DREYFUS APPRECIATION FUND INC, 497, 1995-08-01

DREYFUS APPRECIATION FUND INC
497, 1995-08-01

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DREYFUS APPRECIATION FUND, INC.
Cross-Reference Sheet Pursuant to Rule 497(e)

Items in
Part A of
Form N-1A Caption Page
_________ _______ ____

1 Cover Page Cover

2 Synopsis 3

3 Condensed Financial Information 3

4 General Description of Registrant 4, 18

5 Management of the Fund 8

5(a) Management's Discussion of Fund's Performance *

6 Capital Stock and Other Securities 18

7 Purchase of Securities Being Offered 9

8 Redemption or Repurchase 14

9 Pending Legal Proceedings *

Items in
Part B of
Form N-1A
---------

10 Cover Page Cover

11 Table of Contents Cover

12 General Information and History B-1, B-22

13 Investment Objectives and Policies B-2

14 Management of the Fund B-5

15 Control Persons and Principal B-9
Holders of Securities

16 Investment Advisory and Other B-9
Services

_____________________________________

NOTE: * Omitted since answer is negative or inapplicable.

DREYFUS APPRECIATION FUND, INC.
Cross-Reference Sheet Pursuant to Rule 497(e) (continued)

Items in
Part B of
Form N-1A Caption Page
_________ _______ _____

17 Brokerage Allocation B-20

18 Capital Stock and Other Securities B-22

19 Purchase, Redemption and Pricing B-11, B-13
of Securities Being Offered B-18

20 Tax Status *

21 Underwriters B-1, B-11

22 Calculations of Performance Data B-21

23 Financial Statements B-23

Items in
Part C of
Form N-1A
_________

24 Financial Statements and Exhibits C-1

25 Persons Controlled by or Under C-3
Common Control with Registrant

26 Number of Holders of Securities C-3

27 Indemnification C-3

28 Business and Other Connections of C-4
Investment Adviser

29 Principal Underwriters C-13

30 Location of Accounts and Records C-16

31 Management Services C-16

32 Undertakings C-16

_____________________________________

NOTE: * Omitted since answer is negative or inapplicable.

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PROSPECTUS MAY 1, 1995
AS REVISED, AUGUST 1, 1995

DREYFUS APPRECIATION FUND, INC.
-----------------------------------------------------------------------------
DREYFUS APPRECIATION FUND, INC. (THE "FUND") IS AN OPEN-END,
DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND. ITS
PRIMARY GOAL IS TO PROVIDE YOU WITH LONG-TERM CAPITAL GROWTH CONSISTENT WITH
THE PRESERVATION OF CAPITAL. THE FUND INVESTS PRIMARILY IN THE COMMON STOCKS
OF DOMESTIC AND FOREIGN ISSUERS. CURRENT INCOME IS A SECONDARY GOAL.

YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY. YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.

THE DREYFUS CORPORATION ("DREYFUS") SERVES AS THE FUND'S INVESTMENT
ADVISER. FAYEZ SAROFIM & CO. ("SAROFIM") SERVES AS THE FUND'S SUB-INVESTMENT
ADVISER AND PROVIDES DAY-TO-DAY MANAGEMENT OF THE FUND'S PORTFOLIO.

THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1995, WHICH MAY
BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS
IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO TIME.
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TABLE OF CONTENTS
Page

Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 3
Description of the Fund........................... 4
Management of the Fund............................ 8
How to Buy Fund Shares............................ 9
Shareholder Services.............................. 11
How to Redeem Fund Shares......................... 14
Shareholder Services Plan......................... 16
Dividends, Distributions and Taxes................ 17
Performance Information........................... 18
General Information............................... 18

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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(This Page Intentionally Left Blank)
Page 2
<TABLE>
<CAPTION>

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C> <C> <C> <C>
Management Fees........................................................................... .55%
Other Expenses............................................................................ .39%
Total Fund Operating Expenses............................................................. .94%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $10 $30 $52 $115

</TABLE>
-----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
------------------------------------------------------------------------------

The purpose of the foregoing table is to assist you in understanding
the various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table has been restated to reflect
the Fund's termination of its Rule 12b-1 plan and the adoption of a
Shareholder Services Plan. You can purchase Fund shares without charge
directly from the Fund's distributor; you may be charged a nominal fee if you
effect transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund," "How to Buy Fund Shares"
and "Shareholder Services Plan."

CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
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 Fund's financial statements.
<TABLE>
<CAPTION>

Year Ended December 31,
-----------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year $6.41 $8.51 $9.67 $ 9.03 $10.28 $12.20 $10.95 $14.67 $15.15 $14.92
------ ------ ----- ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net(1). .08(2) .07(2) .08(2) .15 .18 .23 .21 .17 .24 .28
Net realized and unrealized
gain (loss) on investments(2) 2.15 1.21 .38 1.35 2.60 (.46) 3.96 .52 (.14) .26
------ ------ ----- ------ ------ ------ ------- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.23 1.28 .46 1.50 2.78 (.23) 4.17 .69 .10 .54
------ ------ ----- ------ ------ ------ ------- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net (.12) (.02) (.14) (.17) (.17) (.24) (.20) (.13) (.24) (.28)
Excess dividends from investment
income-net................................ -- -- -- -- -- -- -- -- (.03) --
Dividends from net realized gain
on investments............................ (.01) (.10) (.96) (.08) (.69) (.78) (.25) (.08) (.03) (.01)
Excess dividends from net realized
gain on investments....................... -- -- -- -- -- -- -- -- (.03) --
------ ------ ------ ------ ------ ------ ------- ------ ------ ------
TOTAL DISTRIBUTIONS....................... (.13) (.12) (1.10) (.25) (.86) (1.02) (.45) (.21) (.33) (.29)
------ ------ ------ ------ ------ ------ ------- ------ ------ ------
Net asset value, end of year $8.51 $9.67 $9.03 $10.28 $12.20 $10.95 $14.67 $15.15 $14.92 $15.17
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
TOTAL INVESTMENT RETURN..................... 35.30% 15.03% 4.59% 16.61% 27.20% (1.83%) 38.43% 4.62% .71% 3.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.51%(3) 1.50%(3) 1.63% 1.74%(3) 1.18% 1.24% 1.30% 1.14% 1.07% .96%
Ratio of net investment income
to average net assets..................... 1.15% .65% .65% 1.41% 1.38% 2.21% 1.69% 1.46% 1.66% 1.86%
Portfolio Turnover Rate................... 198.19% 183.27% 178.79% 136.56% 130.36% 179.03% 12.89% 2.84% 9.65% 6.58%
Net Assets, end of year (000's omitted) $5,398 $27,378 $39,479 $40,836 $45,672 $40,398 $80,947 $207,627 $237,018 $233,459
----------------
(1) Per share data for the fiscal year from 1985 to 1991 has been restated to reflect a 100%
stock dividend at the close of business on March 9, 1992.
(2) Based on average number of shares outstanding at each month end.
(3) Net of expenses reimbursed.
</TABLE>

Page 3
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVES _ The Fund's primary goal is to provide you with
long-term capital growth consistent with the preservation of capital. Current
income is a secondary goal. The Fund's investment objectives cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares.
There can be no assurance that the Fund's investment objectives will be
achieved.
MANAGEMENT POLICIES _ During periods which the Fund's management judges to
be of market strength, the Fund acts aggressively to increase shareholders'
capital by investing principally in common stocks of domestic and foreign
issuers, common stocks with warrants attached and debt securities of foreign
governments. The Fund will seek investment opportunities in generally larger
capitalization companies (those with market capitalizations exceeding $500
million) which Sarofim believes have the potential to experience above average
and predictable earnings growth. The Fund also will be alert to those
foreign and domestic issuers which it considers undervalued by the stock
market in terms of current earnings, assets or growth prospects. These
companies will include those that management believes have new or innovative
products, services or processes which can enhance prospects for growth in
future earnings. Other than in periods of anticipated market weakness, the
Fund will invest at least 80% of its net assets in common stocks. In periods
of market weakness, the Fund may adopt a temporary defensive posture to
preserve shareholders' capital by investing the Fund's assets in U.S.
Government securities, certificates of deposit, time deposits, bankers'
acceptances and other short-term debt obligations issued by domestic banks,
foreign subsidiaries of domestic banks, foreign branches of domestic banks,
and domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions, or investment grade corporate
bonds. When market conditions warrant, all of the Fund's assets can be so
invested.
The Fund may invest up to 10% of the value of its assets in
securities of foreign governments and foreign companies which are not
publicly traded in the United States. By investing in foreign securities, the
Fund seeks to further its objective of capital growth.
The Fund may invest up to 2% of its net assets in warrants to
purchase securities in which the Fund may invest. Warrants acquired by the
Fund in units or attached to securities shall not be included in this 2%
restriction.
Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities include U.S. Treasury securities, which differ
in their interest rates, maturities and times of issuance. Some obligations
issued or guaranteed by U.S. Government agencies and instrumentalities, for
example, Government National Mortgage Association pass-through certificates,
are supported by the full faith and credit of the U.S. Treasury; others, such
as those of the Federal Home Loan Banks, by the right of the issuer to borrow
from the U.S. Treasury; others, such as those issued by the Federal National
Mortgage Association, by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others,
such as those issued by the Student Loan Marketing Association, only by the
credit of the agency or instrumentality. These securities bear fixed,
floating or variable rates of interest. Principal and interest may fluctuate
based on generally recognized reference rates or the relationship of rates.
While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies and instrumentalities, no assurance can be
given that it will always do so since it is not so obligated by law. The Fund
will invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.
The Fund may enter into repurchase agreements, which involve the
acquisition by the Fund of an underlying debt instrument, subject to an
obligation of the seller to repurchase, and the Fund to resell, the
instrument at a fixed price usually not more than one week after its
purchase. Certain costs may be
Page 4
incurred by the Fund in connection with the sale of securities if the seller
does not repurchase them in accordance with the repurchase agreement. In
addition, if bankruptcy proceedings are commenced with respect to the seller
of the securities, realization on the securities by the Fund may be delayed
or limited.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Fund will not benefit from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the full amount of
the instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
INVESTMENT TECHNIQUES
In connection with its investment objectives and policies, the Fund
may employ, among others, the following investment techniques which may
involve certain risks.
COVERED CALL OPTIONS _ To earn additional income on its investment
securities, the Fund may write covered call option contracts on securities it
owns to the extent of 20% of the value of its net assets at the time such
option contracts are written. A call option gives the purchaser of the option
the right to buy, and obligates the writer to sell, the underlying security
at the exercise price at any time during the option period. A covered call
option sold by the Fund, which is a call option with respect to which the
Fund owns the underlying security, exposes the Fund during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or to possible continued holding of a
security which might otherwise have been sold to protect against depreciation
in the market price of the security.
FOREIGN CURRENCY TRANSACTIONS _ The Fund may engage in currency exchange
transactions to protect against uncertainty in the level of future exchange
rates in connection with hedging and other non-speculative strategies
involving either specific settlement transactions or portfolio positions. The
Fund will conduct its currency exchange transactions either on a spot (i.e.,
cash) basis at the rate prevailing in the currency exchange market, or
through entering into forward contracts to purchase or sell currencies. A
forward currency exchange contract involves an obligation to purchase or sell
a specific currency at a future date, which must be more than two days from
the date of the contract, at a price set at the time of the contract.
Transaction hedging is the purchase or sale of forward currency with respect
to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities. Position
hedging is the sale of forward currency with respect to portfolio security
positions denominated or quoted in the currency. These contracts are entered
into in the interbank market conducted directly between currency traders
(typically commercial banks or other financial institutions) and their
customers.
LENDING PORTFOLIO SECURITIES _ From time to time, the Fund may lend its
portfolio securities to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. Such loans may
not exceed 33 1/3% of the value of the Fund's total assets. In connection
with such loans, the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit issued by domestic
financial institutions which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
The Fund can increase its income through the investment of such collateral.
The Fund continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned security, and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
Page 5
BORROWING MONEY _ As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940. However,
the Fund currently intends to borrow money only for temporary or emergency
(not leveraging) purposes, in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
ILLIQUID SECURITIES _ The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objectives. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, and certain options traded
in the over-the-counter market and securities used to cover such options. As
to these securities, the Fund is subject to a risk that should the Fund
desire to sell them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of the Fund's net assets could
be adversely affected.
CERTAIN FUNDAMENTAL POLICIES _ The Fund may (i) borrow money to the extent
permitted under the Investment Company Act of 1940, which currently limits
borrowing to no more than 331/3% of the value of the Fund's total assets;
(ii) invest up to 5% of its total assets in the obligations of any issuer,
except that up to 25% of the value of the Fund's total assets may be
invested, and securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities may be purchased, without regard to any such
limitation; and (iii) invest up to 25% of its total assets in the securities
of issuers in a single industry, provided that, when the Fund has adopted a
temporary defensive posture, there shall be no such limitation on investments
in securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Notwithstanding any of the foregoing policies, the Fund
may invest all or substantially all of its assets in an investment company
with substantially the same investment objectives as the Fund. This paragraph
describes fundamental policies that cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940) of
the Fund's outstanding voting shares. See "Investment Objectives and
Management Policies _ Investment Restrictions" in the Fund's Statement of
Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES _ The Fund may (i) purchase
securities of any company having less than three years' continuous operation
(including operations of any predecessors) if such purchase does not cause
the value of its investments in all such companies to exceed 5% of the value
of its total assets; (ii) pledge, hypothecate, mortgage or otherwise encumber
its assets, but only to secure permitted borrowings; and (iii) invest up to
15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities. See "Investment Objectives and Management Policies _ Investment
Restrictions" in the Fund's Statement of Additional Information.
RISK FACTORS
INVESTING IN FOREIGN SECURITIES _ In making foreign investments, the Fund
will give appropriate consideration to the following factors among others.
Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign issuers
are less liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States. The issuers of some of these securities, such as
foreign bank obligations, may be subject to less stringent or different
regulations than are U.S. issuers. In addition, there may be less publicly
available information about a non-U.S. issuer, and non-U.S. issuers are not
generally subject to uniform accounting and financial reporting standards,
practices and requirements comparable to those applicable to U.S. issuers.
Page 6
Because stock certificates and other evidences of ownership of such
securities usually are held outside the United States, the Fund will be
subject to additional risks which include possible adverse political and
economic developments, possible seizure or nationalization of foreign
deposits and possible adoption of governmental restrictions which might
adversely affect the payment of principal, interest and dividends on the
foreign securities or might restrict the payment of principal, interest and
dividends to investors located outside the country of the issuer, whether
from currency blockage or otherwise. Custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. Some currency exchange costs may be
incurred when the Fund changes investments from one country to another.
Furthermore, some of these securities may be subject to brokerage
taxes levied by foreign governments, which have the effect of increasing the
cost of such investment and reducing the realized gain or increasing the
realized loss on such securities at the time of sale. Income received by the
Fund from sources within foreign countries may be reduced by withholding or
other taxes imposed by such countries. Tax conventions between certain
countries and the United States, however, may reduce or eliminate such taxes.
All such taxes paid by the Fund will reduce its net income available for
distribution to shareholders.
FOREIGN CURRENCY EXCHANGE _ Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by
the forces of supply and demand in the foreign exchange markets and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors, as seen from an
international perspective. Currency exchange rates also can be affected
unpredictably by intervention by U.S. or foreign governments or central banks
or the failure to intervene or by currency controls or political developments
in the U.S. or abroad.
The foreign currency market offers less protection against defaults
in the forward trading of currencies than is available when trading in
currencies occurs on an exchange. Since a forward currency contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits or force the Fund to cover its
commitments for purchase or resale, if any, at the current market price.
OTHER INVESTMENT CONSIDERATIONS _ The Fund's net asset value per share is
not fixed, and should be expected to fluctuate.
The Fund invests for long-term growth rather than short-term profits;
however, a limited amount of short-term trading can be expected in order to
maintain a flexible portfolio strategy. In addition, the possible need to
realize cash for redemption of Fund shares may make it necessary to sell
securities even though such sales would not otherwise be desirable from an
investment standpoint. Consequently, portfolio turnover may vary from year to
year, as well as within a year. Higher portfolio turnover rates are likely to
result in comparatively greater brokerage commissions. Moreover, when
extraordinary market conditions prevail, investment strategy may shift
rapidly, in which case higher turnover rates can be expected. The amount of
portfolio activity will not be a limiting factor when making portfolio
decisions. Under normal market conditions, the portfolio turnover rate
generally will be less than 100%. See "Portfolio Transactions" in the
Statement of Additional Information.
Investment decisions for the Fund are made independently from those
of other investment companies or accounts advised by Dreyfus or Sarofim.
However, if such other investment companies or accounts are prepared to
invest in, or desire to dispose of, securities of the type in which the Fund
invests at the same time as the Fund, available investments or opportunities
for sales will be allocated equitably to each. In some cases, this procedure
may adversely affect the size of the position obtained for or disposed of by
the Fund or the price paid or received by the Fund.
Page 7
MANAGEMENT OF THE FUND

INVESTMENT ADVISER _ Dreyfus, located at 200 Park Avenue, New York, New York
10166, was formed in 1947 and serves as the Fund's investment adviser.
Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of June 30,
1995, Dreyfus managed or administered approximately $76 billion in assets for
more than 1.8 million investor accounts nationwide.

Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including Dreyfus, Mellon managed more than $200 billion in
assets as of March 31, 1995, including approximately $72 billion in mutual
fund assets. As of March 31, 1995, Mellon, through various subsidiaries,
provided non-investment services, such as custodial or administration
services, for more than $680 billion in assets, including approximately $67
billion in mutual fund assets.

Dreyfus supervises and assists in the overall management of the
Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors in accordance with
Maryland law.
Under the Investment Advisory Agreement, the Fund has agreed to pay
Dreyfus an annual fee, payable monthly, as set forth below:
<TABLE>
<CAPTION>

For the year ended December 31, 1994, the Fund paid Dreyfus a monthly
advisory fee at the effective annual rate of .35 of 1% of the value of the
Fund's average daily net assets.
SUB-INVESTMENT ADVISER _ Sarofim, a registered investment adviser located at
Two Houston Center, Suite 2907, Houston, Texas 77010, was formed in 1958 and
serves as the Fund's sub-investment adviser. As of December 30, 1994, Sarofim
managed approximately $12.2 billion in assets for three other registered
investment companies and numerous separate discretionary accounts.
Sarofim, subject to the supervision and approval of Dreyfus, provides
investment advisory assistance and the day-to-day management of the Fund's
portfolio, as well as investment research and statistical information, under
a Sub-Investment Advisory Agreement with the Fund, subject to the overall
authority of the Fund's Board of Directors in accordance with Maryland law.
Under the Sub-Investment Advisory Agreement, the Fund has agreed to
pay Sarofim an annual fee, payable monthly, as set forth below:
<TABLE>
<CAPTION>

ANNUAL FEE AS A PERCENTAGE OF
TOTAL ASSETS AVERAGE DAILY NET ASSETS
------------ -----------------------------
<S> <C>
0 to $25 million.................................... .11 of 1%
$25 million to $75 million.......................... .18 of 1%
$75 million to $200 million......................... .22 of 1%
$200 million to $300 million........................ .26 of 1%
$300 million or more................................ .275 of 1%
</TABLE>
Page 8
For the year ended December 31, 1994, the Fund paid Sarofim a monthly
sub-advisory fee at the effective annual rate of .20 of 1% of the Fund's
average daily net assets.
The Fund's primary portfolio manager is Fayez Sarofim. He has held
that position since December 27, 1990. Mr. Sarofim founded Fayez Sarofim &
Co. in 1958. The Fund's other portfolio managers are identified in the Fund's
Statement of Additional Information. Dreyfus and Sarofim also provide
research services for the Fund as well as other funds advised by Dreyfus or
Sarofim, respectively, through a professional staff of portfolio managers and
securities analysts.

EXPENSES _ From time to time, Dreyfus and/or Sarofim may waive receipt of
their fees and/or voluntarily assume certain expenses of the Fund, which
would have the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors at the time such amounts are waived or assumed,
as the case may be. The Fund will not pay Dreyfus and/or Sarofim at a later
time for any amounts which may be waived, nor will the Fund reimburse Dreyfus
and/or Sarofim for any amounts which may be assumed.

DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT_The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's Custodian. The
Shareholder Services Group, Inc., a subsidiary of First Data Corporation,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer
and Dividend Disbursing Agent (the "Transfer Agent").
HOW TO BUY FUND SHARES

Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through certain
financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals, such as investment
advisers, accountants and estate planning firms (collectively, "Service
Agents") that have entered into service agreements with the Distributor.
Stock certificates are issued only upon your written request. No certificates
are issued for fractional shares. The Fund reserves the right to reject any
purchase order.

The minimum initial investment is $2,500, or $1,000 if you are a
client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at least
$100. The initial investment must be accompanied by the Fund's Account
Application. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries, directors of Dreyfus, Board members of a fund
advised by Dreyfus, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of Dreyfus or any of its
affiliates or subsidiaries who elect to have a portion of their pay directly
deposited into their Fund account, the minimum initial investment is $50. The
Fund reserves the right to offer Fund shares without regard to minimum
purchase requirements to employees participating in certain qualified or
non-qualified employee benefit plans or other programs where contributions or
account information can be transmitted in a manner and form acceptable to the
Fund. The Fund reserves the right to vary further the initial and subsequent
investment minimum requirements at any time. In addition, Fund shares are
offered without regard to the minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege
or Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step Program. These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You should
be aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.

Page 9
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege, described below. Checks should be made payable to
"The Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts,
to "The Dreyfus Trust Company, Custodian." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to The
Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. For
Dreyfus retirement plan accounts, both initial and subsequent investments
should be sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Neither initial nor subsequent
investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900051906/Dreyfus
Appreciation Fund, Inc., for purchase of Fund shares in your name. The wire
must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account registratio
n and dealer number, if applicable. If your initial purchase of Fund shares
is by wire, please call 1-800-645-6561 after completing your wire payment to
obtain your Fund account number. Please include your Fund account number on
the Fund's Account Application and promptly mail the Account Application to
the Fund, as no redemptions will be permitted until the Account Application
is received. You may obtain further information about remitting funds in this
manner from your bank. All payments should be made in U.S. dollars and, to
avoid fees and delays, should be drawn only on U.S. banks. A charge will be
imposed if any check used for investment in your account does not clear. The
Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.

Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."

The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where (i)
the employers or affiliated employers maintaining such plans or programs have
a minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds one million dollars. All
present holdings of shares of funds in the Dreyfus Family of Funds by such
employee benefit plans or programs will be aggregated to determine the fee
payable with respect to each purchase of Fund shares. The Distributor
reserves the right to cease paying these fees at any time. The Distributor
will pay such fees from its own funds, other than amounts received from the
Fund, including past profits or any other source available to it.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent or other agent. Net asset value per share is determined as of
the close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day the New York Stock Exchange is open
for business. For purposes of determining net asset value per share, options
will be valued 15 minutes after the close of trading on the floor of the New
York Stock Exchange. Net asset value per share is computed by dividing the
value of
Page 10
the Fund's net assets (i.e., the value of its assets less liabilities) by the
total number of shares outstanding. The Fund's investments are valued based
on market value or, where market quotations are not readily available, based
on fair value as determined in good faith by the Fund's Board of Directors.
For further information regarding the methods employed in valuing the Fund's
investments, see "Determination of Net Asset Value" in the Fund's Statement
of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application
or have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one of
these documents and your Fund account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be so designated. The Fund may modify or terminate this Privilege at any
time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES

FUND EXCHANGES _ You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, you should consult your Service Agent or
call 1-800-645-6561 to determine if it is available and whether any
conditions are imposed on its use.

To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account, or by a separate signed Shareholder Services
Form, also available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund Shares _ Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made: Telephone Exchange Privilege, Wire
Redemption Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER
Privilege, and the dividend/capital gain distribution option (except for
Dreyfus Dividend Sweep) selected by the investor.

Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased
Page 11
with a sales load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestment of dividends or
distributions paid with respect to the foregoing categories of shares.
To qualify, at the time of your exchange you must notify the Transfer Agent
or your Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in connection
with exchanges, although the Fund reserves the right, upon not less than
60 days' written notice, to charge shareholders a nominal fee in accordance
with rules promulgated by the Securities and Exchange Commission. The Fund
reserves the right to reject any exchange request in whole or in part. The
availability of Fund Exchanges may be modified or terminated at any time upon
notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE _ Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of the Fund, in shares of other funds in the
Dreyfus Family of Funds of which you are currently an investor. The amount
you designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. See "Shareholder Services" in the Statement of
Additional Information. The right to exercise this Privilege may be modified
or canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
The Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. The exchange of shares of one fund for shares of
another is treated for Federal income tax purposes as a sale of the shares
given in exchange by the shareholder and, therefore, an exchanging
shareholder may realize a taxable gain or loss. For more information
concerning this Privilege and the funds in the Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain a Dreyfus Auto-Exchang
e Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark _ Dreyfus-Automatic Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus
retirement plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box
6427, Providence, Rhode Island 02940-6427, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.

DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE _ Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments
Page 12
as you elect. To enroll in Dreyfus Government Direct Deposit, you must file
with the Transfer Agent a completed Direct Deposit Sign-Up Form for each type
of payment that you desire to include in this Privilege. The appropriate form
may be obtained by calling 1-800-654-6561. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time to
terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon 30
days' notice to you.

DREYFUS PAYROLL SAVINGS PLAN _ Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the Automated Clearing House system at each
pay period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. Your
employer must complete the reverse side of the form and return it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may change the amount of purchase or cancel the authorization only by
written notification to your employer. It is the sole responsibility of your
employer, not the Distributor, Dreyfus, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus Payroll Savings
Plan. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.

DREYFUS DIVIDEND OPTIONS _ Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the purchased shares. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACH permits you to transfer electronically on the payment date
dividends or dividends and capital gain distributions, if any, from the Fund
to a designated bank account. Only an account maintained at a financial
institution which is an Automated Clearing House member may be so designated.
Banks may charge a fee for this service.

For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or
cancellation of these privileges is effective three business days following
receipt. These privileges are available only for existing accounts and may
not be used to open new accounts. Minimum subsequent investments do not apply
for Dreyfus Dividend Sweep. The Fund may modify or terminate these privileges
at any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for these privileges.

AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.

DREYFUS STEP PROGRAM _ Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC Asset Builder,
Page 13
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan.
To establish a Dreyfus Step Program account, you must supply the necessary
information on the Fund's Account Application and file the required
authorization form(s) with the Transfer Agent. For more information concerning
this Program, or to request the necessary authorization form(s), please call
toll free 1-800-782-6620. You may terminate your participation in this
Program at any time by discontinuing your participation in Dreyfus-AUTOMATIC
Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll
Savings Plan, as the case may be, as provided under the terms of such
Privilege(s). The Fund may modify or terminate this Program at any time.
Investors who wish to purchase Fund shares through Dreyfus Step Program in
conjunction with a Dreyfus-sponsored retirement plan may do so only for
IRAs, SEP-IRAs and IRA "Rollover Accounts."

RETIREMENT PLANS _ The Fund offers a variety of pension and profit-sharing
plans, including Keogh Plans, IRAs, SEP-IRAs and IRA "Rollover Accounts,"
401(k) Salary Reduction Plans and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566; for
IRAs and IRA "Rollover Accounts," please call 1-800-645-6561; for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-7880.

HOW TO REDEEM FUND SHARES
GENERAL _ You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents
may charge their clients a nominal fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending upon the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE
OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE DREYFUS TELETRANSFER
PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME
ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.

PROCEDURES _ You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, the Wire Redemption Privilege, the
Telephone Redemption Privilege, the Dreyfus TELETRANSFER Privilege, or, if
you are a client of a Selected Dealer, through the Selected Dealer. Other
redemption procedures may be in effect for clients of certain Service Agents.
The Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities.

Page 14
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Service Agent, and reasonably believed by the Transfer
Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Fund nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement
plan accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427,
Providence, Rhode Island 02940-6427. Redemption requests may be delivered in
person only to a Dreyfus Financial Center. THESE REQUESTS WILL BE FORWARDED
TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location
of the nearest Dreyfus Financial Center, please call one of the telephone
numbers listed under "General Information." Redemption requests must be
signed by each shareholder, including each owner of a joint account, and each
signature must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
If you have a question with respect to signature-guarantees, please call one
of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day)made out to the owners of record and mailed to your address.
Redemption proceeds of less than $1,000 will be paid automatically by check.
Holders of jointly registered Fund or bank accounts may have redemption
proceeds of not more than $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-800-221-4060 or, if you are
calling from overseas, call 1-401-455-3306. The Fund reserves the right to
refuse any redemption request, including requests made shortly after a change
of address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's Statement of Additional Information sets forth
instructions for transmitting redemption requests by wire. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
Page 15
TELEPHONE REDEMPTION PRIVILEGE _ You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which the certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE _ You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. Shares held under Keogh Plans, IRAs or other retirement
plans, and shares issued in certificate form, are not eligible for this
Privilege.
REDEMPTION THROUGH A SELECTED DEALER _ If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by
the Transfer Agent by the close of trading on the floor of the New York Stock
Exchange on a business day, the redemption request will be effective on that
day. If a redemption request is received by the Transfer Agent after the
close of trading on the floor of the New York Stock Exchange, the redemption
request will be effective on the next business day. It is the responsibility
of the Selected Dealer to transmit a request so that it is received in a
timely manner. The proceeds of the redemption are credited to your account
with the Selected Dealer.

SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan, pursuant to which
it reimburses (a) the Distributor for payments made for servicing shareholder
accounts ("Servicing") and (b) Dreyfus, Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus, and any affiliate of either of them for
payments made for Servicing, at an aggregate annual rate of up to .20 of 1%
of the value of the Fund's average daily net assets. Each of the Distributor
and Dreyfus or its affiliates may pay one or more Service Agents a fee in
respect of the Fund's shares owned by shareholders with whom the Service
Agent has a Servicing relationship or for whom the Service Agent is the
dealer or holder of record. The schedule of such fees and the basis upon
which such fees will be paid shall be determined from time to time by the
Fund's Board. If a Fund shareholder ceases to be a client of a Service Agent,
but continues to hold Fund shares, Dreyfus or its affiliates will be
permitted to act as a Service Agent in respect of such Fund shareholder and
receive payments under the Service Plan for Servicing.

Page 16
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net investment income and
distributes net realized securities gains, if any, once a year, but it may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
in all events in a manner consistent with the provisions of the Investment
Company Act of 1940. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been utilized
or have expired. You may choose whether to receive dividends and
distributions in cash or to reinvest in additional Fund shares at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income whether or not reinvested. Depending upon the composition
of the Fund's income, all or a portion of the dividends derived from net
investment income may qualify for the dividends received deduction allowable
to qualifying U.S. corporate shareholders. Distributions from net realized
long-term securities gains of the Fund will be taxable to U.S. shareholders
as long-term capital gains, regardless of how long shareholders have held
their Fund shares and whether such distributions are received in cash or
reinvested in Fund shares. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Dividends and distributions may be subject to state and local
taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions and redemption proceeds may be
subject to backup withholding, as described below, unless the foreign
investor certifies his non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund qualified for the
fiscal year ended December 31, 1994 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify
Page 17
so long as such qualification is in the best interests of its shareholders.
Such qualification relieves the Fund of any liability for Federal income tax
to the extent its earnings are distributed in accordance with applicable
provisions of the Code. The Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance will be calculated on the
basis of average annual total return. Advertisements also may include
performance calculated on the basis of total return.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., the Dow Jones Industrial Average, Standard &
Poor's 500 Composite Stock Price Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on July 30, 1980, and
commenced operations on January 18, 1984. On March 1, 1993, the Fund's name
was changed from General Aggressive Growth Fund, Inc. The Fund is authorized
to issue 100 million shares of Common Stock, par value $.01 per share. Each
share has one vote.
Unless otherwise required by the Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may no longer consider each year
the election of Directors or the appointment of auditors. However, pursuant
to the Fund's By-Laws, the holders of at least 10% of the shares outstanding
and entitled to vote may require the Fund to hold a special meeting of
shareholders for purposes of removing a Director from office and the holders
of at least 25% of such shares may require the Fund to hold a special meeting
of shareholders for any other purpose. Fund shareholders may remove a
Director by the affirmative vote of a majority of the Fund's outstanding
voting shares. In addition, the Board of Directors will call a meeting of
shareholders for the purpose of electing Directors if, at any time, less than
a majority of the Directors then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Page 18
While there is no current intention to do so, the Fund may invest all
of its assets in the securities of a single open-end management investment
company with substantially the same investment objectives, fundamental
policies and investment restrictions as the Fund.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free,
1-800-645-6561. In New York City, call
1-718-895-1206; outside the U.S. and Canada, call 516-794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 19
DREYFUS
Appreciation
Fund, Inc.
(Dreyfus Logo)
Prospectus

Registration Mark

Copy Rights 1995 Dreyfus Service Corporation
141p15080195

DREYFUS APPRECIATION FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1995

AS REVISED, AUGUST 1, 1995

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Appreciation Fund, Inc. (the "Fund"), dated May 1, 1995, as it
may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:

Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452

The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
adviser. Fayez Sarofim & Co. ("Sarofim") serves as the Fund's
sub-investment adviser. Sarofim provides day-to-day management of the
Fund's portfolio, subject to the supervision of Dreyfus. Dreyfus and
Sarofim are referred to collectively as the "Advisers."

Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.

TABLE OF CONTENTS
Page

Investment Objectives and Management Policies . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-5
Investment Advisory Agreements. . . . . . . . . . . . . . . B-9
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-11
Shareholder Services Plan . . . . . . . . . . . . . . . . . B-12
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-13
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-15
Determination of Net Asset Value. . . . . . . . . . . . . . B-18
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-18
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-20
Performance Information . . . . . . . . . . . . . . . . . . B-21
Information About the Fund. . . . . . . . . . . . . . . . . B-22
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . B-22
Financial Statements. . . . . . . . . . . . . . . . . . . . B-23
Report of Independent Auditors. . . . . . . . . . . . . . . B-33

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."

Repurchase Agreements. The Fund's custodian or subcustodian will have
custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the Fund. In an attempt to reduce the risk of incurring a loss on
a repurchase agreement, the Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of one billion dollars or
primary government securities dealers reporting to the Federal Reserve Bank
of New York, with respect to securities of the type in which the Fund may
invest, and will require that additional securities be deposited with it if
the value of the securities purchased should decrease below resale price.
The Advisers will monitor on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price. The Fund
will consider on an ongoing basis the creditworthiness of the institutions
with which it enters into repurchase agreements.

Illiquid Securities. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not
readily marketable, the Fund will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will a lapse
of time between the Fund's decision to sell any such security and the
registration of the security permitting sale. During any such period, the
price of the securities will be subject to market fluctuations. However,
if a substantial market of qualified institutional buyers develops pursuant
to Rule 144A under the Securities Act of 1933, as amended, for certain of
these securities held by the Fund, the Fund intends to treat such
securities as liquid securities in accordance with procedures approved by
the Fund's Board of Directors. Because it is not possible to predict with
assurance how the market for restricted securities pursuant to Rule 144A
will develop, the Fund's Board of Directors has directed the Advisers to
monitor carefully the Fund's investments in such securities with particular
regard to trading activity, availability of reliable price information and
other relevant information. To the extent that, for a period of time,
qualified institutional buyers cease purchasing restricted securities
pursuant to Rule 144A, the Fund's investing in such securities may have the
effect of increasing the level of illiquidity in the Fund's investments
during such period.

Management Policies. The Fund engages in the following practices in
furtherance of its objectives.

Writing Options. To earn additional income on its portfolio, the
Fund, to a limited extent, may write covered call options on securities
owned by the Fund ("covered options" or "options") and purchase call
options to close option transactions, as described below.

A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security at the exercise price
at any time during the option period, regardless of the market price of the
security. The premium paid to the writer is the consideration for
undertaking the obligations under the option contract. When a covered call
option is written by the Fund, the Fund will make arrangements with its
custodian to segregate the underlying securities until the option either is
exercised or expires or the Fund closes out the option as described below.
A covered call option sold by the Fund exposes the Fund during the term of
the option to possible loss of opportunity to realize appreciation in the
market price of the underlying security or to possible continued holding of
a security which might otherwise have been sold to protect against
depreciation in the market price of the security. To limit this exposure,
the value of the portfolio securities underlying covered call options
written by the Fund will be limited to an amount not in excess of 20% of
the value of the Fund's net assets at the time such options are written.

To close out a position, the Fund may make a "closing purchase
transaction," which involves purchasing a call option on the same security
with the same exercise price and expiration date as the option which it has
previously written on a particular security. The Fund will realize a
profit (or loss) from a closing purchase transaction if the amount paid to
purchase a call option is less (or more) than the amount received from the
sale thereof.

Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral. For
the purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Fund to be the
equivalent of cash. From time to time, the Fund may return to the borrower
and/or a third party which is unaffiliated with the Fund, and which is
acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned. Such loans may
not exceed 33 1/3% of the Fund's total assets.

The Securities and Exchange Commission currently requires that the
following conditions be met whenever portfolio securities are loaned: (1)
the Fund must receive at least 100% cash collateral from the borrower; (2)
the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Fund must be
able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board of Directors must
terminate the loan and regain the right to vote the securities if a
material event adversely affecting the investment occurs. These conditions
may be subject to future modification.

Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 10 as fundamental policies. Fundamental policies cannot
be changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940 (the "Act")) of the Fund's outstanding
voting shares. Investment restrictions numbered 11 through 17 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Directors at any time. The Fund may not:

1. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Fund's total assets may
be invested, and securities issued or guaranteed by the U.S. Government, or
its agencies or instrumentalities may be purchased, without regard to any
such limitation.

2. Hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to
75% of the Fund's total assets.

3. Concentrate its investments in any particular industry or
industries, except that the Fund may invest up to 25% of the value of its
total assets in a single industry, provided that, when the Fund has adopted
a defensive posture, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, time deposits and certificates of deposit (including
those issued by foreign branches of domestic banks), and bankers'
acceptances.

4. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.

5. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs, but the Fund may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.

6. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33 1/3 of the value of the
Fund's total assets). For purposes of this investment restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.

7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33 1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Directors.

8. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.

9. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 5, 6 and 13 may be deemed to give rise to a
senior security.

10. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.

11. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessor) if such
purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its total assets.

12. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.

13. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or forward
commitment basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.

14. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.

15. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 15% of the value of the Fund's net assets would
be so invested.

16. Invest in securities of other investment companies, except to the
extent permitted under the Act.

17. Purchase or retain the securities of any issuer if the officers
or Directors of the Fund or the Advisers who own beneficially more than 1/2
of 1% of the securities of such issuer together own beneficially more than
5% of the securities of such issuers.

As a fundamental policy, the Fund may invest, notwithstanding any
other investment restriction (whether or not fundamental), all of the
Fund's assets in the securities of a single open-end management investment
company with substantially the same investment objectives, fundamental
policies and restrictions as the Fund.

If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.

The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.

MANAGEMENT OF THE FUND

Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.

Directors of the Fund

CLIFFORD L. ALEXANDER, JR., Director. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the
Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
The Dun & Bradstreet Corporation, Equitable Resources, Inc., a
producer and distributor of natural gas and crude petroleum, MCI
Communications Corporation and Mutual of America Life Insurance
Company. He is 61 years old and his address is 400 C Street, N.E.,
Washington, D.C. 20002.

PEGGY C. DAVIS, Director. Shad Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served for
three years as a judge in the courts of New York State; was engaged
for eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. She is 52 years old and her address is c/o
New York University School of Law, 249 Sullivan Street, New York, New
York 10012.

*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus and,
until August 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino also is Chairman of the Board of Directors of Noel Group,
Inc., a venture capital company; a director of The Muscular Dystrophy
Association; HealthPlan Corporation; Belding Heminway Company, Inc., a
manufacturer of industrial threads, specialty yarns, home furnishings
and fabrics; Curtis Industries, Inc., a national distributor of
security products, chemicals and automotive and other hardware;
Simmons Outdoor Corporation, and Staffing Resources, Inc.; and a
trustee of Bucknell University. He is 51 years old and his address is
200 Park Avenue, New York, New York 10166.

ERNEST KAFKA, Director. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. For more
than the past five years, Dr. Kafka has held numerous administrative
positions and has published many articles on subjects in the field of
psychoanalysis. He is 62 years old and his address is 23 East 92nd
Street, New York, New York 10128.

SAUL B. KLAMAN, Director. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist at the Board of Governors of the Federal
Reserve System and on several Presidential Commissions and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. He is 75 years old and his address is 431-B
Dedham Street, The Gables, Newton Center, Massachusetts 02159.

NATHAN LEVENTHAL, Director. President of Lincoln Center for the Performing
Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of New York
City from September 1979 to March 1984 and Commissioner of the
Department of Housing Preservation and Development of New York City
from February 1978 to September 1979. Mr. Leventhal was an associate
and then a member of the New York law firm of Poletti Freidin Prashker
Feldman and Gartner from 1974 to 1978. He was Commissioner of Rent
and Housing Maintenance for New York City from 1972 to 1973. Mr.
Leventhal serves as Chairman of Citizens Union, an organization which
strives to reform and modernize City and State government. He is 52
years old and his address is 70 Lincoln Center Plaza, New York, New
York 10023-6583.

For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.

The Fund typically pays its Directors an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. For the fiscal year
ended December 31, 1994, the aggregate amount of compensation paid to each
Director by the Fund and all other funds in the Dreyfus Family of Funds for
which such person is a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation) were as
follows:

(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
------------ ----------------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>

Clifford L. Alexander, Jr. $4,500 none none $ 73,210 (18)

Peggy C. Davis $4,500 none none $ 61,751 (16)

Joseph S. DiMartino** $5,625 none none $445,000 (94)

Ernest Kafka $4,500 none none $ 61,001 (16)

Saul B. Klaman $4,500 none none $ 61,751 (16)

Nathan Leventhal 4,500 none none $ 61,751 (16)

__________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $209 for all Directors as a group.
** Estimated amounts for the current fiscal year ending December 31,
1995.

</TABLE>

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From December 1991 to
July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as
Vice President and Controller, and later as Senior Vice President,
of The Boston Company Advisors. She is 37 years old.

JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 30 years old.

FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by Dreyfus. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.

ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other
investment companies advised or administered by Dreyfus. From
September 1992 to August 1994, he was an attorney with the Board of
Governors of the Federal Reserve System. He is 30 years old.

JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by
Dreyfus. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 32 years old.

JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From 1984 to July 1994, he was Assistant
Vice President in the Mutual Fund Accounting Department of Dreyfus.
He is 59 years old.

PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and, from January 1990 to January
1992, a mutual fund accountant, for The Boston Company Advisors,
Inc. He is 28 years old.

RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by Dreyfus. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.

The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.

Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's Common Stock outstanding on April 4, 1995.

INVESTMENT ADVISORY AGREEMENTS

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."

Investment Advisory Agreement. Dreyfus supervises investment
management of the Fund's portfolio pursuant to the Investment Advisory
Agreement (the "Advisory Agreement") dated August 24, 1994 between Dreyfus
and the Fund. Prior to December 27, 1990, Dreyfus provided management
services pursuant to a Management Agreement dated November 2, 1981 between
Dreyfus and the Fund. The Advisory Agreement is subject to annual approval
by (i) the Fund's Board of Directors or (ii) vote of a majority (as defined
in the Act) of the Fund's outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's
Directors who are not "interested persons" (as defined in the Act) of the
Fund or Dreyfus, by vote cast in person at a meeting called for the purpose
of voting on such approval. The Board of Directors, including a majority
of the Directors who are not "interested persons" of any party to the
Advisory Agreement, last approved the Advisory Agreement at a meeting held
on September 28, 1994. Shareholders approved the Advisory Agreement on
August 3, 1994. The Advisory Agreement is terminable without penalty, on
60 days' notice, by the Fund's Board of Directors or by vote of the holders
of a majority of the Fund's shares, or, on not less than 90 days' notice,
by Dreyfus. The Advisory Agreement will terminate automatically in the
event of its assignment (as defined in the Act).

The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Daniel C. Maclean, Vice President and General Counsel;
Barbara E. Casey, Vice President-Dreyfus Retirement Services; Diane M. Coffey,
Vice President-Corporate Communications; Elie M. Genadry, Vice President-
Institutional Sales; Henry D. Gottmann, Vice President-Retail Sales and
Service; William F. Glavin, Jr., Vice President-Product Management; Andrew
S. Wasser, Vice President-Information Services; Mark N. Jacobs, Vice
President-Legal and Secretary; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Katherine C. Wickham, Vice President-Human Resources;
Maurice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling and David B. Truman, directors.

Under the Advisory Agreement, the Fund has agreed to pay Dreyfus a
monthly fee at the annual rate set forth in the Fund's Prospectus. The
investment advisory fees paid by the Fund pursuant to the Advisory
Agreement for the fiscal years ended December 31, 1992, 1993 and 1994 were
$483,833, $804,828 and $779,597, respectively.

Dreyfus maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. Dreyfus also may make such advertising and
promotional expenditures using its own resources, as it from time to time
deems appropriate.

Sub-Investment Advisory Agreement. Sarofim provides investment
advisory assistance and day-to-day management of the Fund's portfolio
pursuant to the Sub-Investment Advisory Agreement (the "Sub-Advisory
Agreement") dated December 27, 1990 between Sarofim and the Fund. The
Sub-Advisory Agreement is subject to annual approval by (i) the Fund's
Board of Directors or (ii) vote of a majority (as defined in the Act) of
the Fund's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Directors who are
not "interested persons" (as defined in the Act) of the Fund or Sarofim, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Board of Directors, including a majority of the Directors
who are not "interested persons" of any party to the Sub-Advisory
Agreement, last approved the Sub-Advisory Agreement at a meeting held on
September 28, 1994. Shareholders approved the Sub-Advisory Agreement on
December 27, 1990. The Sub-Advisory Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board of Directors or by vote of
the holders of a majority of the Fund's shares, or, on not less than 90
days' notice, by Sarofim. The Sub-Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the Act).

Under the Sub-Advisory Agreement, the Fund has agreed to pay Sarofim a
monthly fee at the annual rate set forth in the Fund's Prospectus. The
sub-advisory fees paid by the Fund pursuant to the Sub-Advisory Agreement
for the fiscal years ended December 31, 1992, 1993 and 1994 were $243,389,
$479,759 and $457,139, respectively.

The following persons are officers and/or directors of Sarofim: Fayez
S. Sarofim, Chairman of the Board, President and a director; Raye G. White,
Executive Vice President, Secretary, Treasurer and a director; Russell M.
Frankel, Russell B. Hawkins, William K. McGee, Jr., Charles E. Sheedy and
Ralph B. Thomas, Senior Vice Presidents; and Nancy V. Daniel, Frank P. Lee,
James A. Reynolds, III, and William Garwood, Vice Presidents.

Sarofim provides day-to-day management of the Fund's portfolio of
investments in accordance with the stated policies of the Fund, subject to
the supervision of Dreyfus and the approval of the Fund's Board of
Directors. Dreyfus and Sarofim provide the Fund with portfolio managers
who are authorized by the Board of Directors to execute purchases and sales
of securities. The Fund's portfolio managers are Thomas A. Frank, Russell
B. Hawkins, Elaine Rees, Fayez S. Sarofim and Howard Stein. Dreyfus also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as other funds advised by Dreyfus. All purchases and sales are
reported for the Board's review at the meeting subsequent to such
transactions.

All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Advisers. The
expenses borne by the Fund include without limitation: taxes, interest,
loan commitment fees, interest and distributions paid on securities sold
short, brokerage fees and commissions, if any, fees of Directors who are
not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of Dreyfus or Sarofim or their affiliates,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent pricing services,
costs of maintaining corporate existence, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports, and any extraordinary
expenses.

Dreyfus has agreed that if in any fiscal year the aggregate expenses
of the Fund, exclusive of interest, taxes, brokerage and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the advisory fees, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from the payment to be made to Dreyfus under the Advisory Agreement,
or Dreyfus will bear, such excess expense to the extent required by state
law. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.

PURCHASE OF FUND SHARES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."

The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement dated August 24, 1994. The Distributor also acts
as distributor for the other funds in the Dreyfus Family of Funds and for
certain other investment companies. In some states, certain financial
institutions effecting transactions in Fund shares may be required to
register as dealers pursuant to state law.

Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on
any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to
use the Dreyfus TeleTransfer Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same
bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares--Dreyfus TeleTransfer Privilege."

Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.

SHAREHOLDER SERVICES PLAN

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."

Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund reimburses (a) the Distributor
for payments to certain securities dealers, financial institutions (which
may include banks), or other financial industry professionals, such as
investment advisers, accountants and estate planning firms (collectively,
"Service Agents"), for servicing shareholder accounts ("Servicing") and (b)
Dreyfus, Dreyfus Service Corporation and any affiliate of either of them
for Servicing.

A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Directors, and by
the Directors who are not "interested persons" (as defined in the Act) of
the Fund or the Advisers and have no direct or indirect financial interest
in the operation of the Plan or in the related service agreements, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Plan and the related service agreements are subject to
annual approval by such vote of the Directors cast in person at a meeting
called for the purpose of voting on the Plan. The Plan was adopted at a
meeting held on July 19, 1995. The Plan is terminable at any time by vote
of a majority of the Directors who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan or in
any of the related service agreements or by vote of a majority of the
Fund's shares. Any service agreement is terminable without penalty, at any
time, by such vote of the Directors or, upon not more than 60 days' written
notice to the Service Agent, by vote of the holders of a majority of the
Fund's shares, or, upon 15 days' notice, by the Distributor. Each service
agreement will terminate automatically in the event of its assignment (as
defined in the Act).

Prior Service Plans. As of July 31, 1995, the Fund terminated its
then-existing Service Plan that had been in effect from August 24, 1994.
That Service Plan, adopted pursuant to Rule 12b-1 under the Act, provided
that the Fund reimburse (a) the Distributor for payments to Service Agents
for distributing the Fund's Shares and Servicing and (b) Dreyfus, Dreyfus
Service Corporation and any affiliate of either of them for servicing at an
aggregate annual rate of .20 of 1% of the value of the Fund's total assets.
Under such Plan, for the period August 24, 1994 through December 31, 1994,
the Fund paid $161,212, of which $69,709 was payable to Dreyfus as
reimbursement for advertising and marketing and for Servicing, $78,895 was
payable to the Distributor as reimbursement for payments made to Service
Agents and $12,608 was paid for preparing, printing and distributing
prospectuses and statements of additional information and for costs
associated with implementing and operating such plan. As of August 24,
1994, the Fund also terminated its then-existing Service Plan, which
provided for payments to be made to Dreyfus Service Corporation, as the
Fund's distributor prior to such date, for advertising, marketing and
distributing Fund shares at an annual rate of .20 of 1% of the value of the
Fund's total assets. For the period January 1, 1994 through August 23,
1994, the Fund paid $288,510 under such Service Plan, of which $92,536 was
paid for advertising, marketing and servicing the Fund's shares, $157,934
was paid to Service Agents and $38,040 was paid for preparing, printing and
distributing prospectuses and statements of additional information and for
costs associated with implementing and operating such Service Plan.

REDEMPTION OF FUND SHARES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."

Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this Privilege
on the next business day after receipt if the Transfer Agent receives the
redemption request in proper form. Redemption proceeds will be transferred
by Federal Reserve wire only to the commercial bank account specified by
the investor on the Account Application or Shareholder Services Form.
Redemption proceeds, if wired, must be in the amount of $1,000 or more and
will be wired to the investor's account at the bank of record designated in
the investor's file at the Transfer Agent, if the investor's bank is a
member of the Federal Reserve System, or to a correspondent bank if the
investor's bank is not a member. Fees ordinarily are imposed by such bank
and usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.

Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:

Transfer Agent's
Transmittal Code Answer Back Sign

144295 144295 TSSG PREP

Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.

To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."

Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have also selected the Dreyfus TeleTransfer Privilege, any request for
a wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."

Stock Certificates; Signatures. Any certificate representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.

Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests made by each shareholder of record, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the
value of the Fund's net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission and is a fundamental policy of the Fund which may not
be changed without shareholder approval. In the case of requests for
redemption in excess of such amount, the Board of Directors reserves the
right to make payments in whole or in part in securities or other assets of
the Fund in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.

Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.

SHAREHOLDER SERVICES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."

Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:

A. Exchanges for shares of funds that are offered
without a sales load will be made without a sales
load.

B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales
load, and the applicable sales load will be deducted.

C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of any
other funds sold without a sales load.

D. Shares of funds purchased with a sales load, shares
of funds acquired by a previous exchange from shares
purchased with a sales load, and additional shares
acquired through reinvestment of dividends
or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be
exchanged for shares of other funds sold with a sales
load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the
Offered Shares exceeds the maximum sales load that
could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares
were acquired), without giving effect to any reduced
sales loads, the difference will be deducted.

To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.

To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, or a
representative of the investor's Service Agent, and reasonably believed by
the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for
telephone exchanges.

To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.

Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.

Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the Fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.

Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
the Dreyfus Auto-Exchange Privilege may be modified or terminated at any
time upon notice to shareholders.

Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.

Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:

A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares
of other funds that are offered without a sales load.

B. Dividends and distributions paid by a fund which does
not charge a sales load may be invested in shares of
other funds sold with a sales load, and the
applicable sales load will be deducted.

C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of
other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares
exceeds the maximum sales load charged by the fund
from which dividends or distributions are being
swept, without giving effect to any reduced loads the
difference will be deducted.

D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon
redemption of such shares.

Corporate Pension/Profit-Sharing and Personal Retirement Plans. The
Fund makes available to corporations a variety of prototype pension and
profit-sharing plans including a 401(k) Salary Reduction Plan. In
addition, the Fund makes available Keogh Plans, IRAs, including IRAs set up
under a Simplified Employee Pension Plan ("SEP-IRAs") and IRA "Rollover
Accounts," and 403(b)(7) Plans. Plan support services also are available.

Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adoption of such plans.

The entity which acts as custodian for Keogh Plans, 403(b)(7) Plans or
IRAs may charge a fee, payment of which could require the liquidation of
shares. All fees charged are described in the appropriate form.

Shares may be purchased in connection with these plans only by direct
remittance to the entity which acts as custodian. Purchases for these
plans may not be made in advance of receipt of funds.

The minimum initial investment for Corporate Plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs, with more than one participant, is
$2,500, with no minimum on subsequent purchases. The minimum initial
investment for Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7)
Plans, with only one participant, is normally $750, with no minimum on
subsequent purchases. Individuals who open an IRA may also open a
non-working spousal IRA with a minimum investment of $250.

The investor should read the Prototype Retirement Plans and the
appropriate form of Custodial Agreement for further details as to
eligibility, service fees and tax implications, and should consult a tax
adviser.

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."

Valuation of Portfolio Securities. Portfolio securities, including
covered call options written, are valued at the last sale price on the
securities exchange on which such securities are primarily traded or at the
last sale price on the national securities market. Securities not listed
on an exchange or national securities market, or securities in which there
were no transactions, are valued at the average of the most recent bid and
asked prices. Bid price is used when no asked price is available. Market
quotations for foreign securities in foreign currencies are translated into
U.S. dollars at the prevailing rates of exchange. Any securities or other
assets for which recent market quotations are not readily available are
valued at fair value as determined in good faith by the Board of Directors.
Expenses and fees, including the advisory fees, are accrued daily and taken
into account for the purpose of determining the net asset value of Fund
shares.

New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."

Management believes that the Fund qualified as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"),
for the fiscal year ended December 31, 1994 and the Fund intends to
continue to so qualify if such qualification is in the best interests of
its shareholders. As a regulated investment company, the Fund will pay no
Federal income tax on net investment income and net realized securities
gains to the extent that such income and gains are distributed to
shareholders in accordance with applicable provisions of the Code. To
qualify as a regulated investment company, the Fund must distribute at
least 90% of its net income (consisting of net investment income and net
short-term capital gain) to its shareholders, must derive less than 30% of
its annual gross income from gain on the sale of securities held for less
than three months, and must meet certain asset diversification and other
requirements. Accordingly, the Fund may be restricted in the selling of
securities held for less than three months, and in the utilization of
certain of the investment techniques described in the Prospectus. The
Code, however, allows the Fund to net certain offsetting positions, making
it easier for the Fund to satisfy the 30% test. The term "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.

Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of the shares below the
cost of the investment. Such a dividend or distribution would be a return
of investment in an economic sense, although taxable as stated above. In
addition, the Code provides that if a shareholder holds shares of the Fund
for six months or less and has received a capital gain distribution with
respect to such shares, any loss incurred on the sale of such shares will
be treated as long-term capital loss to the extent of the capital gain
distribution received.

Depending upon the composition of the Fund's income, all or a portion
of the dividends from net investment income may qualify for the dividends
received deduction allowable to qualifying U.S. corporate shareholders
("dividends received deduction"). In general, dividend income of the Fund
distributed to its qualifying corporate shareholders will be eligible for
the dividends received deduction only to the extent that (i) the Fund's
income consists of dividends paid by U.S. corporations and (ii) the Fund
would have been entitled to the dividends received deduction with respect
to such dividend income if the Fund were not a regulated investment
company. However, Section 246(c) of the Code provides that if a qualifying
corporate shareholder has disposed of Fund shares not held for more than 45
days and has received a dividend from net investment income with respect to
such shares, the portion designated by the Fund as qualifying for the
dividends received deduction will not be eligible for such shareholder's
dividends received deduction. In addition, the Code provides other
limitations with respect to the ability of a qualifying corporate
shareholder to claim the dividends received deduction in connection with
holding Fund shares.

Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains or losses. However, a portion of any gain or
loss realized from the disposition of foreign currencies (including foreign
currency denominated bank deposits) and non-U.S. dollar denominated
securities (including debt instruments and certain forward contracts and
options) may be treated as ordinary income or loss under Section 988 of the
Code. In addition, all or a portion of any gain realized from the sale or
other disposition of certain market discount bonds will be treated as
ordinary income under Section 1276 of the Code. Finally, all or a portion
of any gain realized from engaging in "conversion transactions" may be
treated as ordinary income under Section 1258 of the Code. "Conversion
transactions" are defined to include certain forward, futures, option and
straddle transactions, transactions marketed or sold to produce capital
gains, or transactions described in Treasury regulations to be issued in
the future.

Under Section 1256 of the Code, any gain or loss the Fund realizes
from certain forward contracts and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or loss.

Gain or loss will arise upon exercise or lapse of such contracts and
options as well as from closing transactions. In addition, any such
contracts or options remaining unexercised at the end of the Fund's taxable
year will be treated as sold for their then fair market value, resulting in
additional gain or loss to the Fund characterized in the manner described
above.

Offsetting positions held by the Fund involving certain foreign
currency forward contracts or options may constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively
traded personal property. The tax treatment of "straddles" is governed by
Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Sections 1256 and 988 of the Code.
As such, all or a portion of any short- or long-term capital gain from
certain "straddle" and/or conversion transactions may be recharacterized to
ordinary income.

If the Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles"
were governed by Section 1256 of the Code. The Fund may make one or more
elections with respect to "mixed straddles." Depending on which election
is made, if any, the results to the Fund may differ. If no election is
made to the extent the "straddle" and conversion transaction rules apply to
positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" rules, short-term capital loss on
"straddle" positions may be recharacterized as long-term capital loss, and
long-term capital gain may be treated as short-term capital gain or
ordinary income.

Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligation could under special tax rules affect the amount, timing and
character of distributions to shareholders by causing the Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could
be required to accrue as income each year a portion of the discount (or
deemed discount) at which such securities were issued and to distribute
such income in order to maintain its qualification as a regulated
investment company and to avoid Federal income and excise taxes. In such
case, the Fund may have to dispose of securities which it might otherwise
have continued to hold in order to generate cash to satisfy these
distribution requirements.

PORTFOLIO TRANSACTIONS

Dreyfus assumes general supervision over placing orders on behalf of
the Fund for the purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in Dreyfus' best
judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most favorable
net price. Subject to this consideration, the brokers selected will
include those that supplement the Advisers' research facilities with
statistical data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of services
required to be performed by the Advisers and the Advisers' fees are not
reduced as a consequence of the receipt of such supplemental information.

Such information may be useful to Dreyfus in serving both the Fund and
other funds which it advises and to Sarofim in serving both the Fund and
the other funds or accounts it advises, and, conversely, supplemental
information obtained by the placement of business of other clients may be
useful to the Advisers in carrying out their obligations to the Fund.
Sales of Fund shares by a broker may be taken into consideration, and
brokers also will be selected because of their ability to handle special
executions such as are involved in large block trades or broad
distributions, provided the primary consideration is met. Large block
trades may, in certain cases, result from two or more funds advised or
administered by Dreyfus being engaged simultaneously in the purchase or
sale of the same security. Certain of the Fund's transactions in
securities of foreign issuers may not benefit from the negotiated
commission rates available to the Fund for transactions in securities of
domestic issuers. When transactions are executed in the over-the-counter
market, the Fund will deal with the primary market makers unless a more
favorable price or execution otherwise is obtainable.

Portfolio turnover may vary from year to year as well as within a
year. The Fund's portfolio turnover rate for the fiscal years ended
December 31, 1993 and 1994 was 9.65% and 6.58%, respectively. In periods
in which extraordinary market conditions prevail, the Advisers will not be
deterred from changing investment strategy as rapidly as needed, in which
case higher turnover rates can be anticipated which would result in greater
brokerage expenses. The overall reasonableness of brokerage commissions
paid is evaluated by Dreyfus based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.

In connection with its portfolio securities transactions for the
fiscal years ended December 31, 1992, 1993 and 1994, the Fund paid
brokerage commissions of $141,010, $85,640 and $54,450, respectively, none
of which was paid to the Distributor. The above figures for brokerage
commissions paid do not include gross spreads and concessions on principal
transactions, which, where determinable, amounted to $106,759, $14,800 and
$ 0 in fiscal 1992, 1993 and 1994, respectively, none of which was paid to
the Distributor.

PERFORMANCE INFORMATION

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."

The Fund's average annual total return for the 1, 5 and 10 year
periods ended December 31, 1994 was 3.62%, 8.21% and 13.61%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.

The Fund's total return for the period January 18, 1984 to December
31, 1994 was 307.48%. Total return is calculated by subtracting the amount of
the Fund's net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect
to the reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.

From time to time, advertising materials for the Fund may refer to the
fact that the Fund currently looks for successful companies with
established brands that are expanding into the world marketplace. From
time to time, advertising materials for the Fund may also refer to the
clients of Fayez Sarofim & Co., such as large corporations, states,
universities and other institutions and organizations. From time to time,
advertising materials for the Fund also may refer to Morningstar ratings
and related analyses supporting such ratings.

INFORMATION ABOUT THE FUND

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."

Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.

The Fund sends annual and semi-annual financial statements to all its
shareholders.

On March 1, 1993, the Fund changed its name from General Aggressive
Growth Fund, Inc. to Dreyfus Appreciation Fund, Inc.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS

The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.

Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of Common Stock being sold pursuant to the Fund's Prospectus.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.

AVERAGE ANNUAL TOTAL RETURNS

ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED FROM INCEPTION (1/18/84)
DECEMBER 31, 1994 DECEMBER 31, 1994 DECEMBER 31, 1994 TO DECEMBER 31, 1994
----------------- ----------------- ----------------- ------------------------
<S> <C> <C> <C>
3.62% 8.21% 13.61% 13.68%
</TABLE>

Past performance is not predictive of future performance. Share price and
investment return fluctuate and share price may be more or less than original
cost upon redemption.
The above graph compares a $10,000 investment made in Dreyfus Appreciation
Fund on 1/18/84 (Inception Date) to a $10,000 investment made in the Standard
& Poor's 500 Composite Stock Price Index on that date. For comparative
purposes, the value of the Index on 1/31/84 is used as the beginning value on
1/18/84. All dividends and capital gain distributions are reinvested.
The Fund's performance takes into account all applicable fees and expenses.
The Standard & Poor's 500 Composite Stock Price Index is a widely accepted,
unmanaged index of overall stock market performance which does not take into
account charges, fees and other expenses. Further information relating to
Fund performance, including expense reimbursements, if applicable, is
contained in the Condensed Financial Information section of the Prospectus
and elsewhere in this report.

DREYFUS APPRECIATION FUND, INC. DECEMBER 31, 1994

ASSET ALLOCATION

(Ehibit B)

FIVE LARGEST SECTORS
Food, Beverage & Tobacco........................................ 21.4%
Health Care & Related Products.................................. 15.2
Energy.......................................................... 8.9
Aerospace & Electronics......................................... 7.6
Personal Care................................................... 6.5

TEN LARGEST HOLDINGS
Coca-Cola....................................................... 6.6%
Philip Morris Cos............................................... 6.2
General Electric................................................ 4.4
Merck & Co...................................................... 3.1
Ford Motor Ser. A, Cum. Conv., $4.20............................ 3.0
Royal Dutch Petroleum (New York Shares)......................... 2.8
PepsiCo......................................................... 2.7
Johnson & Johnson............................................... 2.7
Procter & Gamble................................................ 2.7
Pfizer.......................................................... 2.6
All percentages shown above are based on Total Net Assets.

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
COMMON STOCKS-93.4% SHARES VALUE
------------ ------------
<S> <C> <C>
AEROSPACE &
ELECTRONICS-7.6% Emerson Electric........................ 45,000 $ 2,812,500
General Electric........................ 200,000 10,200,000
Motorola................................ 80,000 4,630,000
------------
17,642,500
------------
APPAREL & TEXTILES-2.6% NIKE, Cl. B............................. 35,000 2,611,875
Stride Rite............................. 100,000 1,112,500
Warnaco Group, Cl. A......................(a) 130,000 2,242,500
------------
5,966,875
------------
AUTO RELATED-1.1% Chrysler................................ 55,000 2,695,000
------------
BANKING-3.0% Banc One................................ 30,000 761,250
Citicorp................................ 120,000 4,965,000
MBNA.................................... 30,000 701,250
PNC Bank................................ 30,000 633,750
------------
7,061,250
------------
BUSINESS SERVICES-.4% H&R Block............................... 25,000 928,125
------------
CHEMICALS-5.3% Dow Chemical............................ 55,000 3,698,750
Du Pont (E.I.) de Nemours............... 80,000 4,500,000
Rohm & Haas............................. 75,000 4,284,375
------------
12,483,125
------------
ENERGY-8.9% Chevron................................. 75,000 3,346,875
Exxon................................... 75,000 4,556,250
Mobil................................... 70,000 5,897,500
Pennzoil................................ 10,000 441,250
Royal Dutch Petroleum (New York Shares). 60,000 6,450,000
------------
20,691,875
------------
FINANCIAL-3.7% American General........................ 40,000 1,130,000
Federal National Mortgage Association... 50,000 3,643,750
HSBC Holdings, A.D.R.................... 35,000 3,797,500
------------
8,571,250
------------
FOOD, BEVERAGE &
TOBACCO-21.4%. Anheuser-Busch Cos...................... 70,000 3,561,250
Coca-Cola............................... 300,000 15,450,000
General Mills........................... 60,000 3,420,000
Nestle, A.D.R........................... 115,000 5,476,875
PepsiCo................................. 175,000 6,343,750
Philip Morris Cos....................... 250,000 14,375,000
Sara Lee................................ 50,000 1,262,500
------------
49,889,375
------------

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
COMMON STOCKS (CONTINUED) SHARES VALUE
-------------- ------------
HEALTH CARE &
RELATED PRODUCTS-15.2% Abbott Laboratories..................... 100,000 $ 3,262,500
American Home Products.................. 50,000 3,137,500
Amgen...................................(a) 60,000 3,540,000
Johnson & Johnson....................... 115,000 6,296,250
Merck & Co.............................. 190,000 7,243,750
Pfizer.................................. 80,000 6,180,000
Roche Holdings, A.D.R................... 100,000 4,793,750
Schering-Plough......................... 14,000 1,036,000
------------
35,489,750
------------
INDUSTRIAL SERVICES-.6% WMX Technologies........................ 55,000 1,443,750
------------
INSURANCE COMPANIES-.1% Wellpoint Health Networks, Cl. A........(a) 10,000 291,250
------------
LEISURE TIME-2.4% Disney (Walt)........................... 65,000 2,998,125
Eastman Kodak........................... 55,000 2,626,250
------------
5,624,375
------------
MEDIA-2.3% News Corp, A.D.R........................ 120,000 1,875,000
Reader's Digest Association,
Cl. A (non-voting).................. 70,000 3,438,750
------------
5,313,750
------------
MULTI-INDUSTRY-2.6% Corning................................. 40,000 1,195,000
Minnesota Mining & Manufacturing........ 90,000 4,803,750
------------
5,998,750
------------
OFFICE & BUSINESS
EQUIPMENT-2.1% AT&T.................................... 100,000 5,025,000
------------
PAPER & FOREST
PRODUCTS-1.1% Kimberly-Clark.......................... 50,000 2,525,000
------------
PERSONAL CARE-6.5% Gillette................................ 80,000 5,980,000
Procter & Gamble........................ 100,000 6,200,000
Unilever, N.V. (New York Shares)........ 25,000 2,912,500
------------
15,092,500
------------
RETAIL-5.1% American Stores......................... 80,000 2,150,000
May Department Stores................... 50,000 1,687,500
Toys R Us...............................(a) 70,000 2,135,000
Wal-Mart Stores......................... 140,000 2,975,000
Walgreen................................ 70,000 3,062,500
------------
12,010,000
------------
TRANSPORTATION-1.4% Norfolk Southern........................ 55,000 3,334,375
------------
TOTAL COMMON STOCKS
(cost $192,386,121).................. $218,077,875
============

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PREFERRED STOCKS-4.0% SHARES VALUE
-------------- ------------
AUTO RELATED-2.9% Ford Motor Ser. A, Cum. Conv., $4.20.... 75,000 $ 6,900,000
------------
CAPITAL GOODS-.7% Cooper Industries, Cum. Conv., $1.60.... 80,000 1,640,000
------------
MEDIA-.4% News Corp, A.D.R........................ 60,000 832,500
------------
TOTAL PREFERRED STOCKS
(cost $8,226,497)................... $ 9,372,500
============
PRINCIPAL
SHORT-TERM INVESTMENTS-2.6% AMOUNT VALUE
-------------- ------------
U.S. TREASURY BILLS: 5.12%, 1/19/95..........................$ 38,000 $ 37,903
5.15%, 2/2/95........................... 44,000 43,798
5.18%, 3/2/95........................... 904,000 896,195
5.33%, 3/9/95........................... 5,221,000 5,169,209
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,147,105)................... $ 6,147,105
------------
TOTAL INVESTMENTS (cost $206,759,723).......................................... 100.0% $233,597,480
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (.0%) $ (138,739)
====== ============
NET ASSETS..................................................................... 100.0% $233,458,741
====== ============

NOTE TO STATEMENT OF INVESTMENTS;
(a) Non-income producing.

See notes to financial statements.
</TABLE>

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $206,759,723)-see statement..................................... $233,597,480
Cash.................................................................... 312,896
Dividends and interest receivable....................................... 613,561
Receivable for subscriptions to Common Stock............................ 13,441
Prepaid expenses........................................................ 22,114
--------------
234,559,492
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 38,252
Due to Fayez Sarofim & Co............................................... 69,182
Due to Distributor...................................................... 39,067
Payable for Common Stock redeemed....................................... 769,842
Accrued expenses........................................................ 184,408 1,100,751
---------- --------------
NET ASSETS ................................................................ $233,458,741
==============
REPRESENTED BY:
Paid-in capital......................................................... $206,188,901
Accumulated undistriduted investment income-net......................... 48,800
Accumulated undistributed net realized gain on investments.............. 383,283
Accumulated net unrealized appreciation on investments-Note 3........... 26,837,757
--------------
NET ASSETS at value applicable to 15,390,369 shares outstanding
(100 million shares of $.01 par value Common Stock authorized).......... $233,458,741
==============
NET ASSET VALUE, offering and redemption price per share
($233,458,741 / 15,390,369 shares)...................................... $15.17
======

See notes to financial statements.
</TABLE>

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Cash dividends (net of $118,696 foreign taxes withheld at source)..... $6,219,355
Interest.............................................................. 109,164
------------
TOTAL INCOME...................................................... $6,328,519
EXPENSES:
Investment advisory fee-Note 2(a)..................................... 779,597
Sub-investment advisory fee-Note 2(a)................................. 457,139
Shareholder servicing costs-Note 2(b)................................. 705,389
Prospectus and shareholders' reports.................................. 77,042
Professional fees..................................................... 48,949
Registration fees..................................................... 29,491
Custodian fees........................................................ 26,267
Directors' fees and expenses-Note 2(c)................................ 25,209
Miscellaneous......................................................... 7,222
------------
TOTAL EXPENSES.................................................... 2,156,305
-----------
INVESTMENT INCOME-NET............................................. 4,172,214
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,003,334
Net unrealized appreciation on investments.............................. 2,231,801
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 3,235,135
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,407,349
===========

See notes to financial statements.

</TABLE>

DREYFUS APPRECIATION FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 3,871,354 $ 4,172,214
Net realized gain on investments........................................ 464,765 1,003,334
Net unrealized appreciation (depreciation) on investments for the year.. (1,533,728) 2,231,801
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 2,802,391 7,407,349
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.............................................. (4,132,287) (4,152,619)
In excess of investment income-net...................................... (88,267) --
From net realized gain on investments................................... (631,165) (141,615)
In excess of net realized gain on investments........................... (360,964) --
-------------- --------------
TOTAL DIVIDENDS....................................................... (5,212,683) (4,294,234)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 147,154,427 94,909,133
Dividends reinvested.................................................... 4,837,140 3,933,592
Cost of shares redeemed................................................. (120,189,603) (105,515,580)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 31,801,964 (6,672,855)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 29,391,672 (3,559,740)
NET ASSETS:
Beginning of year....................................................... 207,626,809 237,018,481
-------------- --------------
End of year [including distributions in excess of investment income-net;
($88,267) in 1993 and undistributed investment income-net;
$48,800 in 1994]...................................................... $ 237,018,481 $ 233,458,741
============== ==============

SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 10,126,669 6,370,453
Shares issued for dividends reinvested.................................. 330,438 263,004
Shares redeemed......................................................... (8,276,374) (7,125,102)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 2,180,733 (491,645)
============== ==============
See notes to financial statements.
</TABLE>

DREYFUS APPRECIATION FUND, INC.
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 Fund's financial statements.

YEAR ENDED DECEMBER 31,
----------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........................ $12.20 $10.95 $14.67 $15.15 $14.92
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net *................................... .23 .21 .17 .24 .28
Net realized and unrealized gain (loss) on investments * (.46) 3.96 .52 (.14) .26
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS........................ (.23) 4.17 .69 .10 .54
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net *.................... (.24) (.20) (.13) (.24) (.28)
Dividends in excess of investment income-net. - - - (.03) -
Dividends from net realized gain on investments *......... (.78) (.25) (.08) (.03) (.01)
Dividends in excess of net realized gain on investments... - - - (.03) -
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS..................................... (1.02) (.45) (.21) (.33) (.29)
------ ------ ------ ------ ------
Net asset value, end of year.............................. $10.95 $14.67 $15.15 $14.92 $15.17
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN (1.83%) 38.43% 4.62% .71% 3.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................... 1.24% 1.30% 1.14% 1.07% .96%
Ratio of net investment income to average net assets...... 2.21% 1.69% 1.46% 1.66% 1.86%
Portfolio Turnover Rate................................... 179.03% 12.89% 2.84% 9.65% 6.58%
Net Assets, end of year (000's Omitted)...................$40,398 $80,947 $207,627 $237,018 $233,459
-----------------------------------
* Per share data for 1990 and 1991 has been restated to reflect a 100% stock
dividend at the close of business on March 9, 1992.

See notes to financial statements.
</TABLE>

DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. The Dreyfus
Corporation ("Dreyfus") serves as the Fund's investment adviser. Fayez
Sarofim & Co. ("Sarofim") serves as the Fund's sub-investment adviser. Prior
to August 24, 1994, Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, acted as the distributor of the Fund's shares, which are sold to the
public without a sales load. Effective August 24, 1994, Dreyfus became a
direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: Investments in securities 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. Bid price is used when no asked price
is available. Short-term investments are carried at amortized cost, which
approximates value. Investments denominated in foreign currencies are
translated to U.S. dollars at the prevailing rates of exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of discounts 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 Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. This may result in distributions
that are in excess of investment income-net and net realized gain on a fiscal
year basis. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
During the year ended December 31, 1994, the Fund reclassified $117,472
charged from net realized gain on investments in prior years to investment
income-net.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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 APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(A) Fees payable by the Fund pursuant to the provisions of an Investment
Advisory Agreement with Dreyfus and a Sub-Investment
Advisory Agreement with Sarofim (together "Agreements") are payable monthly,
computed on the average daily value of the Fund's net assets at the following
annual rates:
TOTAL NET ASSETS DREYFUS SAROFIM
------------------- ------------- -------------
0 to $25 million...................... .44 of 1% .11 of 1%
$25 up to $75 million................. .37 of 1% .18 of 1%
$75 up to $200 million................ .33 of 1% .22 of 1%
$200 up to $300 million............... .29 of 1% .26 of 1%
In excess of $300 million............. .275 of 1% .275 of 1%
The Investment Advisory Agreement further provides that if in any full
year the aggregate expenses of the Fund excluding
taxes, interest, brokerage commissions and extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over the Fund, the Fund
may deduct from the fee to be paid to Dreyfus, or Dreyfus will bear, such
excess expense to the extent required by state law. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full year that such expenses (exclusive of distribution
expenses and certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. There was no expense reimbursement for the
year ended December 31, 1994.
(B) On August 3, 1994, Fund shareholders approved the adoption of a new
Service Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to
the Plan, effective August 24, 1994, the Fund (a) reimburses the Distributor
for payments to third parties for distributing the Fund's shares and
servicing shareholder accounts and (b) pays Dreyfus, Dreyfus Service
Corporation or any affiliate for advertising and marketing relating to the
Fund and servicing shareholders accounts, at an annual rate of .20 of 1% of
the value of the Fund's average daily net assets. Each of the Distributor and
Dreyfus may pay Service Agents (a securities dealer, financial institution or
other industry professional) a fee in respect of the Fund's shares owned by
shareholders with whom the Service Agent has a servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determine the amounts to be paid to Service Agents to
which it will make payments and the basis on which such payments are made.
The Plan also separately provides for the Fund to bear the costs of
preparing, printing and distributing certain of the Fund's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay Dreyfus or Dreyfus Service Corporation for
payments made to Service Agents, at an annual rate of .20 of 1% of the
average daily net asset value of Fund shares owned by the clients of the
Service Agent.

DREYFUS APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended December 31, 1994, $173,820 was charged to the Fund
pursuant to the Plan and $326,550 was charged pursuant to the prior Service
Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of Dreyfus and/or Dreyfus
Service Corporation. Each director who is not an "affiliated person" receives
an annual fee of $2,500 and an attendance fee of $500 per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended December 31, 1994,
amounted to $14,669,777 and $24,150,005, respectively.
At December 31, 1994, accumulated net unrealized appreciation on
investments was $26,837,757, consisting of $37,861,696 gross unrealized
appreciation and $11,023,939 gross unrealized depreciation.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS APPRECIATION FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS APPRECIATION FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Appreciation Fund, Inc., including the statement of investments, as
of December 31, 1994, and the related statement of operations for the year
then ended, the statement of 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 December 31, 1994 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 Appreciation Fund, Inc. at December 31, 1994, 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 & Young Signature Logo)
New York, New York
January 31, 1995