LETTER TO SHAREHOLDERS
Dear Shareholder:
The Income Portfolio of Dreyfus Asset Allocation Fund, Inc.
completed its latest semi-annual fiscal period October 31, 1995. In
this letter we summarize the major developments in the Portfolio during
this period, and report the results. To place the events of the half-
year in a broader setting, we also outline the economic and securities
market conditions that prevailed.
ECONOMIC ENVIRONMENT
The much-desired soft landing for the U.S. economy that the Federal
Reserve Board has been striving to attain appears to have occurred.
This is the result of more than a year of moves by the Fed to tighten
interest rates, followed by a token loosening of the reins last summer.
Now that the economy is no longer as overactive, the central bank
must concern itself with the possibility that the economy might slow
down more than would be desirable. However, the latest economic
statistics do not contain convincing evidence of that happening. The
housing industry is doing well. Industrial orders continue to expand
and gross domestic product keeps on growing, albeit at a reduced rate.
In the meantime, the rate of inflation appears to be under firm
control. Consumer prices have advanced only at a very moderate pace,
and average wages have barely inched ahead. Unemployment is not getting
out of hand, and hovers near the so-called full employment level.
Retail spending has settled down, in part because consumers are
carrying large debit balances in mortgage and credit card debts. To
what extent this will affect holiday shopping remains to be seen. The
industrial sector of the economy, however, appears to be forging ahead.
MARKET ENVIRONMENT
As your Fund reached the end of its reporting period, October 31,
1995, stocks were not far below the record levels they had reached
earlier in the fall.
Among the factors accounting for this market strength were good
corporate profits and low interest rates. Third quarter profit reports
from leading corporations, while not universally favorable, were better
than earlier quarters. The extensive lean and mean corporate
reorganizations of the past few years appear to be paying off. Even
though the pricing environment for most corporate products is extremely
competitive, manufacturers and service providers appear able to squeeze
out improved profits.
How long that continuing improvement will last is an open question.
Many economists think that profit levels may flatten out over the coming
months. The recent record on that score, however, has been encouraging.
Interest rates also have buoyed stock prices and sustained the bond
market. As the cost of borrowing has steadily decreased, many
corporations have benefitted.
Another factor in market strength has been the relentless advance of
technology, which has virtually forced corporations -- and now
individual households as well -- to reequip in order to keep up with
technical progress. The obvious result has been seen in record prices
commanded during the year by high technology stocks. While some
disillusionment may set in, the market clearly takes a very optimistic
view of the long-range outlook for these companies.
In addition, all equities have been favorably affected by the very
large inflow of investment money, on a regular basis, from 401(k) and
other retirement plans. To be sure, money managers could at some point
turn off the spigot, and divert this cash flow into bonds or money
market instruments. During the past year, however, equity purchases by
pension funds and other retirement investors have provided a supportive
background for stock prices.
However, there are some concerns. One of the most significant has
been the wrangling between Congress and the White House over how to
reduce Government spending and cut the burden of the Government's
perennial deficit. Hopefully, this impasse will be settled soon,
perhaps by the time this letter reaches its readers. In the meantime,
the uncertainties in Washington have been a source of worry to
investors.
The fading value of the U.S. dollar has also been a question mark.
Yet, after hitting a low last spring, the dollar has gradually recovered
some lost ground. This dollar rebound reflects weakness in the
economies of Western Europe and Japan, but also the strengthening of
economic activity here at home.
PORTFOLIO OVERVIEW
For the first six months of its fiscal year, the period ending
October 31, 1995, the Income Portfolio of Dreyfus Asset Allocation Fund
provided a total return of 9.63%.* This compares with a return of 6.25%
for the Lehman Intermediate Treasury Index** and 8.64% for the
Customized Blended Index which, like the Portfolio, is composed of a
defined weighting of Treasury obligations, common stocks and cash
equivalents that is more fully described below.***
The Income Portfolio continued to benefit during much of the six-
month period from its position in 30-year bonds. Our analysis of the
fixed income market was that the slowing down of the U.S. economy would
result in lower interest rates which raises the selling price of bonds.
Further, there was the possibility that, if Congress and the White House
could reach a budget aggreement, the Federal Reserve might feel
justified in reducing interest rates once again. At one point during the
six-month period we took profits in bonds, but still hold a substantial
position in these instruments.
In the common stock portion of the Fund, several significant changes
were made reflecting a new and less defensive posture toward the
domestic economy and its likely future prospects. The Federal Reserve's
cut in the Fed Funds rate in July caused our view of the stock market to
turn more positive. A significant new position in automotive stocks was
established including both General Motors and Ford Motor. Our positions
in foods and beverages were much reduced with the sales of CPC
International, Coca Cola, General Mills and Heinz, and replaced with a
substantial new position in entertainment content including names such
as Disney (Walt), Viacom, Cl.A. and Time Warner. Changes in technology
are making American entertainment readily available to the world
audience and in our opinion it is an area where the U.S. is very
competitive, probably more so than in foods.
In the technology sector, profits were taken reflecting the dramatic
stock price increases in recent months.
The portfolio actually increased its weightings in communications-
related technology, often taking advantage of recent price weakness as
our longer-term outlook for this area is very positive.
The energy sector has been profitable for the Fund and we like its
longer-term prospects. We maintained our positions in Amerada Hess and
Texaco.
As the investment environment became more turbulent in recent
months, investors searching for safe havens bid up health care stocks to
levels where we felt justified in taking profits.
Along with the Portfolio's new exposure to autos and the diminished
holdings in foods, beverages and health care, usually considered
defensive groups, the most significant changes are reflected in the much
increased weighting in chemicals and railroad stocks. These include
increased positions in duPont (E.I.) de Nemours, Monsanto, a new
position in Praxair, and an expanded weighting in railroad stocks
including a new position in Union Pacific. It should be noted that all
of these companies are in the midst of restructurings with their
respective managements endeavoring to provide value for their
shareholders.
We very much appreciate your investment in this portfolio. We will
of course continue our best efforts to help you achieve your investment
goals.
Sincerely,
Signature
Ernest G. Wiggins
Portfolio Manager
November 15, 1995
New York, N.Y.
*Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LEHMAN BROTHERS - The Lehman Intermediate Treasury Index is
a widely accepted index of U.S. Treasury notes and bonds.
***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 Lehman
Intermediate Treasury Index, an unmanaged index viewed as being a
leading indicator of overall performance of U.S. Treasury notes and
bonds. We have combined the performance of unmanaged indices that
reflect benchmark percentages with respect to each asset class in
which the Portfolio invests as described in the Fund's Prospectus:
55% U.S. Treasury Notes and Bonds, 35% common stocks, and 10% cash
equivalents. The Customized Blended Index combines returns from the
Lehman Intermediate Treasury Index, the Standard & Poor's 500
Composite Stock Price Index and the Bank Rate Monitor Index of money
market returns, and is weighted to the benchmark percentages.
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF INVESTMENTS October 31, 1995 (Unaudited)
COMMON STOCKS--45.7% SHARES VALUE
-------- -----------
<S> <C> <C>
CONSUMER DURABLES--4.5% Ford Motor....................... 1,200 $ 34,500
General Motors................... 1,000 43,750
----------
78,250
----------
CONSUMER NON-DURABLES--1.7% Seagram.......................... 800 28,800
----------
CONSUMER SERVICES--5.4% Disney (Walt).................... 800 46,100
Time Warner...................... 500 18,250
Viacom, Cl. A.................... 600 (a) 29,850
----------
94,200
----------
ELECTRONIC TECHNOLOGY--3.3% cisco Systems.................... 200 (a) 15,500
DSC Communications............... 600 (a) 22,200
Motorola......................... 300 19,687
----------
57,387
----------
ENERGY--4.6% Amerada Hess..................... 956 43,140
Texaco........................... 547 37,264
----------
80,404
----------
INDUSTRIAL SERVICES--4.9% Browning-Ferris Industries....... 1,100 32,038
Schlumberger..................... 500 31,125
WMX Technologies................. 817 22,978
----------
86,141
----------
NON-ENERGY MINERALS--1.1% Aluminum Co. of America.......... 200 10,200
Nucor............................ 200 9,625
----------
19,825
----------
PROCESS INDUSTRIES--11.6% Crown Cork & Seal................ 1,100 (a) 38,362
duPont (E.I.) deNemours.......... 800 49,900
Grace (W.R.)..................... 600 33,450
International Paper.............. 300 11,100
Monsanto......................... 400 41,900
Praxair.......................... 1,000 27,000
----------
201,712
----------
PRODUCER MANUFACTURING--3.4% Allied Signal.................... 500 21,250
Cooper Industries................ 821 27,709
Dresser Industries............... 500 10,375
----------
59,334
----------
RETAIL TRADE--2.7% Home Depot....................... 700 26,075
Wal-Mart Stores.................. 1,000 21,625
----------
47,700
----------
TRANSPORTATION--2.5% Burlington Northern Santa Fe..... 200 16,775
Union Pacific.................... 400 26,150
----------
42,925
----------
TOTAL COMMON STOCKS
(cost $810,834)................ $ 796,678
==========
PRINCIPAL
U.S. TREASURY NOTES--53.2% AMOUNT
---------
5-5/8%, 6/30/1997
(cost $926,135)................ $928,000 $ 928,000
==========
TOTAL INVESTMENTS (cost $1,736,969)........................................ 98.9% $1,724,678
====== ==========
CASH AND RECEIVABLES (NET)................................................. 1.1% $ 18,717
====== ==========
NET ASSETS................................................................. 100.0% $1,743,395
====== ==========
NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995 (UNAUDITED)
ASSETS:
Investments in securities, at value
(cost $1,736,969)--see statement..................................... $1,724,678
Cash................................................................... 28,903
Receivable for investment securities sold.............................. 47,158
Dividends and interest receivable...................................... 18,308
Prepaid expenses....................................................... 4,731
Due from The Dreyfus Corporation....................................... 5,169
----------
1,828,947
LIABILITIES:
Due to Distributor..................................................... $ 364
Payable for investment securities purchased............................ 65,910
Accrued expenses....................................................... 19,278 85,552
------- ----------
NET ASSETS ................................................................ $1,743,395
==========
REPRESENTED BY:
Paid-in capital........................................................ $1,515,895
Accumulated undistributed investment income--net....................... 3,424
Accumulated undistributed net realized gain on investments............. 236,367
Accumulated net unrealized (depreciation) on investments--Note 3....... (12,291)
----------
NET ASSETS at value applicable to 117,562 outstanding shares of
Common Stock, equivalent to $14.83 per share
(100 million shares of $.001 par value authorized)..................... $1,743,395
==========
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
Interest........................................................... $ 29,132
Cash dividends (net of $84 foreign taxes withheld at source)....... 7,338
---------
TOTAL INCOME................................................... $ 36,470
EXPENSES:
Management fee--Note 2(a).............................................. 6,099
Registration fees...................................................... 12,120
Prospectus and shareholders' reports--Note 2(b)........................ 10,586
Shareholder servicing costs--Note 2(b,c)............................... 7,040
Custodian fees......................................................... 2,371
Auditing fees.......................................................... 1,968
Legal fees............................................................. 365
Directors' fees and expenses--Note 2(d)................................ 322
Miscellaneous.......................................................... 348
---------
41,219
Less--expense reimbursement from Manager due to
undertaking and expense limitation--Note 2(a)........................ 27,644
---------
TOTAL EXPENSES..................................................... 13,575
--------
INVESTMENT INCOME--NET............................................. 22,895
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................... $ 214,487
Net unrealized (depreciation) on investments........................... (100,242)
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................... 114,245
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $137,140
========
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995* (UNAUDITED)
---------- ----------------
OPERATIONS:
Investment income--net................................................. $ 18,604 $ 22,895
Net realized gain on investments....................................... 21,880 214,487
Net unrealized appreciation (depreciation)
on investments for the period ....................................... 87,951 (100,242)
---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 128,435 137,140
---------- ----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (15,937) (22,138)
---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................... 1,330,845 251,315
Dividends reinvested................................................... 15,022 20,909
Cost of shares redeemed................................................ (72,402) (29,794)
---------- ----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 1,273,465 242,430
---------- ----------
TOTAL INCREASE IN NET ASSETS................................... 1,385,963 357,432
NET ASSETS:
Beginning of period.................................................... -- 1,385,963
---------- ----------
End of period (including undistributed investment
income--net of $2,667 and $3,424, respectively).................... $1,385,963 $1,743,395
========== ==========
SHARES SHARES
------- -------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 105,429 17,108
Shares issued for dividends reinvested................................. 1,145 1,401
Shares redeemed.................................................... (5,515) (2,006)
------- -------
NET INCREASE IN SHARES OUTSTANDING................................. 101,059 16,503
======= =======
- ----------
* From October 18, 1994 (commencement of operations) to April 30, 1995.
See independent accountants' review report and 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 period indicated. This
information has been derived from the Portfolio's financial statements.
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995(1) (UNAUDITED)
---------- ----------------
PER SHARE DATA:
Net asset value, beginning of period................................... $12.50 $13.71
------ ------
INVESTMENT OPERATIONS:
Investment income--net................................................. .20 .20
Net realized and unrealized gain on investments........................ 1.18 1.12
------ ------
TOTAL FROM INVESTMENT OPERATIONS................................... 1.38 1.32
------ ------
DISTRIBUTIONS;
Dividends from investment income--net.................................. (.17) (.20)
------ ------
Net asset value, end of period............................................. $13.71 $14.83
====== ======
TOTAL INVESTMENT RETURN(2)................................................. 11.14% 9.63%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2)............................. 1.40% .84%
Ratio of net investment income to average net assets(2)................ 1.60% 1.42%
Decrease reflected in above expense ratios due to
undertaking by the Manager and expense limitation(2)................. 4.28% 1.71%
Portfolio Turnover Rate(2)............................................. 94.33% 171.69%
Net Assets, end of period (000's Omitted).............................. $1,386 $1,743
- ----------
(1) From October 18, 1994 (commencement of operations) to April 30, 1995.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and currently offers three portfolios,
including the Dreyfus Income Portfolio (the "Portfolio"). Premier Mutual
Fund Services, Inc. (the "Distributor") acts as the distributor of the
Portfolio's shares, which are sold to the public without a sales load.
The Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc.,
a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of
which is Boston Institutional Group, Inc. The Dreyfus Corporation
("Manager") serves as the Portfolio's investment adviser. The Manager is
a direct subsidiary of Mellon Bank, N.A.
As of October 31, 1995, Major Trading Corporation, a subsidiary of
Mellon Bank Investments Corporation, held 82,161 shares of Common Stock
of the Portfolio. Mellon Bank Investments Corporation is a subsidiary of
Mellon Bank.
The Fund accounts separately for the assets, liabilities and
operations of each portfolio. Expenses directly attributable to each
portfolio are charged to that portfolio's operations; expenses which are
applicable to all portfolios are allocated among them.
(A) PORTFOLIO VALUATION: Investments in securities (including
options and financial futures) are valued at the last sales price on the
securities exchange on which such securities are primarily traded or at
the last sales price on the national securities market. Securities not
listed on an exchange or the national securities market, or securities
for which there were no transactions, are valued at the average of the
most recent bid and asked prices, except for open short positions, where
the asked price is used for valuation purposes. Bid price is used when
no asked price is available. Securities for which there are no such
valuations are valued at fair value as determined in good faith under
the direction of the Board of Directors. Investments denominated in
foreign currencies are translated to U.S. dollars at the prevailing
rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on a trade date basis. Realized
gain and loss from securities transactions are recorded on the
identified cost basis. Dividend income is recognized on the ex-dividend
date and interest income, including, where applicable, amortization of
discount on investments, is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and
paid on a quarterly basis. Dividends from net realized capital gain are
normally declared and paid annually, but the Portfolio may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that net
realized capital gain can be offset by capital loss carryovers, if any,
it is the policy of the Portfolio not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Portfolio to
continue to qualify as a regulated investment company, if such
qualification is in the best interests of its shareholders, by complying
with the applicable provisions of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .75 of 1%
of the average daily value of the Portfolio's net assets and is payable
monthly. The Agreement provides for an expense reimbursement from the
Manager should the Portfolio's aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the Portfolio.
The most stringent state expense limitation applicable to the Portfolio
presently requires reimbursement of expenses in any full fiscal year
that such expenses (exclusive of 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
December 31, 1995, 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 average
daily value of the Portfolio's net assets. The expense reimbursement,
pursuant to the undertakings and expense limitation, amounted to $27,644
for the six months ended October 31, 1995.
The undertaking may be modified by the Manager from time to time,
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 for distributing the Portfolio's shares and
(b) pay the Manager, Dreyfus Service Corporation or any affiliate of
either of them (collectively "Dreyfus") for advertising and marketing
relating to the Portfolio and servicing shareholder accounts, at an
aggregate annual rate of .50 of 1% of the value of the Portfolio's
average daily net assets. Each of the Distributor and Dreyfus could pay
Service Agents (a securities dealer, financial institution, or other
industry professional) a fee in respect of the Portfolio's shares owned
by shareholders with whom the Service Agent had a servicing relationship
or for whom the Service Agent is the dealer or holder of record. Each of
the Distributor and Dreyfus 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 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.
(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 six months ended October 31, 1995, the
Portfolio was charged $2,033 pursuant to the Shareholder Services Plan.
(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 six months ended
October 31, 1995 amounted to $2,950,009 and $2,692,189, respectively.
At October 31, 1995, accumulated net unrealized depreciation on
investments was $12,291, consisting of $30,048 gross unrealized
appreciation and $42,339 gross unrealized depreciation.
At October 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Income Portfolio
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INCOME PORTFOLIO
We have reviewed the accompanying statement of assets and
liabilities, including the statement of investments, of Dreyfus Income
Portfolio (one of the Series constituting the Dreyfus Asset Allocation
Fund, Inc.) as of October 31, 1995, and the related statements of
operations and changes in net assets and financial highlights for the
six month period ended October 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, which will be performed for the full year
with the objective of expressing an opinion regarding the financial
statements and financial highlights taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements and financial
highlights referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights for the period from October 18, 1994 (commencement of
operations) to April 30, 1995 and in our report dated June 2, 1995, we
expressed an unqualified opinion on such statement of changes in net
assets and financial highlights.
Ernst & Young LLP signature
New York, New York
December 1, 1995
Dreyfus Lion Logo
DREYFUS ASSET ALLOCATION FUND, INC.
DREYFUS INCOME PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 553SA9510
Dreyfus Logo
Asset Allocation
Fund, Inc.
Dreyfus
Income Portfolio
Semi-Annual Report
October 31, 1995
