GENERAL NEW YORK MUNICIPAL BOND FUND INC, 497, 1995-04-03

GENERAL NEW YORK MUNICIPAL BOND FUND INC
497, 1995-04-03

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GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)

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

1 Cover Page Cover

2 Synopsis 3

3 Condensed Financial Information 4

4 General Description of Registrant 5, 26

5 Management of the Fund 15

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

6 Capital Stock and Other Securities 26

7 Purchase of Securities Being Offered 16

8 Redemption or Repurchase 21

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-27

13 Investment Objectives and Policies B-2

14 Management of the Fund B-10

15 Control Persons and Principal B-10
Holders of Securities

16 Investment Advisory and Other B-14
Services

_____________________________________

NOTE: * Omitted since answer is negative or inapplicable.

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)

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

17 Brokerage Allocation B-23

18 Capital Stock and Other Securities B-27

19 Purchase, Redemption and Pricing B-16, 18, 22
of Securities Being Offered

20 Tax Status *

21 Underwriters B-1, 16

22 Calculations of Performance Data B-25

23 Financial Statements B-50

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-11

30 Location of Accounts and Records C-14

31 Management Services C-14

32 Undertakings C-14

_____________________________________

NOTE: * Omitted since answer is negative or inapplicable.

FOR USE BY BANKS ONLY
GENERAL NEW YORK MUNICIPAL BOND
FUND, INC.

Supplement to Prospectus Dated March 1, 1995

All mutual fund shares involve certain investment risks, including the
possible loss of principal.

949/sIST

- -------------------------------------------------------------------------------
PROSPECTUS MARCH 1, 1995
GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
GENERAL NEW YORK MUNICIPAL BOND FUND, INC. (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY. ITS GOAL IS TO
MAXIMIZE CURRENT INCOME EXEMPT FROM FEDERAL, NEW YORK STATE AND NEW YORK CITY
INCOME TAXES TO THE EXTENT CONSISTENT WITH THE PRESERVATION OF CAPITAL.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY IMPOSED BY THE FUND.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO EARN INCOME
ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN PURCHASE OR REDEEM SHARES
BY TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S
PORTFOLIO.
THE FUND BEARS CERTAIN COSTS OF ADVERTISING, ADMINISTRATION AND/OR
DISTRIBUTION PURSUANT TO A PLAN ADOPTED IN ACCORDANCE WITH RULE 12B-1 UNDER
THE INVESTMENT COMPANY ACT OF 1940.
-----------------
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 MARCH 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 666.
-----------------
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.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 3
CONDENSED FINANCIAL INFORMATION................... 4
DESCRIPTION OF THE FUND........................... 5
MANAGEMENT OF THE FUND............................ 15
HOW TO BUY FUND SHARES............................ 16
SHAREHOLDER SERVICES.............................. 18
HOW TO REDEEM FUND SHARES......................... 21
SERVICE PLAN...................................... 23
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 24
PERFORMANCE INFORMATION........................... 25
GENERAL INFORMATION............................... 26
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------

[This Page Intentionally Left Blank]

(Page 2)
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees ........................................................................... .60%
12b-1 Fees(distribution and servicing)..................................................... .20%
Other Expenses............................................................................. .08%
Total Fund Operating Expenses.............................................................. .88%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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: $9 $28 $49 $108
</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 does not reflect
any fee waivers or expense reimbursement arrangements that may be in effect.
Long-term investors could pay more in 12b-1 fees than the economic equivalent
of paying a front-end sales charge. Certain Service Agents (as defined below)
may charge their clients direct fees for effecting transactions in Fund
shares; such fees are not reflected in the foregoing table. See "Management
of the Fund," "How to Buy Fund Shares" and "Service Plan."
(Page 3)

CONDENSED FINANCIAL INFORMATION
The information in the following table for the seven years ended
October 31, 1994 has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of
Additional Information. The information in the following table for the three
fiscal years ended October 31, 1987 was audited by another firm of
independent auditors. Further financial data and related notes are included
in the Statement of Additional Information, available upon request. See
"General Information."
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 OCTOBER 31,
------------------------------------------------------------------------------------------------
PER SHARE DATA: 1985(1)(2) 1986(2) 1987(2) 1988(3) 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.50 $17.39 $18.97 $17.87 $18.48 $18.31 $17.96 $19.24 $19.55 $21.53
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net 1.22 1.19 1.06 1.02 1.03 1.32 1.30 1.24 1.17 1.14
Net realized and unrealized gain
(loss) on investments .89 1.58 (1.10) .61 (.17) (.35) 1.28 .31 2.24 (2.49)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT OPERATIONS 2.11 2.77 (.04) 1.63 .86 .97 2.58 1.55 3.41 (1.35)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income -- net... (1.22) (1.19) (1.06) (1.02) (1.03) (1.32) (1.30) (1.24) (1.16) (1.15)
Dividends from net realized
gain on investments -- -- -- -- -- -- -- -- (.27) (.30)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.22) (1.19) (1.06) (1.02) (1.03) (1.32) (1.30) (1.24) (1.43) (1.45)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $17.39 $18.97 $17.87 $18.48 $18.31 $17.96 $19.24 $19.55 $21.53 $18.73
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 13.80%(4) 16.42% (.32%) 9.27% 4.79% 5.47% 14.83% 8.23% 18.05% (6.59%)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets .21%(4) .46% .89% 1.10% 1.32% .07% .36% .62% .69% .76%
Ratio of net investment income to
average net assets 7.47%(4) 6.44% 5.66% 5.49% 5.60% 7.36% 6.95% 6.32% 5.64% 5.62%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation 2.84%(4) 1.06% .38% .33% .02% 1.14% .69% .39% .22% .12%
Portfolio Turnover Rate 31.55%(5) 37.63% 67.33% 31.50% 26.53% 59.98% 19.32% 43.20% 23.46% 24.56%
Net Assets, end of year
(000's omitted). $13,894 $56,996 $53,440 $46,869 $38,250 $102,603 $209,165 $284,383 $414,136 $307,996
</TABLE>
- -------------------------
(1)From November 19, 1984 (commencement of operations) to October 31, 1985.
(2)For the period indicated, the Fund was advised by The Chase Manhattan Bank,
N.A. ("Chase") and administered by The Dreyfus
Corporation. See "General
Information."
(3)During the period from November 1, 1987 to May 31, 1988, Chase served as
the Fund's investment adviser and The Dreyfus Corporation served as the
Fund's
administrator. Effective June 1, 1988, The Dreyfus Corporation began
serving as the Fund's investment adviser.
(4)Annualized.
(5)Not annualized.
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.
(Page 4)
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE -- The Fund's goal is to maximize current income exempt
from Federal, New York State and New York City income taxes to the extent
consistent with the preservation of capital. To accomplish this goal, the
Fund invests primarily in the debt securities of the State of New York, its
political subdivisions, authorities and corporations, the interest from which
is, in the opinion of bond counsel to the issuer, exempt from Federal, New
York State and New York City income taxes (collectively, "New York Municipal
Obligations"). To the extent acceptable New York Municipal Obligations are at
any time unavailable for investment by the Fund, the Fund will invest
temporarily in other debt securities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal, but not New York
State or New York City, income tax. The Fund's investment objective 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 objective will be
achieved.
MUNICIPAL OBLIGATIONS -- Debt securities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal income tax
("Municipal Obligations") generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that generally
do not carry the pledge of the credit of the issuing municipality, but
generally are guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities.
Municipal Obligations bear fixed, floating or variable rates of interest,
which are determined in some instances by formulas under which the Municipal
Obligation's interest rate will change directly or inversely to changes in
interest rates or an index, or multiples thereof, in many cases subject to a
maximum and a minimum. Certain Municipal Obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related Municipal Obligation and
purchased and sold separately.

MANAGEMENT POLICIES -- It is a fundamental policy of the Fund that it will
invest at least 80% of the value of its net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. At least 65% of the
value of the Fund's net assets (except when maintaining a temporary defensive
position) will be invested in bonds, debentures and other debt instruments.
Under normal circumstances, at least 65% of the value of the Fund's net
assets will be invested in New York Municipal Obligations and the remainder
may be invested in securities that are not New York Municipal Obligations and
therefore may be subject to New York State and New York City income taxes.
See "Risk Factors--Investing in New York Municipal Obligations" below, and
"Dividends, Distributions and Taxes."

At least 65% of the value of the Fund's net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than
Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch"). The
Fund may invest up to 35% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by Moody's
and BBB by S&P and Fitch and as low as the lowest rating assigned by Moody's,
S&P or Fitch. The Fund may invest in short-term Municipal Obligations which
are rated in the two highest rating categories by Moody's, S&P or Fitch. See
"Appendix B" in the Statement of Additional Information.
(Page 5)
Municipal
Obligations rated BBB by S&P or Fitch or Baa by Moody's are considered
investment grade obligations; those rated BBB by S&P and Fitch are regarded
as having an adequate capacity to pay principal and interest, while those
rated Baa by Moody's are considered medium grade obligations which lack
outstanding investment characteristics and have speculative characteristics.
Investments rated Ba or lower by Moody's and BB or lower by S&P and Fitch
ordinarily provide higher yields but involve greater risk because of their
speculative characteristics. The Fund may invest in Municipal Obligations
rated C by Moody's or D by S&P or Fitch, which is such rating organizations'
lowest rating and indicates that the Municipal Obligation is in default and
interest and/or repayment of principal is in arrears. See "Risk Factors_Lower
Rated Bonds" below for a further discussion of certain risks. The Fund also
may invest in securities which, while not rated, are determined by The
Dreyfus Corporation to be of comparable quality to the rated securities in
which the Fund may invest; for purposes of the 65% requirement described in
this paragraph, such unrated securities shall be deemed to have the rating so
determined. The Fund also may invest in Taxable Investments of the quality
described below. The Fund intends to invest less than 35% of the value of its
net assets in Municipal Obligations rated Ba or lower by Moody's and BB or
lower by S&P and Fitch.
The Fund may invest more than 25% of the value of its total assets
in Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security also
would affect the other securities; for example, securities the interest upon
which is paid from revenues of similar types of projects. As a result, the
Fund may be subject to greater risk as compared to a fund that does not
follow this practice.
From time to time, the Fund may invest more than 25% of the value
of its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The Fund may invest
without limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Risk Factors_Other Investment Considerations" below.

The Fund may purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated maturities
in excess of one year, but which permit the holder to demand payment of
principal at any time or at specified intervals. Variable rate demand notes
include master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower. These obligations
permit daily changes in the amount borrowed. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Use of letters of credit or other credit support arrangements will not
adversely affect the tax exempt status of these obligations. Because these
obligations are direct lending arrangements between the lender and borrower,
it is not contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the Fund will meet the quality criteria established
for the purchase of Municipal Obligations. The Dreyfus Corporation, on behalf
of the Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the floating and variable rate demand obligations in the Fund's
portfolio.

The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest
(Page 6)
gives the Fund an undivided interest in the Municipal Obligation in the
proportion that the Fund's participation interest bears to the total
principal amount of the Municipal Obligation. These instruments may have
fixed, floating or variable rates of interest. If the participation interest
is unrated, it will be backed by an irrevocable letter of credit or guarantee
of a bank that the Board of Directors has determined meets the prescribed
quality standards for banks set forth below, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For certain
participation interests, the Fund will have the right to demand payment, on
not more than seven days' notice, for all or any part of the Fund's
participation interest in the Municipal Obligation, plus accrued interest. As
to these instruments, the Fund intends to exercise its right to demand payment
only upon a default under the terms of the Municipal Obligation, as needed to
provide liquidity to meet redemptions, or to maintain or improve the quality
of its investment portfolio.

The Fund may purchase tender option bonds. A tender option bond is
a Municipal Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term tax exempt rates, that has
been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing
or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term exempt rate. The Dreyfus Corporation, on behalf of the Fund, will
consider on an ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligations, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in
payment of principal or interest on the underlying Municipal Obligations and
for other reasons. The Fund will not invest more than 15% of the value of its
net assets in illiquid securities, which could include tender option bonds as
to which it cannot exercise the tender feature on not more than seven days'
notice if there is no secondary market available for these obligations.
The Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, the
Fund obligates a broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by
commitment, therefore, is subject to the ability of the seller to make
payment on demand. The Fund will acquire stand-by commitments solely to
facilitate its portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by commitments if
such action is deemed necessary, thus increasing to a degree the cost of the
underlying Municipal Obligation and similarly decreasing such security's
yield to investors. The Fund also may acquire call options on specific
Municipal Obligations. The Fund generally would purchase these call options
to protect the Fund from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the
Municipal Obligation before maturity. The sale by the Fund of a call option
that it owns on a specific Municipal Obligation could result in the receipt
of taxable income by the Fund.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each case,
payments on the two classes are based on payments received on the underlying
Municipal Obligations. One class has the characteristics of a
(Page 7)
typical auction
rate security, where at specified intervals its interest rate is adjusted,
and ownership changes, based on an auction mechanism. This class's interest
rate generally is expected to be below the coupon rate of the underlying
Municipal Obligations and generally is at a level comparable to that of a
Municipal Obligation of similar quality and having a maturity equal to the
period between interest rate adjustments. The second class bears interest at
a rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this case
inversely to changes in the rate of interest of the first class. If the
interest rate on the first class exceeds the coupon rate of the underlying
Municipal Obligations, its interest rate will exceed the rate paid on the
second class. In no event will the aggregate interest paid with respect to
the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should be
expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by the Fund should
increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund also
may purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a multi-class offering and the interest
rate on certain classes may be subject to a cap or floor.
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 objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, and repurchase agreements providing for settlement in more than seven
days after notice. 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 that the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.
The Fund may invest in zero coupon securities which are debt
securities issued or sold at a discount from their face value which do not
entitle the holder to any periodic payment of interest prior to maturity or a
specified redemption date (or cash payment date). The amount of the discount
varies depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of debt
securities that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interest in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
interest-bearing securities and are likely to respond to a greater degree to
changes in interest rates than interest-bearing securities having similar
maturities and credit qualities. The Fund may invest up to 5% of its assets
in zero coupon bonds which are rated below investment grade. See "Risk
Factors_Lower Rated Bonds" and "Other Investment Considerations" below, and
"Investment Objective and Management Policies_Risk Factors_Lower Rated Bonds"
and "Dividends, Distributions and Taxes" in the Statement of Additional
Information.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in taxable
short-term investments ("Taxable Investments") consisting of: notes of
issuers having, at the time of purchase, a quality rating within the three
highest grades of Moody's, S&P or Fitch; obligations of the U.S. Government,
its agencies or instrumentalities; commercial paper rated not lower than P-2
by Moody's, A-2 by S&P or F-2 by Fitch; certificates of deposit of U.S.
domestic banks, including foreign branches of domestic banks, with assets of
one billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any of
the foregoing. Dividends paid by the Fund that are attributable to income
earned by the Fund from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets
be invested in Taxable Investments. When the Fund has adopted a temporary
defensive position, including when acceptable New York Municipal
(Page 8)
Obligations
are unavailable for investment by the Fund, in excess of 35% of the Fund's
net assets may be invested in securities that are not exempt from New York
State and New York City income taxes. Under normal market conditions, the
Fund anticipates that not more than 5% of the value of its total assets will
be invested in any one category of Taxable Investments. Taxable Investments
are more fully described in the Statement of Additional Information, to which
reference hereby is made.
INVESTMENT TECHNIQUES -- The Fund may employ, among others, the investment
techniques described below. Use of certain of these techniques involves risks
and may give rise to taxable income. Options and futures transactions involve
so-called "derivative securities."
WHEN-ISSUED SECURITIES -- New issues of Municipal Obligations usually are
offered on a when-issued basis, which means that delivery and payment for
such Municipal Obligations ordinarily take place within 45 days after the
date of the commitment to purchase. The payment obligation and the interest
rate that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable, although any gain realized on such
sale would be taxable. The Fund will not accrue income in respect of a
when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made if more than 20% of the value of the
Fund's net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in the Fund's portfolio are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased
on a when-issued basis may expose the Fund to risk because they may experience
such fluctuations prior to their actual delivery. Purchasing Municipal
Obligations on a when-issued basis can involve the additional risk that the
yield available in the market when the delivery takes place actually may be
higher than that obtained in the transaction itself. A segregated account of
the Fund consisting of cash, cash equivalents or U.S. Government securities
or other high quality liquid debt securities at least equal at all times to
the amount of the when-issued commitments will be established and maintained
at the Fund's custodian bank. Purchasing Municipal Obligations on a
when-issued basis when the Fund is fully or almost fully invested may result
in greater potential fluctuation in the value of the Fund's net assets and
its net asset value per share.
FUTURES TRANSACTIONS -- IN GENERAL -- The Fund is not a commodity pool.
However, as a substitute for a comparable market position in the underlying
securities or for hedging purposes, the Fund may engage in futures and
options on futures transactions, as described below.
The Fund's commodities transactions must constitute bona fide
hedging or other permissible transactions pursuant to regulations promulgated
by the Commodity Futures Trading Commission. In addition, the Fund may not
engage in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options, other than for
bona fide hedging transactions, would exceed 5% of the liquidation value of
the Fund's assets, after taking into account unrealized profits and unrealized
losses on such contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%. Pursuant to
regulations and/or published positions of the Securities and Exchange
Commission, the Fund may be required to segregate cash or high quality money
market instruments in connection with its commodities transactions in an
amount generally equal to the value of the underlying commodity. To the
extent the Fund engages in the use of futures and options on futures for
other than bona fide hedging purposes, the Fund may be subject to additional
risk.
Initially, when purchasing or selling futures contracts the Fund
will be required to deposit with its custodian in the broker's name an amount
of cash or cash equivalents up to approximately 10% of the contract amount.
This amount is subject to change by the exchange or board of trade on which
the contract is traded and members of such exchange or board of trade may
impose their own higher require-
(Page 9)
ments. This amount is known as "initial
margin" and is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
position, assuming all contractual obligations have been satisfied.
Subsequent payments, known as "variation margin," to and from the broker will
be made daily as the price of the index or securities underlying the futures
contract fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking-to-market." At
any time prior to the expiration of a futures contract, the Fund may elect to
close the position by taking an opposite position at the then prevailing
price, which will operate to terminate the Fund's existing position in the
contract.
Although the Fund intends to purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be
given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during a single trading
day. Once the daily limit has been reached in a particular contract, no
trades may be made that day at a price beyond the limit or trading may be
suspended for specified periods during the trading day. Futures contract
prices could move to the limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses. If it is
not possible or the Fund determines not to close a futures position in
anticipation of adverse price movements, the Fund will be required to make
daily cash payments of variation margin. In such circumstances, an increase
in the value of the portion of the Fund's portfolio being hedged, if any, may
offset partially or completely losses on the futures contract. However, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide an
offset to losses on the futures contract.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is possible
that the hedge will not be fully effective if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures contrac
ts based on indices, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition of the index.
In an effort to compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if the market does not move as
anticipated when the hedge is established.

Successful use of futures by the Fund also is subject to The
Dreyfus Corporation's ability to predict correctly movements in the direction
of the market or interest rates. For example, if the Fund has hedged against
the possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund will
lose part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.

An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the
market price of the
(Page 10)
futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option
on the futures contract.
Call options sold by the Fund with respect to futures contracts
will be covered by, among other things, entering into a long position in the
same contract at a price no higher than the strike price of the call option,
or by ownership of the instruments underlying, or instruments the prices of
which are expected to move relatively consistently with the instruments
underlying, the futures contract. Put options sold by the Fund with respect
to futures contracts will be covered when, among other things, cash or liquid
securities are placed in a segregated account to fulfill the obligation
undertaken.
The Fund may utilize municipal bond index futures to protect
against changes in the market value of the Municipal Obligations in its
portfolio or which it intends to acquire. Municipal bond index futures
contracts are based on an index of long-term Municipal Obligations. The index
assigns relative values to the Municipal Obligations included in the index,
and fluctuates with changes in the market value of such Municipal
Obligations. The contract is an agreement pursuant to which two parties agree
to take or make delivery of an amount of cash based upon the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index contract was originally written.
The acquisition or sale of a municipal bond index futures contract enables
the Fund to protect its assets from fluctuations in rates on tax exempt
securities without actually buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS -- The Fund may purchase and sell interest rate futures contracts
and options on interest rate futures contracts as a substitute for a
comparable market position or to hedge against adverse movements in
interests.
To the extent the Fund has invested in interest rate futures
contracts or options on interest rate futures contracts as a substitute for a
comparable market position, the Fund will be subject to the investment risks
of having purchased the securities underlying the contract.
The Fund may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may purchase put
options on interest rate futures contracts to hedge its portfolio securities
against the risk of rising interest rates.
If the Fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in its
portfolio and rates decrease instead, the Fund will lose part or all of the
benefit of the increased value of securities which it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices which reflect the decline in interest
rates.
The Fund may sell call options on interest rate futures contracts
to partially hedge against declining prices of its portfolio securities. If
the futures price at expiration of the option is below the exercise price,
the Fund will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in the Fund's
portfolio holdings. The Fund may sell put options on interest rate futures
contracts to hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Fund will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Fund intends to
purchase. If a put or call option sold by the Fund is exercised, the Fund
will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures
positions, the Fund's losses from existing options on futures may, to some
extent, be reduced or increased by changes in the value of its portfolio
securities.
The Fund also may sell options on interest rate futures contracts
as part of closing purchase transactions to terminate its options positions.
No assurance can be given that such closing transactions can be effected or
that there will be a correlation between price movements in the options on
interest rate futures
(Page 11)
and price movements in the Fund's portfolio securities
which are the subject of the hedge. In addition, the Fund's purchase of such
options will be based upon predictions as to anticipated interest rate
trends, which could prove to be inaccurate.
FUTURE DEVELOPMENTS -- The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and
any other derivative investments that are not presently contemplated for use
by the Fund or that may be developed, to the extent such opportunities are
both consistent with the Fund's investment objective and legally permissable
for the Fund. Before entering into such transactions or making any such
investment, the Fund will provide appropriate disclosure in its prospectus.
LENDING PORTFOLIO SECURITIES -- From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 331/3% 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 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 interest 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 institutions with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
BORROWING MONEY -- As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940, as amended.
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.

CERTAIN FUNDAMENTAL POLICIES -- The Fund may (i) borrow money to the extent
permitted under the Investment Company Act of 1940, which currently limits
borrowings to no more than 331/3% of the value of the Fund's total assets;
and (ii) invest up to 25% of its total assets in the securities of issuers in
any single industry, provided that there is no such limitation on investments
in Municipal Obligations and, for temporary defensive purposes, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. 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 Objective and Management Policies_Investment Restrictions" in the
Statement of Additional Information.

CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES -- The Fund may (i) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to the
extent necessary to secure permitted borrowings and (ii) invest up to 15% of
its net assets in repurchase agreements providing for settlement in more than
seven days after notice and in other illiquid securities (which securities
could include participation interests (including municipal lease/purchase
agreements) that are not subject to the demand feature described above, and
floating and variable rate demand obligations as to which the Fund cannot
exercise the related demand feature described above and as to which there is
no secondary market). See "Investment Objective and Management
Policies_Investment Restrictions" in the Statement of Additional Information.

RISK FACTORS
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS -- You should consider carefully
the special risks inherent in the Fund's investment in New York Municipal
Obligations. These risks result from the financial condition of New York
State, certain of its public bodies and municipalities, and New York City. Beg
inning in early 1975, New York State, New York City and other State entities
faced serious financial difficulties which jeopardized the credit standing
and impaired the borrowing abilities of such entities and contributed to high
(Page 12)
interest rates on, and lower market prices for, debt obligations issued by
them. A recurrence of such financial difficulties or a failure of certain
financial recovery programs could result in defaults or declines in the
market values of various New York Municipal Obligations in which the Fund may
invest. If there should be a default or other financial crisis relating to
New York State, New York City, a State or City agency, or a State
municipality, the market value and marketability of outstanding New York
Municipal Obligations in the Fund's portfolio and the interest income to the
Fund could be adversely affected. Moreover, the significant slowdown in the
New York and regional economy in the early 1990s added substantial
uncertainty to estimates of the State's tax revenues, which, in part, caused
the State to overestimate its General Fund tax receipts in the 1992 fiscal
year by $575 million. The 1992 fiscal year was the fourth consecutive year in
which New York State incurred a cash-basis operating deficit in the General
Fund and issued deficit notes. The State's 1993 and 1994 fiscal years,
however, were characterized by national and regional economies that performed
better than projected. After reflecting a 1993 year-end deposit to the refund
reserve account of $671 million, reported 1993 General Fund receipts were $45
million higher than originally projected in April 1992. The State completed
the 1994 fiscal year with an operating surplus in the General Fund of $914
million. In September 1994, however, the State projected a General Fund
operating deficit of $690 million for the 1995 fiscal year. There can be no
assurance that New York will not face substantial potential budget gaps in
future years. In 1990, S&Pand Moody's lowered their ratings of the State's
general obligation debt from AA- to A and from A1 to A, respectively, and
short-term notes, from SP-1+ to SP-1 and from MIG-1 to MIG-2, respectively.
In January 1992, Moody's lowered from A to Baal the ratings on certain
appropriation-backed debt of New York State and its agencies. New York
State's general obligation, State-guaranteed and New York State Local
Government Assistance Corporation bonds continue to be rated A by Moody's. In
addition, in January 1992, S&P lowered from A to A- its ratings of New York
State general obligation bonds and stated that it continued to assess the
ratings outlook as negative. The ratings of various agency debt, State moral
obligations, contractual obligations, lease purchase obligations and State
guarantees also were lowered. In February 1991, Moody's lowered its rating on
New York City's general obligation bonds from A to Baal. The rating changes
reflected the rating agencies' concerns about the financial condition of New
York State and City, the heavy debt load of the State and City, and economic
uncertainties in the region. You should obtain and review a copy of the
Statement of Additional Information which more fully sets forth these and
other risk factors.
LOWER RATED BONDS -- You should carefully consider the relative risks of
investing in the higher yielding (and, therefore, higher risk) debt
securities in which the Fund may invest up to 35% of the value of its net
assets. These are bonds such as those rated Ba by Moody's or BB by S&P or
Fitch or as low as the lowest rating assigned by Moody's, S&P or Fitch. They
generally are not meant for short-term investing and may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term vulnerability
to default than other speculative grade debt, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. Bonds rated BB by Fitch are considered speculative
and the payment of principal and interest may be affected at any time by
adverse economic changes. Bonds rated C by Moody's are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Bonds rated D by S&P are in default and the payment of interest and/or
repayment of principal is in arrears. Bonds rated DDD, DD or D by Fitch are
in actual or imminent default, are extremely speculative and should be valued
on the basis of their ultimate recovery value in liquidation or
reorganization of the issuer; DDD represents the highest potential for
recovery of such bonds; and D represents the lowest potential for recovery.
Such bonds, though high yielding, are characterized by great risk.
(Page 13)
See "Appendix B" in the Statement of Additional Information for a general
description of Moody's, S&P and Fitch ratings of Municipal Obligations. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality
of the Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and, although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of these bonds.
Therefore, although these ratings may be an initial criterion for selection
of portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. The Fund's ability to achieve its investment objective may be m
ore dependent on The Dreyfus Corporation's credit analysis than might be the
case for a fund that invested in higher rated securities. Once the rating of
a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.
The market price and yield of bonds rated Ba or lower by Moody's
and BB or lower by S&P and Fitch are more volatile than those of higher rated
bonds. Factors adversely affecting the market price and yield of these
securities will adversely affect the Fund's net asset value. In addition, the
retail secondary market for these bonds may be less liquid than that of
higher rated bonds; adverse conditions could make it difficult at times for
the Fund to sell certain securities or could result in lower prices than
those used in calculating the Fund's net asset value.
The Fund may invest up to 5% of its total assets in zero coupon
securities and pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds) rated Ba or lower by Moody's and BB or lower by
S&P and Fitch. These securities may be subject to greater fluctuations in
value due to changes in interest rates than interest-bearing securities and
thus may be considered more speculative than comparably rated
interest-bearing securities. See "Other Investment Considerations" below, and
"Investment Objective and Management Policies_Risk Factors_Lower Rated Bonds"
and "Dividends, Distributions and Taxes" in the Statement of Additional
Information.
OTHER INVESTMENT CONSIDERATIONS -- Even though interest-bearing securities
are investments which promise a stable stream of income, the prices of such
securities are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. Certain
securities that may be purchased by the Fund, such as those with interest
rates that fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in interest rates and
can subject the holders thereof to extreme reductions of yield and possibly
loss of principal. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing
entities. The Fund's net asset value generally will not be stable and should
fluctuate based upon changes in the value of the Fund's portfolio securities.
Securities in which the Fund invests may earn a higher level of current
income than certain shorter-term or higher quality securities which generally
have greater liquidity, less market risk and less fluctuation in market
value.
Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to accrue income with respect to
these securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of portfolio
securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for the
leased property.
(Page 14)
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions could be
to increase the cost of the Municipal Obligations available for purchase by
the Fund and thus reduce available yield. Shareholders should consult their
tax advisers concerning the effect of these provisions on an investment in
the Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If any
such proposal were enacted that would reduce the availability of Municipal
Obligations for investment by the Fund so as to adversely affect Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940. A "diversified" investment company is required by the Investment
Company Act of 1940 generally to invest, with respect to 75% of its total
assets, not more than 5% of such assets in the securities of a single issuer.
However, the Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Code, which requires that,
at the end of each quarter of its taxable year, (i) at least 50% of the
market value of the Fund's total assets be invested in cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets, and (ii) not more than 25% of the value of its total
assets be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of the Fund's assets may be inv
ested in the obligations of a limited number of issuers, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company.
Investment decisions for the Fund are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time as
the Fund, available investments or opportunities for sales will be allocated
equitably to each investment company. 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.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of December 31, 1994, The Dreyfus Corporation managed or administered
approximately $70 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation 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. The Fund's primary portfolio manager is Monica
S. Wieboldt. She has held that position since June 1988 and has been employed
by The Dreyfus Corporation since November 1983. The Fund's other portfolio
managers are identified under "Management of the Fund" in the Fund's Statement
of Additional Information. The Dreyfus Corporation also provides research
services for the Fund as well as for other funds advised by The Dreyfus
Corporation through a professional staff of portfolio managers and securities
analysts.
(Page 15)
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 The Dreyfus Corporation, Mellon managed more than
$193 billion in assets as of December 31, 1994, including approximately $70
billion in mutual fund assets. As of December 31, 1994, various subsidiaries
of Mellon provided non-investment services, such as custodial or
administration services, for approximately $654 billion in assets, including
approximately $74 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its 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 The Dreyfus Corporation at a later time for any amounts it may waive,
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume. For the fiscal year ended October 31, 1994, the Fund paid The Dreyfus
Corporation a management fee at the effective annual rate of .48 of 1% of the
value of the Fund's average daily net assets pursuant to an undertaking in
effect.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of these payments to pay Service
Agents in respect of these services.
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 Institutional Administration
Services, Inc., a provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Fund bears certain costs of distributing and servicing Fund
shares in accordance with a plan (the "Service Plan") adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940. See "Annual Fund
Operating Expenses" and "Service Plan."
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"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
You can purchase Fund shares through the Distributor or 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. It is not recommended that the Fund be used
as a vehicle for Keogh, IRA or other qualified retirement plans. 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 The Dreyfus Corporation
or any of its affiliates or subsidiaries, directors of
(Page 16)
The Dreyfus
Corporation, Board members of a fund advised by The Dreyfus Corporation,
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 The Dreyfus Corporation 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 vary further the initial and subsequent investment minimum
requirements at any time.
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." 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. 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#8900052406/General New York
Municipal Bond 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
registration 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. Other purchase procedures may be in effect for
clients of certain Service Agents. 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."
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory
authorities, may charge their clients direct fees for Servicing (as defined
under "Service Plan"). These fees would be in addition to any amounts which
might be received under the Fund's Service Plan. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. You should consult
your Service Agent in this regard. See "Service Plan."
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. 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 and futures
contracts 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 the Fund's net assets (i.e., the
(Page 17)
value of its assets
less liabilities) by the total number of shares outstanding. The Fund's
investments are valued by an independent pricing service approved by the
Board of Directors and are valued at fair value as determined by the pricing
service. The pricing service's procedures are reviewed under the general
supervision of the Board of Directors. For further information regarding the
methods employed in valuing Fund 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
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard. In addition, use of the privileges noted below may require that the
proper forms and information be filed with and processed by the Transfer
Agent.
FUND EXCHANGES -- You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by The Dreyfus
Corporation, 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 or your Service Agent acting on your
behalf 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 to 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, Check Redemption 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.

(Page 18)
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 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 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
cancelled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by writing 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-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER -- 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, 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
govern-
(Page 19)
ment automatically deposited into your Fund account. You may deposit as
much of such payments 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 the
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
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 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 price
s 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 domestic
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.
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, The Dreyfus Corporation, 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.
AUTOMATIC WITHDRAWAL PLAN -- The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $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.
(Page 20)
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 a nominal fee for effecting redemptions of Fund shares. Any
stock 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
THE 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-AUT
OMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE.
IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND 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 PURCHASE
CHECK, 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 Check Redemption Privilege, the
Wire Redemption Privilege, the Telephone Redemption Privilege, the Dreyfus TEL
ETRANSFER Privilege or, if you are a client of a Selected Dealer, through the
Selected Dealer. If you have given your Service Agent authority to instruct
the Transfer Agent to redeem shares and to credit the proceeds of such
redemptions to a designated account at your Service Agent, you may redeem
shares only in this manner and in accordance with the regular redemption
procedure described below. If you wish to use the other redemption methods
described below, you must arrange with your Service Agent for delivery of the
required application(s) to the Transfer Agent. 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.
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.
(Page 21)
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. 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 any questions 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.
CHECK REDEMPTION PRIVILEGE -- You may request on the Account Application,
Shareholder Services Form or by later written request that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Potential
fluctuations in the net asset value of Fund shares should be considered in
determining the amount of the check. Redemption Checks should not be used to
close your account. Redemption Checks are free, but the Transfer Agent will
impose a fee for stopping payment of a Redemption Check upon your request or
if the Transfer Agent cannot honor the Redemption Check due to insufficient
funds or other valid reason. You should date your Redemption Checks with the
current date when you write them. Please do not post-date your Redemption
Checks. If you do so, the Transfer Agent will honor upon presentment, even if
presented before the date of the check, all post-dated Redemption Checks
which are dated within six months of presentment for payment, if they are
otherwise in good order. Shares for which certificates have been issued may
not be redeemed by Redemption Check. This Privilege may be modified or
terminated at any time by the Fund or the Transfer Agent upon notice to
shareholders.
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 for which
certificates have been issued are not eligible for this Privilege.
(Page 22)
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 for which 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 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 prior to the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time), 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. See "How to Buy Fund
Shares" for a discussion of additional conditions or fees that may be imposed
upon redemption.
SERVICE PLAN
Under the Service Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund (a) reimburses the Distributor for
payments to certain Service Agents for distributing the Fund's shares and
servicing shareholder accounts ("Servicing") and (b) pays The Dreyfus
Corporation, Dreyfus Service Corporation, a wholly-owned subsidiary of The
Dreyfus Corporation, and any affiliate of either of them (collectively,
"Dreyfus") for advertising and marketing relating to the Fund and for Servicin
g, at an aggregate 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 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. Each of the
Distributor and Dreyfus determine the amounts, if any, to be paid to Service
Agents under the Service Plan and the basis on which such payments are made.
The fees payable under the Service Plan are payable without regard to actual
expenses incurred.
(Page 23)
The Fund also bears the costs of preparing and printing
prospectuses and statements of additional information used for regulatory
purposes and for distribution to existing shareholders. Under the Service
Plan, the Fund bears (a) the costs of preparing, printing and distributing
prospectuses and statements of additional information used for other
purposes, and (b) the costs associated with implementing and operating the
Service Plan (such as costs of printing and mailing service agreements), the
aggregate of such amounts not to exceed in any fiscal year of the Fund the
greater of $100,000 or .005 of 1% of the value of the Fund's average daily
net assets for such fiscal year. Each item for which a payment may be made
under the Service Plan may constitute an expense of distributing Fund shares
as the Securities and Exchange Commission construes such term under Rule
12b-1.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment
income on each day the New York Stock Exchange is open for business. Fund
shares begin earning income dividends on the day following the date of
purchase. Dividends usually are paid on the last business day of each month
and are automatically reinvested in additional Fund shares at net asset value
or, at your option, paid in cash. The Fund's earnings for Saturdays, Sundays
and holidays are declared as dividends on the next business day. If you
redeem all shares in your account at any time during the month, all dividends
to which you are entitled will be paid to you along with the proceeds of the
redemption. Distributions from net realized securities gains, if any,
generally are declared and paid once a year, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of 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 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.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the Fund will not be subject to
Federal or New York State and New York City personal income taxes. To the
extent that you are obligated to pay state or local taxes outside of New York
State and New York City, dividends earned by an investment in the Fund may
represent taxable income. Dividends derived from Taxable Investments,
together with distributions from any 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 are subject to Federal
income tax as ordinary income whether received in cash or reinvested in
additional Fund shares. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S. corporations.
Distributions from net realized long-term securities gains of the Fund
generally are taxable as long-term capital gains for Federal income tax
purposes if you are a citizen or resident of the United States. Dividends and
distributions attributable to income or gain derived from securities
transactions and from the use of certain of the investment techniques
described under "Description of the Fund_Investment Techniques," will be
subject to Federal income tax. 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%. Under the Code, interest on indebtedness incurred or
continued to purchase or carry Fund shares which is deemed to relate to
exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by shareholders of the Fund from their gross income for
Federal income tax purposes, the Fund may purchase specified private activity
bonds, the interest from which may be (i) a preference item for purposes of
the alternative minimum tax, (ii) a component of the "adjusted current
earnings" preference item for purposes of the corporate alternative minimum
tax as well as a component in computing the corporate environmental tax or
(iii) a factor in determining the extent to which a shareholder's Social
Security benefits are taxable. If the
(Page 24)
Fund purchases such securities, the
portion of the Fund's dividends related thereto will not necessarily be tax
exempt to an investor who is subject to the alternative minimum tax and/or
tax on Social Security benefits and may cause an investor to be subject to
such taxes.
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. These statements set
forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. These dollar amounts will vary
depending on the size and length of time of your investment in the Fund. If
the Fund pays dividends derived from taxable income, it intends to designate
as taxable the same percentage of the day's dividend as the actual taxable
income earned on that day bears to total income earned on that day. Thus, the
percentage of the dividend designated as taxable, if any, may vary from day
to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable 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 has qualified for the
fiscal year ended October 31, 1994 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if 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 may be calculated on
several bases, including current yield, tax equivalent yield, average annual
total return and/or total return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to any undertaking which
may be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
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
(Page 25)
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, or for
shorter time periods depending upon the length of time during which the Fund
has operated.
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 CDA
Investment Technologies, Inc., Lipper Analytical Services, Inc., Moody's Bond
Survey Bond Index, Lehman Brothers Municipal Bond Index, Morningstar, Inc.
and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on November 19, 1984.
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 the purpose 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.
On May 31, 1988, Fund shareholders accepted the resignation of The
Chase Manhattan Bank, N.A. ("Chase") as the Fund's investment adviser and The
Dreyfus Corporation was engaged to serve as the Fund's manager (which
involves providing both the services formerly provided by Chase and those
provided by The Dreyfus Corporation under its prior administration agreement
with the Fund) pursuant to the Management Agreement.
The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account.
(Page 26)
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, on Long Island call 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 27)

General New York
Municipal
Bond Fund, Inc.
PROSPECTUS

Registration Mark

Copy Rights 1995 Dreyfus Service Corporation
949p15030195

__________________________________________________________________________

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 1, 1995
__________________________________________________________________________

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of General New York Municipal Bond Fund, Inc. (the "Fund"), dated March 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
On Long Island -- Call 794-5452

The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.

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

TABLE OF CONTENTS
Page

Investment Objective and Management Policies . . . . . . . . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . B-10

Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . . B-16

Service Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17

Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . B-18

Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . B-20

Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . B-22

Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . B-23

Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . . B-24

Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . B-25

Information About the Fund . . . . . . . . . . . . . . . . . . . . . . . . B-27

Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . . . . B-27

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28

Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-42

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . B-50

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . B-61

INVESTMENT OBJECTIVE 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."

Portfolio Securities. The average distribution of investments (at
value) in Municipal Obligations (including notes) by ratings for the
fiscal year ended October 31, 1994, computed on a monthly basis, was as
follows:

Fitch Moody's Standard
Investors Investors & Poor's
Service, Inc. Service, Inc. Corporation Percentage
("Fitch") or ("Moody's") or ("S&P") of Value

AAA Aaa AAA 11.6%
AA Aa AA 20.9%
A A A 26.3%
BBB Baa BBB 34.3%
BB BB BB .5%
F-1 P-1 A-1 .8%
Not Rated Not Rated Not Rated 5.6%*
100.0%

___________________________________

* Included in the Not Rated category are securities comprising 5.6% of
the Fund's market value which, while not rated, have been determined
by the Manager to be of comparable quality to securities rated
Baa/BBB.

Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.

Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.

The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under its Service Plan, will have the effect
of reducing the yield to investors.

Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. The staff of
the Securities and Exchange Commission currently considers certain lease
obligations to be illiquid. Determination as to the liquidity of such
securities is made in accordance with guidelines established by the Fund's
Board. Pursuant to such guidelines, the Board has directed the Manager to
monitor carefully the Fund's investment in such securities with particular
regard to (1) the frequency of trades and quotes for the lease obligation;
(2) the number of dealers willing to purchase or sell the lease obligation
and the number of other potential buyers; (3) the willingness of dealers
to undertake to make a market in the lease obligation; (4) the nature of
the marketplace trades including the time needed to dispose of the lease
obligation, the method of soliciting offers and the mechanics of transfer;
and (5) such other factors concerning the trading market for the lease
obligation as the Manager may deem relevant. In addition, in evaluating
the liquidity and credit quality of a lease obligation that is unrated,
the Fund's Board has directed the Manager to consider (a) whether the
lease can be cancelled; (b) what assurance there is that the assets
represented by the lease can be sold; (c) the strength of the lessee's
general credit (e.g., its debt, administrative, economic, and financial
characteristics); (d) the likelihood that the municipality will
discontinue appropriating funding for the leased property because the
property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an "event of nonappropriation"); (e)
the legal recourse in the event of failure to appropriate; and (f) such
other factors concerning credit quality as the Manager may deem relevant.
The Fund will not invest more than 15% of the value of its net assets in
lease obligations that are illiquid and in other illiquid securities.

The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee
payment arrangements, will not adversely affect the tax exempt status of
the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Fund. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will
be monitored to assure that it is valued at fair value.

Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted 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 Manager 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 its portfolio during such period.

Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent
that the ratings given by Moody's, S&P or Fitch for Municipal Obligations
may change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in
the Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these ratings may be
an initial criterion for selection of portfolio investments, the Manager
also will evaluate these securities.

Futures Contracts and Options on Futures Contracts. Upon exercise of
an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in
the writer's futures margin account, which represents the amount by which
the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on
the futures contract. The potential loss related to the purchase of an
option on futures contracts is limited to the premium paid for the option
(plus transaction costs). Because the value of the option is fixed at the
time of sale, there are no daily cash payments to reflect changes in the
value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of
the Fund.

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 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. Such loans may not exceed 33-1/3% of the value of
the Fund's total assets. From time to time, the Fund may return to the
borrower 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.

The Securities and Exchange Commission currently requires that the
following conditions must 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 interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan. These conditions may be subject to future
modification.

Taxable Investments. 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. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. 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 or 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.

Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.

Certificates of deposit are negotiable certificates representing 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 (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. 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 face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.

Repurchase agreements 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. The Fund's custodian
or sub-custodian 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 Manager will monitor on
an ongoing basis the value of the collateral to assure that it always
equals or exceeds the repurchase price. Certain costs may be incurred by
the Fund in connection with the sale of the 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. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into repurchase
agreements.

Risk Factors

Investing in New York Municipal Obligations. Each investor should
consider carefully the special risks inherent in the Fund's investment in
New York Municipal Obligations. These risks result from the financial
condition of New York State, certain of its public bodies and
municipalities, and New York City. Beginning in early 1975, New York
State, New York City and other State entities faced serious financial
difficulties which jeopardized the credit standing and impaired the
borrowing abilities of such entities and contributed to high interest
rates on, and lower market prices for, debt obligations issued by them. A
recurrence of such financial difficulties or a failure of certain
financial recovery programs could result in defaults or declines in the
market values of various New York Municipal Obligations in which the Fund
may invest. If there should be a default or other financial crisis
relating to New York State, New York City, a State or City agency, or a
State municipality, the market value and marketability of outstanding New
York Municipal Obligations in the Fund's portfolio and the interest income
to the Fund could be adversely affected. Moreover, the significant
slowdown in the New York and regional economy in the early 1990s added
substantial uncertainty to estimates of the State's tax revenues, which,
in part, caused the State to overestimate its General Fund tax receipts
for the 1992 fiscal year by $575 million. The 1992 fiscal year was the
fourth consecutive year in which New York State incurred a cash-basis
operating deficit in the General Fund and issued deficit notes. The
State's 1993 and 1994 fiscal years, however, were characterized by
national and regional economies that performed better than projected.
After reflecting a 1993 year-end deposit to the refund reserve account of
$671 million, reported 1993 General Fund receipts were $45 million higher
than originally projected in April 1992. The State completed the 1994
fiscal year with an operating surplus in the General Fund of $914 million.
In September 1994, however, the State projected a General Fund operating
deficit of $690 million for the 1995 fiscal year. There can be no
assurance that New York will not face substantial potential budget gaps in
future years. In 1990, S&P and Moody's lowered their ratings of the
State's general obligation debt from AA- to A and from A1 to A,
respectively, and short-term notes from SP-1+ to SP-1 and from MIG-1 to
MIG-2, respectively. In January 1992, Moody's lowered from A to Baa1 the
ratings on certain appropriation-backed debt of New York State and its
agencies. New York State general obligation, State-guaranteed and New
York State Local Government Assistance Corporation bonds continue to be
rated A by Moody's. In addition, in January 1992, S&P lowered from A to
A- its ratings of New York State general obligation bonds and stated that
it continued to assess the ratings outlook as negative. The ratings of
various agency debt, State moral obligations, contractual obligations,
lease purchase obligations and State guarantees also were lowered. In
February 1991, Moody's lowered its rating on New York City's general
obligation bonds from A to Baa1. The rating changes reflected the rating
agencies' concerns about the financial condition of New York State and
City, the heavy debt load of the State and City, and economic
uncertainties in the region. Investors should review "Appendix A" which
more fully sets forth these and other risk factors.

Lower Rated Bonds. The Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See "Description of
the Fund--Risk Factors--Lower Rated Bonds" in the Prospectus for a
discussion of certain risks and "Appendix B" for a general description of
Moody's, S&P and Fitch ratings of Municipal Obligations. Although ratings
may be useful in evaluating the safety of interest and principal payments,
they do not evaluate the market value risk of these bonds. The Fund will
rely on the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in
the Fund's portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether the Fund should
continue to hold the bond.

Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by Moody's, S&P
and Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in
the higher rating categories.

Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues
when necessary to meet the Fund's liquidity needs or in response to a
specific economic event such as a deterioration in the creditworthiness of
the issuer. The lack of a liquid secondary market for certain securities
also may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's portfolio and calculating
its net asset value. Adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable objective data may be available.

These bonds may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.

The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The
Fund has no arrangement with any persons concerning the acquisition of
such securities, and the Manager will review carefully the credit and
other characteristics pertinent to such new issues.

Lower rated zero coupon securities and pay-in-kind bonds involve
special considerations. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon bonds and pay-in-kind
bonds. Such zero coupon, pay-in-kind or delayed interest bonds carry an
additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Fund will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer
defaults, the Fund may obtain no return at all on its investment. See
"Dividends, Distributions and Taxes."

Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 7 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, as amended (the "Act"))
of the Fund's outstanding voting shares. Investment restrictions numbered
8 through 12 are not fundamental policies and may be changed by vote of a
majority of the Directors at any time. The Fund may not:

1. Invest more than 25% of its assets in the securities of issuers
in any single industry; provided that there shall be no limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

2. 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.

3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not prevent the Fund
from investing in Municipal Obligations secured by real estate or
interests therein, or prevent the Fund from purchasing and selling
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.

4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and 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.

5. 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.

6. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent that the activities permitted in
Investment Restriction Nos. 2, 3 and 10 may be deemed to give rise to a
senior security.

7. Sell securities short or 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 indexes,
and options on futures contracts or indexes.

8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options
or as otherwise provided in the Fund's Prospectus.

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

10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings, and except
to the extent related to the deposit of assets in escrow in connection
with the purchase of securities on a when-issued or delayed-delivery basis
and collateral and initial or variation margin arrangements with respect
to options, futures contracts, including those relating to indices, and
options on futures contracts or indices.

11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described in the Fund's Prospectus, and floating and
variable rate demand obligations as to which the Fund cannot exercise the
demand feature described in the Fund's Prospectus on less than seven days'
notice and as to which there is no secondary market) if, in the aggregate,
more than 15% of its net assets would be so invested.

12. Invest in companies for the purpose of exercising control.

For purposes of Investment Restriction No. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."

If a percentage restriction is adhered to at the time of investment,
a later increase or decrease 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. Mr. Alexander is also a Board member of 17 other
funds in the Dreyfus Family of Funds. 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. Ms. Davis is also
a Board member of 15 other funds in the Dreyfus Family of Funds. 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 24, 1994, Chief
Operating Officer, of the Manager and Executive Vice President and a
director of Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager and the Fund's distributor until August 4, 1994. He is
also a director and former Treasurer of The Muscular Dystrophy
Association; a trustee of Bucknell University; and a director of the
Noel Group, Inc. Mr. DiMartino is also a Board member of 58 funds in
the Dreyfus Family of Funds. 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. Dr. Kafka is also a Board member of
15 other funds in the Dreyfus Family of Funds. 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 to 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. Mr. Klaman is also a Board member of 15 other
funds in the Dreyfus Family of Funds. 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, 1-end 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. Mr. Levanthal is also a Board of 15 other
funds in the Dreyfus Family of Funds. 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
"Service 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 October 31, 1994, the aggregate amount of compensation paid to
each Director by the Fund and the aggregate amount of compensation paid to
each Director for the other funds in the Dreyfus Family of Funds for which
such person is a Board member were as follows:

<TABLE>
<CAPTION>
(5)
Total
Compensation from
(3) Fund and Fund
(2) Pension or (4) Complex Paid to
(1) Aggregate Retirement Benefits Estimated Annual Board Member For
Name of Board Compensation from Accrued as Part of Benefits Upon the 1994 Calendar
Member Fund* Fund's Expenses Retirement Year
_____________ __________________ ____________________ ________________ _________________
<S> <C> <C> <C> <C>
Clifford L. Alexander, Jr $5,000 none none $ 73,210

Peggy C. Davis $5,000 none none $ 61,751

Joseph S. DiMartino** $6,250 none none $445,000

Ernest Kafka $5,000 none none $ 61,001

Saul B. Klaman $5,000 none none $ 61,751

Nathan Leventhal $5,000 none none $ 61,751
</TABLE>

_________________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $160 for all Directors as a group.

** Estimated amounts for the current fiscal year ending October 31,
1995.

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 the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
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 the Manager. 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, and prior to August 1990,
he was employed as an Associate at Sidley & Austin. 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 the Manager. 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 the Manager. 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 the
Manager. 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. Vice President of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From 1984 to July 1994, he was Assistant Vice
President in the Mutual Fund Accounting Department of the Manager.
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 the Manager. From January 1992 to July 1994, he was
a Senior Legal Product Manager for The Boston Company Advisors, Inc.,
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 the Manager. 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, and prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
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 December 12, 1994.

MANAGEMENT AGREEMENT

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

The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which 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 outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested
persons" (as defined in the Act) of the Fund or the Manager, by vote cast
in person at a meeting called for the purpose of voting on such approval.
The Agreement was approved by shareholders on August 3, 1994, and was last
approved by the Fund's Board of Directors, including a majority of the
Directors who are not "interested persons" of any party to the Agreement,
at a meeting held on September 28, 1994. The 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 the Manager. The 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; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Paul H. Snyder, Vice President-Finance and Chief Financial
Officer; 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; 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; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Julian M. Smerling and David
B. Truman, directors.

The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the
Fund's Board of Directors. The Manager is responsible for investment
decisions and provides 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 Richard J. Moynihan, Joseph P. Darcy, A.
Paul Disdier, Karen M. Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager 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 for other funds advised by the Manager. 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 Manager. 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 the Manager, Securities and Exchange Com-
mission 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 maintaining corporate existence, costs of independent
pricing services, 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 in existing shareholders, costs
of shareholders' reports and any extraordinary expenses, and costs
associated with implementing and operating such plan. See "Service Plan."

The Manager 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. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.

The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed 1-1/2% of the value of the Fund's average net assets
for that fiscal year, the Fund may deduct from the payment to be made to
the Manager under the Agreement, or the Manager will bear, such excess
expense. 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.

As compensation for the Manager's services, the Fund has agreed to
pay the Manager a monthly management fee at the annual rate of .60 of 1%
of the value of the Fund's average daily net assets. For the fiscal years
ended October 31, 1992, 1993 and 1994, the management fees payable
amounted to $1,566,544, $2,214,742 and $2,150,206, respectively, which
amounts were reduced by $1,029,723, $810,067 and $44,0853, respectively,
pursuant to undertakings in effect, resulting in net fees paid to the
Manager of $536,821 in fiscal 1992, $1,404,675 in fiscal 1993 and
$1,709,353 in fiscal 1994.

The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.

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.

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.

SERVICE PLAN

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

Service Plan. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
has adopted such a plan (the "Plan") pursuant to which the Fund (a)
reimburses the Distributor for payments to certain securities dealers,
certain financial institutions (which may include banks) or other industry
professionals such as investment advisers, accountants and estate planning
firms (collectively, "Service Agents") for distributing the Fund's shares
and servicing shareholder accounts ("Servicing") and (b) pay the Manager,
Dreyfus Service Corporation and any affiliate of either of them
("Dreyfus") for advertising and marketing relating to the Fund and or
Servicing. The Fund's Board of Directors believes that there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders. In some states, certain financial institutions effecting
transactions in Fund shares may be required to register as dealers
pursuant to state law.

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 it may
not be amended to increase materially the costs which the Fund may bear
for distribution pursuant to the Plan without shareholder approval and
that other material amendments of the Plan must be approved by the Board
of Directors, and by the Directors who neither are "interested persons"
(as defined in the Act) of the Fund nor have any direct or indirect
financial interest in the operation of the Plan or in the related service
agreements, by vote of the Directors 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 so approved by the Board of Directors at a meeting
held on September 28, 1994. 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).

For the period from November 1, 1993 through August 23, 1994, the
Fund paid Dreyfus Service Corporation, as the Fund's distributor during
such period, $606,032 pursuant to the Plan, of which $592,543 represented
expenditures related to advertising, marketing and distributing the Fund's
shares and Servicing. For the period from August 24, 1994 through October
31, 1994, the Fund (a) reimbursed the Distributor $126,661 for payments
made to Service Agents for distributing Fund shares and Servicing and (b)
paid Dreyfus $124,192 for advertising and marketing Fund shares and for
Servicing. In addition, for the fiscal year ended October 31, 1994, the
Fund paid $15,958 for printing the Fund's prospectuses and statements of
additional information as well as implementing and operating the 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."

Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only
to the registered owner(s) of the account and only to the address of
record. The Account Application or later written request must be manually
signed by the registered owner(s). Checks may be made payable to the
order of any person in an amount of $500 or more. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the Fund to redeem a sufficient number of
full or fractional shares in the investor's account to cover the amount of
the Check. Dividends are earned until the Check clears. After clearance,
a copy of the Check will be returned to the investor. Investors generally
will be subject to the same rules and regulations that apply to checking
accounts, although election of this Privilege creates only a
shareholder-transfer agent relationship with the Transfer Agent.

If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.

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 transmission:

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
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 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 certificates 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 by any 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. 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 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 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, or an investor's Service Agent
acting on the investor's behalf, 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
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 stock
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.

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. The Fund's investments are valued
by an independent pricing service (the "Service") approved by the Board of
Directors. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side
of the market, these investments are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation
of the market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general
market conditions. The Service may employ electronic data processing
techniques and/or a matrix system to determine valuations. The Service's
procedures are reviewed by the Fund's officers under the general
supervision of the Board of Directors. Expenses and fees, including the
management fee (reduced by the expense limitation, if any) and fees
pursuant to the Service Plan, are accrued daily and are 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.

PORTFOLIO TRANSACTIONS

Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which
it appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked
price. No brokerage commissions have been paid by the Fund to date.

Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to
that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager to supplement its own
research and analysis with the views and information of other securities
firms.

Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.

The Fund's portfolio turnover rate for the fiscal years ended
October 31, 1993 and 1994 was 23.46% and 24.56%, respectively. The Fund
anticipates that its annual portfolio turnover rate generally will not
exceed 100%, but the turnover rate will not be a limiting factor when the
Fund deems it desirable to sell or purchase securities. Therefore,
depending upon market conditions, the Fund's annual portfolio turnover
rate may exceed 100% in particular years.

The amount of transactions during the fiscal year ended October 31,
1994 in newly issued debt instruments in fixed price public offerings
directed to an underwriter or underwriters in consideration of, among
other things, research services provided was $2,426,063.

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 has qualified as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
(the "Code"), for the fiscal year ended October 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 capital 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 from tax exempt obligations and taxable income other than net
capital gains) 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 under
"Description of the Fund--Investment Techniques." 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 his shares
below the cost of his investment. Such a distribution would be a return
on the investment in an economic sense although taxable as stated in
"Dividends, Distributions and Taxes" in the Prospectus. In addition, the
Code provides that if a shareholder has not held his Fund shares for more
than six months (or such shorter period as the Internal Revenue Service
may prescribe by regulation) and has received an exempt-interest dividend
with respect to such shares, any loss incurred on the sale of such shares
will be disallowed to the extent of the exempt-interest dividend received.

Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gains or losses. However, all or a portion of
any gains realized from the sale or other disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of
the Code. In addition, all or a portion of the 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" transaction,
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, gain or loss the Fund realizes from
certain futures 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 futures and options as well
as from closing transactions. In addition, any such futures 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 futures and
options transactions may be considered, for tax purposes, to 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 Section 1256 of the
Code. As such, all or a portion of any short- or long-term capital gain
from certain "straddle" transactions may be recharacterized to ordinary
income.

If the Fund were treated as entering into "straddles" by reason of
its engaging in certain futures or options transactions, such "straddles"
could be characterized as "mixed straddles" if the futures 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. To the extent the "straddle"
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" and conversion
transaction rules, short-term capital losses on "straddle" positions may
be recharacterized as long-term capital losses, and long-term capital
gains may be treated as short-term capital gains 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 obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, the
Fund could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. 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.

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 current yield for the 30-day period ended October 31, 1994
was 5.97%. The Fund's yield reflects the waiver of a portion of the
management fee without which the Fund's yield for the 30-day period ended
October 31, 1994 would have been 5.87%. Current yield is computed
pursuant to a formula which operates as follows: The amount of the Fund's
expenses accrued for the 30-day period (net of reimbursements) is
subtracted from the amount of the dividends and interest earned (computed
in accordance with regulatory requirements) by the Fund during the period.
That result is then divided by the product of: (a) the average daily
number of shares outstanding during the period that were entitled to
receive dividends, and (b) the net asset value per share on the last day
of the period less any undistributed earned income per share reasonably
expected to be declared as a dividend shortly thereafter. The quotient is
then added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the
result by 2.

Based upon a combined 1994 Federal, New York State and New York City
effective tax rate of 47.05%, the Fund's tax equivalent yield for the
30-day period ended October 31, 1994 was 11.27%. Without the waiver of a
portion of the management fee then in effect, the Fund's 30-day tax
equivalent yield for the period ended October 31, 1994 would have been
11.09%. Tax equivalent yield is computed by dividing that portion of the
current yield (calculated as described above) which is tax exempt by 1
minus a stated tax rate and adding the quotient to that portion, if any,
of the yield of the Fund that is not tax exempt.

The tax equivalent yield noted above represents the application of
the highest Federal, New York State and New York City marginal personal
income tax rates presently in effect. For Federal personal income tax
purposes, a 39.60% tax rate has been used. For New York State personal
income tax purposes, a 7.875% tax rate has been used. For New York City
personal income tax purposes, a 4.46% tax rate has been used. The tax
equivalent figure, however, does not reflect the potential effect of any
local (including, but not limited to, county, district or city, other than
New York City) taxes, including applicable surcharges. In addition, there
may be pending legislation which could affect such stated tax rates or
yields. Each investor should consult its tax adviser, and consider its
own factual circumstances and applicable tax laws, in order to ascertain
the relevant tax equivalent yield.

The Fund's average annual total return for the 1, 5 and 9.951 year
periods ended October 31, 1994 was -6.59%, 7.65% and 8.11%, 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 from November 19, 1984 to
October 31, 1994 was 117.24%. 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.

Certain performance figures set forth above are for periods when the
Fund's investment restrictions were different from what they are as of the
date hereof. See "Information About the Fund."

From time to time, the Fund may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and not as representative of
the Fund's past or future performance.

From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to or arising from actual or proposed tax
legislation. From time to time, advertising materials for the Fund also
may refer to statistical or other information concerning trends relating
to investment companies, as compiled by industry associations such as the
Investment Company Institute. From time to time, advertising materials
for the Fund also may refer to Morningstar ratings and related analysis
supporting such rating.

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 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.

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

The Bank of New York, 110 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.

APPENDIX A

RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS

The financial condition of New York State (the "State") and certain
of its public bodies (the "Agencies") and municipalities, particularly New
York City (the "City"), could affect the market values and marketability
of New York Municipal Obligations which may be held by the Fund. The
following information constitutes only a brief summary, does not purport
to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State, the
City and the Municipal Assistance Corporation for the City of New York
("MAC") available as of the date of this Statement of Additional
Information. While the Fund has not independently verified such
information, it has no reason to believe that such information is not
correct in all material respects.

A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economic forecast calls for employment to increase in 1994 and 1995.
Employment growth will moderate in 1995 when the pace of national economic
growth is projected to slacken and entire industries adjust to changing
markets and the State's economy absorbs the full impact of these
developments. Personal income is estimated to increase by 5.3% in 1994,
and a more moderate rate in 1995.

The State's budget for the 1994-95 fiscal year was enacted by the
Legislature on June 7, 1994, more than two months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for 1994-95 fiscal year was
formulated on June 16, 1994 and is based on the State's budget as enacted
by the Legislature and signed into law by the Governor.

The State Financial Plan is based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward
spending, Federal financial and monetary policies, the availability of
credit and the condition of the world economy, which could have an adverse
effect on the State. There can be no assurance that the State economy
will not experience worse-than-predicted results in the 1994-95 fiscal
year, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.

The State issued its first update to the GAAP-basis Financial Plan
for the State's 1994-95 fiscal year on September 1, 1994. In the
September GAAP-basis update, the Division of the Budget projected a
General Fund Operating deficit of $690 million. The prior projection of
the 1994-95 GAAP-basis State Financial Plan, issued in February 1994 as
part of the 1994-95 Executive Budget (the "February 1994 Projection"),
projected an operating surplus in the General Fund of $7 million.

In the February 1994 projection, General Fund operating results over
the 1993-94 and 1994-95 fiscal year projection period were anticipated to
reduce the accumulated deficit by $256 million. The impact of the
reported results for the State's 1993-94 fiscal year and the revised
projection on the accumulated deficit is substantially the same.
Combining the $914 million operating surplus for the State's 1993-94
fiscal year with the projected $690 million operating deficit for the
1994-95 fiscal year results in an anticipated $224 million reduction in
the accumulated deficit.

Total revenues in the General Fund are projected at $32.825 billion,
consisting of $30.783 billion in tax revenues and $2.042 billion in
miscellaneous revenue. Personal income tax revenue is projected to reach
$17.712 billion, or nearly 58% of total tax revenue. User taxes and fees
are projected to total $6.561 billion, or nearly 21% of total taxes.
Business taxes are projected at $5.442 billion, or 18%, while revenue from
other taxes is projected at $1.068 billion or 3% of total tax revenue.
Total expenditures in the General Fund are projected at $33.633 billion,
including $23.778 billion for grants to local governments, $8.033 billion
for State operations, $1.807 billion for general State charges, and $15
million for debt service. Compared to the projections made in February,
expenditures for grants to local governments are substantially increased,
while expenditures for state operations are reduced.

There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant
disparity between tax revenues projected from a lower recurring receipts
base and the spending required to maintain State programs at current
levels. To address any potential budgetary imbalance, the State may need
to take significant actions to align recurring receipts and disbursements
in future fiscal years.

On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's
outstanding general obligation bonds from AA- to A and from A to A-,
respectively. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New
York State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.

(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term
notes issued by the New York State Urban Development Corporation ("UDC")
in February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created
substantial investor resistance to securities issued by the State and by
some of its municipalities and Agencies. For a time, in late 1975 and
early 1976, these difficulties resulted in a virtual closing of public
credit markets for State and many State related securities.

In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92
million that actually resulted was financed by issuing notes that were
paid during the first quarter of the State's 1978 fiscal year). In
addition, legislation was enacted limiting the occurrence of additional
so-called "moral obligation" and certain other Agency debt, which
legislation does not, however, apply to MAC debt.

State Financial Results. New York State's financial operations have
improved during recent fiscal years. During the period 1989-90 through
1991-92, the State incurred General Fund operating deficits that were
closed with receipts from the issuance of tax and revenue anticipation
notes ("TRANs"). First, the national recession, and then the lingering
economic slowdown in the New York and regional economy, resulted in
repeated shortfalls in receipts and three budget deficits. For its 1992-
93 and 1993-94 fiscal years, the State recorded balanced budgets on a cash
basis, with substantial fund balances in each year as described below.

On July 29, 1994, the Office of the State Comptroller issued the
General Purpose Financial Statements of the State of New York for the
1993-94 fiscal year. The Statements were prepared on GAAP-basis and were
independently audited in accordance with generally accepted auditing
standards. The State's Combined Balance Sheet as of March 31, 1994 showed
an accumulated surplus in its combined governmental funds of $370 million,
reflecting liabilities of $13.219 billion and assets of $13.589 billion.
This accumulated Governmental Funds surplus includes a $1.637 billion
accumulated deficit in the General Fund, as well as accumulated surpluses
in the Special Revenue and Debt Service fund types and a $622 million
accumulated deficit in the Capital Projects Fund type.

The State completed its 1993-94 fiscal year with a combined
Governmental Funds operating surplus of $1.051 billion, which included an
operating surplus in the General Fund of $914 million, in the Special
Revenue Funds of $149 million and in the Debt Service Funds of $23
million, and an operating deficit in the Capital Projects Funds of $35
million. The following table updates Table 6 of the Annual Information
Statement.

The State reported a General Fund operating surplus of $914 million
for the 1993-94 fiscal year, as compared to an operating surplus of $2.065
billion for the prior fiscal year. The 1993-94 fiscal year surplus
reflects several major factors, including the cash basis surplus recorded
in 1993-94, the use of $671 million of the 1992-93 surplus to fund
operating expenses in 1993-94, net proceeds of $575 million in bonds
issued by the Local Government Assistance Corporation, and the
accumulation of $265 million balance in the Contingency Reserve Fund.
Revenues increased $543 million (1.7%) over prior fiscal year revenues
with the largest increase occurring in personal income taxes.
Expenditures increased $1.659 billion (5.6%) over the prior fiscal year,
with the largest increase occurring in State aid for social services
programs.

The State ended its 1993-94 fiscal year with a balance of $1.140
billion in the tax refund reserve account, $265 million in its Contingency
Reserve Fund and $134 million in its tax stabilization reserve fund.
These fund balances were primarily the result of an improving national
economy, State employment growth, tax collections that exceeded earlier
projections and disbursements that were below expectations. Deposits to
the personal income tax refund reserve have the effect of reducing
reported personal income tax receipts in the fiscal year when made and
withdrawals from such reserve increase receipts in the fiscal year when
made. The balance in the tax reserve account will be used to pay taxpayer
refunds, rather than drawing from 1994-95 receipts.

Of the $1.140 billion deposited in the tax refund reserve account,
$1.026 billion was available for budgetary planning purposes in the 1994-
95 fiscal year. The remaining $114 million will be redeposited in the tax
refund reserve account at the end of the State's 1994-95 fiscal year to
continue the process of restructuring the State's cash flow as part of the
New York Local Government Assistance Corporation ("LGAC") program. The
balance in the contingency reserve fund will be used to meet the cost of
litigation facing the State. The tax stabilization reserve fund may be
used only in the event of an unanticipated General Fund cash-basis deficit
during the 1994-95 fiscal year.

Before the deposit of $1.140 billion in the tax refund reserve
account, General Fund receipts in 1993-94 exceeded those originally
projected when the State Financial Plan for the year was formulated on
April 16, 1993 by $1.002 billion. Greater-than-expected receipts in the
personal income tax, the bank tax, the corporation franchise tax and the
estate tax accounted for most of this variance, and more than offset
weaker-than-projected collections from the sales and use tax and
miscellaneous receipts. Collections from individual taxes were affected
by various factors including changes in Federal business laws, sustained
profitability of banks, strong performance of securities firms, and
higher-than-expected consumption of tobacco products following price cuts.

The higher receipts resulted, in part, because the New York economy
performed better than forecasted. Employment growth started in the first
quarter of the State's 1993-94 year, and although this lagged the national
economic recovery, the growth in New York began earlier than forecasted.
The New York economy exhibited signs of strength in the service sector, in
construction, and in trade. Long Island, and the Mid-Hudson Valley
continued to lag the rest of the State in economic growth. Approximately
100,000 jobs are believed to have been added during the 1993-94 fiscal
year.

Disbursements and transfer from the General Fund were $303 million
below the level projected in April 1993, an amount that would have been
$423 million had the State not accelerated the payment of Medicaid
billings, which in the April 1993 State Financial Plan were planned to be
deferred into the 1994-95 fiscal year. Compared to the estimates included
in the State Financial Plan formulated in April 1993, disbursements were
lower for Medicaid, capital projects, and debt service (due to
refundings). In addition, $114 million of school and payments were funded
from the proceeds of LGAC bonds. Disbursements were higher-than-expected
for general support for public schools. The State also made the first of
six required payments to the State of Delaware related to the settlement
of Delaware's litigation against the State regarding the disposition of
abandoned property receipts.

During the 1993-94 fiscal year, the State also established and funded
a Contingency Reserve Fund ("CRF") as a way to assist the State in
financing the cost of litigation affecting the State. The CRF was
initially funded with a transfer of $100 million attributable to the
positive margin recorded in the 1992-93 fiscal year. In addition, the
State augmented this initial deposit with $132 million on debt service
savings attributable to the refinancing of State and public authority
bonds during 1993-94. A year-end transfer of $36 million was also made to
the CRF, which, after a disbursement for authorized fund purposes, brought
the CRF balance at the end of 1993-94 to $265 million. This amount was
$165 million higher than the amount originally targeted for this reserve
fund.

For its 1992-93 fiscal year the State had a balanced budget on a cash
basis with a positive margin of $671 million in the General Fund that was
deposited in the refund reserve account.

After reflecting a 1992-93 year-end deposit to the refund reserve
account of $671 million, reported 1992-93 General Fund receipts were $45
million higher than originally projected in April 1992. If not for that
year-end transaction, which had the effect of reducing 1992-93 receipts by
$671 million and making those receipts available in 1993-94, General Fund
receipts would have been $716 million higher than originally projected.

The favorable performance was primarily attributable to personal
income tax collections that were more than $700 million higher than
originally projected (before reflecting the refund reserve transaction).
The withholding and estimated payment components of the personal income
tax exceeded original estimates by more than $800 million combined,
reflecting both stronger economic activity, particularly at year's end,
and the tax-induced one-time acceleration of income into 1992. Modest
shortfalls were experienced in other components of the income tax.

There were large, but largely offsetting, variances in other
categories. Significantly higher-than-projected business tax collections
and the receipt of unbudgeted payments from the Medical Malpractice
Insurance Association and the New York Racing Association approximately
offset the loss of an anticipated $200 million Federal reimbursement, the
loss of certain budgeted hospital differential revenue as a result of
unfavorable court decisions, and shortfalls in certain miscellaneous
revenue sources.

Disbursements and transfers to other funds totaled $30.829 billion,
an increase of $45 million above projections in April 1992. After
adjusting for the impact of a $150 million payment from the Medical
Malpractice Insurance Association to health insurers made pursuant to
legislation passed in January 1993, actual disbursements were $105 million
lower than projected. This reduction primarily reflected higher-than-
anticipated costs for educational programs, as offset by lower costs in
virtually all other categories of spending, including Medicaid, local
health programs, agency operations, fringe benefits, capital projects and
debt service.

During its 1989-90, 1990-91 and 1991-92 fiscal years, the State
incurred cash-basis operating deficits in the General Fund of $775
million, $1.081 billion and $575 million, respectively, prior to the
issuance of short-term tax and revenue anticipation notes ("TRANs"), owing
to lower-than-projected receipts.

Governmental Funds. The principal operating fund of the State is the
General Fund. It receives all State income that is not required by law to
be deposited in another fund. General Fund receipts, including transfers
from other funds, totalled $32.229 billion in the State's 1993-94 fiscal
year. General Fund receipts in the State's 1994-95 fiscal year are
estimated in the State Financial Plan at $34.321 billion. Including
transfers to other funds, total General Fund disbursements in the 1993-94
fiscal year were $31.897 billion, and are estimated to total $34.248
billion in the State's 1994-95 fiscal year.

The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and
include all moneys received from the Federal government. Total receipts
in Special Revenue Funds are projected at $24.598 billion in the State's
1994-95 fiscal year. Federal grants are projected to account for 75% of
the total projected receipts in Special Revenue Funds in the State's 1994-
95 fiscal year.

Disbursements from Special Revenue Funds are projected to be $24.982
billion for the State's 1994-95 fiscal year. Grants to local governments
disbursed from this fund type are projected to account for 75% of
disbursements from this fund for the 1994-95 fiscal year.

The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Federal grants for
capital projects, largely highway-related, are projected to account for
33% of the $3.233 billion in total projected receipts in Capital Projects
Funds in the State's 1994-95 fiscal year. Total disbursements for capital
projects are projected to be $3.730 billion during the State's 1994-95
fiscal year. Of total disbursements from Capital Projects Funds,
approximately 54% is for various transportation purposes, including
highways and mass transportation facilities; 4% is for programs of the
Department of Correctional Services and other public protection
activities; 16% is for health and mental hygiene facilities; 13% is for
environmental and recreational programs; 5% is for educational programs;
and 5% is for housing and economic development programs. The balance is
for the maintenance of State office facilities and various other capital
programs.

The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Total receipts in Debt
Service Funds are projected to reach $2.318 billion in the State's 1994-95
fiscal year. Total disbursements from Debt Service Funds for debt
service, lease/purchase and contractual obligation financing commitments
are projected to be $2.246 billion for the 1994-95 fiscal year.

State Borrowing Plan. The State issued $850 million in TRANs on May
4, 1993 to fund its day-to-day operations and certain local assistance
payments to its municipalities and school districts. All of these TRANs
matured on December 31, 1993.

The State anticipates that its 1994-95 borrowings for capital
purposes will consist of approximately $374 million in general obligation
bonds (including $140 million for the purpose of redeeming outstanding
bond anticipation notes) and $140 million in new commercial paper
issuances. The Legislature has authorized the issuance of up to $69
million in certificates of participation for real property and equipment
acquisitions during the State's 1994-95 fiscal year. The projections of
the State regarding its borrowings for the 1994-95 fiscal year may change
if actual receipts fall short of State projections or if other
circumstances require.

In addition, the LGAC is authorized to provide net proceeds of $315
million during the 1994-95 fiscal year to make payments to local
governmental units, otherwise made by the State, reduces the State's
future liabilities.

State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of
its Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).

At September 30, 1993, there were 18 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 18 Agencies was $63.5 billion as of September
30, 1993. As of March 31, 1994, aggregate Agency debt outstanding as
State-supported debt was $21.1 billion and as State-related was $29.4
billion. Debt service on the outstanding Agency obligations normally is
paid out of revenues generated by the Agencies' projects or programs, but
in recent years the State has provided special financial assistance, in
some cases on a recurring basis, to certain Agencies for operating and
other expenses and for debt service pursuant to moral obligation
indebtedness provisions or otherwise. Additional assistance is expected
to continue to be required in future years.

Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to
meet their obligations could result in a default by one or more of such
Agencies. If a default were to occur, it would likely have a significant
effect on the marketability of obligations of the State and the Agencies.
These Agencies are discussed below.

The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and
nursing home development, and other programs. In general, HFA depends
upon mortgagors in the housing programs it finances to generate sufficient
funds from rental income, subsidies and other payments to meet their
respective mortgage repayment obligations to HFA, which provide the
principal source of funds for the payment of debt service on HFA bonds, as
well as to meet operating and maintenance costs of the projects financed.
From January 1, 1976 through March 31, 1987, the State was called upon to
appropriate a total of $162.8 million to make up deficiencies in the debt
service reserve funds of HFA pursuant to moral obligation provisions. The
State has not been called upon to make such payments since the 1986-87
fiscal year and no payments are anticipated during the 1993-94 fiscal
year.

UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are
unable to make full payments on their mortgage loans. Through a
subsidiary, UDC is currently attempting to increase its rate of collection
by accelerating its program of foreclosures and by entering into
settlement agreements. UDC has been, and will remain, dependent upon the
State for appropriations to meet its operating expenses. The State also
has appropriated money to assist in the curing of a default by UDC on
notes which did not contain the State's moral obligation provision.

The Metropolitan Transportation Authority (the "MTA") oversees New
York City's subway and bus lines by its affiliates, the New York City
Transit Authority and the Manhattan and Bronx Surface Transit Operating
Authority (collectively, the "TA"). Through MTA's subsidiaries, the Long
Island Rail Road Company, the Metro-North Commuter Railroad Company and
the Metropolitan Suburban Bus Authority, the MTA operates certain commuter
rail and bus lines in the New York metropolitan area. In addition, the
Staten Island Rapid Transit Authority, an MTA subsidiary, operates a rapid
transit line on Staten Island. Through its affiliated agency, the
Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates
certain toll bridges and tunnels. Because fare revenues are not
sufficient to finance the mass transit portion of these operations, the
MTA has depended and will continue to depend for operating support upon a
system of State, local government and TBTA support and, to the extent
available, Federal operating assistance, including loans, grants and
operating subsidies.

The TA and the commuter railroads, which are on a calendar fiscal
year, ended 1993 with their budgets balanced on a cash basis. The TA had
a closing cash balance of approximately $39 million.

Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. The
surcharge, which expires in November 1995, yielded $533 million in
calendar year 1993, of which the MTA was entitled to receive approximately
90%, or approximately $480 million.

For 1994, the TA projects that it will end the year with $77.6
million cash surplus. For the 1994-95 State fiscal year, total State
assistance to the MTA is estimated at $1.3 billion.

A subway fire on December 28, 1990 and a subway derailment on August
28, 1991, each of which caused fatalities and many injuries, have given
rise to substantial claims for damages against both the TA and the City.

In 1981, the State Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan for the capital
program designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities and
equipment, and also granted certain additional bonding authorization
therefor.

On April 5, 1993, the Legislature approved, and the Governor
subsequently signed into law, legislation authorizing a five-year $9.56
billion capital plan for the MTA for 1992-1996. The MTA has submitted a
1992-1996 Capital Program based on this legislation for the approval of
the MTA Capital Program Review Board (the "CPRB"), as State law requires.
On July 1, 1993, the CPRB indicated that it was withholding approval
pending the resolution of certain related issues. If approved, the 1992-
1996 Capital Program would succeed two previous five-year capital programs
of the periods covering 1982-1986 and 1987-1991. The 1987-1991 Capital
Program totalled approximately $8.0 billion, including $6.2 billion for TA
capital projects.

The 1992-1996 Capital Program would supersede a one-year program
adopted in 1992. State budget legislation for the 1992-93 fiscal year had
required the MTA to submit a one-year capital program for 1992 instead of
a five-year program. The one-year program, which contained $1.635 billion
of projects for transit and commuter facilities combined, was approved by
the CPRB in May 1992, but the five-year program for 1992-1996, required to
be submitted subsequently by the MTA as an amendment to the one-year plan,
was disapproved without prejudice by the CPRB in December 1992.

There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1992-1996 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.

The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad
powers and responsibilities with respect to the government, finances and
welfare of these political subdivisions, especially in education and
social services. In recent years the State has been called upon to
provide added financial assistance to certain localities.

Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State
assistance during the State's 1994-95 fiscal year and thereafter. The
potential impact on the State of such actions by localities is not
included in the projections of the State receipts and disbursements in the
State's 1994-95 fiscal year.

Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1992, the total indebtedness of
all localities in the State, other than the City, was approximately $15.7
billion. A small portion (approximately $71.6 million) of this
indebtedness represented borrowing to finance budgetary deficits and was
issued pursuant to enabling State legislation. State law requires the
Comptroller to review and make recommendations concerning the budgets of
those local government units other than the City authorized by State law
to issue debt to finance deficits during the period that such deficit
financing is outstanding. Seventeen localities had outstanding
indebtedness for deficit financing at the close of their fiscal year
ending in 1992.

Certain proposed Federal expenditure reductions would reduce, or in
some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to
suffer serious financial difficulties jeopardizing their respective access
to the public credit markets, the marketability of notes and bonds issued
by localities within the State could be adversely affected. Localities
also face anticipated and potential problems resulting from certain
pending litigation, judicial decisions and long-range economic trends.
The longer-range, potential problems of declining city population,
increasing expenditures and other economic trends could adversely affect
localities and require increasing State assistance in the future.

Because of significant fiscal difficulties experienced from time to
time by the City of Yonkers, a Financial Control Board was created by the
State in 1984 to oversee Yonkers' fiscal affairs. Future actions taken by
the Governor or the State Legislature to assist Yonkers in this crisis
could result in the allocation of State resources in amounts that cannot
yet be determined.

Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession
of certain funds taken pursuant to the State's Abandoned Property law;
(vii) alleged responsibility of State officials to assist in remedying
racial segregation in the City of Yonkers; (viii) an action, in which the
State is a third party defendant, for injunctive or other appropriate
relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (ix) actions
challenging the constitutionality of legislation enacted during the 1990
legislative session which changed the actuarial funding methods for
determining contributions to State employee retirement systems; (x) an
action against State and City officials alleging that the present level of
shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (xi) an action challenging
legislation enacted in 1990 which had the effect of deferring certain
employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge
to the constitutionality of financing programs of the Thruway Authority
authorized by Chapters 166 and 410 of the Laws of 1991 (described below in
this Part); (xiii) a challenge to the constitutionality of financing
programs of the Metropolitan Transportation Authority and the Thruway
Authority authorized by Chapter 56 of the Laws of 1993 (described below in
this Part); (xiv) challenges to the delay by the State Department of
Social Services in making two one-week Medicaid payments to the service
providers; (xv) challenges by commercial insurers, employee welfare
benefit plans, and health maintenance organizations to provisions of
Section 2807-c of the Public Health Law which impose 13%, 11% and 9%
surcharges on inpatient hospital bills and a bad debt and charity care
allowance on all hospital bills paid by such entities; (xvi) challenges to
the promulgation of the State's proposed procedure to determine the
eligibility for and nature of home care services for Medicaid recipients;
(xvii) a challenge to State implementation of a program which reduces
Medicaid benefits to certain home-relief recipients; and (xviii)
challenges to the rationality and retroactive application of State
regulations recalibrating nursing home Medicaid rates.

Adverse developments or decisions in such cases could affect the
ability of the State to maintain a balanced 1994-95 State Financial Plan.

(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax
and other ongoing revenues to cover expenses in each fiscal year.
However, the City's operating results for the fiscal year ending June 30,
1993 were balanced in accordance with GAAP, the eleventh consecutive year
in which the City achieved balanced operating results in accordance with
GAAP. The City's ability to maintain balanced operating results in future
years is subject to numerous contingencies and future developments.

The City's economy, whose rate of growth slowed substantially over
the past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and
increases in social services costs, and has been required to take actions
to close substantial budget gaps in order to maintain balanced budgets in
accordance with the Financial Plan.

In 1975, the City became unable to market its securities and entered
a period of extraordinary financial difficulties. In response to this
crisis, the State created MAC to provide financing assistance to the City
and also enacted the New York State Financial Emergency Act for the City
of New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of
approval over the City Financial Plan were suspended pursuant to the
Emergency Act. However, the Control Board, MAC and OSDC continue to
exercise various monitoring functions relating to the City's financial
condition. The City prepares and operates under a four-year financial
plan which is submitted annually to the Control Board for review and which
the City periodically updates.

The City's independently audited operating results for each of its
fiscal years from 1981 through 1993 show a General Fund surplus reported
in accordance with GAAP. The City has eliminated the cumulative deficit
in its net General Fund position. In addition, the City's financial
statements for the 1993 fiscal year received an unqualified opinion from
the City's independent auditors, the eleventh consecutive year the City
has received such an opinion.

In August 1993, the City adopted and submitted to the Control Board
for its review a four-year Financial Plan covering fiscal years 1994
through 1997 (the "Financial Plan"). The Financial Plan was based on the
City's fiscal year 1994 expense budget adopted June 14, 1993 as well as
certain changes incorporated subsequent to the budget adoption process.
On November 23, 1993, the City adopted and submitted to the Control Board
for its review a first quarter modification to the Financial Plan (the
"November Modification") incorporating various re-estimates of revenues
and expenditures. For fiscal year 1994, the November Modification
includes additional resources stemming primarily from the City
Comptroller's fiscal year 1993 annual audit, savings from a reduction in
prior years' accrued expenditures, and higher State and Federal aid
resulting from claims by the City for reimbursement of various social
services costs. These resources were used to fund new needs in the
November Modification including higher costs in the uniformed agencies, at
the Board of Education (the "BoE") and for certain social services, the
unlikelihood of the sale of the Off-Track Betting Corporation (the "OTB"),
and lower estimates of miscellaneous and other revenues. After taking
these adjustments into account, the November Modification projects a
balanced budget for fiscal year 1994, based upon revenues of $31,585
billion. For fiscal years 1995, 1996 and 1997, the November Modification
projects budget gaps of $1.730 billion, $2.513 billion and $2.699 billion,
respectively. These gaps are higher by about $450 million in fiscal year
1995 and by about $700 million in each of fiscal years 1996 and 1997 than
in the Financial Plan, primarily on account of the nonrecurring value of
the fiscal year 1994 revenue adjustments, the loss of certain one-time
resources funding BoE fiscal year 1994 spending needs, and the
reclassification of anticipated State aid from the baseline revenue
estimates to the gap-closing program. To offset these larger gaps, the
November Modification relies on additional City, State and other actions.

On December 1, 1993, a three-member panel appointed by the Mayor to
address City structural budget imbalance released a report setting forth
its findings and recommendations. In its report, the panel noted that
budget imbalance is likely to be greater than the City now projects by
$255 million in fiscal year 1995, rising to nearly $1.5 billion in fiscal
year 1997. The report provided a number of options that the City should
consider in addressing the structural balance issue such as severe cuts in
City-funded personnel levels, increases in residential property taxes and
the sales tax, and the imposition of bridge tolls and solid waste
collection fees. The report also noted that additional State actions will
be required in many instances to allow the City to cut its budget without
grave damage to basic services.

On December 21, 1993, OSDC issued a report reviewing the November
Modification. The report noted that while the outlook for fiscal year
1994 has improved since August, it will be necessary for the City to
manage its budget aggressively in order to stay on course for budget
balance this year. For fiscal years 1995 through 1997, the report
expressed concern that the gaps identified by the City in the November
Modification are the largest as a percentage of City-fund revenues that
the City has faced at this point in the fiscal year since budget balance
in accordance with GAAP was first achieved in fiscal year 1981.

On December 21, 1993, the staff of the Control Board issued its
report on the November Modification. The report states that the plan is
now more realistic in terms of the gaps it portrays and the solutions it
offers. However, the solutions are mostly limited to fiscal year 1994
while the gap for fiscal year 1995 has been increased by $450 million.
Beginning in fiscal year 1995, budget gaps average over $1 billion
annually. Therefore, the staff recommends that prompt action to replace
many current-year one-shots with recurring savings is critical.

On February 2, 1994, the Mayor presented to the City Council and the
Control Board a mid-year modification to the Financial Plan (the "February
Modification"). The February Modification projects a balanced budget for
fiscal year 1994, based upon revenues of $31.735 billion, including a
general reserve of $81 million. For fiscal years 1995, 1996 and 1997, the
February Modification projects gaps of $2.261 billion, $3.167 billion and
$3.253 billion, respectively, and assumes no wage and salary increases
beyond the expiration of current labor agreements which expire in fiscal
years 1995 and 1996. These gaps have grown since November by about $530
million in fiscal year 1995, and $650 million and $550 million in fiscal
years 1996 and 1997, respectively, owing in large part to lower estimates
of real property tax revenues. To close the budget gap projected for
fiscal year 1995, the February Modification includes a gap-closing program
that consists of the following major elements: (i) an agency program of
$1.048 billion; (ii) fringe benefit and pension savings of $400 million;
(iii) an intergovernmental aid package of $400 million; (iv) a workforce
reduction program of $144 million; and (v) the assumption of a $234
million surplus roll from fiscal year 1994. Implementation of many of the
gap-closing initiatives requires the cooperation of the municipal labor
unions, the City Council and the State and Federal governments. The
February Modification also includes a tax reduction program, with most of
the financial impact affecting the later years of the Plan period.

The City requires certain amounts of financing for seasonal and
capital spending purposes. The City has issued $1.75 billion of notes for
seasonal financing purposes during the 1994 fiscal year. The City's
capital financing program projects long-term financing requirements of
approximately $17 billion for the City's fiscal years 1995 through 1998
for the construction and rehabilitation of the City's infrastructure and
other fixed assets. The major capital requirement include expenditures
for the City's water supply system, and waste disposal systems, roads,
bridges, mass transit, schools and housing. In addition, the City and the
Municipal Water Finance Authority have issued about $1.8 billion in
refunding bonds in the 1994 fiscal year.

State Economic Trends. The City accounts for approximately 41% of
the State's population and personal income, and the City's financial
health affects the State in numerous ways. The State has long been one of
the wealthiest states in the nation. For decades, however, the State
economy has grown more slowly than that of the nation as a whole,
resulting in the gradual erosion of its relative economic affluence. The
causes of this relative decline are varied and complex, in many cases
involving national and international developments beyond the State's
control. In recent years, the State's economic position has improved in a
manner consistent with that of the Northeast as a whole.

Part of the reason for the long-term relative decline in the State's
economy has been attributed to the combined State and local tax burden,
which is among the highest in the United States. The burdens of State and
local taxation, in combination with many other causes of regional economic
dislocation, may have contributed to the decision of businesses and
individuals to relocate outside, or not locate within, the State. In
1987, the State enacted a major personal income tax reduction and reform
program and also reduced the tax rate on corporation income. In addition,
the State has provided various tax incentives to encourage business
relocation and expansion. The State, however, in its 1989-90, 1990-91 and
1991-92 fiscal years substantially increased taxes and fees to help close
projected budget gaps in those years, and in 1990-91, 1991-92 and 1992-93
delayed and restructured the remainder of the personal income tax
reduction program originally enacted in 1987. Under legislation proposed
with the 1993-94 budget, the rules for calculating tax liability for the
1993 tax year will be the same as those for the 1992 tax year (deferring
for a fourth year a previously scheduled tax reduction), and the tax
reduction program will be frozen at current rates. Also, in July 1991
State legislation was enacted to phase out the benefit of graduated income
tax tables for taxpayers with adjusted gross income above $100,000.

APPENDIX B

Description of Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's") and Fitch Investors Service, Inc.
("Fitch") ratings:

S&P

Municipal Bond Ratings

An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.

The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default--capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.

AAA

Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.

Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for
payment of debt service. It differs from the two higher ratings because:

General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to meet debt obligations at some future date.

Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management
performance appears adequate.

BBB

Of the investment grade, this is the lowest.

General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.

Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions
are no more than adequate. Management performance could be stronger.

BB, B, CCC, CC, C

Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.

Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.

CCC

Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.

The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.

Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.

Municipal Note Ratings

SP-1

The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+)
designation.

SP-2

The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.

Commercial Paper Ratings

The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus sign (+) designation. Capacity for timely payment on
issues with an A-2 designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.

Moody's

Municipal Bond Ratings

Aaa

Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment some
time in the future.

Baa

Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.

Municipal Note Ratings

Moody's ratings for state municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements
are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.

A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.

Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment
grade situation.

MIG 1/VMIG 1

This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2

This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

Commercial Paper Rating

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a wide range of financial
markets and assured sources of alternative liquidity.

Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.

Fitch

Municipal Bond Ratings

The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.

AAA

Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.

BBB

Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.

Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.

Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

CCC

Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

Bonds rated CC are minimally protected. Default in payment of
interest and/or principal seems probable over time.
C

Bonds rated C are in imminent default in payment of interest or
principal.

DDD, DD and D

Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest
potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months or the DDD, DD or D categories.

Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.

Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.

F-1+

Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1

Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.

F-2

Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS OCTOBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
NEW YORK-90.1%
Albany Industrial Development Agency:
IDR (Hampton Plaza Project) 6.25%, 3/1/2018............................. $ 5,600,000 $ 4,901,176
LR:
(New York State Assembly Building Project) 7.75%, 1/1/2010............ 3,615,000 3,720,088
(New York State Department of Health Building Project) 7.25%, 10/1/2010 1,755,000 1,734,379
Board of Cooperative Educational Services, COP (Greenport Vocational
Facility Project)
7.875%, 10/1/2000....................................................... 1,120,000 1,174,813
Cohoes Industrial Development Agency, IDR (Norlite Corp. Project)
6.75%, 5/1/2009 (LOC; Dresdner Bank) (a)................................ 2,400,000 2,384,664
Erie County Water Authority, Water Revenue, Refunding
Zero Coupon, 12/1/2017 (Insured; AMBAC)................................. 1,210,000 227,431
Franklin County Solid Waste Management Authority, Solid Waste Systems Revenue
6.125%, 6/1/2009........................................................ 2,150,000 2,010,379
Grand Central District Management Association, Inc., Business Improvement
District,
Capital Improvement, Refunding:
5.125%, 1/1/2014...................................................... 1,000,000 811,830
5.25%, 1/1/2022....................................................... 3,000,000 2,353,320
Jefferson County Industrial Development Agency, SWDR
(Champion International Corp.) 7.20%, 12/1/2020......................... 2,000,000 2,009,540
Metropolitan Transportation Authority, Service Contract,
Transportation Facilities:
Refunding:
7.125%, 7/1/2009.................................................. 2,000,000 2,036,740
7%, 7/1/2012...................................................... 3,000,000 3,016,980
Revenue 7.004%, 7/1/2022 (b,c)........................................ 3,000,000 1,980,000
New York City:
7.50%, 2/1/2006......................................................... 5,000,000 5,275,200
7.65%, 2/1/2006......................................................... 3,000,000 3,196,110
7.75%, 8/15/2007........................................................ 4,000,000 4,279,640
7%, 10/1/2008........................................................... 1,750,000 1,761,025
7.50%, 3/15/2009........................................................ 1,000,000 1,035,260
6.25%, 8/1/2011 (Insured; FSA, Prerefunded 8/1/2002) (d)................ 1,550,000 1,622,633
7.20%, 2/1/2014......................................................... 5,000,000 5,052,900
New York City Health and Hospital Authority, Local Government Revenue,
Refunding
6%, 2/15/2007........................................................... 2,750,000 2,574,880
New York City Industrial Development Agency:
Civic Facility Revenue:
(Saint Christopher Ottilie Project) 7.50%, 7/1/2021 (LOC; Allied Irish Banks) (a) 2,620,000 2,690,792
(YMCA of Greater New York Project) 8%, 8/1/2016....................... 3,300,000 3,426,357
IDR:
7.625%, 11/1/2009 (LOC; ABN Amro Bank) (a)............................ 1,340,000 1,369,132
(Plaza Packaging Corp. Project) 7.65%, 12/1/2009 (LOC; Barclays Bank) (a) 2,750,000 2,870,037
Special Facility Revenue:
(American Airlines, Inc. Project) 6.90%, 8/1/2024..................... 3,000,000 2,886,210
(Terminal One Group Association Project):
6%, 1/1/2015...................................................... 4,375,000 3,980,069
6.125%, 1/1/2024.................................................. 6,000,000 5,391,000

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
NEW YORK (CONTINUED)
New York City Municipal Water Finance Authority, Water and Sewer Systems
Revenue
7%, 6/15/2009........................................................... $ 3,500,000 $ 3,626,875
New York State, Crossover, Refunding 6.125%, 11/15/2012..................... 5,000,000 4,807,450
New York State Dormitory Authority, Revenues:
City University;
5.75%, 7/1/2011....................................................... 2,455,000 2,164,377
Consolidated City University Systems:
2nd Generation 5.75%, 7/1/2013........................................ 5,000,000 4,321,100
5.75%, 7/1/2013....................................................... 2,975,000 2,571,054
State University Educational Facilities:
6.25%, 5/15/2014...................................................... 2,000,000 1,851,500
6.25%, 5/15/2017...................................................... 5,000,000 4,588,250
6.25%, 5/15/2020...................................................... 2,000,000 1,813,820
5.40%, 5/15/2023...................................................... 12,750,000 10,100,550
5.75%, 5/15/2024...................................................... 2,000,000 1,670,200
Refunding:
5.50%, 5/15/2008.................................................. 5,000,000 4,442,650
7.50%, 5/15/2011.................................................. 2,000,000 2,121,260
7.375%, 5/15/2014................................................. 1,310,000 1,339,868
7%, 5/15/2016..................................................... 4,245,000 4,249,712
6%, 5/15/2017..................................................... 2,575,000 2,279,750
Suffolk County Judicial Facility 9.50%, 4/15/2014....................... 3,000,000 3,510,570
Upstate Community Colleges 7.20%, 7/1/2021 (Prerefunded 7/1/2001) (d)... 2,130,000 2,357,910
New York State Energy Research and Development Authority:
Electric Facilities Revenue:
(Consolidated Edison Co. of New York, Inc.) 6.75%, 1/15/2027.......... 3,250,000 3,162,282
(Long Island Lighting Co.):
7.15%, Series A, 6/1/2020......................................... 2,000,000 1,883,980
7.15%, Series A, 2/1/2022......................................... 3,000,000 2,822,250
6.90%, Series D, 8/1/2022......................................... 4,000,000 3,647,520
Gas Facilities Revenue 7.539%, 7/8/2026 (Insured; MBIA) (b)............. 3,000,000 2,032,500
New York State Environmental Facilities Corp.:
PCR (State Water Revolving Fund):
7.25%, 6/15/2010...................................................... 1,300,000 1,379,287
7.20%, 3/15/2011...................................................... 4,500,000 4,759,875
7.50%, 6/15/2012...................................................... 2,000,000 2,163,880
6.30%, 3/15/2016...................................................... 5,200,000 4,903,132
Special Obligation (Riverbank State Park):
7.25%, 4/1/2007....................................................... 1,500,000 1,554,885
7.25%, 4/1/2012....................................................... 2,500,000 2,582,675
New York State Housing Finance Agency, Revenue:
Childrens' Rescue Fund Housing 7.625%, 5/1/2018 ........................ 2,400,000 2,350,008
Multi-Family Housing:
Second Mortgage 6.625%, 8/15/2012..................................... 2,500,000 2,480,325
7.75%, 11/1/2020 (Insured; AMBAC)..................................... 2,230,000 2,346,451
(Refunding - Health Facilities) 8%, 11/1/2008........................... 2,000,000 2,207,940
Service Contract Obligation:
6.30%, 9/15/2012...................................................... 2,500,000 2,378,975
7.375%, 9/15/2021 (Prerefunded 3/15/2002) (d)......................... 2,000,000 2,241,020

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
NEW YORK (CONTINUED)
New York State Local Government Assistance Corp.:
7.25%, 4/1/2018 (Prerefunded 4/1/2001) (d).............................. $ 4,000,000 $ 4,434,960
Refunding 6%, 4/1/2014.................................................. 4,000,000 3,673,680
New York State Medical Care Facilities Finance Agency, Revenue:
(Hospital & Nursing Home Insured Mortgage):
6.85%, 2/15/2012 (Insured; FHA)....................................... 3,000,000 3,076,140
6.20%, 8/15/2013 (Insured; FHA)....................................... 3,000,000 2,862,180
8%, 2/15/2028 (Insured; FHA).......................................... 4,470,000 4,865,193
7.45%, 8/15/2031 (Insured; FHA)....................................... 3,000,000 3,141,090
Refunding 6.20%, 2/15/2023 (Insured; FHA)............................. 1,700,000 1,561,314
Refunding (Huntington Hospital Mortgage Project) 6.50%, 11/1/2014..... 1,750,000 1,640,503
Improvement (Mental Health Services Facilities):
6.50%, 2/15/2019...................................................... 5,290,000 4,895,630
7.875%, 8/15/2020 (Prerefunded 8/15/2000) (d)......................... 1,250,000 1,414,912
(Long Term Health Care - Insured Program) 6.45%, 11/1/2010 (Insured; CGIC) 5,000,000 4,995,050
(North General Hospital) 7.40%, 2/15/2019............................... 1,000,000 1,021,160
(Refunding - Mortgage Hospital) 8%, 2/15/2025
(Insured; FHA, Prerefunded 8/15/1997) (d)............................. 1,000,000 1,099,180
New York State Mortgage Agency, Revenue:
6.30%, 10/1/2017........................................................ 4,550,000 4,267,354
Homeowner Revenue:
7.50%, 4/1/2016....................................................... 1,000,000 1,031,710
7.50%, 10/1/2017...................................................... 3,000,000 3,087,480
7.55%, 10/1/2017...................................................... 1,000,000 1,035,550
6.45%, 10/1/2020...................................................... 3,960,000 3,874,424
7.80%, 10/1/2020...................................................... 2,000,000 2,067,580
6.65%, 4/1/2022....................................................... 2,000,000 1,943,440
7.95%, 4/1/2022....................................................... 1,950,000 2,015,832
New York State Power Authority, General Purpose Revenue 5%, 1/1/2014........ 7,000,000 5,705,910
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 7.25%, 1/1/2010.............................. 4,350,000 4,489,766
New York State Urban Development Corp., Revenue:
(Alfred Technology Resources, Inc. Project) 7.875%, 1/1/2020............ 2,070,000 2,194,283
(Onondaga County Convention Project) 7.875%, 1/1/2020................... 1,000,000 1,066,370
North Country Development Authority, Solid Waste Management System Revenue
6.75%, 7/1/2012......................................................... 4,530,000 4,433,511
Oneida - Herkimer Solid Waste Management Authority, Solid Waste System
Revenue,
Refunding 6.75%, 4/1/2014............................................... 1,600,000 1,525,184
Rensselaer County Industrial Development Agency, IDR (Albany International
Corp.)
7.55%, 6/1/2007......................................................... 4,000,000 4,218,160
Suffolk County Industrial Development Agency, Civic Facility Revenue
(Long Island Association of Children) 7.35%, 8/1/2009 (LOC; Barclays Bank) (a) 2,040,000 2,073,191
Triborough Bridge and Tunnel Authority:
(Convention Center Project) 7.25%, 1/1/2010............................. 4,500,000 4,654,620
Revenues:
7%, 1/1/2020 (Prerefunded 1/1/2001) (d)............................... 2,550,000 2,785,391
7%, 1/1/2021 (Prerefunded 1/1/2001) (d)............................... 2,000,000 2,177,460
Special Obligation, Refunding 7.10%, 1/1/2010........................... 3,000,000 3,147,120

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
U.S. RELATED-9.9%
Commonwealth of Puerto Rico Highway and Transportation Authority,
Highway Revenue 6.444%, 7/1/2006 (b).................................... $ 7,450,000 $ 6,118,313
Commonwealth of Puerto Rico Infrastructure Financing Authority 7.50%, 7/1/2009 2,000,000 2,132,800
Guam Airport Authority, Revenue 6.60%, 10/1/2010............................ 2,000,000 1,946,920
Puerto Rico Electric Power Authority, Power Revenue 6.375%, 7/1/2024........ 1,500,000 1,420,785
Puerto Rico Housing Finance Corp., SFMR 9.302%, 8/4/2025 (Collateralized; GNMA) (b) 2,000,000 1,762,500
Puerto Rico Industrial Medical and Environmental Pollution Control
Facilities Financing Authority, Revenue:
(Pepsico, Inc. Project) 6.25%, 11/15/2013 (Guaranteed; Pepsico, Inc.). 4,000,000 3,878,800
(Refunding - St Luke's Hospital Project) 6.25%, 6/1/2010.............. 1,100,000 1,062,655
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport
Project)
8.10%, 10/1/2005........................................................ 3,500,000 3,759,525
Virgin Islands Public Finance Authority, Revenue:
(Highway - Transportation Trust Fund) 7.70%, 10/1/2004................ 1,750,000 1,877,960
(Refunding - Matching Fund Loan Note) 7.25%, 10/1/2018................ 3,500,000 3,472,280
Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 1,000,000 1,019,670
--------------
TOTAL INVESTMENTS
(cost $308,980,015)..................................................... $303,414,002
==============
</TABLE>
<TABLE>
<CAPTION>

SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
CGIC Capital Guaranty Insurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
GNMA Government National Mortgage Association SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue
</TABLE>

SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 12.5%
AA Aa AA 19.5
A A A 27.0
BBB Baa BBB 33.3
BB Ba BB 1.6
Not Rated Not Rated Not Rated 6.1
------
100.0%
======
</TABLE>

NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1994, this security amounted to $1,980,000 or .6% of net assets.
(d) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.

See notes to financial statements.

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $308,980,015)-see statement..................................... $303,414,002
Interest receivable..................................................... 6,042,163
Prepaid expenses........................................................ 4,736
--------------
309,460,901
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 135,333
Due to Custodian........................................................ 1,148,422
Payable for Common Stock redeemed....................................... 9,649
Accrued expenses and other liabilities.................................. 171,886 1,465,290
----------- --------------
NET ASSETS ................................................................ $307,995,611
==============
REPRESENTED BY:
Paid-in capital......................................................... $311,656,579
Accumulated undistributed net realized gain on investments.............. 1,905,045
Accumulated net unrealized (depreciation) on investments-Note 3......... (5,566,013)
--------------
NET ASSETS at value applicable to 16,443,758 shares outstanding
(100 million shares of $.01 par value Common Stock authorized).......... $307,995,611
==============
NET ASSET VALUE, offering and redemption price per share
($307,995,611 / 16,443,758 shares)...................................... $18.73
========

See notes to financial statements.
</TABLE>

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 23,013,649
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,150,206
Shareholder servicing costs-Note 2(b)................................. 855,535
Professional fees..................................................... 46,958
Custodian fees........................................................ 43,350
Prospectus and shareholders' reports-Note 2(b)........................ 30,067
Directors' fees and expenses-Note 2(c)................................ 26,033
Registration fees..................................................... 2,345
Miscellaneous......................................................... 36,162
--------------
3,190,656
Less-reduction in management fee due to undertakings-Note 2(a)........ 440,853
--------------
TOTAL EXPENSES.................................................. 2,749,803
-------------
INVESTMENT INCOME-NET........................................... 20,263,846
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 1,906,458
Net unrealized (depreciation) on investments............................ (46,196,850)
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (44,290,392)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(24,026,546)
=============

See notes to financial statements.
</TABLE>

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 20,808,983 $ 20,263,846
Net realized gain on investments........................................ 5,565,671 1,906,458
Net unrealized appreciation (depreciation) on investments for the year.. 33,345,236 (46,196,850)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 59,719,890 (24,026,546)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (20,735,883) (20,385,019)
Net realized gain on investments........................................ (4,115,876) (5,588,704)
-------------- --------------
TOTAL DIVIDENDS....................................................... (24,851,759) (25,973,723)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 367,798,322 178,945,529
Dividends reinvested.................................................... 19,356,609 19,895,760
Cost of shares redeemed................................................. (292,270,773) (254,981,061)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 94,884,158 (56,139,772)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 129,752,289 (106,140,041)
NET ASSETS:
Beginning of year....................................................... 284,383,363 414,135,652
-------------- --------------
End of year (including undistributed investment income-net;
$121,173 in 1993)..................................................... $414,135,652 $307,995,611
============== ==============

SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 17,866,847 8,859,506
Shares issued for dividends reinvested.................................. 941,812 980,345
Shares redeemed......................................................... (14,115,202) (12,633,641)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 4,693,457 (2,793,790)
============== ==============

See notes to financial statements.

</TABLE>

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated March 1, 1995.

GENERAL NEW YORK MUNICIPAL BOND 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 non-diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the distributor of the Fund's
shares, which are sold to the public without a sales load. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the 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: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgement of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. Investments 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.
(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. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay prinicipal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
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. 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.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets. The Agreement provides that if in any
full fiscal year the aggregate expenses of the Fund, exclusive of 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 payment to be made to the Manager under the Agreement, or
the Manager will bear, the excess expense to the extent required by state
law. However, the Manager had undertaken from November 1, 1993 through April
7, 1994, to reduce the management fee paid by the Fund, to the extent that
the Fund's aggregate expenses (excluding certain expenses as described above)
exceeded specified annual percentages of the Fund's average daily net assets.
The Manager has currently undertaken from April 8, 1994 to waive receipt of
the management fee payable to it by the Fund in excess of an annual rate of
.50 of 1% of the Fund's average daily net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $440,853 for the year ended
October 31, 1994.
The Manager may modify the expense limitation percentages from time to
time, provided that the resulting expense reimbursement would not be less
than the amount required pursuant to the Agreement.
(B) On August 3, 1994, Fund shareholders approved a revised 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 the Manager, Dreyfus Service Corporation or
any affiliate (collectively "Dreyfus") for advertising and marketing relating
to the Fund and servicing Shareholders accounts, at an aggregate 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, not to exceed the greater of
$100,000 or .005 of 1% of the Fund's average daily net assets for any full
fiscal year.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay Dreyfus Service Corporation at an annual rate of
.20 of 1% of the value of the Fund's average daily net assets, for costs and
expenses in connection with advertising, marketing and distributing the
Fund's shares and for servicing shareholder accounts. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's shares owned by clients of the Service Agent. The prior Service
Plan also separately provided 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 prior Service Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Fund's average daily net assets for any full fiscal year.

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended October 31, 1994, $126,661 was charged to the Fund
pursuant to the Plan and $606,032 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 the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $2,500 and an attendence fee of $500 per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $218,281,486 and $278,077,925, respectively, for the year ended
October 31, 1994, and consisted entirely of long-term and short-term
municipal investments.
At October 31, 1994, accumulated net unrealized depreciation on
investments was $5,566,013, consisting of $8,383,052 gross unrealized
appreciation and $13,949,065 gross unrealized depreciation.
At October 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
GENERAL NEW YORK MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
General New York Municipal Bond Fund, Inc., including the statement of
investments, as of October 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 October 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 General New York Municipal Bond Fund, Inc. at October 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 and Young LLP Signature Logo)
New York, New York
December 7, 1994