the Portfolio in this sector
included duPont (EI) deNemours and Grace (W.R.).
The Portfolio's significant contrarian position in energy stocks finally
began to pay off in 1995 when this group began to recover from a previous
slump. Holdings in Texaco, Schlumberger and Royal Dutch Petroleum helped
considerably.
Lastly, select positions in producer manufacturing such as TRINOVA, Deere &
Co. and Boeing turned in strong showings for the year.
<PAGE>
Your investment in the Portfolio is very much appreciated. Of course,
Portfolio composition and allocation percentages are subject to change over
time. In this regard, we will continue to exert our best efforts to achieve the
Portfolio's objective of maximizing current income, with a secondary goal of
capital appreciation.
Sincerely,
(Ernest G. Wiggins Signature Logo)
Ernest G. Wiggins
Portfolio Manager
May 16, 1995
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** The Customized Blended Index has been prepared by the Fund and is intended
to be a more accurate comparison to the Portfolio's general portfolio
composition than the benchmark index, which is the Shearson Lehman
Intermediate Treasury Bond Index, an unmanaged index viewed as being a
leading indicator of overall performance of U.S. Treasury notes and bonds.
We have combined the performance of unmanaged indices which reflect
benchmark percentages with respect to each asset class in which the
Portfolio invests as described in the Fund's Prospectus: 55% U.S. Treasury
notes and bonds, 35% common stocks, and 10% cash equivalents. The Customized
Blended Index combines returns from the Shearson Lehman Intermediate
Treasury Bond Index, the Standard & Poor's 500 Composite Stock Price Index
and the Bank Rate Monitor Index of money market returns, and is weighted to
the benchmark percentages. The Customized Blended Index covers the period
from 10/31/94 through 4/30/95 (not from inception, 10/18/94).
*** SOURCE: LEHMAN BROTHERS - Reflects the reinvestment of income dividends
and, where applicable, capital gain distributions. The Shearson Lehman
Brothers Intermediate Treasury Bond Index is a widely accepted index of U.S.
Treasury notes and bonds.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS INCOME
PORTFOLIO OF DREYFUS ASSET ALLOCATION FUND, INC. WITH THE SHEARSON LEHMAN
INTERMEDIATE TREASURY INDEX AND A CUSTOMIZED BLENDED INDEX
(Exhibit A)
In Dollars
Dreyfus Income Portfolio $11,114
Customized Blended Index** $10,665
Shearson Lehman Intermediate Treasury Bond Index* $10,519
*Source: Lehman Brothers
**Source: Lipper Analytical Services, Inc., Lehman Brothers and Bank Rate
Monitor
ACTUAL AGGREGATE TOTAL RETURN
- -----------------------------------------------------------------------------
From Inception (10/18/94) to April 30, 1995......................... 11.14%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in the Dreyfus Income
Portfolio on 10/18/94 (Inception Date) to a $10,000 investment made in the
Shearson Lehman Intermediate Treasury Bond Index on that date as well as to a
Customized Blended Index reflecting the Portfolio's benchmark percentage
allocations which are described below. For comparative purposes, the value of
each index on 10/31/94 is used as the beginning value on 10/18/94. All
dividends and capital gain distributions are reinvested.
The Dreyfus Income Portfolio allocates your money among U.S. Treasury notes and
bonds, stocks and money market instruments. The Portfolio's performance takes
into account all applicable fees and expenses. The Shearson Lehman
Intermediate Treasury Bond Index is a widely accepted index of U.S. Treasury
notes and bonds which does not take into account charges, fees and other
expenses. The Shearson Lehman Intermediate Treasury Bond Index was selected
because (1) Treasuries represent the highest benchmark percentage and (2) the
weighted average maturity of the Treasuries portion of the Portfolio ranges
between 3 and 10 years. The Customized Blended Index has been prepared by the
Fund for purposes of more accurate comparison to the Portfolio's general
portfolio composition. We have combined the performance of unmanaged indices
reflecting the benchmark percentages set forth in the Prospectus: 55% U.S.
Treasury notes and bonds, 35% common stocks, and 10% money market instruments.
The benchmark percentages represent the asset mix that The Dreyfus Corporation
would expect to maintain where its assessment of economic conditions and
investment opportunities indicate that the financial markets are fairly valued
in relation to each other. The Customized Blended Index combines returns from
the Shearson Lehman Intermediate Treasury Bond Index, The Standard & Poor's 500
Composite Stock Price Index and the Bank Rate Monitor Index of money market
returns, and is weighted to the aforementioned benchmark percentages. Further
information relating to the Portfolio's performance, including expense
reimbursements, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this Report.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -----------------------------------------------------------------
STATEMENT OF INVESTMENTS APRIL 30, 1995
<TABLE>
<CAPTION>
COMMON STOCKS--45.2% SHARES VALUE
- ----------------------------------------------------------------------------- ------ ----------
<S> <C> <C> <C>
CONSUMER DURABLES--.7% Mattel ................................... 430 $ 10,212
----------
CONSUMER NON-DURABLES--4.9% CPC International ........................ 300 17,587
Coca-Cola ................................ 150 8,719
General Mills ............................ 200 12,200
Heinz (H.J.) ............................. 600 25,200
PepsiCo .................................. 98 4,079
----------
67,785
----------
DRUGS--.6% SmithKline Beecham ADS ................... 200 7,775
----------
ENERGY--6.5% Amerada Hess ............................. 356 18,022
Occidental Petroleum ..................... 300 6,900
Royal Dutch Petroleum .................... 81 10,044
Schlumberger ............................. 396 24,898
Texaco ................................... 447 30,564
----------
90,428
----------
FINANCE--1.5% American International Group ............. 200 21,350
----------
HEALTH CARE--6.8% Abbott Laboratories ...................... 200 7,875
American Home Products ................... 203 15,656
Baxter International ..................... 200 6,950
Columbia/HCA Healthcare .................. 485 20,370
Johnson & Johnson ........................ 139 9,035
Lilly (Eli) .............................. 100 7,475
Merck & Co. .............................. 89 3,816
Pfizer ................................... 100 8,662
Schering-Plough .......................... 100 7,538
United Healthcare ........................ 200 7,250
----------
94,627
----------
INDUSTRIAL SERVICES--2.0% CBI Industries ........................... 300 7,425
WMX Technologies ......................... 717 19,538
----------
26,963
----------
PROCESS INDUSTRIES--6.8% Corning .................................. 204 6,809
duPont(EI)deNemours ...................... 500 32,938
Grace (W.R.) ............................. 545 29,226
Monsanto ................................. 300 24,975
----------
93,948
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
COMMON STOCKS (continued) SHARES VALUE
- ----------------------------------------------------------------------------- ------ ----------
<S> <C> <C> <C>
PRODUCER MANUFACTURING--5.8% Cooper Industries ........................ 447 $ 17,433
Deere & Co. .............................. 321 26,322
Minnesota Mining & Manufacturing ......... 121 7,215
TRINOVA .................................. 840 29,190
----------
80,160
----------
RETAIL TRADE--2.0% May Department Stores .................... 400 14,500
Wal-Mart Stores .......................... 569 13,514
----------
28,014
----------
TECHNOLOGY--6.6% Boeing ................................... 137 7,535
cisco Systems ............................ 200(a) 7,975
DSC Communications ....................... 100(a) 3,700
Intel .................................... 237 24,263
Microsoft ................................ 200(a) 16,350
Motorola ................................. 209 11,887
Texas Instruments ........................ 190 20,140
----------
91,850
----------
TRANSPORTATION--1.0% Burlington Northern ...................... 240 14,280
----------
TOTAL COMMON STOCKS
(cost $570,233) ........................ $ 627,392
==========
<CAPTION>
PRINCIPAL
U.S. TREASURY BONDS--52.3% AMOUNT
- ----------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
7.125%, 2/15/2023
(cost $693,616) ........................ $750,000 $ 724,453
==========
SHORT-TERM INVESTMENTS--7.5%
- -----------------------------------------------------------------------------
U.S. TREASURY BILL; 6.37%, 7/6/1995
(cost $103,927) ........................ $105,000 $ 103,882
==========
TOTAL INVESTMENTS (cost $1,367,776) ......................................... 105.0% $1,455,727
====== ==========
LIABILITIES, LESS CASH AND RECEIVABLES ...................................... (5.0%) $ (69,764)
====== ==========
NET ASSETS .................................................................. 100.0% $1,385,963
====== ==========
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $1,367,776)--see statement .............................. $1,455,727
Cash .............................................................. 4,701
Receivable for investment securities sold ......................... 16,627
Dividends and interest receivable ................................. 11,595
Prepaid expenses .................................................. 11,584
Due from The Dreyfus Corporation .................................. 5,613
----------
1,505,847
LIABILITIES:
Due to Distributor ................................................ $ 825
Payable for investment securities purchased ....................... 96,855
Accrued expenses .................................................. 22,204 119,884
------- ----------
NET ASSETS $1,385,963
==========
REPRESENTED BY:
Paid-in capital ................................................... $1,273,465
Accumulated undistributed investment income--net .................. 2,667
Accumulated undistributed net realized gain on investments ........ 21,880
Accumulated net unrealized appreciation on investments--Note 3 .... 87,951
----------
NET ASSETS at value applicable to 101,059 shares outstanding
(100 million shares of $.001 par value Common Stock authorized) ... $1,385,963
==========
NET ASSET VALUE, offering and redemption price per share
($1,385,963 / 101,059 shares) ..................................... $13.71
======
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- ----------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
<TABLE>
<S> <C> <C>
INCOME:
INCOME:
Interest ..................................................... $29,714
Cash dividends ............................................... 5,175
-------
TOTAL INCOME ......................................... $ 34,889
EXPENSES:
Management fee--Note 2(a) .................................... 4,661
Legal fees ................................................... 17,649
Auditing fees ................................................ 15,000
Registration fees ............................................ 12,301
Shareholder servicing costs--Note 2(b,c) ..................... 6,778
Prospectus and shareholders' reports--Note 2(b) .............. 5,175
Custodian fees ............................................... 2,872
Directors' fees and expenses--Note 2(d) ...................... 198
Miscellaneous ................................................ 1,399
-------
66,033
Less--expense reimbursement from Manager due to
undertaking and expense limitation--Note 2(a) ............ 49,748
-------
TOTAL EXPENSES ....................................... 16,285
--------
INVESTMENT INCOME--NET ............................... 18,604
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3 ......................... $21,880
Net unrealized appreciation on investments ....................... 87,951
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ...... 109,831
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $128,435
========
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -----------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM OCTOBER 18, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net ....................................................... $ 18,604
Net realized gain on investments ............................................. 21,880
Net unrealized appreciation on investments for the period .................... 87,951
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... 128,435
----------
DIVIDEND TO SHAREHOLDERS FROM;
Investment income-net ........................................................ (15,937)
----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold ................................................ 1,330,845
Dividends reinvested ......................................................... 15,022
Cost of shares redeemed ...................................................... (72,402)
----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS ................... 1,273,465
----------
TOTAL INCREASE IN NET ASSETS ......................................... 1,385,963
NET ASSETS:
Beginning of period--Note 1 .................................................. --
----------
End of period (including undistributed investment
income--net of $2,667) ................................................... $1,385,963
==========
<CAPTION>
SHARES
----------
<S> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................................................. 105,429
Shares issued for dividends reinvested ....................................... 1,145
Shares redeemed .............................................................. (5,515)
----------
NET INCREASE IN SHARES OUTSTANDING ....................................... 101,059
==========
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for the period October 18, 1994 (commencement of
operations) to April 30, 1995. This information has been derived from the
Portfolio's financial statements.
<TABLE>
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period .......................................... $12.50
------
INVESTMENT OPERATIONS:
Investment income--net ........................................................ .20
Net realized and unrealized gain on investments ............................... 1.18
------
TOTAL FROM INVESTMENT OPERATIONS .......................................... 1.38
------
Distributions;
Dividends from investment income-net .......................................... (.17)
------
Net asset value, end of period ................................................ $13.71
======
TOTAL INVESTMENT RETURN 11.14%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ....................................... 1.40%*
Ratio of net investment income to average net assets .......................... 1.60%*
Decrease reflected in above expense ratio due to
undertaking by the Manager and expense limitation ......................... 4.28%*
Portfolio Turnover Rate ....................................................... 94.33%*
Net Assets, end of period (000's Omitted) ..................................... $1,386
<FN>
- ------------
* Not annualized.
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") began operating under such
name on July 1, 1993 and is currently offering three portfolios, including the
Dreyfus Income Portfolio (the "Portfolio"), which was authorized by the Board
of Directors on August 25, 1994. The Portfolio had no operations until October
18, 1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
Securities Act of 1933. Premier Mutual Fund Services, Inc. (the "Distributor")
acts as the distributor of the Portfolio's shares, which are sold to the public
without a sales load. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution Services,
Inc., a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc. The Dreyfus Corporation ("Manager") serves as
the Portfolio's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
As of April 30, 1995, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, held 81,065 shares of Common Stock of the
Portfolio. Mellon Bank Investments Corporation is a subsidiary of Mellon Bank.
The Fund accounts separately for the assets, liabilities and operations of
each portfolio. Expenses directly attributable to each portfolio are charged
to that portfolio's operations; expenses which are applicable to all portfolios
are allocated among them.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Investments denominated in foreign currencies are translated to U.S. dollars at
the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including, where
applicable, amortization of discount on investments, is recognized on the
accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid on a
quarterly basis. Dividends from net realized capital gain are normally declared
and paid annually, but the Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue
Code. To the extent that net realized capital gain can be offset by capital
loss carryovers, if any, it is the policy of the Portfolio not to distribute
such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .75 of 1% of the average daily
value of the Portfolio's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Portfolio's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Portfolio. The most stringent state expense limitation
applicable to the Portfolio presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of distribution expenses and
certain expenses as described above) exceed 2-1/2% of the first $30 million, 2%
of the next $70 million and 1-1/2% of the excess over $100 million of the
average value of the Portfolio's net assets in accordance with California "blue
sky" regulations. However, the Manager had undertaken from October 18, 1994 to
April 30, 1995 to waive receipt of the management, service and distribution
fees. The expense reimbursement, pursuant to the undertaking and expense
limitation, amounted to $49,748 for the period ended April 30, 1995.
The Manager may modify the expense limitation percentages from time to
time, provided that the resulting expense reimbursement would not be less than
the amount required pursuant to the Agreement.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Portfolio (a) reimburses the Distributor for payments to
certain Service Agents for distributing shares and (b) pays the Manager,
Dreyfus Service Corporation or any affiliate (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio and servicing shareholders
accounts, at an aggregate annual rate of .50 of 1% of the value of the
Portfolio's average daily net assets. Each of the Distributor and Dreyfus may
pay Service Agents (a securities dealer, financial institution or other
industry professional) a fee in respect of the Portfolio's shares owned by
shareholders with whom the Service Agent has a servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determine the amounts to be paid to Service Agents to
which it will make payments and the basis on which such payments are made. The
Plan also separately provides for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio's prospectuses and
statements of additional information and costs associated with implementing and
operating the Plan, not to exceed the greater of $100,000 or .005 of 1% of the
Portfolio's average daily net assets for any full fiscal year. For the period
ended April 30, 1995, $4,838 was charged to the Portfolio pursuant to the
Distribution Plan.
(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor, at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the period ended April 30, 1995,
$1,554 was charged to the Portfolio pursuant to the Shareholder Services Plan.
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1995
amounted to $2,074,973 and $834,107, respectively.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $87,951, consisting of $91,076 gross unrealized appreciation and $3,125
gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
<PAGE>
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
- -------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Asset Allocation Fund, Inc.,
Dreyfus Income Portfolio (one of the Series constituting the Dreyfus Asset
Allocation Fund, Inc.) as of April 30, 1995, and the related statements of
operations and changes in net assets and financial highlights for the period
from October 18, 1994 (commencement of operations) to April 30, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of April 30, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus Asset Allocation Fund, Inc., Dreyfus Income Portfolio at April 30,
1995, and the results of its operations, the changes in its net assets and the
financial highlights for the period from October 18, 1994 to April 30, 1995, in
conformity with generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
June 2, 1995
<PAGE>
[LOGO]
DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS INCOME PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 553AR954
<PAGE>
Dreyfus
Asset Allocation
Fund, Inc.
Dreyfus
Income Portfolio
Annual Report
April 30, 1995
[LION]
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE DREYFUS INCOME PORTFOLIO OF DREYFUS ASSET ALLOCATION
FUND, INC. WITH THE SHEARSON LEHMAN INTERMEDIATE
TREASURY INDEX AND A CUSTOMIZED BLENDED INDEX
EXHIBIT A:
|-----------|---------------------------------|-----------|
| | | | |
| | DREYFUS | SHEARSON LEHMAN |CUSTOMIZED |
| PERIOD | INCOME | INTERMEDIATE | BLENDED |
| | PORTFOLIO | TREASURY INDEX* | INDEX ** |
|-----------|------------- | ----------------|-----------|
| 10/18/94 | 10,000 | 10,000 | 10,000 |
| 10/31/94 | 10,072 | 10,000 | 10,000 |
| 1/31/95 | 10,268 | 10,148 | 10,099 |
| 4/30/95 | 11,114 | 10,519 | 10,665 |
|---------------------------------------------------------|
*Source: Lehman Brothers
**Source: Lipper Analytical Services, Inc., Lehman
Brothers and Bank Rate Monitor
