DREYFUS ASSET ALLOCATION FUND INC, N-30D, 1996-07-08

DREYFUS ASSET ALLOCATION FUND INC
N-30D, 1996-07-08

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DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my pleasure to introduce Timothy M. Ghriskey, who is now the
manager of Dreyfus Asset Allocation Fund, Inc., Dreyfus Total Return
Portfolio.
Tim joined the investment staff of The Dreyfus Corporation in the summer
of 1995 as a Senior Equity Portfolio Manager. Before joining Dreyfus, he
spent 10 years with Loomis, Sayles & Company as both an equity and a balanced
portfolio manager. At his previous firm, Tim was an Associate Managing
Partner and a member of the Investment Policy Committee and the Planning
Committee. He began his investment career as an equity analyst following a
number of industries, including beverage, tobacco, leisure, entertainment,
home products, cosmetics, metals and mining.
Tim is a graduate of Trinity College and received his M.B.A. from the
Darden School at the University of Virginia. He is a Chartered Financial
Analyst and a Chartered Investment Counselor.
We have great confidence in the new approach that Tim brings to portfolio
management.
Sincerely,

[Stephen Canter signature logo]

Stephen Canter
Chief Investment Officer
The Dreyfus Corporation

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
This letter is my first to you, as I assumed portfolio management of the
Dreyfus Asset Allocation Fund, Inc., Dreyfus Total Return Portfolio at a
meeting of your Fund's board of directors on February 1, 1996.
After taking over management of the Fund, performance has been off to a
good start. For the three-month period ended April 30, 1996, the total return
of the Fund was 2.35%,* which compares favorably to the Customized Blended
Index return of 1.29%.** Including a substantial period of time under the
former portfolio manager, the Fund's 12-month total return was 15.67%
compared to the Customized Blended Index return of 19.52%.** Since the Fund
will always hold both stock and bond investments, it should always
underperform an all-stock index in a strong market for stocks. The Standard &
Poor's 500 Composite Stock Price Index, which is entirely composed of
equities, provided a total return of 30.18% during the Fund's fiscal year.***
Our approach to asset allocation includes output from our econometric
model which provides asset return projections based on how each financial
asset class has historically reacted to economic events. We formally analyze
the output from this model in regular meetings with our economists and our
other senior portfolio managers, and then we make a final asset allocation
decision.
In deciding which fixed-income securities to own, we are closely assisted
by Kevin McClintock, the head of Taxable Fixed Income for Dreyfus.
With equity securities, we are ardent believers in a disciplined value
style of equity investing. This investment style seeks undervalued securities
with the opportunity for growth through a disciplined investment approach.
This approach and investment process are described in detail in the following
sections.
VALUE STOCK INVESTING
As value investors, we believe that in the investment world inexpensive
is better than expensive. By definition, securities with low valuations
should have more potential for an increase in these valuations than
securities with high valuations, provided, of course, that the business
fundamentals are sound. In fact, securities priced at a valuation discount to
the average market valuation tend to move toward higher valuations over time
and, therefore, have a built-in advantage for long-term price appreciation.
Investors tend to have low expectations for securities with low valuations,
and these low expectations tend to be more easily met than for securities
with high expectations. Furthermore, investors and analysts often extrapolate
or project past growth into the future which tends to result in excessive
pessimism about low valuation stocks. More often than not, the opposite
growth pattern occurs, relative to these expectations, with low valuation
stocks growing more rapidly than expected. Finally, when a stock with a low
valuation is unfortunately greeted with bad news and its price corrects, we
believe that it is already relatively inexpensive and simply should not have
far to fall in value.
Investing in value stocks is somewhat counter to human nature - a decided
advantage. A successful value investor does not follow the herd of other
investors, does not blindly accept widely distributed recommendations from
brokerage firms, and does not just buy glamorous investment stories that many
others already know and own. A successful value investor is more proactive
than reactive, and takes advantage of other investors' overreaction to
events. Among the numerous reasons that value stocks may
appreciate in value are lower expectations, more thorough analysis of actual,
reported data instead of forecasts, typically higher dividends, often more
stock repurchases by the companies, and the potential for takeovers and asset
restructuring. Because of its focus on securities with low valuations, value
investing should, we believe, result in steady investment gains and not wildly
volatile swings in investment performance. In this sense, it typically is a
lower risk, more conservative style of equity investing.
EQUITY INVESTMENT PROCESS
Our approach to the selection of securities starts and ends with our
analysts who are an integral part of our investment team. We only want to own
securities that our dedicated team of analysts know and follow closely
through regular management interviews and company visits.
Using our analysts' work as a starting point, we then screen the universe
of stocks by computer according to two principal methods. First, we screen
for high projected earnings yield (the inverse of the price-earnings ratio)
on earnings for the next twelve months. We only want to own securities with
earnings that are competitive with risk-free investments, such as U.S.
Treasuries. Otherwise, we would rather own the risk-free security. Second, we
apply our proprietary screen of 21 fundamental factors that have historically
affected stock returns. These factors include the growth outlook over various
time horizons, several relative value measures, company size, earnings
revision and surprise, cash flow, financial, operating and foreign leverage,
momentum measures, and a qualitative evaluation of the potential for positive
change to occur at each company.
Combining this data with our analysts' in-depth knowledge of the
individual companies, we then construct a portfolio of securities that we
believe is adequately diversified without overly diluting the potential
impact of good investment ideas.
Selling is also a major part of our discipline and, we believe, an often
neglected part of the investment management process. We use specific criteria
to determine when selling a security is in our shareholders' best interest.
PORTFOLIO OVERVIEW
The Fund maintained a high equity allocation throughout the fiscal year
ended April 30, 1996. Generally, between 65% and 70% of the assets were
invested in stocks, at the upper end of the allowable range, and the Fund
benefited accordingly as this asset class produced the best financial returns
available to the Fund. Bond investments were also heavily weighted until the
end of the fiscal year when bonds were reduced in favor of cash. Again, these
moves were advantageous, as bonds generally were profitable investments
relative to cash throughout 1995, and lagged cash during the first calendar
quarter of 1996. While these overall asset allocation moves added value,
unfortunately the security selection in both the equity and bond sectors was
not consistent, leading to returns below the Customized Blended Index for the
fiscal year. On a positive note, as reported above, the Fund's performance
relative to the Customized Blended Index was strong during the Fund's fourth
quarter under your new portfolio manager.
As the fiscal year ended, we were only slightly overweighted in stocks
relative to our Customized Blended Index. We continue to believe that we are
in an extraordinary period for financial assets, but we were cautious over the
near term given an inhospitable bond market environment. We were defensive in
our bond holdings and held close to the maximum percentage of cash permitted
in the Fund's investment guidelines.
It is an honor to have been named as portfolio manager of your assets in
this Fund. I will endeavor to serve you to the best of my abilities.
Sincerely,

[Timothy M. Ghriskey signature logo]

Timothy M. Ghriskey
Portfolio Manager
May 8, 1996
New York, N.Y.

* Total return includes reinvestment of dividends and any capital gains
paid.
**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 Standard & Poor's 500
Composite Stock Price Index, a leading indicator of overall stock market
performance. 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% 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 Lehman Brothers Intermediate Treasury Bond
Index and the Bank Rate Monitor Index of money market returns, and is
weighted to the benchmark percentages.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the reinvestment
of income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN APRIL 30, 1996
PORTFOLIO 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
[Exhibit A:
Dollars
$15,636
Standard & Poor's 500 Composite Stock
Price Index*
$13,657
Customized
Blended Index**
$13,342
Dreyfus Total Return
Portfolio
*Source: Lipper Analytical Services, Inc.
**Source: Lipper Analytical Services, Inc., Lehman Brothers and Bank Rate
Monitor]
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C>
ONE YEAR ENDED FROM INCEPTION (7/1/93)
APRIL 30, 1996 TO APRIL 30, 1996
______________ _____________
15.67% 10.72%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in 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 shown in the line graph takes into account all applicable fees
and expenses. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted, unmanaged index of overall stock market performance which
does not take into account charges, fees and other expenses. The Customized
Blended Index has been prepared by the Fund for purposes of more accurate
comparison to the 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 Lehman Brothers Intermediate Treasury Bond
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 Financial Highlights section of the Prospectus and
elsewhere in this report.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF INVESTMENTS APRIL 30, 1996
COMMON STOCKS-63.7% SHARES VALUE
_______ ______
<S> <C> <C> <C>
COMMERCIAL SERVICES-1.3% McGraw-Hill Cos........................ 19,200 $ 847,200
______
CONSUMER DURABLES-1.3% Eastman Kodak......................... 10,400 795,600
______
CONSUMER
NON-DURABLES-5.3% American Greetings, Cl. A.............. 28,800 795,600
Colgate-Palmolive...................... 11,000 842,875
Kimberly-Clark......................... 11,000 798,875
Reebok International................... 31,000 899,000
______
3,336,350
______
CONSUMER SERVICES-1.8% Harrah's Entertainment................. 32,000 (a) 1,104,000
______
ELECTRONIC TECHNOLOGY-6.4% Boeing................................. 9,800 804,825
Digital Equipment...................... 11,400 (a) 681,150
Hewlett-Packard........................ 8,000 847,000
Intel.................................. 13,000 880,750
Perkin-Elmer........................... 15,200 834,100
______
4,047,825
______
ENERGY MINERALS-4.5% Amerada Hess........................... 17,000 962,625
Phillips Petroleum..................... 25,000 1,037,500
Sun.................................... 27,800 861,800
______
2,861,925
______
FINANCE-5.2% Alexander & Alexander Services......... 46,000 868,250
CIGNA.................................. 6,700 759,613
First Chicago NBD...................... 19,200 792,000
First Union............................ 13,500 830,250
______
3,250,113
______
HEALTH SERVICES-1.4% Humana................................. 35,000 (a) 861,875
______
HEALTH TECHNOLOGY-5.4% Baxter International................... 21,300 942,525
Bristol-Myers Squibb................... 8,800 723,800
Schering-Plough........................ 14,800 849,150
Warner-Lambert......................... 8,000 894,000
______
3,409,475
______
NON-ENERGY MINERALS-1.5% Aluminum Co. of America................ 15,000 935,625
______
PROCESS INDUSTRIES-6.1% duPont (E.I.) de Nemours............... 5,000 401,875
Grace. (W.R.).......................... 10,600 821,500
James River............................ 32,000 856,000
Praxair................................ 21,300 822,713
Union Carbide.......................... 20,000 910,000
______
3,812,088
______

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
______ _______

PRODUCER
MANUFACTURING-9.5% Allied Signal.......................... 15,300 $ 889,312
Deere & Co............................. 18,000 699,750
Honeywell.............................. 14,800 778,850
National Service Industries............ 21,900 810,300
Raychem................................ 12,900 1,004,588
Tenneco................................ 16,000 878,000
Westinghouse Electric.................. 47,000 887,125
______
5,947,925
______
RETAIL STORES-1.3% Price/Costco........................... 44,500 (a) 845,500
______
RETAIL TRADE-1.6% Tandy.................................. 19,500 1,011,562
______
TECHNOLOGY SERVICES-1.3% Computer Associates International...... 11,500 843,812
______
TRANSPORTATION-2.8% Burlington Northern Santa Fe........... 10,500 918,750
Consolidated Freightways............... 32,500 849,062
______
1,767,812
______
UTILITIES-7.0% AT&T................................... 11,600 710,500
Ameritech.............................. 13,300 776,387
Entergy................................ 25,700 681,050
GTE.................................... 16,900 733,038
NYNEX.................................. 15,800 776,175
Texas Utilities........................ 18,700 752,675
______
4,429,825
______
TOTAL COMMON STOCKS
(cost $38,338,140)................... $40,108,512
======

PRINCIPAL
U.S. TREASURY NOTES-24.7% AMOUNT
_______
5.625%, 11/30/2000..................... $11,790,000 $11,432,616
6.25%, 2/15/2003....................... 4,200,000 4,128,469
______
TOTAL U.S. TREASURY NOTES
(cost $16,149,812)................... $15,561,085
======
SHORT-TERM INVESTMENTS-11.1%
U.S. TREASURY BILLS: 4.91%, 5/2/96.......................... $ 4,223,000 $ 4,222,409
5.01%, 5/9/96.......................... 1,112,000 1,110,821
4.79%, 5/16/96......................... 611,000 609,778
4.975%, 7/5/96......................... 1,011,000 1,001,921
______
TOTAL SHORT-TERM INVESTMENTS
(cost $6,945,023).................... $ 6,944,929
======

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
VALUE
______

TOTAL INVESTMENTS (cost $61,432,975)........................................ 99.5% $62,614,526
===== ======
CASH AND RECEIVABLES (NET).................................................. .5% $ 325,429
===== ======
NET ASSETS.................................................................. 100.0% $62,939,955
===== ======
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $61,432,975)-see statement...................................... $62,614,526
Cash.................................................................... 54,090
Dividends and interest receivable....................................... 368,131
Prepaid expenses........................................................ 52,823
______
63,089,570
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $38,486
Due to Distributor...................................................... 12,925
Payable for Common Stock redeemed....................................... 27,446
Accrued expenses........................................................ 70,758 149,615
_______ __________
NET ASSETS.................................................................. $62,939,955
======
REPRESENTED BY:
Paid-in capital......................................................... $58,883,189
Accumulated undistributed investment income-net......................... 358,380
Accumulated undistributed net realized gain on investments and
foreign currency transactions......................................... 2,516,835
Accumulated net unrealized appreciation on investments-Note 3(b)........ 1,181,551
______
NET ASSETS at value applicable to 4,664,631 shares outstanding
(100 million shares of $.001 par value Common Stock authorized)......... $62,939,955
======
NET ASSET VALUE, offering and redemption price per share
($62,939,955 / 4,664,631 shares)........................................ $13.49
======

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 1,316,374
Cash dividends (net of $7,044 foreign taxes withheld at source)....... 817,355
______
TOTAL INCOME.................................................... $ 2,133,729
EXPENSES:
Management fee-Note 2(a).............................................. 469,019
Shareholder servicing costs-Note 2(b,c)............................... 332,513
Professional fees..................................................... 38,934
Prospectus and shareholders' reports-Note 2(b)........................ 35,823
Directors' fees and expenses-Note 2(d)................................ 21,939
Registration fees..................................................... 21,379
Custodian fees........................................................ 11,962
Miscellaneous......................................................... 21,629
______
TOTAL EXPENSES.................................................. 953,198
Less-reduction in management fee due to undertakings-Note 2(a)........ 170,503
______
NET EXPENSES.................................................... 782,695
______
INVESTMENT INCOME-NET........................................... 1,351,034
______
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3(a).............................. $10,939,480
Net realized (loss) on forward currency exchange contracts-Note 3(a);
Short transactions.................................................... (19,869)
______
NET REALIZED GAIN..................................................... 10,919,611
Net unrealized (depreciation) on investments............................ (3,331,125)
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 7,588,486
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 8,939,520
======

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
________________________________
1995 1996
______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,532,118 $ 1,351,034
Net realized gain (loss) on investments................................. (299,354) 10,919,611
Net unrealized appreciation (depreciation) on investments for the year.. 5,745,320 (3,331,125)
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 6,978,084 8,939,520
______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (1,414,222) (1,572,884)
Net realized gain on investments........................................ (193,729) (8,104,494)
______ ______
TOTAL DIVIDENDS....................................................... (1,607,951) (9,677,378)
______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 19,578,479 21,004,054
Dividends reinvested.................................................... 1,551,632 9,365,253
Cost of shares redeemed................................................. (20,923,382) (23,330,934)
______ ______
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 206,729 7,038,373
______ ______
TOTAL INCREASE IN NET ASSETS...................................... 5,576,862 6,300,515
NET ASSETS:
Beginning of year....................................................... 51,062,578 56,639,440
______ ______
End of year (including undistributed investment income-net of
$580,230 in 1995 and $358,380 in 1996)................................ $ 56,639,440 $ 62,939,955
====== ======

SHARES SHARES
______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,522,416 1,464,307
Shares issued for dividends reinvested.................................. 123,439 737,421
Shares redeemed......................................................... (1,633,975) (1,638,061)
______ ______
NET INCREASE IN SHARES OUTSTANDING.................................... 11,880 563,667
====== ======

</TABLE>

See notes to financial statements.

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 year indicated. This information
has been derived from the Portfolio's financial statements.
<TABLE>

YEAR ENDED APRIL 30,
__________________________________
PER SHARE DATA: 1994(1) 1995 1996
____ ____ ____
<S> <C> <C> <C>
Net asset value, beginning of year.................................... $12.50 $12.49 $13.81
____ ____ ____
INVESTMENT OPERATIONS:
Investment income-net................................................. .24 .39 .32
Net realized and unrealized gain (loss) on investments................ (.11) 1.35 1.70
____ ____ ____
TOTAL FROM INVESTMENT OPERATIONS.................................... .13 1.74 2.02
____ ____ ____
DISTRIBUTIONS:
Dividends from investment income-net.................................. (.13) (.37) (.38)
Dividends from net realized gain on investments....................... (.01) (.05) (1.96)
____ ____ ____
TOTAL DISTRIBUTIONS................................................. (.14) (.42) (2.34)
____ ____ ____
Net asset value, end of year.......................................... $12.49 $13.81 $13.49
==== ==== ====
TOTAL INVESTMENT RETURN................................................... .99%(2) 14.22% 15.67%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... .16%(2) .67% 1.25%
Ratio of net investment income to average net assets.................. 2.48%(2) 3.00% 2.16%
Decrease reflected in above expense ratios due to
undertakings by the Manager......................................... 1.58%(2) 1.27% .27%
Portfolio Turnover Rate............................................... - 160.11% 370.06%
Net Assets, end of year (000's Omitted)............................... $51,063 $56,639 $62,940
______________________
(1) From July 1, 1993 (commencement of operations) to April 30, 1994.
(2) Not annualized.

</TABLE>

See notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and currently offers three portfolios including
the Dreyfus Total Return Portfolio (the "Portfolio"). The Portfolio's
investment objective is to maximize total return. The Dreyfus Corporation
("Manager") serves as the Portfolio's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A. ("Mellon"). 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 charge.
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. Forward currency exchange contracts are
valued at forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion
of the results of operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized on securities transactions, the difference between
the amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities, resulting from changes in exchange rates. Such gains and losses
are included with net realized and unrealized gain or loss on investments.
(C) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(D) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Portfolio may
make distributions on a more frequent basis to comply with the
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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.
(E) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the value
of the Portfolio's average daily net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Portfolio's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Portfolio. The most stringent state
expense limitation applicable to the Portfolio presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Portfolio's net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
May 1, 1995 through July 3,1995 to waive receipt of the service and
distribution fees, and thereafter, had undertaken through April 30, 1996 to
reduce the management fee paid by the Portfolio, to the extent that the
Portfolio's aggregate annual expenses (exclusive of certain expenses as
described above) exceeded an annual rate of 1.25 of 1% of the value of the
Portfolio's average daily net assets. The reduction in management fee,
pursuant to the undertakings, amounted to $170,503 for the year ended April
30, 1996.
(B) Prior to September 1, 1995, the Portfolio had a Distribution Plan
(the "Plan") adopted pursuant to Rule 12b-1 under the Act, which provided
that the Portfolio (a) reimburse the Distributor for payments to certain
Service Agents (a securities dealer, financial institution, or other industry
professional) for distributing the Portfolio's shares and (b) pay the
Manager, Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, and any affiliate of either of them (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio at an aggregate annual rate
of .50 of 1% of the value of the Portfolio's average daily net assets. The
Distributor could pay Service Agents a fee in respect of the Portfolio's
shares owned by shareholders with whom the Service Agent had a servicing
relationship or for whom the Service Agent is the dealer or holder of record.
The Distributor determined the amounts to be paid to Service Agents to which
it made payments and the basis on which such payments were made. The Plan
also separately provided for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the Portfolio's average daily net assets for any full fiscal year. During
the period from May 1, 1995 through August 31, 1995, the Portfolio was
charged $118,413 pursuant to the Plan. Effective September 1, 1995, the Plan
was terminated.
(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for the provision of certain
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

services. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Portfolio and providing reports and other information, and services related
to the maintenance of shareholder accounts. The Distributor may make payments
to Service Agents in respect of these services. The Distributor determines
the amounts to be paid to Service Agents. During the year ended April 30,
1996, the Portfolio was charged $156,344 pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Portfolio compensates Dreyfus Transfer,
Inc., a wholly owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Portfolio. Such compensation amounted to $18,073 for the
period from December 1, 1995 through April 30, 1996.
Effective May 10, 1996, the Fund entered into a Custody Agreement with
Mellon to provide custodial services for the Fund.
(D) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended April 30, 1996
amounted to $216,302,113 and $222,856,833, respectively.
The Portfolio enters into forward currency exchange contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. When executing forward currency exchange
contracts, the Portfolio is obligated to buy or sell a foreign currency at a
specified rate on a certain date in the future. With respect to sales of
forward currency exchange contracts, the Portfolio would incur a loss if the
value of the contract increases between the date the forward contract is
opened and the date the forward contract is closed. The Portfolio realizes a
gain if the value of the contract decreases between those dates. With respect
to purchases of forward currency exchange contracts, the Portfolio would
incur a loss if the value of the contract decreases between the date the
forward contract is opened and the date the forward contract is closed. The
Portfolio realizes a gain if the value of the contract increases between
those dates. The Portfolio is also exposed to credit risk associated with
counter party nonperformance on these forward currency exchange contracts
which is typically limited to the unrealized gains on such contracts that are
recognized in the statement of assets and liabilities. At April 30, 1996,
there were no open forward currency exchange contracts.
(B) At April 30, 1996, accumulated net unrealized appreciation on
investments was $1,181,551, consisting of $2,766,782 gross unrealized
appreciation and $1,585,231 gross unrealized depreciation.
At April 30, 1996, 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
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Asset Allocation Fund,
Inc., Dreyfus Total Return Portfolio (one of the Series constituting the
Dreyfus Asset Allocation Fund, Inc.), as of April 30, 1996, and the related
statements of operations for the year then ended and changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1996 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Asset Allocation Fund, Inc., Dreyfus Total Return
Portfolio at April 30, 1996, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the indicated
years, in conformity with generally accepted accounting principles.

[Ernst and Young LLP signature logo]

New York, New York
June 4, 1996

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS TOTAL RETURN PORTFOLIO
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Portfolio hereby designates $.285 per share
as a long-term capital gain distribution of the $2.338 per share paid on
December 18, 1995.

[Dreyfus lion "d" logo]
DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS TOTAL RETURN PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903

Further information is contained
in the Prospectus, which must
precede or accompany this report.

Printed in U.S.A. 550AR964
[Dreyfus logo]
Asset Allocation
Fund, Inc.
Dreyfus Total
Return Portfolio
Annual Report
April 30, 1996

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

EXHIBIT A:
|---------|-----------------------------------|-----------|
| | | STANDARD | |
| | | & POOR'S 500 |CUSTOMIZED |
| PERIOD | DREYFUS TOTAL |COMPOSITE STOCK | BLENDED |
| | RETURN PORTFOLIO | PRICE INDEX * | INDEX ** |
|---------|------------------|----------------|-----------|
| 7/1/93 | 10,000 | 10,000 | 10,000 |
| 4/30/94 | 10,099 | 10,227 | 10,135 |
| 4/30/95 | 11,535 | 12,010 | 11,356 |
| 4/30/96 | 13,342 | 15,636 | 13,657 |
|---------------------------------------------|-----------|

*Source: Lipper Analytical Services, Inc.
**Source: Lipper Analytical Services, Inc., Lehman
Brothers and Bank Rate Monitor

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
It is my pleasure to introduce Timothy M. Ghriskey, who is now the
manager of Dreyfus Asset Allocation Fund, Inc. Dreyfus Income Portfolio.
Tim joined the investment staff of The Dreyfus Corporation in the summer
of 1995 as a Senior Equity Portfolio Manager. Before joining Dreyfus, he
spent 10 years with Loomis, Sayles & Company as both an equity and a balanced
portfolio manager. At his previous firm, Tim was an Associate Managing
Partner and a member of the Investment Policy Committee and the Planning
Committee. He began his investment career as an equity analyst following a
number of industries, including beverage, tobacco, leisure, entertainment,
home products, cosmetics, metals and mining.
Tim is a graduate of Trinity College and received his M.B.A. from the
Darden School at the University of Virginia. He is a Chartered Financial
Analyst and a Chartered Investment Counselor.
We have great confidence in the new approach that Tim brings to portfolio
management.
Sincerely,

[Stephen Canter signature logo]

Stephen Canter
Chief Investment Officer
The Dreyfus Corporation

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
This letter is my first to you, as I assumed portfolio management of the
Dreyfus Asset Allocation Fund, Income Portfolio at a meeting of your Board of
Directors on February 1, 1996.
After taking over management of the Fund, performance has been off to a
good start. For the three-month period ended April 30, 1996, the total return
of the Fund was 0.96%,* which compares favorably to the Customized Blended
Index return of 0.25%.** Including a substantial period of time under the
former portfolio manager, the Fund's 12-month total return was 17.06%*
compared to the Customized Blended Index total return of 14.99%.** This
compares with a return of 7.53% for the Lehman Brothers Intermediate Treasury
Bond Index.***
Our approach to asset allocation includes output from our econometric
model which provides asset return projections based on how each financial
asset class has historically reacted to economic events. We formally analyze
the output from this model in regular meetings with our economists and our
other senior portfolio managers. The final asset allocation decision,
however, is ours alone, since we believe that successful investment results
require a sole decision maker.
In deciding which fixed-income securities to own, we are closely assisted
by Kevin McClintock, the head of Taxable Fixed Income for Dreyfus.
With equity securities, we are ardent believers in a disciplined value
style of equity investing. This investment style seeks undervalued securities
with the opportunity for growth through a disciplined investment approach.
This approach and investment process are described in detail in the following
sections.
VALUE STOCK INVESTING
While there are other investment disciplines practiced at Dreyfus, we are
passionate believers in value investing. Paying attention to the value of
securities has proven in numerous industry and academic studies to result in
superior and more consistent long-term investment returns compared to other
investment approaches. Why? Value investors are frugal. We want to buy
growing companies, but we do not want to pay much for them.
As value investors, we believe that in the investment world inexpensive
is better than expensive. By definition, securities with low valuations
should have more potential for an increase in this valuation than securities
with high valuations. Securities priced at a valuation discount to the
average market valuation tend to move toward higher valuations over time and,
therefore, have a built-in advantage for long-term price appreciation.
Investors tend to have low expectations for securities with low valuations,
and these low expectations tend to be more easily met than for securities
with high expectations. Furthermore, investors and analysts often extrapolate
or project past growth into the future which tends to result in excessive
pessimism about low valuation stocks. More often than not, the opposite
growth pattern occurs relative to these expectations, with low valuation
stocks growing more rapidly than expected. Finally, when a stock with a low
valuation is unfortunately greeted with bad news and its price corrects, we
believe that it is already relatively inexpensive and should not have far to
fall in value.
Investing in value stocks is somewhat counter to human nature, a decided
advantage. A successful value investor does not follow the herd of other
investors, does not blindly accept widely distributed
recommendations from brokerage firms, and does not just buy glamorous
investment stories that many others already know and own. A successful value
investor is more proactive than reactive, and takes advantage of other
investors' overreaction to events. Among the numerous reasons that value
stocks may appreciate in value are lower expectations, more thorough analysis
of actual, reported data instead of forecasts, typically higher dividends,
often more stock repurchases by the companies, and the potential for
takeovers and asset restructuring. Because of its focus on securities with
low valuations, value investing should, we believe, result in steady
investment gains and not wildly volatile swings in investment performance. In
this sense, it is typically a lower-risk, more conservative style of equity
investing.
EQUITY INVESTMENT PROCESS
Our approach to the selection of securities starts with and ends with our
analysts who are an integral part of our investment team. We only want to own
securities that our dedicated team of analysts know and follow closely
through regular management interviews and company visits.
Using our analysts' work as a starting point, we then screen the universe
of stocks by computer according to two principal methods. First, we screen
for high projected earnings yield (the inverse of the price-earnings ratio)
on earnings for the next 12 months. We only want to own securities with
earnings that are competitive with risk-free investments: U.S. Treasuries.
Otherwise, we would rather own the risk-free security. Second, we apply our
proprietary screen of 21 fundamental factors that have historically affected
stock returns. These factors include the growth outlook over various time
horizons, several relative value measures, company size, earnings revision
and possible surprise, cash flow, financial, operating and foreign leverage,
momentum measures, and a qualitative evaluation of the potential for positive
change to occur at each company.
Combining this data with our analysts' in-depth knowledge of the
individual companies, we then construct a portfolio of securities that we
believe is adequately diversified without overly diluting the potential
impact of good investment ideas.
Selling is also a major part of our discipline and, we believe, an often
neglected part of the investment management process. We use specific criteria
to determine when selling a security is in our shareholders' best interest.
PORTFOLIO OVERVIEW
The Fund maintained a high equity allocation throughout the fiscal year
ended April 30, 1996. Generally, between 35% and 45% of the assets were
invested in stocks, at the upper end of the allowable range, and the Fund
benefited accordingly as this asset class produced the best financial returns
available to the Fund. Bond investments were also heavily weighted until the
end of the fiscal year when bonds were reduced in favor of cash. Again, these
moves were advantageous, as bonds generally were profitable investments
relative to cash throughout 1995, and lagged cash during the first calendar
quarter of 1996.

As the fiscal year ended, we were only slightly overweighted in stocks
compared to our Customized Blended Index. We continue to believe that we are
in an extraordinary period for financial assets, but we are cautious over the
near term given an inhospitable bond market environment. We were defensive in
our bond holdings and held close to the maximum percentage of cash permitted
in the Fund's investment guidelines.
It is an honor to have been named as portfolio manager of your assets in
this Fund. I will endeavor to serve you to the best of my abilities.
Sincerely,

[Timothy M. Ghriskey signature logo]

Timothy M. Ghriskey
Portfolio Manager
May 9, 1996
New York, N.Y.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO APRIL 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS INCOME
PORTFOLIO OF DREYFUS ASSET ALLOCATION FUND, INC. WITH THE LEHMAN BROTHERS
INTERMEDIATE TREASURY BOND INDEX AND
A CUSTOMIZED BLENDED INDEX
[Exhibit A:
Dollars
$13,011
Dreyfus Income Portfolio
$12,297
Customized
Blended Index**
$11,312
Lehman Brothers
Intermediate
Treasury Bond Index*
*Source: Lehman Brothers
**Source: Lipper Analytical Services, Inc., Lehman Brothers and Bank Rate
Monitor]
<TABLE>

AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C>
ONE YEAR ENDED FROM INCEPTION (10/18/94)
APRIL 30, 1996 TO APRIL 30, 1996
_____________ ______________
17.06% 18.72%
</TABLE>

Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Income
Portfolio on 10/18/94 (Inception Date) to a $10,000 investment made in the
Lehman Brothers 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
shown in the line graph takes into account all applicable fees and expenses.
The Lehman Brothers 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 Lehman Brothers 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 Lehman Brothers
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 Financial Highlights section of the
Prospectus and elsewhere in this report.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF INVESTMENTS APRIL 30, 1996
COMMON STOCKS-40.5% SHARES VALUE
______ ______
<S> <C> <C> <C>
COMMERCIAL SERVICES-1.2% McGraw-Hill Cos....................... 600 $ 26,475
_____
CONSUMER DURABLES-1.1% Eastman Kodak......................... 300 22,950
_____
CONSUMER
NON-DURABLES-3.2% American Greetings, Cl. A.............. 800 22,100
Kimberly-Clark......................... 300 21,788
Reebok International................... 800 23,200
_____
67,088
_____
ELECTRONIC TECHNOLOGY-5.6% Boeing................................. 300 24,638
Digital Equipment...................... 400 (a) 23,900
Hewlett-Packard........................ 200 21,175
Intel.................................. 300 20,325
Perkin-Elmer........................... 500 27,437
_____
117,475
_____
ENERGY MINERALS-3.4% Amerada Hess............................ 400 22,650
Phillips Petroleum..................... 600 24,900
Sun.................................... 800 24,800
_____
72,350
_____
FINANCE-2.9% Alexander & Alexander Services......... 1,200 22,650
CIGNA.................................. 200 22,675
St. Paul Cos........................... 300 15,938
_____
61,263
_____
HEALTH SERVICES-1.0% Humana................................ 900 (a) 22,163
_____
HEALTH TECHNOLOGY-4.6% Baxter International.................... 500 22,125
Bristol-Myers Squibb................... 300 24,675
Schering-Plough........................ 500 28,687
Warner-Lambert......................... 200 22,350
_____
97,837
_____
PROCESS INDUSTRIES-4.4% duPont (E.I.) de Nemours............... 300 24,112
Grace (W.R.)........................... 300 23,250
Praxair................................ 600 23,175
Union Carbide.......................... 500 22,750
_____
93,287
_____
PRODUCER
MANUFACTURING-6.5% Allied Signal.......................... 300 17,437
Honeywell.............................. 400 21,050
National Service Industries............ 600 22,200
Raychem................................ 400 31,150
Tenneco................................ 400 21,950
Westinghouse Electric.................. 1,200 22,650
_____
136,437
_____

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______
RETAIL STORES-1.2% Price/Costco........................... 1,300 (a) $ 24,700
_____
TRANSPORTATION-1.1% Consolidated Freightways 900 23,513
_____
UTILITIES-4.3% AT&T................................... 400 24,500
GTE.................................... 500 21,687
NYNEX.................................. 400 19,650
Texas Utilities........................ 600 24,150
_____
89,987
_____
TOTAL COMMON STOCKS
(cost $816,755)...................... $ 855,525
=====
PRINCIPAL
U.S. TREASURY NOTES-45.9% AMOUNT
______
5.625%, 11/30/2000
(cost $998,844)...................... $1,000,000 $ 969,688
=====
SHORT-TERM INVESTMENTS-12.4%
U.S. TREASURY BILLS: 4.91%, 5/2/1996........................ $ 232,000 $ 231,967
5.01%, 5/9/1996........................ 30,000 29,968
_____
TOTAL SHORT-TERM INVESTMENTS
(cost $261,935)...................... $ 261,935
=====
TOTAL INVESTMENTS (cost $2,077,534)..................................... 98.8% $2,087,148
===== =====
CASH AND RECEIVABLES (NET).................................................. 1.2% $ 25,048
===== =====
NET ASSETS.................................................................. 100.0% $2,112,196
===== =====

NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $2,077,534)-see statement....................................... $2,087,148
Cash.................................................................... 23,589
Dividends and interest receivable....................................... 24,119
Prepaid expenses........................................................ 1,309
Due from The Dreyfus Corporation........................................ 1,558
_____
2,137,723
LIABILITIES:
Due to Distributor...................................................... $ 428
Accrued expenses........................................................ 25,099 25,527
____ _____
NET ASSETS ................................................................ $2,112,196
=====
REPRESENTED BY:
Paid-in capital......................................................... $2,017,438
Accumulated undistributed investment income-net......................... 6,741
Accumulated undistributed net realized gain on investments.............. 78,403
Accumulated net unrealized appreciation on investments-Note 3........... 9,614
_____
NET ASSETS at value applicable to 155,370 shares outstanding
(100 million shares of $.001 par value Common Stock authorized)......... $2,112,196
=====
NET ASSET VALUE, offering and redemption price per share
($2,112,196 / 155,370 shares)........................................... $13.59
=====

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest.............................................................. $ 60,106
Cash dividends (net of $100 foreign taxes withheld at source)......... 15,437
_____
TOTAL INCOME.................................................... $ 75,543
EXPENSES:
Management fee-Note 2(a).............................................. 13,414
Registration fees..................................................... 17,065
Prospectus and shareholders' reports-Note 2(b)........................ 14,096
Auditing fees......................................................... 12,648
Shareholder servicing costs-Note 2(b,c)............................... 11,068
Custodian fees........................................................ 3,871
Legal fees............................................................ 774
Directors' fees and expenses-Note 2(d)................................ 695
Miscellaneous......................................................... 868
_____
TOTAL EXPENSES.................................................. 74,499
Less-expense reimbursement from Manager due to
undertakings and expense limitation-Note 2(a)..................... 48,798
_____
NET EXPENSES.................................................... 25,701
_____
INVESTMENT INCOME-NET........................................... 49,842
_____
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $293,243
Net unrealized (depreciation) on investments............................ (78,337)
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 214,906
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $264,748
=====

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
______________________________
1995* 1996
_____ _____
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 18,604 $ 49,842
Net realized gain on investments........................................ 21,880 293,243
Net unrealized appreciation (depreciation) on investments for the year.. 87,951 (78,337)
_____ _____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 128,435 264,748
_____ _____
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (15,937) (45,768)
Net realized gain on investments........................................ __ (236,720)
_____ _____
TOTAL DIVIDENDS....................................................... (15,937) (282,488)
_____ _____
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 1,330,845 711,307
Dividends reinvested.................................................... 15,022 271,371
Cost of shares redeemed................................................. (72,402) (238,705)
_____ _____
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 1,273,465 743,973
_____ _____
TOTAL INCREASE IN NET ASSETS...................................... 1,385,963 726,233
NET ASSETS:
Beginning of year....................................................... __ 1,385,963
_____ _____
End of year (including undistributed investment
income-net of $2,667 in 1995 and $6,741 in 1996)...................... $1,385,963 $2,112,196
===== =====
SHARES SHARES
_____ _____
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 105,429 51,017
Shares issued for dividends reinvested.................................. 1,145 20,548
Shares redeemed......................................................... (5,515) (17,254)
_____ _____
NET INCREASE IN SHARES OUTSTANDING.................................... 101,059 54,311
===== =====
*From October 18, 1994 (commencement of operations) to April 30, 1995.

</TABLE>

See notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Portfolio's financial statements.
<TABLE>

YEAR ENDED APRIL 30,
____________________________
PER SHARE DATA: 1995(1) 1996
____ ____
<S> <C> <C>
Net asset value, beginning of year........................................... $12.50 $13.71
____ ____
INVESTMENT OPERATIONS:
Investment income-net........................................................ .20 .40
Net realized and unrealized gain on investments.............................. 1.18 1.83
____ ____
TOTAL FROM INVESTMENT OPERATIONS........................................... 1.38 2.23
____ ____
DISTRIBUTIONS:
Dividends from investment income-net......................................... (.17) (.38)
Dividends from net realized gain on investments.............................. - (1.97)
____ ____
TOTAL DISTRIBUTIONS........................................................ (.17) (2.35)
____ ____
Net asset value, end of year................................................. $13.71 $13.59
==== ====
TOTAL INVESTMENT RETURN.......................................................... 11.14%(2) 17.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...................................... 1.40%(2) 1.44%
Ratio of net investment income to average net assets......................... 1.60%(2) 2.79%
Decrease reflected in above expense ratios due to
undertakings by the Manager and expense limitation......................... 4.28%(2) 2.73%
Portfolio Turnover Rate...................................................... 94.33%(2) 326.88%
Net Assets, end of year (000's Omitted)...................................... $1,386 $2,112
______________________
(1) From October 18, 1994 (commencement of operations) to April 30, 1995.
(2) Not annualized.

</TABLE>

See notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and currently offers three portfolios including
the Dreyfus Income Portfolio (the "Portfolio"). The Portfolio's investment
objective is to maximize current income with a secondary goal of capital
appreciation. The Dreyfus Corporation ("Manager") serves as the Portfolio's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon"). 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 charge.
As of April 30, 1996, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, the parent company of which is Mellon Bank
Corporation, held 95,736 shares of the Portfolio.
On February 1, 1996, the Board of Directors approved an Agreement and
Plan of Reorganization providing for the transfer of all or substantially all
of the assets and liabilities of the Portfolio to Dreyfus Lifetime
Portfolios, Inc., Income Portfolio in a tax free exchange for shares of
Common Stock of Dreyfus Lifetime Portfolios, Inc., Income Portfolio at net
asset value and the assumption of stated liabilities (the "Exchange"). The
Exchange is subject to the approval of the Portfolio's shareholders.
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.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue to
qualify as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .75 of 1% of the value
of the Portfolio's average daily net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Portfolio's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Portfolio. The most stringent state
expense limitation applicable to the Portfolio presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Portfolio's net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
May 1, 1995 through July 3, 1995 to waive receipt of the management, service
and distribution fees, and thereafter, has currently undertaken through June
30, 1996, to reduce the management fee paid by, or reimburse such excess
expenses of the Portfolio, to the extent that the Portfolio's aggregate
annual expenses (exclusive of certain expenses as described above) exceed an
annual rate of 1.25 of 1% of the value of the Portfolio's average daily net
assets. The expense reimbursement, pursuant to the undertakings and expense
limitation, amounted to $48,798 for the year ended April 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Prior to September 1, 1995, the Portfolio had a Distribution Plan
(the "Plan") adopted pursuant to Rule 12b-1 under the Act, which provided
that the Portfolio (a) reimburse the Distributor for payments to certain
Service Agents (a securities dealer, financial institution, or other industry
professional) for distributing the Portfolio's shares and (b) pay the
Manager, Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, and any affiliate of either of them (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio, at an aggregate annual
rate of .50 of 1% of the value of the Portfolio's average daily net assets.
The Distributor could pay Service Agents a fee in respect of the Portfolio's
shares owned by shareholders with whom the Service Agent had a servicing
relationship or for whom the Service Agent is the dealer or holder of record.
The Distributor determined the amounts to be paid to Service Agents to which
it made payments and the basis on which such payments were made. The Plan
also separately provided for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the Portfolio's average daily net assets for any full fiscal year. During
the period from May 1, 1995 through August 31, 1995, the Portfolio was
charged $4,113 pursuant to the Plan. Effective September 1, 1995, the Plan
was terminated.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio
and providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the year ended April 30, 1996,
the Portfolio was charged $4,471 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Portfolio compensates Dreyfus Transfer,
Inc., a wholly owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Portfolio. Such compensation amounted to $285 for the period
from December 1, 1995 through April 30, 1996.
Effective May 10, 1996, the Fund entered into a Custody Agreement with
Mellon to provide custodial services for the Fund.
(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 year ended April 30, 1996
amounted to $5,568,357 and $5,310,812, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $9,614, consisting of $56,338 gross unrealized appreciation and $46,724
gross unrealized depreciation.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS INCOME PORTFOLIO
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, 1996, and the related
statements of operations for the year then ended and changes in net assets
for each of the two years in the period then ended, and financial highlights
for the each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1996 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Asset Allocation Fund, Inc., Dreyfus Income Portfolio at
April 30, 1996, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended and the financial highlights for each of the indicated years, in
conformity with generally accepted accounting principles.

[Ernst and Young LLP signature logo]

New York, New York
June 4, 1996

IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal tax purposes the Portfolio hereby designates $.003 per share
as a long-term capital gain distribution of the $2.08 per share paid on
December 18, 1995.

[Dreyfus lion "d" 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
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903

Further information is contained
in the Prospectus, which must
precede or accompany this report.

Printed in U.S.A. 553AR964
[Dreyfus logo]
Asset Allocation
Fund, Inc.
Dreyfus
Income Portfolio
Annual Report
April 30, 1996

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE DREYFUS INCOME PORTFOLIO OF
DREYFUS ASSET ALLOCATION FUND, INC. WITH THE
LEHMAN BROTHERS INTERMEDIATE TREASURY BOND
INDEX AND A CUSTOMIZED BLENDED INDEX

EXHIBIT A:
|---------|-----------------------------------|-----------|
| | |LEHMAN BROTHERS | |
| | | INTERMEDIATE |CUSTOMIZED |
| PERIOD | DREYFUS INCOME | TREASURY | BLENDED |
| | PORTFOLIO | BOND 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 |
| 7/31/95 | 12,205 | 10,892 | 11,261 |
|10/31/95 | 12,184 | 11,176 | 11,600 |
| 1/31/96 | 12,887 | 11,524 | 12,241 |
| 4/30/96 | 13,011 | 11,312 | 12,297 |
|---------------------------------------------------------|

*Source: Lehman Brothers
**Source: Lipper Analytical Services, Inc., Lehman
Brothers and Bank Rate Monitor

DREYFUS ASSET ALLOCATION FUND,INC., DREYFUS GROWTH PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
Management of Dreyfus Asset Allocation Fund - Dreyfus Growth Portfolio,
was transferred on February 1, 1996, to a new team led by Timothy M.
Ghriskey, Portfolio Manager. I am pleased to introduce this highly qualified
young man to you.
Tim Ghriskey joined the investment staff of The Dreyfus Corporation in
the summer of 1995. Previously, he spent 10 years with Loomis, Sayles &
Company as both an equity and a balanced portfolio manager. At his prior
firm, Tim was an Associate Managing Partner. He began his investment career
as an equity analyst following a number of industries, including beverage,
tobacco, leisure, entertainment, home products, cosmetics, metals and mining.
Tim is a graduate of Trinity College and received his M.B.A. from the Darden
School at the University of Virginia. He is a Chartered Financial Analyst and
a Chartered Investment Counselor.
We have great confidence in the new approach that Tim brings to portfolio
management.
Sincerely,
[Stephen Canter signature logo]
Stephen Canter
Chief Investment Officer
The Dreyfus Corporation

DREYFUS ASSET ALLOCATION FUND,INC., DREYFUS GROWTH PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
This letter is my first to you, as I assumed portfolio management of the
Dreyfus Asset Allocation Fund - Dreyfus Growth Portfolio at a meeting of your
Fund's Board on February 1, 1996. Fortunately, I am ably assisted by Paul
Kandel, one of our senior analysts who follows electronic technology, who has
worked on the Fund for almost a year now, and is largely responsible for the
Fund's performance.
The Fund's twelve-month total return for the fiscal year ended April 30,
1996 was 31.16%* compared to the performance of the Fund's benchmark index,
the Wilshire 5000 Index, which had a total return of 32.16%.**
ECONOMIC REVIEW
Several key U.S. economic indicators have rebounded in recent months,
implying that the economic slowdown that began in early 1995 may be ending.
However, overall corporate profit growth is slowing this year. The shift to
somewhat faster economic growth is promoting inflation fears and raising bond
yields. Higher bond yields have caused the yield curve to steepen, a
condition that usually favors continued economic growth. Hence, although this
is the sixth expansion year for this business cycle, we believe that it will
prove to be a long cycle.
The U.S. economy grew only 2.1% in 1995, and sequential economic shocks
since September threatened to keep it slow in 1996 too. But the underlying
trend of the economy proved resilient and real Gross Domestic Product
rebounded 2.8% in the first quarter. In recent months, steady job creation
has supported faster growth in real consumer incomes and spending. Home sales
are at high levels, and capital spending remains robust. Moreover,
inventories are now quite lean. Lean inventories when demand is rising
usually stimulate a period of somewhat faster economic growth, though this
may not translate into continued fast growth of profits.
An imbalance caused by rising demand and low inventories has begun to
affect reported inflation. This symptom is currently most pronounced in the
oil sector, but the strength in overall consumer demand is reigniting fears
of yet higher future inflation. Thus, bond yields have risen substantially
since January. By contrast, short-term market rates have risen only
marginally, held stable by the steadiness of the Federal Funds rate.
Surviving the midcycle growth slowdown that prevailed in 1995 raises the
odds that economic expansion can be sustained. A key concern going forward is
whether faster growth will reignite inflation. Higher inflation, if it
occurs, would justify a tighter monetary policy.
THE MARKETS
The U.S. equity market benefited from one of its most vigorous price
increases during the early months of this year. One of the underlying
reasons, in addition to economic growth, was a decision by the Federal
Reserve Board to take no action in February to change short-term interest
rates. As winter turned into spring, however, the market's own forces brought
about a tightening of long-term rates. Several times in March, April and May,
the prospect of higher borrowing costs jolted the stock averages. Nonetheless,
by the time your Fund's latest fiscal period ended on April 30, 1996, the
major market indexes were all solidly ahead of last year's level.
As shown by the flood of money going into mutual funds, investors appear
to have a voracious appetite for owning stocks. Saving for retirement has
become a national preoccupation, as evidenced by
the growth of 401(k) and other retirement plans. Stock market valuations
have, of course, benefited from this trend. However, if interest rates rise
high enough, the attraction of equities could diminish. The coming months
will tell whether this is a possibility.
PORTFOLIO OVERVIEW
The Fund maintained a high equity allocation throughout the fiscal year
ended April 30, 1996, and the Fund's performance benefited accordingly.
Over the past year, three primary sectors strengthened the Fund's equity
performance: technology, health care and finance. Technology is becoming more
important in everyday life, and we boosted the technology weighting in the
Fund. This strategy has helped the Fund with particular winners in Cisco
Systems, Safeguard Scientific and Sierra On-line. In the Financial sector, we
benefited from our holdings in insurance providers GCR Holdings, Exel and
Ace. As interest rates rose, we made two changes. First, we reduced our
weightings in this sector and second, we sold many of our interest-sensitive
names and concentrated on niche insurance providers. Finally, the Fund also
profited from its exposure in health care. Guidant, a medical device company,
and Parexel, a provider of health care technology, were two of our big
winners.
While several technology stocks strongly contributed to the Fund's
performance, several stocks in this sector also subtracted from the results.
DSC Communications, Texas Instruments, Micron Technology and Intel were
disappointing investments.
Looking forward, we continue to believe that the main engines of growth
in the `90s will come from technology and health care. To this end, we have
raised our weightings in both sectors. Recent additions in technology include
Shiva and McAfee Associates. In health care, recent additions include HBO &
Co., Fuisz Technologies and Transition Systems.
It is an honor to have been named as portfolio manager of your assets in
this Fund. I will endeavor to serve you to the best of my abilities.
Sincerely,
[Timothy M. Ghriskey signature logo]
Timothy M. Ghriskey
Portfolio Manager
May 23, 1996
New York, N.Y.

* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES - Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Wilshire
5000 Index consists of both larger and small companies and is a widely
accepted unmanaged index of overall stock market performance.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO APRIL 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE DREYFUS GROWTH
PORTFOLIO OF
DREYFUS ASSET ALLOCATION FUND, INC. WITH THE WILSHIRE 5000 INDEX
[Exhibit A:
Dollars
$14,418
Wilshire 5000 Index*
$13,841
Dreyfus Growth Portfolio
*Source: Wilshire Associates, Incorporated]
<TABLE>

AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C>
ONE YEAR ENDED FROM INCEPTION (10/18/94)
APRIL 30, 1996 TO APRIL 30, 1996
______________ _________________
31.16% 23.60%
</TABLE>

Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus Growth
Portfolio on 10/18/94 (Inception Date) to a $10,000 investment made in the
Wilshire 5000 Index on that date. For comparative purposes, the value of the
Index on 10/31/94 is used as the beginning value on 10/18/94. All dividends
and capital gain distributions are reinvested.
The Portfolio's performance shown in the line graph takes into account all
applicable fees and expenses. The Wilshire 5000 Index consists of almost all
publicly traded stocks in the United States, and is a widely accepted,
unmanaged index of overall stock market performance which does not take into
account charges, fees and other expenses. Further information relating to the
Portfolio's performance, including expense reimbursements, if applicable, is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
<TABLE>

DREYFUS ASSET ALLOCATION FUND,INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF INVESTMENTS APRIL 30,1996
COMMON STOCKS-98.3% SHARES VALUE
______ ______
<S> <C> <C>
CONSUMER
NON-DURABLES-7.1% CPC International...................... 500 $ 34,563
Canandaigua Wine, Cl. A................ 1,000 (a) 30,375
Jones Apparel Group.................... 800 (a) 41,100
PepsiCo................................ 570 36,195
Philip Morris Cos...................... 400 36,050
_____
178,283
_____
CONSUMER SERVICES-7.6% CUC International...................... 1,000 (a) 32,875
Disney (Walt).......................... 400 24,800
Liberty Media Group, Cl. A............. 850 (a) 23,269
Scholastic............................. 500 (a) 32,750
Time Warner............................ 1,000 40,875
Viacom, Cl. A.......................... 900 (a) 36,000
_____
190,569
_____
ELECTRONIC
TECHNOLOGY-18.2% Adaptec................................ 700 (a) 40,250
Boeing................................. 550 45,169
Cisco Systems.......................... 800 (a) 41,500
HBO & Co............................... 200 23,750
Hewlett-Packard........................ 350 37,056
Intel.................................. 700 47,425
Perkin-Elmer........................... 800 43,900
PictureTel............................. 1,200 40,800
Rohr................................... 2,000 (a) 36,500
Shiva.................................. 700 (a) 41,825
Thiokol................................ 800 34,200
Transition Systems..................... 1,000 (a) 24,250
_____
456,625
_____
FINANCE-11.7% Aetna Life & Casualty.................. 500 35,625
Allstate............................... 463 17,999
American Travellers.................... 2,200 (a) 42,900
BayBanks............................... 300 31,425
Chase Manhattan........................ 500 34,438
CorVel................................. 850 (a) 25,393
FINOVA Group........................... 750 41,625
Federal National Mortgage Association.. 1,000 30,625
Guarantee Life Cos..................... 2,000 (a) 34,250
_____
294,280
_____
HEALTH SERVICES-3.3% American Home Products................. 300 31,650
Humana................................. 1,200 (a) 29,550
McKesson............................... 480 22,860
_____
84,060
_____

DREYFUS ASSET ALLOCATION FUND,INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1996
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______

HEALTH TECHNOLOGY-10.4% AMSCO International.................... 1,700 (a) $ 24,650
Bio-Rad Labs, Cl. A.................... 800 (a) 37,200
Bristol-Myers Squibb................... 500 41,125
Fuisz Technologies..................... 1,500 (a) 38,250
Mentor................................. 1,500 35,438
PAREXEL International.................. 1,000 (a) 49,250
Pfizer................................. 500 34,437
_____
260,350
_____
INDUSTRIAL SERVICES-3.3% Culligan Water Technologies............ 1,000 (a) 33,750
Schlumberger........................... 550 48,538
_____
82,288
_____
MACHINERY-INDUSTRIAL/
SPECIALTY-1.5% Parker Drilling....................... 5,000 (a) 38,125
_____
OIL & GAS EXPLORATION-1.8% Ranger Oil............................ 6,000 45,000
_____
PROCESS INDUSTRIES-5.4% Albany International, Cl. A........... 1,700 36,550
Crown Cork & Seal..................... 650 30,631
International Specialty Products...... 3,000 (a) 37,500
Witco................................. 900 30,713
_____
135,394
_____
PRODUCER
MANUFACTURING-7.4% Coltec Industries...................... 3,000 (a) 39,000
Cooper Industries...................... 1,028 43,690
Olin................................... 400 35,400
Raychem................................ 500 38,938
Thermo Electron........................ 480 29,580
_____
186,608
_____
RETAIL TRADE-5.1% Gap.................................... 1,500 45,187
Lowe's Cos............................. 1,000 32,375
May Department Stores.................. 600 30,600
Talbots................................ 700 20,125
_____
128,287
_____
SEMICONDUCTORS-1.5% Tencor Instruments...................... 1,500 (a) 37,125
_____
TECHNOLOGY-4.8% Business Objects, A.D.S................. 400 (a) 34,600
Intergrated Systems Consulting (Rights). 134 (a) 2,412
Sun Microsystems........................ 800 (a) 43,400
Symantec................................ 2,500 (a) 40,312
_____
120,724
_____
TECHNOLOGY SERVICES-6.4% Discreet Logic......................... 2,200 (a) 36,575
McAfee Associates...................... 600 (a) 36,750

DREYFUS ASSET ALLOCATION FUND,INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1996
COMMON STOCKS (CONTINUED) SHARES VALUE
______ ______

TECHNOLOGY
SERVICES (CONTINUED) Microsoft.............................. 300 (a) $ 34,012
Safeguard Scientifics.................. 800 (a) 53,600
_____
160,937
_____
UTILITIES-2.8% MCI Communications..................... 1,000 29,437
SBC Communications..................... 800 40,000
_____
69,437
_____
TOTAL COMMON STOCKS
(cost $2,159,338).................... $2,468,092
=====

PRINCIPAL
SHORT-TERM INVESTMENTS-.8% AMOUNT
______
U.S. TREASURY BILLS; 4.79%, 5/16/96
(cost $20,959)....................... $ 21,000 $ 20,958
=====
TOTAL INVESTMENTS (cost $2,180,297)......................................... 99.1% $2,489,050
===== =====
CASH AND RECEIVABLES (NET).................................................. .9% $ 22,106
===== =====
NET ASSETS.................................................................. 100.0% $2,511,156
===== =====
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $2,180,297)-see statement....................................... $2,489,050
Cash.................................................................... 46,304
Dividends receivable.................................................... 1,326
Prepaid expenses........................................................ 1,632
Due from The Dreyfus Corporation........................................ 1,289
_____
2,539,601
LIABILITIES:
Due to Distributor...................................................... $ 493
Accrued expenses........................................................ 27,952 28,445
____ _____
NET ASSETS.................................................................. $2,511,156
=====
REPRESENTED BY:
Paid-in capital......................................................... $2,032,740
Accumulated undistributed investment income-net......................... 899
Accumulated undistributed net realized gain on investments.............. 168,764
Accumulated net unrealized appreciation on investments-Note 3........... 308,753
_____
NET ASSETS at value applicable to 155,163 shares outstanding
(100 million shares of $.001 par value Common Stock authorized)......... $2,511,156
=====
NET ASSET VALUE, offering and redemption price per share
($2,511,156 / 155,163 shares)........................................... $16.18
=====

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Cash dividends (net of $34 foreign taxes withheld at source).......... $ 24,007
Interest.............................................................. 5,726
____
TOTAL INCOME.................................................... $ 29,733
EXPENSES:
Management fee-Note 2(a).............................................. 14,629
Registration fees..................................................... 19,937
Prospectus and shareholders' reports-Note 2(b)........................ 14,322
Shareholder servicing costs-Note 2(b,c)............................... 12,673
Auditing fees......................................................... 12,320
Custodian fees........................................................ 4,176
Legal fees............................................................ 698
Directors' fees and expenses-Note 2(d)................................ 666
Miscellaneous......................................................... 926
____
TOTAL EXPENSES.................................................. 80,347
Less-expense reimbursement from Manager due to
undertakings and expense limitation-Note 2(a)..................... 52,389
____
NET EXPENSES.................................................... 27,958
____
INVESTMENT INCOME-NET........................................... 1,775
____
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $326,968
Net unrealized appreciation on investments.............................. 201,379
____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 528,347
____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $530,122
====

</TABLE>

See notes to financial statements.
<TABLE>

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
______________________________
1995* 1996
______ ______
<S> <C> <C>
OPERATIONS:

Investment income-net................................................... $ 46,798 $ 1,775
Net realized gain (loss) on investments................................. (80,489) 326,968
Net unrealized appreciation on investments for the year................. 107,374 201,379
_____ _____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 73,683 530,122
_____ _____
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (2,536) (45,138)
Net realized gain on investments........................................ __ (77,715)
_____ _____
TOTAL DIVIDENDS....................................................... (2,536) (122,853)
_____ _____
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 1,789,201 1,034,341
Dividends reinvested.................................................... 2,536 122,852
Cost of shares redeemed................................................. (494,560) (421,630)
_____ _____
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 1,297,177 735,563
_____ _____
TOTAL INCREASE IN NET ASSETS...................................... 1,368,324 1,142,832
NET ASSETS:
Beginning of year....................................................... __ 1,368,324
_____ _____
End of year (including undistributed investment
income-net of $44,262 in 1995 and $899 in 1996)....................... $1,368,324 $2,511,156
===== =====

SHARES SHARES
_____ _____
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 143,001 70,906
Shares issued for dividends reinvested.................................. 207 8,738
Shares redeemed......................................................... (39,204) (28,485)
_____ _____
NET INCREASE IN SHARES OUTSTANDING.................................... 104,004 51,159
===== =====
* From October 18, 1994 (commencement of operations) to April 30, 1995.

</TABLE>

See notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Portfolio's financial statements.
<TABLE>

YEAR ENDED APRIL 30,
______________________
PER SHARE DATA: 1995(1) 1996
____ ____
<S> <C> <C>
Net asset value, beginning of year............................................... $12.50 $13.16
____ ____
INVESTMENT OPERATIONS:
Investment income-net............................................................ .45 .01(2)
Net realized and unrealized gain on investments.................................. .24 3.95
____ ____
TOTAL FROM INVESTMENT OPERATIONS............................................... .69 3.96
____ ____
DISTRIBUTIONS:
Dividends from investment income-net............................................. (.03) (.35)
Dividends from net realized gain on investments.................................. - (.59)
____ ____
TOTAL DISTRIBUTIONS............................................................ (.03) (.94)
____ ____
Net asset value, end of year..................................................... $13.16 $16.18
==== ====
TOTAL INVESTMENT RETURN.............................................................. 5.53%(3) 31.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................................... 1.40%(3) 1.43%
Ratio of net investment income to average net assets............................. 3.91%(3) .09%
Decrease reflected in above expense ratios due to
undertakings by the Manager and expense limitation............................. 4.63%(3) 2.69%
Portfolio Turnover Rate.......................................................... 497.41%(3) 220.74%
Net Assets, end of year (000's Omitted).......................................... $1,368 $2,511
(1) From October 18, 1994 (commencement of operations) to April 30, 1995.
(2) Based on average shares outstanding at each month end.
(3) Not annualized.

</TABLE>

See notes to financial statements.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and currently offers three portfolios including
the Dreyfus Growth Portfolio (the "Portfolio"). The Portfolio's investment
objective is capital appreciation. The Dreyfus Corporation ("Manager") serves
as the Portfolio's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A. ("Mellon"). 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 charge.
As of April 30, 1996, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, the parent company of which is Mellon Bank
Corporation, held 85,545 shares of the Portfolio.
On February 1, 1996, the Board of Directors approved an Agreement and
Plan of Reorganization providing for the transfer of all or substantially all
of the assets and liabilities of the Portfolio to Dreyfus Lifetime
Portfolios, Inc., Growth Portfolio in a tax free exchange for shares of
Common Stock of Dreyfus Lifetime Portfolios, Inc., Growth Portfolio at net
asset value and the assumption of stated liabilities (the "Exchange"). The
Exchange is subject to the approval of the Portfolio's shareholders.
The Fund accounts separately for the assets, liabilities and operations
of each portfolio. Expenses directly attributable to each portfolio are
charged to that portfolio's operations; expenses which are applicable to all
portfolios, are allocated among them.
(A) PORTFOLIO VALUATION: Investments in securities (including options and
financial futures) are valued at the last sales price on the securities
exchange on which such securities are primarily traded or at the last sales
price on the national securities market. Securities not listed on an exchange
or the national securities market, or securities for which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except for open short positions, where the asked price is used for
valuation purposes. Bid price is used when no asked price is available.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Directors.
Investments denominated in foreign currencies are translated to U.S. dollars
at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net and dividends from net realized
capital gain are normally declared and paid annually, but the Portfolio may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net realized
capital gain can be offset by capital loss carryovers, if any, it is the
policy of the Portfolio not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to continue
to qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH 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 value
of the Portfolio's average daily net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Portfolio's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Portfolio. The most stringent state
expense limitation applicable to the Portfolio presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Portfolio's net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
May 1, 1995 through July 3, 1995 to waive receipt of the management, service
and distribution fees, and thereafter, has currently undertaken through June
30, 1996, to reduce the management fee paid by, or reimburse such excess
expenses of the Portfolio, to the extent that the Portfolio's aggregate
annual expenses (exclusive of certain expenses as described above) exceed an
annual rate of 1.25 of 1% of the value of the Portfolio's average daily net
assets. The expense reimbursement, pursuant to the undertakings and expense
limitation, amounted to $52,389 for the year ended April 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Prior to September 1, 1995, the Portfolio had a Distribution Plan
(the "Plan") adopted pursuant to Rule 12b-1 under the Act, which provided
that the Portfolio (a) reimburse the Distributor for payments to certain
Service Agents (a securities dealer, financial institution or other industry
professional) for distributing the Portfolio's shares and (b) pay the
Manager, Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, and any affiliate of either of them (collectively "Dreyfus") for
advertising and marketing relating to the Portfolio, at an aggregate annual
rate of .50 of 1% of the value of the Portfolio's average daily net assets.
The Distributor could pay Service Agents a fee in respect of the Portfolio's
shares owned by shareholders with whom the Service Agent had a servicing
relationship or for whom the Service Agent is the dealer or holder of record.
The Distributor determined the amounts to be paid to Service Agents to which
it made payments and the basis on which such payments were made. The Plan
also separately provided for the Portfolio to bear the costs of preparing,
printing and distributing certain of the Portfolio's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the Portfolio's average daily net assets for any full fiscal year. During
the period from May 1, 1995 through August 31, 1995, the Portfolio was
charged $4,088 pursuant to the Plan. Effective September 1, 1995, the Plan
was terminated.
(C) Pursuant to the Portfolio's Shareholder Services Plan, the Portfolio
pays the Distributor at an annual rate of .25 of 1% of the value of the
Portfolio's average daily net assets for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Portfolio and
providing reports and other information,
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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
year ended April 30, 1996, $4,876 was charged to the Portfolio pursuant to
the Shareholder Services Plan.
Effective December 1, 1995, the Portfolio compensates Dreyfus Transfer,
Inc., a wholly owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Portfolio. Such compensation amounted to $410 for the period
from December 1, 1995 through April 30, 1996.
Effective May 10, 1996, the Fund entered into a Custody Agreement with
Mellon to provide custodial services for the Fund.
(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 year ended April 30, 1996
amounted to $4,786,732 and $4,151,551, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $308,753, consisting of $338,274 gross unrealized appreciation and
$29,521 gross unrealized depreciation.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS ASSET ALLOCATION FUND, INC., DREYFUS GROWTH PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Asset Allocation Fund,
Inc., Dreyfus Growth Portfolio (one of the Series constituting the Dreyfus
Asset Allocation Fund, Inc.), as of April 30, 1996, and the related
statements of operations for the year then ended and changes in net assets
for each of the two years in the period then ended, and financial highlights
for the each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1996 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Asset Allocation Fund, Inc., Dreyfus Growth Portfolio at
April 30, 1996, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended and the financial highlights for each of the indicated years, in
conformity with generally accepted accounting principles.

[Ernst and Young LLP signature logo]

New York, New York
June 4, 1996

[Dreyfus lion "d" logo]
DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS GROWTH PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903

Further information is contained
in the Prospectus, which must
precede or accompany this report.

Printed in U.S.A. 554AR964
[Dreyfus logo]
Asset Allocation
Fund, Inc.
Dreyfus
Growth Portfolio
Annual Report
April 30, 1996

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE DREYFUS GROWTH PORTFOLIO OF DREYFUS ASSET ALLOCATION
FUND, INC. WITH THE WILSHIRE 5000 INDEX

EXHIBIT A:
|---------|---------------------------------------|
| | | |
| | | |
| PERIOD | DREYFUS GROWTH | |
| | PORTFOLIO | WILSHIRE 5000 INDEX* |
|---------|---------------------------------------|
|10/18/94 | 10,000 | 10,000 |
|10/31/94 | 10,128 | 10,000 |
| 1/31/95 | 9,607 | 9,975 |
| 4/30/95 | 10,553 | 10,910 |
| 7/31/95 | 11,619 | 12,118 |
|10/31/95 | 11,571 | 12,575 |
| 1/31/96 | 12,986 | 13,679 |
| 4/30/96 | 13,841 | 14,418 |
|---------|---------------------------------------|

*Source: Wilshire Associates, Incorporated