LETTER TO SHAREHOLDERS
Dear Shareholder:
The Total Return 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
The Total Return Portfolio of Dreyfus Asset Allocation Fund provided
a total return of 6.08% for the six months ended October 31, 1995.* As
you know, the Fund divides its assets between common stocks and fixed
income securities. The Portfolio's performance may be compared to the
total return for the same period of 10.27% for the Customized Blended
Index, which, like the Portfolio, is composed of a weighting of common
stocks, Treasury obligations and cash.** The return for the S&P 500
Composite Stock Price Index, which is composed entirely of stocks, was
14.44%.***
The bond component of the Portfolio did well during the period,
reflecting a strong bond market. It should be noted that the bond
position was liquidated late in the period as management believed it
likely that conflicts between Congress and the administration could make
for disorderly markets. Also, it is likely much of the easy money has
been made at the long end of the market, and future profits in long bond
positions could be harder to come by in the future.
In the common stock portion of the portfolio several significant
changes were made as we took a less defensive view of the economy and
its future prospects, reflecting the Fed's turn toward easing rates in
July. As a consequence, we added a significant position in automobile
stocks including both Ford Motor and General Motors, and took profits in
most of our food, beverage and toiletry positions including such names
as Coca Cola, CPC International, Heinz and Gillette. The Fund actually
increased its exposure to the consumer sector but the new focus was on
entertainment, with new positions in Viacom Cl.A & Cl.B and Seagram,
which now has a major stake in entertainment and much expanded positions
in Disney (Walt) and Time Warner.
In the technology field, where there have been such dramatic stock
price increases in recent months, we took profits in a number of
holdings, such as Intel and Texas Instruments, cutting the technology
position by half. We opportunistically increased our positions in
Motorola and DSC Communications on price weakness. We think the long-
term outlook for communications-related technology is excellent.
The energy sector has been profitable for the Fund. We kept most of
our major investments in this area, which includes Texaco, Amerada Hess,
Mobil and Schlumberger, and we like the sector's longer-term prospects.
Finance stocks, in our opinion, became fairly high priced.
Accordingly, we took some profits in that category. For much the same
reasons, we sold a number of health industry stocks, also taking
profits.
In keeping with our increasing exposure to the potential growth of
the U.S. economy, the holdings in chemical stocks, such as duPont (E.I.)
de Nemours and Monsanto, were increased, and we added to the railroad
investments by increasing Burlington Northern Sante Fe and buying Union
Pacific. It should be noted that all these companies are in the midst
of restructuring, with management endeavoring to provide value for
shareholders.
Not all these changes have been profitable, as indicated by the fact
that the yearly total return was less than that of the Blended Index.
Investments in General Motors and Ford Motor have yet to run a profit.
Home Depot and Wal-Mart Stores in the Retail Trade sector show paper
losses to date. In the industrial area, Browning-Ferris Industries,
Crown Cork & Seal and Cooper Industries had unrealized losses at the end
of October.
Your investment in this Portfolio is very much appreciated. We will
continue to exert our best efforts to help you reach your investment
goals.
Sincerely,
Signature
Ernest G. Wiggins
Portfolio Manager
November 22, 1995
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 Intermediate Treasury Index and
the Bank Rate Monitor Index of money market returns, and is
weighted to the benchmark percentages.
***SOURCE: LIPPER ANALYTICAL SERVICES, Inc.- The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
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<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF INVESTMENTS OCTOBER 31, 1995 (UNAUDITED)
COMMON STOCKS--63.0% SHARES VALUE
--------------------------
<S> <C> <C>
CONSUMER DURABLES--5.4% Ford Motor....................... 55,000 $ 1,581,250
General Motors................... 40,000 1,750,000
-----------
3,331,250
-----------
CONSUMER NON-DURABLES--2.4% Seagram.......................... 40,000 1,440,000
-----------
CONSUMER SERVICES--8.8% Disney (Walt).................... 35,000 2,016,875
Time Warner...................... 45,000 1,642,500
Viacom, Cl. A.................... 30,000 (a) 1,492,500
Viacom, Cl. B.................... 5,000 (a) 250,000
-----------
5,401,875
-----------
ELECTRONIC TECHNOLOGY--3.2% DSC Communications............... 26,500 (a) 980,500
Motorola......................... 15,000 984,375
-----------
1,964,875
-----------
ENERGY MINERALS--7.1% Amerada Hess..................... 36,966 1,668,091
Mobil............................ 10,000 1,007,500
Texaco........................... 25,000 1,703,125
-----------
4,378,716
-----------
FINANCE--2.4% American International Group..... 10,000 843,750
Citicorp......................... 10,000 648,750
-----------
1,492,500
-----------
HEALTH SERVICES--.8% Columbia/HCA Healthcare.......... 10,000 491,250
-----------
INDUSTRIAL SERVICES--5.8% Baker Hughes..................... 30,000 588,750
Browning-Ferris Industries....... 30,000 873,750
Schlumberger..................... 20,000 1,245,000
WMX Technologies................. 30,000 843,750
-----------
3,551,250
-----------
NON-ENERGY MINERALS--.8% Aluminum Co. of America.......... 10,000 510,000
-----------
PROCESS INDUSTRIES--11.5% Crown Cork & Seal................ 50,000 (a) 1,743,750
duPont (E.I.) deNemours.......... 35,000 2,183,125
Grace (W.R.)..................... 17,986 1,002,719
International Paper.............. 15,000 555,000
Monsanto......................... 15,000 1,571,250
-----------
7,055,844
-----------
PRODUCER MANUFACTURING--6.2% Allied Signal.................... 30,000 1,275,000
Cooper Industries................ 31,748 1,071,495
Deere & Co....................... 4,000 357,500
Dresser Industries............... 20,000 415,000
Xerox............................ 5,000 648,750
-----------
3,767,745
-----------
RETAIL TRADE--3.9% Home Depot....................... 35,000 $ 1,303,750
Wal-Mart Stores.................. 50,000 1,081,250
-----------
2,385,000
-----------
TRANSPORTATION--4.7% Burlington Northern Santa Fe..... 15,000 1,258,125
Union Pacific.................... 25,000 1,634,375
-----------
2,892,500
-----------
TOTAL COMMON STOCKS
(cost $39,719,206)............. $38,662,805
===========
PRINCIPAL
U.S. TREASURY NOTES--36.6% AMOUNT
-------------
5-5/8%, 6/30/97
(cost $22,386,782)............. $22,432,000 $22,432,000
===========
TOTAL INVESTMENTS (cost $62,105,988)....................................... 99.6% $61,094,805
====== ===========
CASH AND RECEIVABLES (NET)................................................. .4% $ 249,202
====== ===========
NET ASSETS..................... .................................... 100.0% $61,344,007
====== ===========
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 Total Return Portfolio
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995 (UNAUDITED)
ASSETS:
Investments in securities, at value
(cost $62,105,988)--see statement.................................... $61,094,805
Dividends and interest receivable...................................... 450,431
Prepaid expenses....................................................... 64,372
-----------
61,609,608
LIABILITIES:
Due to The Dreyfus Corporation......................................... $ 56,279
Due to Distributor..................................................... 13,146
Due to Custodian....................................................... 126,830
Payable for Common Stock redeemed...................................... 6,625
Accrued expenses....................................................... 62,721 265,601
-------- -----------
NET ASSETS ............................................................... $61,344,007
===========
REPRESENTED BY:
Paid-in capital........................................................ $53,066,762
Accumulated undistributed investment income--net....................... 1,278,236
Accumulated undistributed net realized gain on investments............. 8,010,192
Accumulated net unrealized (depreciation) on investments--Note 3....... (1,011,183)
-----------
NET ASSETS at value applicable to 4,186,140 outstanding shares of
Common Stock, equivalent to $14.65 per share
(100 million shares of $.001 par value authorized)..................... $61,344,007
===========
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
INVESTMENT INCOME:
INCOME:
Interest........................................................... $ 670,948
Cash dividends (net of $6,482 foreign taxes withheld at source).... 415,315
----------
TOTAL INCOME................................................... $1,086,263
EXPENSES:
Management fee-Note 2(a)........................................... 232,886
Shareholder servicing costs-Note 2(b,c)............................ 219,454
Prospectus and shareholders' reports-Note 2(b)..................... 27,388
Professional fees.................................................. 16,419
Registration fees.................................................. 15,591
Directors' fees and expenses--Note 2(d)............................ 9,363
Custodian fees..................................................... 6,391
Miscellaneous...................................................... 10,908
----------
538,400
Less-reduction in management fee due to
undertakings-Note 2(a)......................................... 150,143
----------
TOTAL EXPENSES............................................. 388,257
----------
INVESTMENT INCOME-NET...................................... 698,006
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................... $ 8,308,474
Net unrealized (depreciation) on investments........................... (5,523,859)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............ 2,784,615
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $3,482,621
==========
See independent accountants' review report and notes to financial statements.
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1995
1995 (UNAUDITED)
---------- ----------------
OPERATIONS:
Investment income--net................................................. $ 1,532,118 $ 698,006
Net realized gain (loss) on investments................................ (299,354) 8,308,474
Net unrealized appreciation (depreciation)
on investments for the period....................................... 5,745,320 (5,523,859)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,978,084 3,482,621
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (1,414,222) --
Net realized gain on investments..................................... (193,729) --
----------- -----------
TOTAL DIVIDENDS.................................................. (1,607,951) --
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 19,578,479 15,749,321
Dividends reinvested................................................. 1,551,632 --
Cost of shares redeemed.............................................. (20,923,382) (14,527,375)
----------- -----------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........... 206,729 1,221,946
----------- -----------
TOTAL INCREASE IN NET ASSETS................................. 5,576,862 4,704,567
NET ASSETS:
Beginning of period.................................................. 51,062,578 56,639,440
----------- -----------
End of period (including undistributed investment income--net
of $580,230 and $1,278,236, respectively).......................... $56,639,440 $61,344,007
=========== ===========
SHARES SHARES
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 1,522,416 1,073,105
Shares issued for dividends reinvested............................... 123,439 --
Shares redeemed...................................................... (1,633,975) (987,929)
----------- -----------
NET INCREASE IN SHARES OUTSTANDING............................... 11,880 85,176
=========== ===========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of Common Stock outstanding, total investment return, ratios to
average net assets and other supplemental data for each period
indicated. This information has been derived from the Portfolio's
financial statements.
YEAR ENDED APRIL 30, SIX MONTHS ENDED
-------------------- OCTOBER 31, 1995
PER SHARE DATA: 1994(1) 1995 (UNAUDITED)
------- ------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $12.50 $12.49 $13.81
------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net................................................. .24 .39 .16
Net realized and unrealized gain (loss) on investments................. (.11) 1.35 .68
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................................... .13 1.74 .84
------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net................................... (.13) (.37) --
Dividends from net realized gain on investments........................ (.01) (.05) --
------ ------ ------
TOTAL DISTRIBUTIONS................................................ (.14) (.42) --
------ ------ ------
Net asset value, end of period......................................... $12.49 $13.81 $14.65
====== ====== ======
TOTAL INVESTMENT RETURN.................................................... .99%(2) 14.22% 6.08%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................ .16%(2) .67% .63%(2)
Ratio of net investment income to average net assets................... 2.48%(2) 3.00% 1.13%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager.......................................... 1.58%(2) 1.27% .24%(2)
Portfolio Turnover Rate................................................ -- 160.11% 193.35%(2)
Net Assets, end of period (000's Omitted).............................. $51,063 $56,639 $61,344
- ------------
(1) From July 1, 1993 (commencement of operations) to April 30, 1994.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS ASSET ALLOCATION FUND, INC., Dreyfus Total Return Portfolio
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Asset Allocation Fund, Inc. (the "Fund") 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"). 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.
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, 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.
The Portfolio has an unused capital loss carryover of approximately
$243,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to April 30,
1995. If not applied, the carryover expires in fiscal 2003.
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 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 reduction in management fee, pursuant to the
undertakings, amounted to $150,143 for the six months ended October 31,
1995.
The undertaking maybe 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 was 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 $102,626 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 $77,629 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 $119,555,677 and $115,858,586, respectively.
At October 31, 1995, accumulated net unrealized depreciation on
investments was $1,011,183, consisting of $1,234,505 gross unrealized
appreciation and $2,245,688 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 Total Return Portfolio
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS TOTAL RETURN PORTFOLIO
We have reviewed the accompanying statement of assets and
liabilities, including the statement of investments, of Dreyfus Total
Return 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 for the year
ended April 30, 1995 and financial highlights for each of the two years
in the period ended 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 TOTAL RETURN 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. 550SA9510
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Asset Allocation
Fund, Inc.
Dreyfus Total
Return Portfolio
Semi-Annual Report
October 31, 1995
