DREYFUS NEW JERSEY MUNICIPAL BOND FUND INC, 497, 1995-05-05

DREYFUS NEW JERSEY MUNICIPAL BOND FUND INC
497, 1995-05-05

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FOR USE BY BANKS ONLY
May 1, 1995
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
Supplement to Prospectus Dated May 1, 1995
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
750/s050195IST

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PROSPECTUS MAY 1, 1995
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
- ---------------------------------------------------------------------------
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC. (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A
MUNICIPAL BOND FUND. ITS GOAL IS TO PROVIDE YOU WITH AS HIGH A LEVEL OF
CURRENT INCOME EXEMPT FROM FEDERAL AND NEW JERSEY INCOME TAXES AS IS
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 MAY 1, 1995, WHICH MAY
BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS
IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 3
CONDENSED FINANCIAL INFORMATION................... 4
DESCRIPTION OF THE FUND........................... 4
MANAGEMENT OF THE FUND............................ 13
HOW TO BUY FUND SHARES............................ 14
SHAREHOLDER SERVICES.............................. 15
HOW TO REDEEM FUND SHARES......................... 18
SERVICE PLAN...................................... 21
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 21
PERFORMANCE INFORMATION........................... 23
GENERAL INFORMATION............................... 24
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees ...................................................................... .60%
12b-1 Fee (distribution and servicing)................................................ .25%
Other Expenses........................................................................ .12%
Total Fund Operating Expenses......................................................... .97%
</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: $10 $31 $54 $119
</TABLE>
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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%.
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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. Long-term investors could pay more in 12b-1 fees than the economic
equivalent of paying a front end sales charge. The information in the
foregoing table does not reflect any fee waivers or expense reimbursement
arrangements that may be in effect. 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" and "Service Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
PER SHARE DATA: 1987(1) 1988 1989 1990 1991 1992 1993 1994
-------- ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $11.50 $11.62 $12.16 $12.36 $12.47 $13.06 $13.17 $14.03
------- ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net......... .14 .88 .83 .83 .81 .80 .79 .78
Net realized and unrealized
gain on investments......... .12 .54 .24 .11 .63 .31 .88 (1.61)
------- ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS..... .26 1.42 1.07 .94 1.44 1.11 1.67 (.83)
------- ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.... (.14) (.88) (.83) (.83) (.81) (.80) (.79) (.77)
Dividends from net realized
gain on investments......... -- -- (.04) -- (.04) (.20) (.02) --
Dividends in excess of net realized
gain on investments......... -- -- -- -- -- -- -- (.02)
------- ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS......... (.14) (.88) (.87) (.83) (.85) (1.00) (.81) (.79)
------- ------- ------ ------ ------ ------ ------ ------
Net asset value, end of year.. $11.62 $12.16 $12.36 $12.47 $13.06 $13.17 $14.03 $12.41
====== ======= ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN........... 14.73%(2) 12.59% 9.11% 7.94% 11.95% 8.77% 12.97% (6.02%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to
average net assets.......... -- .39% .82% .77% .75% .73% .72% .77%
Ratio of net investment income
to average net assets....... 8.02%(2) 7.36% 6.77% 6.74% 6.36% 6.06% 5.74% 5.94%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation
(limited to the expense limitation
provision of the management agreement).... 1.50%(2) .91% .25% .25% .25% .25% .25% .20%
Portfolio Turnover Rate....... -- 60.77% 34.96% 25.02% 22.53% 33.58% 6.05% 10.02%
Net Assets, end of year (000's Omitted).. $37,743 $174,788 $256,902 $350,416 $515,706 $614,529 $725,815 $577,525
</TABLE>

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(1) From November 6, 1987 (commencement of operations) to December 31, 1987.
(2) 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.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE _ The Fund's goal is to provide you with as high a
level of current income exempt from Federal and New Jersey income taxes as is
consistent with the preservation of capital. To accomplish this goal, the
Fund invests primarily in the debt securities of the State of New Jersey, its
political subdivisions, authorities and corporations, and certain other
specified securities, the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal and New Jersey income taxes
(collectively, "New Jersey Municipal Obligations"). To the extent acceptable
New Jersey Municipal
Page 4
Obligations are at any time unavailable for investment by the Fund, the Fund
may 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 Jersey, income tax. The dollar-weighted average maturity of the Fund's
portfolio is expected to exceed ten years. 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 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.
Generally, at least 65% of the value of the Fund's net assets will be
invested in New Jersey Municipal Obligations and the remainder may be invested
in securities that are not New Jersey Municipal Obligations and therefore
may be subject to New Jersey income tax. See "Risk Factors _ Investing in New
Jersey Municipal Obligations" below, and "Dividends, Distributions and
Taxes."
At least 80% 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 20% 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. 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
normally provide higher
Page 5
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 the lowest rating assigned by such rating organizations 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 80% requirement described above, 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 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 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, the
participa-
Page 6
tion interest 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 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 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 multiclass 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.
To the extent consistent with the requirements for a "qualified
investment fund" under the New Jersey gross income tax, 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,
Page 7
thus increasing to a degree the cost of the underlying Municipal Obligation
and similarly decreasing such security's yield to investors. Gains realized in
connection with stand-by commitments will be taxable. 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 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.
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 tax 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 Obligation, 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.
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 two
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
Page 8
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 Jersey Municipal
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 Jersey income tax. 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.
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 value of the Fund's total assets. In connection with such loans, the
Fund will receive collateral consisting of cash, U.S. Government securities
or irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. The Fund can increase its income through the investment of such
collateral. The Fund continues to be entitled to payments in amounts equal to
the interest or other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
As a fundamental policy, the Fund is permitted to borrow to the
extent permitted under the Investment Company Act of 1940. However, the Fund
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
CERTAIN FUNDAMENTAL POLICIES _ The Fund may: (i) borrow money to the extent
permitted under the Investment Company Act of 1940, which currently limits
borrowing to no more than 331/3% of the value of the Fund's total assets; and
(ii) invest up to 25% of its total assets in the securities of issuers in any
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 secure
permitted borrowings; and (ii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities (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 JERSEY MUNICIPAL OBLIGATIONS _ You should consider
carefully the special risks inherent in the Fund's investment in New Jersey
Municipal Obligations. If there should be a default or other financial crisis
relating to the State of New Jersey or an agency or municipality thereof, the
market
Page 9
value and marketability of outstanding New Jersey Municipal Obligations in the
Fund's portfolio and interest income to the Fund could be adversely affected.
Although New Jersey enjoyed a period of economic growth with unemployment
levels below the national average during the mid-1980s, its economy slowed
down well before the onset of the national recession, which, according to the
National Bureau of Economic Research, began in July 1990. Reflecting the
economic downturn, the State's unemployment rate rose from a low of 3.6% in
the first quarter of 1989 to a recessionary peak of 9.3% during 1992. Since
then, the State's unemployment rate fell to 6.7% during the fourth quarter of
1993 and averaged 7.1% during the first nine months of 1994. As a result of
New Jersey's fiscal weakness, in July 1991, S&P lowered its rating of the
State's general obligation debt from AAA to AA+. 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) securities in
which the Fund may invest up to 20% 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 Municipal Obligations, though high yielding, are characterized by great
risk. 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 more 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 market condi-
Page 10
tions 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 will invest 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.
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 securi
ties, 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.
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
Page 11
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.
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
invested 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.
Page 12
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 March 31, 1995, The Dreyfus Corporation managed or administered
approximately $72 billion in assets for approximately 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 Samuel
J. Weinstock. He has held that position since August 31, 1988 and has been
employed by The Dreyfus Corporation since 1987. The Fund's other portfolio
managers are identified 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.

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
approximately $193 billion in assets as of December 31, 1994, including
approximately $70 billion in mutual fund assets. As of December 31, 1994,
Mellon, through various subsidiaries, provided non-investment services, such
as custodial and 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
Fund's overall expense ratio 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 December 31, 1994, the Fund paid The
Dreyfus Corporation a monthly management fee at the effective annual rate of
.58 of 1% of the value of the Fund's average daily net assets pursuant to
undertakings by The Dreyfus Corporation.

The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from its 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 such payments to pay Service Agents in respect of these
services.
The Fund bears certain costs of distributing 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 Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of FDI
Page 13
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc.
The 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, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold 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 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 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 subseq
uent 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#8900052295/Dreyfus New
Jersey 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
Page 14
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 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.
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. Net
asset value per share is computed by dividing the value of the Fund's net
assets (i.e., the value of its assets less liabilities) by the total number
of shares outstanding. The Fund's investments are valued 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.
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
Page 15
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 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.
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 which 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 day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. See "Shareholder Services"
Page 16
in the Statement of Additional Information. The right to exercise this
Privilege may be modified or canceled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. The exchange
of shares of one fund for shares of another is treated for Federal income
tax purposes as a sale of the shares given in exchange by the shareholder and,
therefore, an exchanging shareholder may realize a taxable gain or loss. For
more information concerning this Privilege and the funds in the Dreyfus Family
of Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.

DREYFUS-AUTOMATIC ASSET BUILDER Registration Mark _ Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-AUTOMATIC Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.

DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE _ Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
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
prices which do not include the sales load or which reflect a reduced sales
load. If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the purchased shares. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACHpermits you to transfer electronically on the payment date
dividends or dividends and capital gain distributions, if any, from the Fund
to a designated bank account. Only an account maintained at a financial
institution which is an Automated Clearing House member may be so designated.
Banks may charge a fee for this service.

Page 17

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
to 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.
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
certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Fund's then-current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL 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
Page 18
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
TELETRANSFER 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.
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
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
Page 19
("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 postdate your Redemption
Checks. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all postdated 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.
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 the certificates have been issued are not eligible for this P
rivilege.
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
Page 20
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 by 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 such close of trading, 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
Servicing, at an aggregate annual rate of .25 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 amount, 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.
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 net investment income on
each day the New York Stock Exchange is open for business. Dividends usually
are paid on the last business day of each month, and are
Page 21
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.
Management of the Fund believes that the Fund was a "qualified
investment fund" within the meaning of the New Jersey gross income tax for
calendar year 1994. The primary criteria for constituting a "qualified
investment fund" are that (i) the Fund is an investment company registered
with the Securities and Exchange Commission, which for the calendar year in
which the dividends and distributions (if any) are paid, has no investments
other than interest-bearing obligations, obligations issued at a discount,
and cash and cash items, including receivables, and financial options,
futures and forward contracts, or other similar financial instruments
relating to interest-bearing obligations, obligations issued at a discount or
bond indexes related thereto and (ii) at the close of each quarter of the
taxable year, the Fund has not less than 80% of the aggregate principal
amount of all of its investments, excluding financial options, futures and
forward contracts, or other similar financial instruments related to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto, cash and cash items, which cash items shall include
receivables, in New Jersey Municipal Obligations, including obligations of
Puerto Rico, the Virgin Islands and other territories and possessions of the
United States and certain other specified securities. Additionally, a
qualified investment fund must comply with certain continuing reporting
requirements.
If the Fund qualifies as a qualified investment fund and the Fund
complies with its reporting obligations, (a) dividends and distributions paid
by the Fund to a New Jersey resident individual shareholder will not be
subject to New Jersey gross income tax to the extent that the dividends and
distributions are attributable to income earned by the Fund as interest on or
gain from New Jersey Municipal Obligations, and (b) gain from the sale of
Fund shares by a New Jersey resident individual shareholder will not subject
to the New Jersey gross income tax. Shares of the Fund are not subject to
property taxation by New Jersey or its political subdivisions. To the extent
that you are subject to state and local taxes outside of New Jersey,
dividends and distributions earned by an investment in the Fund and gain from
the sale of shares in the Fund may represent taxable income.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends from net investment income paid by the Fund
will not be subject to Federal income tax. 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 or not 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. 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
Page 22
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 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 dividends 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 December 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 taxes 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 cal-
Page 23
culating 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 that 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.
For purposes of advertising, calculations of average annual total
return and certain calculations of total return will take into account the
performance of Dreyfus New Jersey Tax Exempt Bond Fund, L.P., the assets and
liabilities of which were transferred to the Fund in exchange for shares of
the Fund on August 31, 1988. See "General Information."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, 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. The Fund's yield generally should be higher
than that of shorter-term funds (which generally fluctuate less in price per
share).
GENERAL INFORMATION
The Fund was incorporated under Maryland law on January 11, 1988, and
commenced operations on August 31, 1988. On September 14, 1990, the Fund's
name was changed from Dreyfus New Jersey Tax Exempt Bond Fund, Inc. to
Dreyfus New Jersey Municipal Bond Fund, Inc. The Fund is authorized to issue
500 million shares of Common Stock, par value $.001 per share. Each share has
one vote.

On August 31, 1988, all of the assets and liabilities of Dreyfus New
Jersey Tax Exempt Bond Fund, L.P. (the "Partnership") were transferred to the
Fund in exchange for shares of Common Stock of the Fund pursuant to a
proposal approved at a Meeting of Partners of the Partnership held on August
17, 1988.
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 not con-
Page 24
sider 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.
The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account.

Shareholder inquiries may be made to your Service Agent or by writing
to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or by calling toll free 1-800-645-6561. In New York City, call 1-718-895-1206;
outside the U.S. and Canada, call 516-794-5452.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 25
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Page 26
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Page 27
DREYFUS
NEW JERSEY
MUNICIPAL
BOND FUND, INC.
PROSPECTUS
(Lion Logo)
Registration Mark

Copy Rights 1995 Dreyfus Service Corporation
750p10050195

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1995

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

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

The Dreyfus Corporation (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-9
Management Agreement. . . . . . . . . . . . . . . . . . . . . .B-13
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . .B-15
Service Plan. . . . . . . . . . . . . . . . . . . . . . . . . .B-16
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . .B-17
Shareholder Services. . . . . . . . . . . . . . . . . . . . . .B-19
Determination of Net Asset Value. . . . . . . . . . . . . . . .B-22
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . .B-22
Dividends, Distributions and Taxes . . . . . . . . . . . . . .B-23
Performance Information . . . . . . . . . . . . . . . . . . . .B-23
Information About the Fund. . . . . . . . . . . . . . . . . . .B-25
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . .B-25
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . .B-26
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . .B-29
Financial Statements. . . . . . . . . . . . . . . . . . . . . .B-38
Report of Independent Auditors. . . . . . . . . . . . . . . . .B-51

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."

The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended December
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

<S> <C> <C> <C>
AAA Aaa AAA 43.0%
AA Aa AA 8.4%
A A A 21.2%
BBB Baa BBB 13.5%
BB Ba BB 2.3%
B B B .6%
F-1 MIG 1, P-1 SP-1, A-1 .3%
Not Rated Not Rated Not Rated 10.7%
------
100.0%
======
</TABLE>

- ----------------------------
(1) Includes tax exempt notes rated in one of the two highest rating
categories by Moody's, S&P or Fitch. These securities, together with
Municipal Obligations rated Baa or better by Moody's or BBB or better by
S&P or Fitch, are taken into account at the time of a purchase for purposes
of determining that the Fund's portfolio meets the 80% minimum quality
standard discussed in the Fund's Prospectus.

(2) Included in the Not Rated category are securities comprising 10.7% of
the value of the Fund's market value which, while not rated, have been
determined by the Manager to be of comparable quality to securities in the
following rating categories: Aaa/AAA (2.0%), A/A (1.1%), Baa/BBB (6.8%)
and Ba/BB (.8%).

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 obligations 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 the 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. See "Investment Restriction No. 11" below.

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.

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.

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.

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 the Fund's portfolio during such period.

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. 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 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
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 Jersey Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
New Jersey Municipal Obligations. If there should be a default of other
financial crisis relating to the State of New Jersey or an agency or
municipality thereof, the market value and marketability of outstanding New
Jersey Municipal Obligations in the Fund's portfolio and interest income to
the Fund could be adversely affected. These risks result from the
financial condition of the State of New Jersey. Although New Jersey
enjoyed a period of economic growth with unemployment levels below the
national average during the mid-1980s, its economy slowed down well before
the onset of the national recession, which, according to the National
Bureau of Economic Research, began in July 1990. Reflecting the economic
downturn, the State's unemployment rate rose from a low of 3.6% in the
first quarter of 1989 to a recessionary peak of 9.3% during 1992. Since
then, the State's unemployment rate fell to 6.7% during the fourth quarter
of 1993 and averaged 7.1% during the first nine months of 1994. As a
result of New Jersey's recent fiscal weakness, in July 1991, S&P lowered
its rating of the State's general obligation debt from AAA to AA+.
Investors should review Appendix A which 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 in the Prospectus
"Description of the Fund--Risk Factors--Lower Rated Bonds" 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 and will fluctuate over time. These bonds are considered
by S&P, Moody's and Fitch, on balance, as 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 an economic recession could severely disrupt 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, in which the Fund may invest up to
5% of its total assets, involve special considerations. The credit risk
factors pertaining to lower rated securities also apply to lower rated zero
coupon bonds. Such zero coupon 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 below as fundamental policies. These restrictions
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 Fund's Directors at any time. The Fund may not:

1. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
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 Restrictions numbered 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 indices,
and options on futures contracts or indices.

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 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, forward contracts, futures contracts, including those related 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
interests 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

*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995 Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus and
until August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino is a director and former Treasurer of the Muscular Dystrophy
Association; a trustee of Bucknell University; Chairman of the Board
of Directors of the Noel Group, Inc.; a director of HealthPlan
Corporation; a director of Belding Heminway Company, Inc.; and a
director of Curtis Industries, Inc. Mr. DiMartino is also a Board
member of 93 other funds in the Dreyfus Family of Funds. He is 51
years old and his address is 200 Park Avenue, New York, New York
10166.

GORDON J. DAVIS, Director. Since October 1994, Mr. Davis has been a senior
partner with the law firm of LeBoeuf, Lamb, Greene & MacRae. From
1983 to September 1994, he was a senior partner with the law firm of
Lord Day & Lord, Barrett Smith. Mr. Davis was Commissioner of Parks
and Recreation for the City of New York from 1978 to 1983. He is also
a Director of Consolidated Edison, a utility company, and Phoenix Home
Life Insurance Company and a member of various other corporate and
not-for-profit boards. He is also a Board member of 11 other funds in
the Dreyfus Family of Funds. Mr. Davis is 53 years old and his
address is 241 Central Park West, New York, New York 10024.

*DAVID P. FELDMAN, Director. Corporate Vice President-Investment Management
of AT&T. He is also a trustee of Corporate Property Investors, a real
estate investment company. He is also a Board member of 27 other funds
in the Dreyfus Family of Funds. Mr. Feldman is 55 years old and his
address is One Oak Way, Berkeley Heights, New Jersey 07922.

LYNN MARTIN, Director. Holder of the Davee Chair at the J.L. Kellogg
Graduate School of Management, Northwestern University. During the
Spring Semester 1993, she was a Visiting Fellow at the Institute of
Policy, Kennedy School of Government, Harvard University. Ms. Martin
also is a consultant to the international accounting firm of Deloitte
& Touche, and chairwoman of its Council on the Advancement of Women.
From January 1991 through January 1993, Ms. Martin served as Secretary
of the United States Department of Labor. From 1981 to 1991, she was
United States Congresswoman for the State of Illinois. She also is a
Director of Harcout General Corporation, a publishing, insurance and
retailing company, Ameritech Corporation, a telecommunications and
information company, and Ryder Systems Incorporated, a transportation
company. She is also a Board member of 11 other funds in the Dreyfus
Family of Funds. Ms. Martin is 53 years old and her address is 3750
Lake Shore Drive, Chicago, Illinois 60613.

EUGENE McCARTHY, Director. Writer and columnist; former Senator from
Minnesota from 1958-1970. He is also a Board member of 11 other funds
in the Dreyfus Family of Funds. Mr. McCarthy is 78 years old and his
address is P.O. Box 22, Woodville, Virginia 22749.

DANIEL ROSE, Director. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic American Enterprise
Fund, which will make equity investments and loans and provide
technical business assistance to new business concerns in the Baltic
States. He is also Chairman of the Housing Committee of The Real
Estate Board of New York, Inc., and a Trustee of Corporate Property
Investors, a real estate investment company. He is also a Board
member of 21 other funds in the Dreyfus Family of Funds. Mr. Rose is
65 years old and his address is c/o Rose Associates, Inc., 380 Madison
Avenue, New York, New York 10017.

SANDER VANOCUR, Director. Since January 1992, Mr. Vanocur has been the
President of Old Owl Communications, a full-service communications
firm, and since November 1989, he has served as a Director of the
Damon Runyon-Walter Winchell Cancer Research Fund. From June 1986 to
December 1991, he was a Senior Correspondent of ABC News and, from
October 1986 to December 1991, he was Anchor of the ABC News program
"Business World," a weekly business program on the ABC television
network. He is also a Board member of 21 other funds in the Dreyfus
Family of Funds. Mr. Vanocur is 67 years old and his address is 2928
P Street, N.W., Washington, D.C. 20007.

ANNE WEXLER, Director. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also
a Director of American Cyanamid Company, Alumax, The Continental
Corporation, Comcast Corporation, The New England Electric System,
NOVA and a member of the Board of the Carter Center of Emory
University, the Council of Foreign Relations, the National Park
Foundation; the Visiting Committee of the John F. Kennedy School of
Government at Harvard University and the Board of Visitors of the
University of Maryland School of Public Affairs. She is also a Board
member of 16 other funds in The Dreyfus Family of Funds. Ms. Wexler
is 65 years old and her address is 1317 F Street, N.W., Washington,
D.C. 20004.

REX WILDER, Director. Financial Consultant. He is also a Board member of
11 other funds in the Dreyfus Family of Funds. Mr. Wilder is 74 years
old and his address is 290 Riverside Drive, New York, New York 10025.

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 December 31, 1994, the aggregate amount of compensation paid to each
Director by the Fund and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member were as follows:

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

<S> <C> <C> <C> <C>
Gordon J. Davis $3,500 none none $ 29,602

Joseph S. DiMartino** $4,375 none none $445,000

Lynn Martin $3,000 none none $ 26,852

David P. Feldman $3,500 none none $ 85,631

Eugene McCarthy $3,500 none none $ 29,403

Daniel Rose $3,500 none none $ 62,006

Sander Vanocur $3,500 none none $ 62,006

Anne Wexler $1,182 none none $ 26,329

Rex Wilder $3,500 none none $ 29,403

* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $432 for all Directors
as a group.

** Estimated amounts for current fiscal year ending December 31, 1995.
</TABLE>

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by 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, Inc. 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.

ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered 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.

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.

JOSEPH F. 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 59 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 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. 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 February 17, 1995.

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 Board of Directors of the Fund, including a majority of the
Directors who are not "interested persons" of any party to the Agreement,
at a meeting held on November 9, 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 outstanding voting shares, or, upon
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; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Robert E. Riley, President, Chief Operating
Officer and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Paul H. Snyder, Vice President-Finance and Chief Financial
Officer; 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; Daniel C. Maclean, Vice President and General
Counsel; Mark N. Jacobs, Vice President-Legal and Secretary; Elvira
Oslapas, Assistant Secretary; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Katherine C. Wickham, Vice President-Human Resources;
William F. Glavin, Jr., Vice President-Product Management; Andrew S.
Wasser, Vice President-Information Services; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene, 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 A. Paul Disdier, Karen M. Hand, Stephen C.
Kris, Richard J. Moynihan, 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
Directors' 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: 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 Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
corporate existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and corporate
meetings and any extraordinary expenses. Pursuant to the Fund's Service
Plan, the Fund bears expenses for advertising, marketing and distributing
the Fund's shares and servicing shareholder accounts, and also bears the
cost of preparing and printing prospectuses and statements of additional
information 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.

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. The management fees payable
for the fiscal years ended December 31, 1992, 1993 and 1994 amounted to
$3,432,689, $4,137,876 and $3,715,934, respectively.

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 the 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.

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."

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 of Directors
has adopted such a plan (the "Plan"), pursuant to which the Fund (a)
reimburses the Distributor for payments to certain financial institutions
(which may include banks), securities dealers and other financial industry
professionals (collectively, "Service Agents") for distributing the Fund's
shares and for servicing shareholder accounts ("Servicing") and (b) pays
the Manager and Dreyfus Service Corporation and any affiliate of either of
them (collectively, "Dreyfus") for advertising and marketing relating to
the Fund and 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, banks or other 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
Board of 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 are not "interested persons" (as
defined in the Act) of the Fund or the Manager and have no direct or
indirect financial interest in the operation of the Plan or in the related
service agreements, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plan and the related service
agreements are subject to annual approval by such vote of the Directors
cast in person at a meeting called for the purpose of voting on the Plan.
The Plan was approved by shareholders on August 3, 1994 and was last
approved by the Board of Directors at a meeting held on November 7, 1994.
The Plan may be terminated at any time by vote of the holders 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 may be terminated 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 August 24, 1994 through December 31, 1994, $536,710 was
payable to the Distributor for payments made to Service was payable by the
Fund under the Plan Agents for distributing Fund shares and Servicing, (b)
$521,748 was payable to Dreyfus for advertising and marketing Fund shares
and Servicing and (c) $2,035 was payable for printing the Fund's
prospectuses and statement of additional information, as well as
implementing and operating the Plan. Pursuant to undertakings in effect,
the amount chargeable to the Fund pursuant to the Plan was reduced by
$244,422, resulting in a net fee of $292,288.

Prior Service Plan

For the period from January 1, 1994 through August 23, 1994,
$1,077,272 was payable by the Fund under the prior plan, of which (a)
$26,360 was payable to Dreyfus Service Corporation, as the Funds'
Distributor during such period, for payments made to Service Agents for
distributing Fund shares and Servicing, (b) $1,043,981 was payable to
Dreyfus for advertising and marketing Fund shares and Servicing and (c)
$6,931 was payable for printing the Fund's prospectuses and statement of
additional information, as well as implementing and operating the prior
service plan. Pursuant to undertakings in effect, the amount chargeable to
the Fund pursuant to the prior service plan was reduced by $907,021,
resulting in a net fee of $170,251.

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 and 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 acting on the
investor's behalf, 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 by the
Transfer Agent of a 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 borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.

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

Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP

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

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

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

Stock Certificates; Signatures. Any 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 Signature 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 the investor's Service Agent
acting on his 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 certifi-
cate form are not eligible for telephone exchange.

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. Fund Exchanges or the Dreyfus
Auto Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.

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

Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on 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.

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."

The Internal Revenue Code of 1986, as amended (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. In
addition, 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
investment in an economic sense although taxable as stated in "Dividends,
Distributions and Taxes" in the Prospectus.

Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. 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.

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 December 31, 1994
was 6.05%, which reflects the absorption of expenses pursuant to expense
limitations in effect. See "Management of the Fund" in the Prospectus.
Had expenses not been absorbed the Fund's current yield for the same period
would have been 5.90%. 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 1995 Federal and State of New Jersey personal
income tax rate of 43.57%, the Fund's tax equivalent yield for the 30-day
period ended December 31, 1994 was 10.72%, which reflects the absorption of
expenses pursuant to expense limitations in effect. See "Management of the
Fund" in the Prospectus. Had expenses not been absorbed the Fund's tax
equivalent yield for the same period would have been 10.46%. 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 and New Jersey State marginal personal income tax rates
presently in effect. For Federal income tax purposes, a 39.60% tax rate
has been used. For New Jersey income tax purposes, a 6.65% tax rate has
been used. The tax equivalent yield figure, however, does not include the
potential effect of any local (including, but not limited to, county,
district or 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 7.153 year
periods ended December 31, 1994 was -6.02%, 6.89% and 8.16%, 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 November 6, 1987 to
December 31, 1994 was 75.31%. Total return is calculated by subtracting
the amount of the Fund's net asset value per share at the beginning of
a stated period from the net asset value per share at the end of the
period (after giving effect to the reinvestment of dividends and
distributions during the period), and dividing the result by the net
asset value per share at the beginning of the period.

From time to time, 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 are not representative of the
Fund's past or future performance.

From time to time, the Fund may use hypothetical 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. Advertising materials for the Fund also may
refer to or discuss then-current or past economic conditions, developments
and/or events, and actual or proposed tax legislation. From time to time,
advertising materials for the Fund may also refer to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute, and may
refer to Morningstar ratings and related analyses supporting the 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 nonassessable.
Fund shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights
and are freely transferable.

On August 3, 1994, the Fund's shareholders voted to (a) approve (i) a
new investment advisory agreement with the Manager and (ii) a new Service
Plan, both of which became effective upon consummation of the merger
between the Manager and a subsidiary of Mellon Bank, N.A., and (b) change
certain of the Fund's investment restrictions to permit the Fund to (i)
borrow money to the extent permitted under the Act and (ii) pledge its
assets to the extent necessary to secure permitted borrowings.

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

APPENDIX A

RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS.

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 of
New Jersey and various local agencies available as of the date of this
Statement of Additional Information. While the Fund has not independently
verified this information, it has no reason to believe that such
information is not correct in all material respects.

New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's principal
manufacturing industries produce chemicals, pharmaceutical, electrical
equipment and instruments, machinery, printing and food products. Other
economic activities include services, wholesale and retail trade,
insurance, tourism, petroleum refining and truck farming.

While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. Initially, this
slowdown was an expected response to the State's tight labor market and the
decrease in the number of persons entering the labor force. Late in the
decade, a decline in construction demand and in the rate of growth in
consumer spending as well as continued softness in the State's
manufacturing sector set the stage for recession in New Jersey. By the
beginning of the national recession in July 1990 (according to the National
Bureau of Economic Research), construction activity had already been
declining in New Jersey for nearly two years. As the rapid acceleration of
real estate prices forced many would-be homeowners out of the market and
high non-residential vacancy rates reduced new commitments for offices and
commercial facilities, construction employment began to decline; also
growth had tapered off markedly in the service sectors and the long-term
downward trend of factory employment had accelerated, partly because of a
leveling off of industrial demand nationally. The onset of recession
caused an acceleration of New Jersey's job losses in construction and
manufacturing, as well as an employment downturn in such previously growing
sectors as wholesale trade, retail trade, finance, utilities and trucking
and warehousing. The net effect was a decline in the State's total nonfarm
wage and salary employment from a peak of 3,706,400 in March 1989 to a low
of 3,445,000 in March 1992. This loss has been followed by an employment
gain of 118,700 from March 1992 to September 1994. As a result of the
State's fiscal weakness, S&P, in July 1991, lowered its rating of the
State's general obligation debt from AAA to AA+.

Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary peak
of 9.3% during 1992. Since then, the unemployment rate fell to 6.7% during
the fourth quarter of 1993. The jobless rate averaged 7.1% during the
first nine months of 1994. In the first nine months of 1994, relative to
the same period a year ago, job growth took place in services (3.5%) and
construction (5.7%), more moderate growth took place in trade (1.9%),
transportation and utilities (1.2%) and finance/insurance/real estate
(1.4%), while manufacturing and government declined (by 1.5% and 0.1%,
respectively). The net result was a 1.6% increase in average employment
during the first nine months of 1994 compare to the first nine months of
1993.

The fiscal year ending June 30, 1995 Appropriations Act forecasts
Sales and Use Tax collections for fiscal year 1995 of $3.980 billion, a
5.3% increase from unaudited revenue for Fiscal Year 1994. Unaudited
revenue for fiscal year 1994 for the Sales and Use Tax of $3.778 billion
represents a 3.5% increase from actual receipts for fiscal year 1993.

The fiscal year 1995 Appropriations Act forecasts Gross Income Tax
collections for fiscal year 1995 of $4.582 billion, a 2.4% increase from
unaudited revenue for fiscal year 1994. Included in the fiscal year 1995
Gross Income Tax forecast is a 5% reduction of personal income tax rates
effective January 1, 1994 and a further 10% reduction of personal income
tax rates effective January 1, 1995. The fiscal year 1995 Gross Income Tax
estimates a $549 million reduction effective related to these tax cuts.
Unaudited revenue for fiscal year 1994 for the Gross Income Tax of $4.475
billion represents a 2.9% increase from actual receipts for fiscal year
1993.

The fiscal year 1995 Appropriations Act forecasts Corporation Business
Tax collections for fiscal year 1995 of $915 million, a 14% decrease from
unaudited revenue for fiscal year 1994. Included in the Corporation
Business Tax forecast is a reduction in the Corporation Business Tax rate
from 9.375% to 9.0% of net New Jersey income. Unaudited revenue for fiscal
year 1994 for the Corporation Business Tax of $1.063 billion, represents a
10.6% increase from actual receipts for fiscal year 1993.

The fiscal year 1995 Appropriations Act forecasts Other Miscellaneous
Taxes Fees and Revenues collections for fiscal year 1995 of $1.338 billion,
represents a 15.6% decrease from unaudited revenue for fiscal year 1994 for
Other Miscellaneous Taxes, Fees and Revenues. Included in the Other
Miscellaneous Taxes Fees and Revenues forecast is a decline of $426 million
in the Public Utility Gross receipts and Franchise tax in accordance with
the collection date changes that were legislated in 1991.

In connection with the current fiscal year 1995 budget, certain unions
and individual plaintiffs have filed a lawsuit concerning the funding of
certain retirement systems.

Should revenues be less than the amount anticipated in the budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent
any expenditure under any appropriation. There are additional means by
which the Governor may ensure that the State is operated efficiently and
does not incur a deficit. No supplemental appropriation may be enacted
after adoption of an appropriations act except where there are sufficient
revenues on hand or anticipated, as certified by the Governor, to meet such
appropriation. In the past when actual revenues have been less than the
amount anticipated in the budget, the Governor has exercised her plenary
powers leading to, among other actions, implementation of a hiring freeze
for all State departments and the discontinuation of programs for which
appropriations were budgeted but not yet spent.

The State appropriated approximately $15.492 billion and $15.291
billion for fiscal 1994 and 1995, respectively. Of the $15.291 billion
appropriated in fiscal year 1995 from the General Fund, the Property Tax
Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $5.782 billion (37.8%) is appropriated for
State Aid to Local Governments, $3.762 billion (24.6%) is appropriated for
Grants-in-Aid (payments to individuals or public or private agencies for
benefits to which a recipient is entitled by law or for the provision of
service on behalf of the State), $5.203 billion (34.0%) for Direct State
services, $103.5 million (0.7%) for Debt Service on State general
obligation bonds and $440.6 million (2.9%) for Capital Construction.

Should tax revenues be less than the amount anticipated in the Budget
for a fiscal year, the Governor may, pursuant to statutory authority,
prevent any expenditure under any appropriation. The appropriations for
fiscal year 1994 are unaudited and for fiscal year 1995 are revised
estimates, as of November 7, 1994, from the amounts contain in the fiscal
year 1995 Appropriations Act.

The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1991 through 1994 in the
amounts of $388.5 million, $410.6 million, $444.3 million and $119.9
million, respectively. For fiscal year 1995, $103.5 million has been
appropriated for principal and interest payments for general obligation
bonds.

As of June 30, 1993, the outstanding general obligation bonded
indebtedness of the State was approximately $3.6 billion.

APPENDIX B

Description of S&P's, Moody's and 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 and 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 payments.

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 interest and repayment 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

An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.

Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1

This designation 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 (+)
designation.

A-2

Capacity for timely payment on issues with this 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 sometime 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 and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference 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.

MIG 3/VMIG 3

This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.

MIG 4/VMIG 4

This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.

Commercial Paper Ratings

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 range of financial markets and
assured sources of alternate 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
reasonable 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 an 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 profitability 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 payment of interest
and/or principal seems probable over time.

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 lowest
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 13-36
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.

<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
STATEMENT OF INVESTMENTS
DECEMBER 31, 1994 PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--97.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
NEW JERSEY--82.2%
Atlantic City:
6.30%, 2/1/1996......................................................... $ 2,000,000 $ 2,023,980
6.30%, 2/1/1997......................................................... 2,000,000 2,035,700
Atlantic County Utilities Authority, Solid Waste System Revenue:
7%, 3/1/2008............................................................ 4,250,000 4,100,952
7.125%, 3/1/2016........................................................ 6,650,000 6,366,111
Bedminster Township Board of Education, COP 7.125%, 9/1/2010................ 2,500,000 2,592,700
Bergen County Utilities Authority, Water Pollution Control System Revenue
5.50%, 12/15/2015 (Insured; FGIC)....................................... 5,000,000 4,395,600
Bordentown Sewer Authority, Revenue 6.80%, 12/1/2025 (Insured; MBIA)........ 3,000,000 3,043,680
City of Camden:
Zero Coupon, 2/15/2010 (Insured; FSA)................................... 2,500,000 975,650
Zero Coupon, 2/15/2012 (Insured; FSA)................................... 4,585,000 1,564,310
Camden County Municipal Utilities Authority, Sewer Revenue
8.25%, 12/1/2017 (Insured; FGIC)........................................ 8,480,000 9,197,323
Camden County Pollution Control Financing Authority,
Solid Waste Disposal and Resource Recovery System Revenue:
7.50%, 12/1/2009...................................................... 3,335,000 3,273,202
7.50%, 12/1/2010...................................................... 13,000,000 12,715,950
East Orange:
Zero Coupon, 8/1/2009 (Insured; FSA).................................... 1,000,000 405,850
Zero Coupon, 8/1/2010 (Insured; FSA).................................... 4,240,000 1,607,893
Zero Coupon, 8/1/2011 (Insured; FSA).................................... 2,500,000 886,575
Elk Township Board of Education, COP 7.375%, 12/1/2009 (Insured; MBIA)...... 2,000,000 2,111,280
Essex County Improvement Authority, Lease Revenue:
7%, 12/1/2020 (Insured; AMBAC).......................................... 4,000,000 4,334,160
(Newark) 6.60%, 4/1/2014................................................ 1,000,000 970,740
Evesham Township Board of Education, COP, Lease Purchase Agreement
6.875%, 9/1/2011 (Insured; FGIC)........................................ 3,050,000 3,144,885
Gloucester Township Municipal Utilities Authority, Revenue
5.65%, 3/1/2018 (Insured; AMBAC)........................................ 2,530,000 2,254,685
Howell Township, Refunding 6.80%, 1/1/2014 (Insured; FGIC).................. 5,000,000 5,111,250
Hudson County Improvement Authority:
Facility Lease Revenue 6.389%, 12/1/2025 (Insured; FGIC) (a,b).......... 13,835,000 11,085,294
Multi-Family Housing Revenue (Conduit Financing - Observer Park Project)
6.90%, 6/1/2022 (Insured; FNMA)....................................... 4,190,000 4,113,826
Jersey City Zero Coupon, 5/15/2010 (Insured; FSA)........................... 4,745,000 1,782,886
Keansburg Board of Education, COP 8%, 11/1/2014 (Prerefunded 11/1/1999) (c). 7,750,000 8,663,725
Manchester Township Board of Education, COP
7.20%, 12/15/2009 (Prerefunded 12/15/1998) (Insured; MBIA) (c).......... 4,175,000 4,490,046

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
NEW JERSEY (CONTINUED)
Mercer County Improvement Authority, Revenue, Refunding:
Insured Solid Waste (Resource Recovery Project) 6.70%, 4/1/2013 (Insured; FGIC) $ 11,000,000 $ 11,066,110
Solid Waste (Resource Recovery Project) 6.80%, 4/1/2005................. 6,150,000 6,043,728
Middlesex County Utilities Authority, Sewer Revenue 6%, 8/15/2015 (Insured; AMBAC) 1,300,000 1,219,608
Monmouth County Improvement Authority, Revenue (Asbury Park Project)
7.375%, 12/1/2009....................................................... 3,000,000 3,113,700
Monroe Township Municipal Utilities Authority, Water and Sewer System Revenue
6.875%, 2/1/2017 (Insured; MBIA)........................................ 5,000,000 5,202,650
Borough of Moonachie Board of Education, COP
6.375%, 3/1/2014 (Lease Purchase Agreement; Lamington Funding Corp.).... 3,775,000 3,615,733
New Brunswick Parking Authority, Revenue, Refunding
7.125%, 9/1/2015 (Prerefunded 9/1/1999) (Insured; FGIC) (c)............. 2,000,000 2,151,020
New Jersey Economic Development Authority, Revenue:
(Community Mental Health Loan Program) 8.50%, 7/1/2017.................. 7,610,000 7,720,573
District Heating and Cooling Revenue (Trigen - Trenton Project):
6.10%, 12/1/2004...................................................... 3,375,000 3,286,778
6.20%, 12/1/2007...................................................... 2,725,000 2,658,728
Economic Development:
(American Airlines Inc. Project) 7.10%, 11/1/2031..................... 2,855,000 2,688,782
First Mortgage (The Evergreens) 9.25%, 10/1/2022...................... 5,000,000 5,094,950
First Mortgage Gross (Mega Care Inc. Project)
8.625%, 8/1/2007 (Prerefunded 8/1/1997) (c)....................... 5,000,000 5,480,000
Gas Facilities (Elizabethtown Gas Co. Project) 6.75%, 10/1/2021....... 1,350,000 1,301,346
Refunding:
(Manchester Manor Project) 6.70%, 8/1/2022 (Insured; GNMA)........ 2,500,000 2,388,200
(Stolt Terminals Inc. Project) 10.50%, 1/15/2018.................. 9,440,000 10,571,384
(Tevco Inc. Project) 8.125%, 10/1/2009 (LOC; Credit Lyonnais) (d). 2,500,000 2,618,500
Waste Paper Recycling (Marcal Paper Mills Inc. Project):
6.25%, 2/1/2009................................................... 6,605,000 6,005,860
8.50%, 2/1/2010................................................... 5,850,000 6,322,738
Water Facilities:
(American Water Co. Inc. Project) 6.50%, 4/1/2022 (Insured; FGIC). 32,800,000 32,139,736
(Elizabeth Water Project):
6.60%, 8/1/2021................................................. 6,010,000 5,777,113
6.70%, 8/1/2021................................................. 3,965,000 3,789,866
(Hackensack Water Project) 7%, 10/1/2017.......................... 1,500,000 1,502,700
New Jersey Educational Facilities Authority, Revenue:
(New Jersey Institute of Technology) 6.90%, 7/1/2009 (Insured; MBIA).... 2,000,000 2,069,660
(Seton Hall University Project):
6.85%, 7/1/2019 (Insured; BIGI)....................................... 9,050,000 9,196,610
7%, 7/1/2021.......................................................... 3,500,000 3,502,170
(Trenton State College)
7.125%, 7/1/2009 (Prerefunded 7/1/1999) (Insured; AMBAC) (c).......... 4,000,000 4,310,480
(Union County College) 7.25%, 7/1/2009.................................. 2,100,000 2,174,571

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
NEW JERSEY (CONTINUED)
New Jersey Health Care Facilities Financing Authority, Revenue:
(Bridgeton and Millville Hospitals):
7.875%, 7/1/2010 (Prerefunded 7/1/1998) (Insured; MBIA) (c)........... $ 1,250,000 $ 1,366,175
8%, Series C, 7/1/2013 (Prerefunded 7/1/1998) (Insured; MBIA) (c)..... 1,735,000 1,897,275
8%, Series D, 7/1/2013 (Insured; MBIA)................................ 645,000 701,238
(Community Memorial Hospital Association) 8%, 7/1/2014 (Insured; MBIA).. 2,500,000 2,720,475
(Deborah Heart and Lung Center Issue):
6.20%, 7/1/2013....................................................... 1,250,000 1,109,300
6.30%, 7/1/2023....................................................... 2,700,000 2,329,371
(Elmer Community Hospital)
7.90%, 2/1/2007 (Prerefunded 8/1/1997) (Insured; FHA) (c)............. 3,100,000 3,343,970
Health System (Franciscan Sisters of the Poor - Health Systems, Inc.,
Saint Mary's
Hospital) 5.875%, 7/1/2012 (Insured; MBIA)............................ 3,250,000 2,695,810
(Hunterdon Medical Center) 7%, 7/1/2020 (Insured; AMBAC)................ 5,000,000 5,116,800
(Kennedy Memorial Hospital University Medical Center):
8.375%, 7/1/2010...................................................... 2,065,000 2,308,938
6%, 7/1/2020.......................................................... 4,115,000 3,567,746
(Kimball Medical Center) 8%, 7/1/2013................................... 13,000,000 13,347,360
(Medical Center of Ocean County) 6.75%, 7/1/2020 (Insured; FSA)......... 2,000,000 2,012,820
(Newcomb Medical Center) 7.875%, 7/1/2003............................... 2,795,000 2,850,006
(Overlook Hospital Association) 6%, 7/1/2000 (Insured; FGIC)............ 250,000 254,915
(Palisades Medical Center):
7.50%, 7/1/2006....................................................... 2,450,000 2,418,517
7.60%, 7/1/2021....................................................... 2,400,000 2,323,104
(Princeton Medical Center) 7%, 7/1/2022 (Insured; AMBAC)................ 3,375,000 3,453,840
(Raritan Bay Medical Center) 7.25%, 7/1/2014............................ 13,000,000 12,289,290
(Refunding - Atlantic City Medical Center) 6.80%, 7/1/2011.............. 2,500,000 2,481,650
(Saint Peter's Medical Center)
6%, 7/1/2021 (Prerefunded 7/1/2001) (Insured; MBIA)................... 1,500,000 1,520,910
(Zurbrugg Memorial Hospital) 8.50%, 7/1/2012............................ 9,565,000 9,928,470
New Jersey Housing and Mortgage Finance Agency, Revenue:
Home Buyer:
7.65%, 10/1/2016 (Insured; MBIA)...................................... 1,085,000 1,136,364
4.880%, 4/1/2025 (Insured; MBIA) (a,b)................................ 9,200,000 6,497,500
7.70%, 10/1/2029 (Insured; MBIA)...................................... 4,835,000 4,969,461
Home Mortgage 8.10%, 10/1/2017 (Insured; MBIA).......................... 2,955,000 3,095,540
Multi-Family Housing, Refunding (Presidential Plaza at Newport Project)
7%, 5/1/2030 (Insured; FHA)........................................... 5,000,000 5,064,950
Rental Housing 6.75%, 11/1/2022......................................... 9,310,000 8,915,628
New Jersey Housing Finance Agency, General Resolution (Section 8)
7.10%, 11/1/2012........................................................ 1,000,000 1,016,890
New Jersey Transit Corp., Lease Purchase Agreement, COP (Raymond Plaza East Inc.)
6.50%, 10/1/2016 (Insured; FSA)......................................... 3,945,000 3,944,487
New Jersey Transportation Trust Fund Authority 1.295%, 5/15/1997 (a,b)...... 10,000,000 9,362,500
New Jersey Wastewater Treatment Trust, Loan Revenue
7.375%, 5/15/2007 (Insured; MBIA)....................................... 2,000,000 2,129,360

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
NEW JERSEY (CONTINUED)
North Jersey District Water Supply Commission:
(Wanaque North Project) 6%, 11/15/2019 (Insured; MBIA).................. $ 3,850,000 $ 3,604,832
(Wanaque South Project) 6%, 7/1/2019 (Insured; MBIA).................... 2,000,000 1,864,360
Ocean County Pollution Control Financing Authority, PCR, Refunding
(Ciba Geigy Corp. Project) 6%, 5/1/2020................................. 11,700,000 10,282,077
Passaic Board of Education, COP 7.875%, 4/1/2004 (Prerefunded 4/1/1999)
(LOC: Marine Midland Bank) (c,d)........................................ 4,000,000 4,383,720
Passaic County Utilities Authority, Solid Waste System Revenue 7%, 11/15/2007 5,000,000 4,895,900
Port Authority of New York and New Jersey:
(Delta Airlines Inc. Project) 6.95%, 6/1/2008........................... 7,200,000 6,908,976
Revenue:
(Consolidated Board 71st Series) 6.50%, 1/15/2026..................... 4,000,000 3,850,480
(Consolidated Board 73rd Series) 6.75%, 4/15/2026..................... 9,000,000 8,837,820
Special Obligation (Continental-Eastern LaGuardia Project) 9.125%, 12/1/2015 6,500,000 7,040,085
Rutgers State University 7%, 5/1/2019 (Prerefunded 5/1/1999) (c)............ 4,525,000 4,840,257
Salem County Improvement Authority, Revenue (County Correctional Facility and
Court
House) 7.125%, 5/1/2017 (Prerefunded 5/1/1999) (Insured; AMBAC) (c)..... 2,000,000 2,151,260
Salem County Industrial Pollution Control Financing Authority, Revenue
(Atlantic City Electric Project) 7.375%, 4/15/2014...................... 2,575,000 2,675,168
Sayreville Housing Development Corp., Mortgage Revenue, Refunding
(Lakeview Section 8) 7.75%, 8/1/2024 (Insured; FHA)..................... 2,990,000 3,043,073
Southeast Morris County Municipal Utilities Authority, Water Revenue
6.50%, 1/1/2011 (Insured; FGIC)......................................... 1,475,000 1,489,617
University of Medicine and Dentistry 7.20%, 12/1/2019....................... 5,710,000 5,916,588
West New York Municipal Utilities Authority, Sewer Revenue, Refunding
7.30%, 12/15/2017 (Prerefunded 12/15/2000) (Insured; FGIC) (c).......... 6,250,000 6,861,687
U.S. RELATED --14.8%
Guam Power Authority, Revenue 6.30%, 10/1/2022.............................. 3,750,000 3,334,275
Commonwealth of Puerto Rico:
5.50%, 7/1/2013......................................................... 4,500,000 3,902,085
7.30%, 7/1/2020 (Prerefunded 7/1/2000) (c).............................. 10,850,000 11,911,130
Public Improvement 6.80%, 7/1/2021 (Prerefunded 7/1/2002) (c)........... 4,400,000 4,752,220
Puerto Rico Electric Power Authority, Power Revenue, Refunding
8%, 7/1/2008 (Prerefunded 7/1/1998) (c)................................. 2,000,000 2,205,180
Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.625%, 7/1/2002........................................................ 510,000 545,425
6.360%, 7/1/2007 (a).................................................... 11,100,000 9,060,375
6.023%, 7/1/2009 (a).................................................... 2,950,000 2,282,563
7.75%, 7/1/2016 (Prerefunded 7/1/2000) (c).............................. 3,460,000 3,871,394
6.625%, Series S, 7/1/2018 (Prerefunded 7/1/2002) (c)................... 9,400,000 10,052,924
6.625%, Series T, 7/1/2018 (Prerefunded 7/1/2002) (c)................... 2,040,000 2,010,134

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
U.S. RELATED (CONTINUED)
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank of Puerto Rico) (d) .. $ 3,355,000 $ 3,458,200
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Baxter Travenol Laboratories) 8%, 9/1/2012 5,000,000 5,357,550
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities:
6%, 7/1/2012.......................................................... 1,650,000 1,531,992
7%, 7/1/2019 (Prerefunded 7/1/1998) (c)............................... 2,000,000 2,128,400
Puerto Rico Urban Renewal and Housing Corp. 7.875%, 10/1/2004............... 2,000,000 2,146,700
University of Puerto Rico, University Revenues, Refunding 6.50%, 6/1/2013... 2,250,000 2,230,785
Virgin Islands, Matching Fund (Hugo Insurance Claims Fund Program)
7.75%, 10/1/2006........................................................ 3,475,000 3,638,221
Virgin Islands Public Finance Authority, Revenue, Refunding
(Matching Fund Loan Notes) 7.25%, 10/1/2018 ............................ 4,750,000 4,644,123
Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 4,000,000 4,032,520
--------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $544,113,160)..................................................... $544,174,303
=============
SHORT-TERM MUNICIPAL INVESTMENTS--3.0%
NEW JERSEY:
New Jersey Economic Development Authority, Revenue, VRDN:
Industrial and Economic Development (Merck and Co.)
5.75% (LOC; Bankers Trust Co.) (d,e).................................. $ 2,000,000 $ 2,000,000
Pollution Control:
(Merck and Co.) 6% (e)................................................ 800,000 800,000
Refunding (Hoffman LaRoche Project) 5.75% (LOC; Bankers Trust Co.) (d,e) 2,800,000 2,800,000
New Jersey Turnpike Authority, Turnpike Revenue, VRDN
4.65% (LOC; Societe Generale, Insured; FGIC) (d,e)...................... 6,300,000 6,300,000
Port Authority of New York and New Jersey, Special Obligation Revenue, VRDN
6% (SBPA; Morgan Guaranty Trust Co.) (e)................................ 5,000,000 5,000,000
--------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $16,900,000)...................................................... $ 16,900,000
=============
TOTAL INVESTMENTS--100.0%
(cost $561,013,160)..................................................... $561,074,303
=============
</TABLE>
<TABLE>
<CAPTION>

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation GNMA Government National Mortgage Association
BIGI Bond Investors Guaranty Insurance LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue
FHA Federal Housing Administration PCR Pollution Control Revenue
FNMA Federal National Mortgage Association SBPA Standby Bond Purchase Agreement
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>

SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 40.7%
AA Aa AA 6.4
A A A 20.2
BBB Baa BBB 14.5
BB Ba BB 2.1
B B B 1.3
F1 MIG1 SP1 2.2
Not Rated (g) Not Rated (g) Not Rated (g) 12.6
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994, these securities amounted to $26,945,294 or 4.7% of net assets.
(c) 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.
(d) Secured by letters of credit.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard and
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $561,013,160)_see statement..................................... $561,074,303
Cash.................................................................... 4,543,365
Interest receivable..................................................... 12,299,237
Prepaid expenses........................................................ 11,675
--------------
577,928,580
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $219,567
Due to Distributor...................................................... 123,596
Payable for shares of Common Stock redeemed............................. 3,425
Accrued expenses........................................................ 57,209 403,797
---------- --------------
NET ASSETS ................................................................ $577,524,783
==============
REPRESENTED BY:
Paid-in capital......................................................... $578,911,627
Accumulated undistributed investment income-net......................... 93,977
Accumulated net realized capital losses and distributions in excess of net
realized gain on investments_Note 1(c)................................ (1,541,964)
Accumulated net unrealized appreciation on investments_Note 3........... 61,143
--------------
NET ASSETS at value applicable to 46,540,437 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $577,524,783
==============
NET ASSET VALUE, offering and redemption price per share
($577,524,783 / 46,540,437 shares)...................................... $12.41
=======
</TABLE>

See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
<S> <C> <C>

INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 43,059,985
EXPENSES:
Management fee-Note 2(a).............................................. $ 3,852,037
Shareholder servicing costs-Note 2(b)................................. 2,016,172
Custodian fees........................................................ 72,895
Professional fees..................................................... 50,316
Prospectus and shareholders' reports-Note 2(b)........................ 27,202
Directors' fees and expenses-Note 2(c)................................ 25,541
Registration fees..................................................... 4,677
Miscellaneous......................................................... 167,771
-------------
6,216,611
Less-reduction in management fee and shareholder servicing costs
due to undertakings-Note 2(b)..................................... 1,287,546
-------------
TOTAL EXPENSES.................................................. 4,929,065
--------------
INVESTMENT INCOME--NET.......................................... 38,130,920
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments_Note 3............................... $ (1,454,272)
Net unrealized (depreciation) on investments............................ (78,775,736)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (80,230,008)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(42,099,088)
=============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 39,555,174 $ 38,130,920
Net realized gain (loss) on investments................................. 1,854,233 (1,454,272)
Net unrealized appreciation (depreciation) on investments for the year.. 41,608,187 (78,775,736)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 83,017,594 (42,099,088)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.............................................. (39,555,174) (38,036,943)
From net realized gain on investments................................... (1,117,588) ___
In excess of net realized gain on investments........................... ___ (743,575)
-------------- --------------
TOTAL DIVIDENDS....................................................... (40,672,762) (38,780,518)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 259,116,860 167,291,374
Dividends reinvested.................................................... 32,091,573 29,894,610
Cost of shares redeemed................................................. (222,267,812) (264,596,453)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 68,940,621 (67,410,469)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 111,285,453 (148,290,075)
NET ASSETS:
Beginning of year....................................................... 614,529,405 725,814,858
-------------- --------------
End of year (including undistributed investment income-net; $93,977 in 1994) $725,814,858 $577,524,783
============== ============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 18,866,106 12,816,258
Shares issued for dividends reinvested.................................. 2,325,735 2,298,448
Shares redeemed......................................................... (16,110,778) (20,301,295)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 5,081,063 (5,186,589)
============== ============
</TABLE>

See notes to financial statements.

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated May 1, 1994.

See notes to financial statements.
DREYFUS NEW JERSEY 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 Fund's
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment 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.
(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 principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends from investment income-net on each business day. 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, it is the policy of the Fund not to distribute such gain.
Dividends in excess of net realized gain on investments for financial
statement purposes result primarily from distributions of realized gain
necessary to satisfy tax requirements.
(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.
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of approximately $1,454,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1994. If not
applied, the carryover expires in fiscal 2002.
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 and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed 1 1/2% of the average value of the Fund's net
assets for any full year. However, the manager has currently undertaken from
November 8, 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) exceed specified annual percentages of the Fund's average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $136,103 for the year ended December 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 certain Service Agents for distributing the Fund's shares and
servicing shareholder accounts and (b) pays the Manager, Dreyfus Service
Corporation or any other affiliate (collectively "Dreyfus") for advertising
and marketing relating to the Fund and servicing shareholder accounts, at an
aggregate annual rate of .25 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 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
.25 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 year.
During the year ended December 31, 1994, $536,710 was charged to the Fund
pursuant to the Plan, of which $244,422 was waived by the Manager and
$1,077,272 was charged to the Fund pursuant to the prior Service Plan, of
which $907,021 was waived by the Manager.
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 attendance fee of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $91,731,576 and $176,044,065, respectively, for the year ended
December 31, 1994, and consisted entirely of long-term and short-term
municipal investments.
At December 31, 1994, accumulated net unrealized appreciation on
investments was $61,143, consisting of $17,278,254 gross unrealized
appreciation and $17,217,111 gross unrealized depreciation.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus New Jersey Municipal Bond Fund, Inc., including the statement of
investments, as of December 31, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New Jersey Municipal Bond Fund, Inc. at December 31,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.

(Ernst & Young LLP Signature Logo)
New York, New York
February 6, 1995