LETTER TO SHAREHOLDERS
Dear Shareholder:
It is a pleasure to send you this semi-annual report for the Dreyfus
Total Return Portfolio of Dreyfus Asset Allocation Fund, Inc. covering the
six months ended October 31, 1994.
In a difficult market environment, characterized by repeated increases in
interest rates initiated by the Federal Reserve Board, your Dreyfus Total
Return Portfolio, as the Fund has now been renamed, provided a total return
of 4.72% for the six months ended October 31, 1994.* This compares with a
total return for the same period of 3.91% for the Customized Blended Index
which, like the Portfolio, is composed of common stocks, Treasury obligations
and cash.**
A principal strategy of Dreyfus Total Return Portfolio during these past
six months has been to avoid holding long-term bonds, which declined in price
throughout the period. However, late in October, just before the period
ended, we began to establish some initial positions in bonds at what we
considered to be attractive prices and yields. If interest rates continue to
rise from current levels on the long-term Treasury bond, we may consider
adding to those positions.
The allocation of the Total Return Portfolio's assets to Treasury notes
and bonds was 13.5% as of October 31. Equity holdings in this Portfolio were
increased modestly during the six months, from 60% at the start of the period
to 61.4% at the end.
At the moment, the outlook for stocks appears potentially volatile. This
results in part from the sweeping political changes in Washington, the
pressures on interest rates, and the weakness of the U.S. dollar.
Consequently, our approach to equities for the moment is cautious.
As for Treasury notes and bonds, we expect attractive yields. This is
based in part on the continuing actions of the Federal Reserve Board to fight
inflation in the U.S. by raising interest rates. Of course, the continued
volatility arising out of the Fed's actions merits our careful monitoring as
well. In addition, there is another phenomenon at work -- the increasing
worldwide demand for capital, as extensive areas of the world experience
economic growth, including the emerging nations and the newly liberated
economies of Eastern Europe and the former Soviet Union.
During the last weeks of the semi-annual period, two additional
portfolios for the Fund were introduced: Dreyfus Income Portfolio, which
seeks to maximize current income and has a secondary goal of capital
appreciation; and Dreyfus Growth Portfolio, which seeks capital appreciation.
Each of the new portfolios, like your renamed Dreyfus Total Return Portfolio,
follows an investment strategy that actively allocates the portfolio's assets
among common stocks, U.S. Treasury notes and bonds and short-term money
market instruments in a manner consistent with its stated investment
objective.
We continue to watch market trends closely, and stand ready to adjust the
Dreyfus Total Return Portfolio's asset allocations as changing conditions may
require.
Sincerely,
(Ernest G. Wiggins Signature Logo)
Ernest G. Wiggins
Portfolio Manager
November 21, 1994
New York, N.Y.
Share price and investment return fluctuate, and an investor may
receive more or less than original cost upon redemption. Mutual fund
shares are not FDIC-insured.
*Total return represents the change during the period in a
hypothetical account with dividends reinvested. For the six-month
period ended October 31, 1994, the Standard & Poor's 500 Composite
Stock Price Index, which is composed only of common stocks, provided a
total return of 6.32%. The S&P 500 Index is a widely accepted
unmanaged index of stock market performance.
** -- For Customized Blended Index, see chart footnote.
<TABLE>
<CAPTION>
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS TOTAL
RETURN PORTFOLIO OF DREYFUS ASSET ALLOCATION FUND, INC. WITH THE STANDARD &
POOR'S 500 COMPOSITE STOCK PRICE INDEX AND A CUSTOMIZED BLENDED INDEX
FOR AN INVESTMENT MADE 7/1/93
[Exhibit A]
* Source: Lipper Analytical Services, Inc.
** Source: Lipper Analytical Services, Inc., Lehman Brothers and Bank Rate Monitor
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED SINCE INCEPTION (7/1/93)
OCTOBER 31, 1994 TO OCTOBER 31, 1994
------------------- ----------------------------
<S> <C> <C>
3.69% 4.28%
</TABLE>
Past performance is not predictive of future performance.
The above compares a $10,000 investment made in the Dreyfus Total Return
Portfolio on 7/1/93 (Inception Date) to a $10,000 investment made in the
Standard & Poor's 500 Composite Stock Price Index on that date 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. All dividends and capital gain
distributions are reinvested.
The Dreyfus Total Return Portfolio allocates your money among stocks, U.S.
Treasury notes and bonds, and money market instruments. The Portfolio's
performance 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
Portfolio'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% U.S. Treasury notes and bonds, 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 Shearson Lehman Intermediate Treasury 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.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
<TABLE>
<CAPTION>
ASSET ALLOCATION AS OF OCTOBER 31, 1994
[Exhibit B]
FIVE LARGEST SECTORS AS OF OCTOBER 31, 1994
<S> <C> <C>
U.S. Treasury Bonds............................................. 13.5 %
Technology...................................................... 9.6
Energy.......................................................... 9.4
Health Care..................................................... 7.1
Consumer Non-Durables........................................... 5.8
TEN LARGEST HOLDINGS AS OF OCTOBER 31, 1994
U.S. Treasury Bonds, 7.125%, 2/15/2023.......................... 13.5 %
Exxon........................................................... 3.3
dupont (El) de Nemours.......................................... 2.9
Johnson & Johnson............................................... 2.1
Royal Dutch Petroleum........................................... 2.0
General Electric................................................ 1.9
AT&T............................................................ 1.8
Motorola........................................................ 1.7
Coca-Cola....................................................... 1.6
Mobil........................................................... 1.5
</TABLE>
All percentages shown above are based on Total Net Assets.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31,1994 (UNAUDITED)
COMMON STOCKS 61.4% SHARES VALUE
------------- -------------
<S> <C> <C> <C>
CONSUMER DURABLES--2.5% Eastman Kodak...................... 2,792 $ 134,365
Echlin........................... 5,504 169,248
Ford Motor....................... 13,377 394,622
General Motors................... 9,306 367,587
Mattel........................... 5,676 166,023
-------------
1,231,845
-------------
CONSUMER NON-DURABLES--5.8% Archer-Daniels-Midland............. 5,727 163,935
Coca-Cola........................ 15,587 783,247
Gillette......................... 2,170 161,394
PepsiCo.......................... 10,179 356,265
Philip Morris Cos................ 10,760 659,050
Procter & Gamble................. 8,550 534,375
Sara Lee......................... 10,178 250,633
-------------
2,908,899
-------------
CONSUMER SERVICES--1.2% Comcast, Cl. A (non-voting)........ 9,213 150,863
Disney (Walt).................... 3,548 139,702
Gannett.......................... 1,280 61,440
McDonald's....................... 9,073 260,849
-------------
612,854
-------------
ENERGY--9.4% Amerada Hess....................... 4,966 247,058
Amoco............................ 3,272 207,363
Chevron.......................... 5,235 235,575
Exxon............................ 25,958 1,632,109
Mobil............................ 8,658 744,588
Royal Dutch Petroleum............ 8,448 984,192
Schlumberger..................... 2,825 165,969
Texaco........................... 7,242 473,446
-------------
4,690,300
-------------
FINANCE--5.3% American Express................... 4,537 139,513
American General................. 1,570 43,175
American International Group..... 4,246 397,532
Banc One......................... 4,238 122,372
Bank of Boston................... 5,753 165,399
BankAmerica...................... 3,000 130,500
Chase Manhattan.................. 3,490 125,640
Chemical Banking................. 7,561 287,318
Citicorp......................... 5,300 253,075
Dun & Bradstreet................. 1,454 85,241
Federal National Mortgage Association 3,199 243,124
General Re....................... 582 65,184
Household International.......... 4,354 152,934
Morgan (J.P.).................... 1,803 111,561
NationsBank...................... 3,257 161,221
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1994 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
FINANCE (CONTINUED) Shawmut National.................. 7,613 $ 157,018
-------------
2,640,807
-------------
HEALTH CARE--7.1% Abbott Laboratories................ 5,467 169,477
American Home Products........... 4,653 295,464
Baxter International............. 1,977 51,402
Columbia/HCA Healthcare.......... 9,351 389,235
Johnson & Johnson................ 19,431 1,061,418
Lilly (Eli)...................... 4,670 289,540
Medtronic........................ 3,027 157,782
Merck & Co....................... 7,892 282,139
National Medical Enterprises..... 10,421 (a) 151,104
Schering-Plough.................. 5,238 373,207
U.S. HealthCare.................. 5,031 237,715
Upjohn........................... 2,269 74,877
-------------
3,533,360
-------------
INDUSTRIAL SERVICES--.8% Fluor.............................. 3,337 165,181
WMX Technologies................. 8,201 240,904
-------------
406,085
-------------
NON-ENERGY MINERALS--1.7% Alcan Aluminium.................... 872 23,326
Aluminum Co. of America.......... 7,307 622,922
Inco............................. 5,200 156,650
Placer Dome...................... 2,268 49,046
-------------
851,944
-------------
PROCESS INDUSTRIES--5.1%Corning............................ 7,852 266,968
Dow Chemical..................... 2,617 192,349
duPont (EI) de Nemours........... 24,590 1,466,179
Eastman Chemical................. 698 37,692
Grace (W.R.) .................... 3,986 157,945
International Paper.............. 3,250 242,125
Weyerhaeuser..................... 4,259 167,166
-------------
2,530,424
-------------
PRODUCER MANUFACTURING--4.1% Caterpillar........................ 3,141 187,675
Cooper Industries................ 3,239 121,058
Deere & Co....................... 2,177 156,200
General Electric................. 19,426 949,446
Minnesota Mining & Manufacturing. 5,583 309,159
TRINOVA.......................... 4,541 158,935
Tyco International............... 3,381 163,133
-------------
2,045,606
-------------
RETAIL TRADE--4.1% Albertson's........................ 11,051 331,530
Home Depot....................... 5,700 259,350
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1994 (UNAUDITED)
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- -------------
RETAIL TRADE (CONTINUED) K mart............................ 2,791 $ 45,703
Lowe's Cos....................... 4,128 164,088
May Department Stores............ 8,725 328,278
Penney (J.C.).................... 1,570 79,481
Sears, Roebuck................... 2,734 135,333
Wal-Mart Stores.................. 27,976 657,436
-------------
2,001,199
-------------
TECHNOLOGY--9.6% Apple Computer..................... 4,362 188,384
Automatic Data Processing........ 2,600 151,775
Boeing........................... 14,271 626,140
Hewlett-Packard.................. 3,199 312,702
Intel............................ 10,200 633,675
International Business Machines.. 7,254 540,423
Motorola......................... 14,715 866,346
Tele-Communications, Cl. A....... 22,772 (a) 515,217
Texas Instruments................ 8,000 599,000
United Technologies.............. 5,235 329,805
-------------
4,763,467
-------------
TRANSPORTATION--.6%CSX................................ 1,047 75,908
Norfolk Southern................. 1,279 80,577
Union Pacific.................... 3,141 153,516
-------------
310,001
-------------
UTILITIES--4.1% AT&T............................... 16,053 882,915
AirTouch Communications.......... 930 (a) 27,784
Ameritech........................ 5,000 201,875
Duke Power....................... 3,300 130,763
Pacific Enterprises.............. 7,613 163,680
Public Service Enterprise........ 1,163 30,529
Southern......................... 29,663 585,844
-------------
2,023,390
-------------
TOTAL COMMON STOCKS
(cost $29,334,259)............. $30,550,181
=============
PRINCIPAL
U.S. TREASURY BONDS--13.5% AMOUNT
-------------
7.125%, 2/15/2023
(cost $6,687,674).............. $ 7,500,000 $ 6,731,250
============
SHORT-TERM INVESTMENTS--22.1%
U.S. TREASURY BILLS: 4.25%, 11/3/1994................. 71,000 70,977
4.81%, 11/10/1994................ 423,000 422,476
3.20%, 11/17/1994................ 471,000 470,015
4.595%, 11/25/1994............... 7,835,000 7,811,658
4%, 12/1/1994.................... 829,000 825,923
4.65%, 12/8/1994................. 197,000 196,068
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1994 (UNAUDITED)
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
U.S. TREASURY BILLS(CONTINUED): 3%, 12/15/1994................... $ 615,000 $ 611,464
4.545%, 12/22/1994............... 627,000 622,707
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $11,031,288)............. $11,031,288
============
TOTAL INVESTMENTS (cost $47,053,221)........................................ 97.0% $48,312,719
======= ============
CASH AND RECEIVABLES (NET).................................................. 3.0% $ 1,473,235
======= ============
NET ASSETS.................................................................. 100.0% $49,785,954
======= ============
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $47,053,221) see statement...................................... $48,312,719
Cash.................................................................... 209,874
Receivable for investment securities sold............................... 964,685
Dividends and interest receivable....................................... 179,283
Prepaid expenses........................................................ 95,868
Due from The Dreyfus Corporation........................................ 190,981
-------------
49,953,410
LIABILITIES:
Due to the Distributor.................................................. $68,408
Payable for Common Stock redeemed....................................... 27,390
Accrued expenses........................................................ 71,658 167,456
-------- -------------
NET ASSETS ................................................................ $49,785,954
============
REPRESENTED BY:
Paid-in capital......................................................... $48,037,067
Accumulated undistributed investment income net......................... 1,226,945
Accumulated net realized (loss) on investments.......................... (737,556)
Accumulated net unrealized appreciation on investment Note 3(b)........ 1,259,498
-------------
NET ASSETS at value applicable to 3,806,486 outstanding shares of
Common Stock, equivalent to $13.08 per share
(100 million shares of $.001 par value authorized)...................... $49,785,954
============
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1994 (UNAUDITED)
INVESTMENT INCOME:
<S> <C> <C>
INCOME:
Cash dividends (net of $8,037 foreign taxes withheld at source)....... $ 498,249
Interest.............................................................. 402,184
----------
TOTAL INCOME...................................................... $ 900,433
EXPENSES:
Management fee--Note 2(a)............................................. 190,238
Shareholder servicing costs Note 2(b,c)............................... 223,744
Legal fees............................................................ 37,437
Prospectus and shareholders' report Note 2(b)........................ 23,481
Registration fees..................................................... 20,716
Organization expenses................................................. 9,980
Directors fees and expenses Note 2(d)................................. 6,101
Custodian fees........................................................ 3,989
Auditing fees......................................................... 135
Miscellaneous......................................................... 476
----------
516,297
Less expense reimbursement from Manager due to
undertakings Note 2(a)............................................ 380,475
----------
TOTAL EXPENSES.................................................. 135,822
------------
INVESTMENT INCOME--NET.......................................... 764,611
------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 3(a)........................... $(929,572)
Net realized (loss) on financial futures Note 3(a);
Short transactions.................................................... (2,785)
----------
NET REALIZED (LOSS)................................................... (932,357)
Net unrealized appreciation on investments.............................. 2,492,142
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,559,785
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,324,396
============
</TABLE>
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994
1994* (UNAUDITED)
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 923,546 $ 764,611
Net realized gain (loss) on investments................................. 235,388 (932,357)
Net unrealized appreciation (depreciation) on investments for the period (1,232,644) 2,492,142
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... (73,710) 2,324,396
--------------- ---------------
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 9,804,756
Dividends reinvested.................................................... 486,322 --
Cost of shares redeemed................................................. (18,696,071) (13,405,776)
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 51,538,087 (3,601,020)
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 50,962,578 (1,276,624)
NET ASSETS:
Beginning of period..................................................... 100,000 51,062,578
--------------- ---------------
End of period (including undistributed investment
income net of $462,334 and $1,226,945, respectively).................. $51,062,578 $49,785,954
=============== ===============
SHARES SHARES
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 5,525,794 770,750
Shares issued for dividends reinvested.................................. 38,293
Shares redeemed......................................................... (1,483,003) (1,053,348)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 4,081,084 (282,598)
=============== ===============
</TABLE>
* From July 1, 1993 (commencement of operations) to April 30, 1994.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from information provided in the Portfolio's
financial statements.
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994
PER SHARE DATA: 1994(1) (UNAUDITED)
--------------- ---------------
<S> <C> <C>
Net asset value, beginning of period.................................... $12.50 $12.49
------- ------
INVESTMENT OPERATIONS:
Investment income net................................................... .24 .21
Net realized and unrealized gain (loss) on investments.................. (.11) .38
------- ------
TOTAL FROM INVESTMENT OPERATIONS...................................... .13 .59
------- ------
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 $13.08
======= ======
TOTAL INVESTMENT RETURN .99%(2) 4.72%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. .16%(2) .27%(2)
Ratio of net investment income to average net assets.................... 2.48%(2) 1.52%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager........................................... 1.58%(2) .76%(2)
Portfolio Turnover Rate................................................. 53.58%(2)
Net Assets, end of period (000's Omitted)............................... $51,063 $49,786
- ---------------------
</TABLE>
(1) From July 1, 1993 (commencement of operations) to April 30, 1994.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 Dreyfus Total Return Portfolio (the "Portfolio") as the original
Portfolio of the Fund became known on August 25, 1994. The Fund is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified
open-end management investment company. Dreyfus Service Corporation, until
August 24, 1994, acted as the distributor of the Portfolio's shares, which
are sold to the public without a sales load. Dreyfus Service Corporation is a
wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Portfolio's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
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.
Short-term investments are carried at amortized cost, which approximates
value. Investments denominated in foreign currencies are translated to U.S.
dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Portfolio may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Portfolio not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 has undertaken from May 1, 1994 to October 31, 1994 to reduce the
management fee paid by, and reimburse such excess expenses of the Portfolio,
to the extent that the Portfolio's aggregate expenses (excluding certain
expenses as described above) exceed specified annual percentages of the
Portfolio's average daily net assets. The expense reimbursement, pursuant to
the undertakings, amounted to $380,475 for the six months ended October 31,
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) On August 4, 1994, Fund shareholders approved a revised Distribution
Plan (the "Plan") pursuant to rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Portfolio (a) reimburses the Distributor for
payments to certain Service Agents for distributing the Portfolio's shares
and (b) Pays the Manager, Dreyfus Service Corporation or any affiliate
(collectively "Dreyfus") for advertising and marketing relating to the
Portfolio and servicing shareholder accounts, at an aggregate annual rate of
.50 of 1% of the value of the Portfolio's average daily net assets. Each of
the Distributor and Dreyfus 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 Distribution 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.
Prior to August 24, 1994, the Distribution Plan ("prior Distribution
Plan") provided that the Portfolio pay Dreyfus Service Corporation at an
annual rate of .50 of 1% of the value of the Portfolio's average daily net
assets, for costs and expenses in connection with advertising, marketing and
distributing the Portfolio's shares. Dreyfus Service Corporation made
payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the Portfol
io's shares owned by clients of the Service Agent. The Plan also separately
provided for the Portfolio to bear the costs of preparing, printing and
distributing certain of the Portfolio's prospectuses and statements of
additional information and costs associated with implementing and operating
the Plan, not to exceed the greater of $100,000 or .005 of 1% of the
Portfolio's average daily net assets for any full fiscal year.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
During the six months ended October 31, 1994, $45,605 was charged to the
Portfolio pursuant to the Distribution Plan and $81,220 was charged to the
Portfolio pursuant to the prior 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. From May 1, 1994 through August 23,
1994, $40,610 was charged by Dreyfus Service Corporation. From August 24,
1994 through October 31, 1994, $22,803 was charged by the Distributor.
(D) Prior to August 24, 1994 certain officers and directors of the
Portfolio were "affiliated persons," as defined in the Act, of the Manager
and/or Dreyfus Service Corporation. Each director who is not an "affiliated
person" receives an annual fee from the Fund of $1,000 and an attendance fee
of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the six months ended October 31, 1994
amounted to $17,711,890 and $20,028,288, respectively.
The Portfolio is engaged in trading financial futures contracts. The
Portfolio 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 October 31, 1994, there were no financial
futures contracts outstanding.
(B) At October 31, 1994, accumulated net unrealized appreciation on
investments was $1,259,498, consisting of $1,956,559 gross unrealized
appreciation and $697,061 gross unrealized depreciation.
At October 31, 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., Dreyfus Total Return Portfolio
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Asset Allocation Fund, Inc., Dreyfus Total Return Portfolio (one of
the Series constituting the Dreyfus Asset Allocation Fund, Inc.), including
the statement of investments, as of October 31, 1994, and the related
statements of operations and changes in net assets and financial highlights
for the six month period ended October 31, 1994. These financial statements
and financial highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights for the period from July 1, 1993 (commencement of operations) to
April 30, 1994 and in our report dated June 6, 1994, we expressed an
unqualified opinion on such statement of changes in net assets and financial
highlights.
Ernst and Young LLP (Signature Logo)
New York, New York
December 13, 1994
(Dreyfus Lion "D" Logo)
DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS TOTAL RETURN PORTFOLIO
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
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. 550SA9410
(Dreyfus Logo)
Asset Allocation
Fund, Inc.
Dreyfus Total
Return Portfolio
Semi-Annual
Report
October 31, 1994
Dreyfus Asset Allocation Fund, Inc., Return Portfolio October 31, 1994
Asset Allocation
|-----------------------------------------------------------|
|Common Stocks 61.4 %|
|U.S. Treasury Bonds 13.5 %|
|Cash Equivalents 25.1 %|
|-----------------------------------------------------------|
