DREYFUS ASSET ALLOCATION FUND INC
485BPOS, 1998-08-28
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                                                          File Nos. 33-62626
   
                                                                    811-7710
    
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933               [X]

     Pre-Effective Amendment No.                                      [__]
   
     Post-Effective Amendment No. 11                                  [X]
    
                                   and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940       [X]
   
     Amendment No. 11                                                 [X]
    
                      (Check appropriate box or boxes.)

                     DREYFUS ASSET ALLOCATION FUND, INC.
             (Exact Name of Registrant as Specified in Charter)


          c/o The Dreyfus Corporation
          200 Park Avenue, New York, New York          10166
          (Address of Principal Executive Offices)     (Zip Code)

     Registrant's Telephone Number, including Area Code: (212) 922-6000

                            Mark N. Jacobs, Esq.
                               200 Park Avenue
                          New York, New York 10166
                   (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate
box)

          immediately upon filing pursuant to paragraph (b)
     ----
   
      X   on September 1, 1998 pursuant to paragraph (b)
     ----
    
          60 days after filing pursuant to paragraph (a)(i)
     ----
          on     (date)      pursuant to paragraph (a)(i)
     ----
          75 days after filing pursuant to paragraph (a)(ii)
     ----
          on     (date)      pursuant to paragraph (a)(ii) of Rule 485
     ----

If appropriate, check the following box:

          this post-effective amendment designates a new effective date for
          a previously filed post-effective amendment.
     ----
   
    
                     DREYFUS ASSET ALLOCATION FUND, INC.
                Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A     Caption                                       Page
_________     _______                                       ____

  1           Cover Page                                     Cover
   
  2           Synopsis                                       3
    
   
  3           Condensed Financial Information
  4           General Description of Registrant              4
    
   
  5           Management of the Fund                         5,19
    
   
  5(a)        Management's Discussion of Fund's Performance  *
    
   
  6           Capital Stock and Other Securities             18
    
   
  7           Purchase of Securities Being Offered           9
    
   
  8           Redemption or Repurchase                       15
    
   
  9           Pending Legal Proceedings                      *
    
Items in
Part B of
Form N-1A
_________
   
  10          Cover Page                                     Cover
    
   
  11          Table of Contents                              Cover
    
   
  12          General Information and History                B-34
    
   
  13          Investment Objectives and Policies             B-2
    
   
  14          Management of the Fund                         B-17
    
   
  15          Control Persons and Principal                  B-17,22
              Holders of Securities
    
   
  16          Investment Advisory and Other                  B-22,23
              Services
    
_____________________________________
NOTE:  * Omitted since answer is negative or inapplicable.

                     DREYFUS ASSET ALLOCATION FUND, INC.
          Cross-Reference Sheet Pursuant to Rule 495(a) (continued)

Items in
Part B of
Form N-1A     Caption                                      Page
_________     _______                                      _____
   
  17          Brokerage Allocation                         B-32
    
   
  18          Capital Stock and Other Securities           B-33
    
   
  19          Purchase, Redemption and Pricing             B-23,25,32
              of Securities Being Offered
    
   
  20          Tax Status                                   *
    
   
  21          Underwriters                                 B-33
    
   
  22          Calculations of Performance Data             B-31
    
   
  23          Financial Statements                         B-35
    
Items in
Part C of
Form N-1A
_________
   
  24          Financial Statements and Exhibits            C-1
    
   
  25          Persons Controlled by or Under               C-4
              Common Control with Registrant
    
   
  26          Number of Holders of Securities              C-4
    
   
  27          Indemnification                              C-4
    
   
  28          Business and Other Connections of            C-5
              Investment Adviser
    
   
  29          Principal Underwriters                       C-11
    
   
  30          Location of Accounts and Records             C-13
    
   
  31          Management Services                          C-14
    
   
  32          Undertakings                                 C-14
    
_____________________________________
NOTE:  * Omitted since answer is negative or inapplicable.



- --------------------------------------------------------------------------------
   

PROSPECTUS                                                    SEPTEMBER 1, 1998
    

                      DREYFUS ASSET ALLOCATION FUND, INC.
- --------------------------------------------------------------------------------

   DREYFUS   ASSET   ALLOCATION   FUND,  INC.  (THE  "FUND" ) IS  AN  OPEN-END,
NON-DIVERSIFIED  MANAGEMENT  INVESTMENT  COMPANY,  KNOWN  AS  A MUTUAL FUND. THE
FUND's  INVESTMENT OBJECTIVE IS TO MAXIMIZE TOTAL RETURN, CONSISTING OF CAPITAL
APPRECIATION  AND  CURRENT  INCOME. THE FUND FOLLOWS AN INVESTMENT STRATEGY THAT
ACTIVELY  ALLOCATES  THE  FUND'S ASSETS AMONG EQUITY AND FIXED-INCOME SECURITIES
AND  SHORT-TERM  MONEY  MARKET  INSTRUMENTS.  IN  ADDITION  TO  USUAL INVESTMENT
PRACTICES,   THE   FUND  MAY  USE  SPECULATIVE  INVESTMENT  TECHNIQUES  SUCH  AS
SHORT-SELLING,  BORROWING  FOR  INVESTMENT  PURPOSES,  AND  FUTURES  AND OPTIONS
TRANSACTIONS.

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

   THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
                               -----------------

   THIS  PROSPECTUS  SETS  FORTH  CONCISELY  INFORMATION ABOUT THE FUND THAT YOU
SHOULD  KNOW  BEFORE  INVESTING.  IT  SHOULD  BE  READ  AND  RETAINED FOR FUTURE
REFERENCE.
   
   THE  STATEMENT  OF ADDITIONAL INFORMATION, DATED SEPTEMBER 1, 1998, 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. THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A WEB SITE
(HTTP: //WWW.SEC.GOV)  THAT  CONTAINS  THE  STATEMENT OF ADDITIONAL INFORMATION,
MATERIAL  INCORPORATED  BY  REFERENCE, AND OTHER INFORMATION REGARDING THE FUND.
FOR A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, WRITE TO THE FUND AT
144   GLENN   CURTISS   BOULEVARD,  UNIONDALE,  NEW  YORK  11556-0144,  OR  CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
                               -----------------
    
   MUTUAL  FUND  SHARES  ARE  NOT  DEPOSITS  OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED  BY,  ANY  BANK,  AND  ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE  CORPORATION,  THE  FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE NET
ASSET  VALUE  OF  FUNDS  OF  THIS  TYPE  WILL  FLUCTUATE  FROM  TIME  TO  TIME.
- --------------------------------------------------------------------------------

                             TABLE OF CONTENTS
                                                               PAGE

          ANNUAL FUND OPERATING EXPENSES                        3

          CONDENSED FINANCIAL INFORMATION                       4

          DESCRIPTION OF THE FUND                               5

          MANAGEMENT OF THE FUND                                8

          HOW TO BUY SHARES                                     9

          SHAREHOLDER SERVICES                                 12

          HOW TO REDEEM SHARES                                 15

          SHAREHOLDER SERVICES PLAN                            17

          DIVIDENDS, DISTRIBUTIONS AND TAXES                   17

          PERFORMANCE INFORMATION                              18

          GENERAL INFORMATION                                  19

          APPENDIX                                             20
- --------------------------------------------------------------------------------

THESE  SECURITIES  HAVE  NOT  BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE  COMMISSION  OR  ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL    OFFENSE.
- --------------------------------------------------------------------------------

                     [This Page Intentionally Left Blank]

                                   [Page 2]

                        ANNUAL FUND OPERATING EXPENSES

                 (as a percentage of average daily net assets)
   
     Management Fees                                                   .75%

     Other Expenses                                                    .52%

     Total Fund Operating Expenses                                    1.27%

EXAMPLE:

   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:

     1 YEAR                                                           $  13

     3 YEARS                                                          $  40

     5 YEARS                                                          $  70

     10 YEARS                                                         $ 153
    
- --------------------------------------------------------------------------------
   THE  AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED.  MOREOVER,  WHILE  THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S
ACTUAL  PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%.
- --------------------------------------------------------------------------------

   The  purpose  of  the  foregoing  table is to assist you in understanding the
costs  and  expenses  borne  by  the  Fund,  the  payment  of  which will reduce
investors'  annual  return. Certain Service Agents (as defined below) may charge
their  clients  direct fees for effecting transactions in Fund shares; such fees
are  not reflected in the foregoing table. See "Management of the Fund," "How to
Buy Shares" and "Shareholder Services Plan."

                                   [Page 3]


                        CONDENSED FINANCIAL INFORMATION
     
   The information in the following table has been audited by Ernst & Young LLP,
the  Fund's independent auditors. Further financial data, related notes and the
report   of   independent   auditors   accompany  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 APRIL 30,

                                                                      -----------------------------------------------------------

<S>                                                                   <C>           <C>         <C>         <C>         <C>
                                                                      1994(1)       1995        1996        1997        1998
                                                                     -------       ------      ------       ------      -----
PER SHARE DATA:

  Net asset value, beginning of year                                  $12.50       $12.49      $13.81       $13.49      $14.68
                                                                     -------       ------      ------       ------      ------
INVESTMENT OPERATIONS:

  Investment income-net                                                  .24          .39         .32          .33         .24

  Net realized and unrealized gain (loss) on investments               (.11)         1.35        1.70         1.83        4.40
                                                                      -------       ------      ------       ------      -----




     TOTAL FROM INVESTMENT OPERATIONS                                    .13         1.74        2.02         2.16        4.64
                                                                       -------       ------      ------       ------      ------

 DISTRIBUTIONS:

  Dividends from investment income-net                                 (.13)        (.37)       (.38)        (.34)       (.24)

  Dividends from net realized gain on investments                      (.01)        (.05)      (1.96)        (.63)      (3.59)
                                                                      -------       ------      ------       ------     ------




     TOTAL DISTRIBUTIONS                                               (.14)        (.42)       (2.34)        (.97)      (3.83)
                                                                      -------       ------     ------       ------      ------
  Net asset value, end of year                                        $12.49       $13.81      $13.49       $14.68      $15.49
                                                                      ======       ======      ======       ======      ======


TOTAL INVESTMENT RETURN                                              .99%(2)       14.22%      15.67%       16.49%      34.33%

RATIOS / SUPPLEMENTAL DATA:

  Ratio of expenses to average net assets                            .16%(2)         .67%       1.25%        1.31%       1.27%

  Ratio of net investment income to average net assets              2.48%(2)        3.00%       2.16%        2.12%       1.57%

  Decrease  reflected  in   above   expense  ratios  due to

     undertakings by The Dreyfus Corporation                        1.58%(2)        1.27%        .27%          --         --

  Portfolio Turnover Rate                                                --      160.11%     370.06%      223.50%     262.74%

  Average Commission Rate Paid (3)                                       --          --         --         $.0538       $.0633

  Net Assets, end of year (000's omitted)                           $51,063      $56,639     $62,940      $60,856     $94,896
- ------------------

(1)  From July 1, 1993 (commencement of operations) through April 30, 1994.

(2)  Not annualized.

(3)For  fiscal  years  beginning  May  1,  1996,  the  Fund is required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
    
</TABLE>
   Further  information  about the Fund's performance is contained in the Fund's
annual  report which may be obtained without charge by writing to the address or
calling the number set forth on the cover page of this Prospectus.


                                     [Page 4]



                               DEBT OUTSTANDING
   

                                                  YEAR ENDED APRIL 30, 1998
                                                   -----------------------------

PER SHARE DATA:

  Amount of debt outstanding at
     end of year (in thousands)                           --

  Average amount of debt outstanding
     throughout year (in thousands)(1)                    --

  Average number of shares outstanding
     throughout year (in thousands)(2)                    --

  Average amount of debt per
     share throughout year                                --
- ----------------------------------------------

(1)Based upon daily outstanding borrowings.

(2)Based upon month-end balances.
    
                            DESCRIPTION OF THE FUND

INVESTMENT OBJECTIVE

   The  Fund's  investment objective is to maximize total return, consisting of
capital  appreciation  and current income. It cannot be changed without approval
by  the holders of a majority (as defined in the Investment Company Act of 1940,
as  amended (the "1940 Act")) of the Fund's outstanding voting shares. There can
be no assurance that the Fund's investment objective will be achieved.

MANAGEMENT POLICIES

   The  Fund  seeks  to  achieve  its investment objective by following an asset
allocation  strategy  that  contemplates  shifts,  which  may be frequent, among
equity and fixed-income securities and short-term money market instruments.

   The  following  table sets forth the asset classes, benchmark percentages and
asset  class  strategy  ranges  within  which The Dreyfus Corporation intends to
manage the Fund's assets:

ASSET                                         BENCHMARK         STRATEGY

CLASS                                        PERCENTAGE          RANGE
- ------                                      -------------       --------



Equity Securities                                55%            40-80%

Fixed-Income Securities                          35%            20-60%

Short-Term Money Market Instruments              10%             0-40%

   " Benchmark  percentage"  represents  the  asset  mix The Dreyfus Corporation
expects  to  maintain  when its assessment of economic conditions and investment
opportunities  indicate that the financial markets are fairly valued relative to
each  other.  The  asset  class  "strategy  range" indicates ordinarily expected
variations from this benchmark and reflects that The Dreyfus Corporation expects
to make policy weight shifts within specific asset classes.

   The  Dreyfus  Corporation  has  broad  latitude  in  selecting  the  class of
investments  and  market  sectors  in  which  the Fund will invest. Under normal
market  conditions, The Dreyfus Corporation expects to adhere to the asset class
strategy  ranges  set  forth  above;  however, it reserves the right to vary the
asset  class mix and the percentage of securities invested in any asset class or
market  from the benchmark percentages and asset class strategy ranges set forth
above  as the risk/return characteristics of either markets or asset classes, as
assessed  by  The  Dreyfus  Corporation,  vary  over  time. The Fund will not be
managed  as a balanced portfolio. The asset allocation mix will be determined by
The  Dreyfus Corporation at any given time in light of its assessment of current
economic  conditions  and investment opportunities. Some of the factors that The
Dreyfus Corporation may consider in determining the asset allocation mix include
the  following:  (1)  level  and  direction  of  long-term interest rates versus
short-term  interest  rates;  (2)  historical  investment returns for each asset
class  in  which  the Fund can invest relative to the prevailing business cycle;
and (3) general economic conditions, such as current inflation, unemployment and
capacity   utilization   figures,  that  could  affect  investments.  The  asset
allocation mix selected will be a primary determinant

[Page 5]

of  the  Fund's investment performance. Under certain market conditions,
limiting  the  Fund's asset allocation among these asset classes may inhibit its
ability to achieve its investment objective.

   The  equity  securities  in which the Fund may invest include, common stocks,
preferred stocks and convertible securities of domestic and foreign issuers. The
Fund  is  particularly  alert  to companies, both domestic and foreign, which it
considers  undervalued  by the stock market in terms of current earnings, assets
or  overall  growth prospects. The Fund may invest up to 25% of the value of its
total  assets  in  equity securities of foreign companies which are not publicly
traded in the United States.

   The  fixed-income  securities  in  which  the  Fund  may  invest include U.S.
dollar-denominated   bonds,  debentures,  notes,  mortgage-related  securities,
asset-backed  securities,  municipal  obligations,  warrants,  convertible  debt
obligations  and  convertible preferred stocks. The issuers of these obligations
may  include  domestic  and  foreign  corporations,  partnerships or trusts, and
governments,  their  political  subdivisions,  agencies  or  municipalities, and
corporations.  The Fund may invest up to 30% of its total assets in fixed-income
securities  of  foreign issuers, including securities of issuers whose principal
activities  are  in,  or which are governments of, emerging markets. The Fund is
not subject to any limit on the percentage of its assets that may be invested in
fixed-income  securities  having  a  certain rating. Thus, it is possible that a
substantial  portion  of  the  Fund's  assets  may  be invested in fixed-income
securities  that are unrated or rated in the lowest categories of the recognized
rating  services  (i.e.,  securities  rated C by Moody's Investors Service, Inc.
(" Moody's" ) or D by Standard & Poor's Ratings Group ("S&P"), Fitch IBCA, Inc.
(" Fitch" ) or  Duff & Phelps Credit Rating Co. ("Duff")). Low-rated and unrated
securities  have  special  risks  relating to the ability of the Fund to receive
timely,  or  perhaps  ultimate,  payment  of  principal  and  interest. They are
considered  to  have speculative characteristics and to be of poor quality; some
obligations  in which the Fund may invest, such as debt securities rated D by S&
P,  Fitch  and Duff, may be in default. The Fund intends to invest less than 35%
of its assets in debt securities rated Ba or lower by Moody's and BB or lower by
S& P,  Fitch  and Duff. See "Investment Considerations and Risks -- Fixed-Income
Securities"  and  "--  Lower Rated Securities" below for a discussion of certain
risks.

                            [Page 6]

   The  money  market  instruments  in  which  the  Fund may invest include U.S.
Government   securities,  certificates  of  deposit,  time  deposits,  bankers'
acceptances,  short-term  investment  grade corporate bonds and other short-term
debt    instruments,   and   repurchase   agreements,   as   set   forth   under
" Appendix--Certain  Portfolio  Securities--Money  Market Instruments." When The
Dreyfus  Corporation  determines  that adverse market conditions exist, the Fund
may  adopt  a temporary defensive posture and invest without limitation in money
market instruments.
   

   The  Fund's annual portfolio turnover rate for the current fiscal year is not
expected  to  exceed  250% . A  turnover  rate of 100% is equivalent to the Fund
buying  and selling all of the securities in its portfolio once in the course of
a  year.  Higher  portfolio turnover rates usually generate additional brokerage
commissions   and  expenses  and  the  short  term  gains  realized  from  these
transactions are taxable to shareholders as ordinary income. The Fund may engage
in various investment techniques, such as foreign currency transactions, lending
portfolio securities, short-selling, leveraging, interest rate swaps and options
and  futures  transactions.  For  a  discussion of the investment techniques and
their   related   risks,   see   "Investment   Considerations   and  Risks"  and
"Appendix--Investment Techniques" below and "Investment Objective and Management
Policies--Management Policies" in the Statement of Additional Information.
    
INVESTMENT CONSIDERATIONS AND RISKS

GENERAL -- The Fund's net asset value per share should be expected to fluctuate.
Investors  should  consider  the  Fund  as a supplement to an overall investment
program  and  should  invest  only  if  they  are willing to undertake the risks
involved. See "Investment Objective and Management Policies" in the Statement of
Additional Information for a further discussion of certain risks.


EQUITY  SECURITIES  --  Equity  securities  fluctuate  in  value, often based on
factors  unrelated  to  the  value  of  the  issuer  of the securities, and such
fluctuations  can  be pronounced. Changes in the value of the Fund's investments
will  result  in  changes  in  the value of its shares and thus the Fund's total
return to investors.

   The  Fund  may  purchase  securities of smaller capitalization companies, the
prices  of  which may be subject to more abrupt or erratic market movements than
larger,  more  established  companies,  because  these  securities typically are
traded  in lower volume and the issuers typically are more subject to changes in
earnings and prospects.

FIXED-INCOME   SECURITIES   --   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. The values of fixed-income
securities  also  may  be  affected by changes in the credit rating or financial
condition of the issuer. Certain securities purchased by the Fund, such as those
rated  Baa  or  lower by Moody's and BBB or lower by S&P, Fitch and Duff, may be
subject  to  such  risk with respect to the issuing entity and to greater market
fluctuations  than certain lower yielding, higher rated fixed-income 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.  Mortgage-related  securities in which the Fund may invest are complex
derivative  instruments,  subject to both credit and prepayment risk, and may be
more  volatile  and  less  liquid  than  more  traditional debt securities. Some
mortgage-related  securities  have  structures  that  make  their  reactions  to
interest rate changes and other factors difficult to predict, making their value
highly volatile. See "Lower Rated Securities" and "Appendix -- Certain Portfolio
Securities  --  Mortgage-Related Securities and Ratings" below and "Appendix" in
the Statement of Additional Information.

FOREIGN  SECURITIES -- Foreign securities markets generally are not as developed
or  efficient  as those in the United States. Securities of some foreign issuers
are  less  liquid  and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less than
in  the  United States and, at times, volatility of price can be greater than in
the United States.

   Because  evidences  of  ownership of such securities usually are held outside
the  United  States,  the Fund will be subject to additional risks which include
possible:    adverse   political   and   economic   developments,   seizure   or
nationalization  of  foreign  deposits and adoption of governmental restrictions
which  might  adversely affect or restrict the payment of principal and interest
on  the  foreign  securities  to  investors  located  outside the country of the
issuer, whether from currency blockage or otherwise.

Developing countries have economic structures that are generally less diverse
and  mature, and political systems that are less stable, than those of developed
countries.  The  markets  of  developing countries may be more volatile than the
markets of more mature economies; however, such markets may provide higher rates
of   return   to  investors.  Many  developing  countries  providing  investment
opportunities  for  the  Fund  have experienced substantial, and in some periods
extremely  high,  rates  of  inflation  for  many  years.  Inflation  and  rapid
fluctuations  in  inflation  rates  have  had  and may continued to have adverse
effects on the economies and securities markets of certain of these countries.

   Since  foreign  securities often are purchased with and payable in currencies
of  foreign countries, the value of these assets as measured in U.S. dollars may
be  affected  favorably or unfavorably by changes in currency rates and exchange
control  regulations. See "Appendix -- Investment Techniques -- Foreign Currency
Transactions."

LOWER  RATED  SECURITIES  --  The Fund may invest up to 35% of its net assets in
higher  yielding  (and,  therefore,  higher  risk) debt securities such as those
rated  Ba  by Moody's or BB by S&P, Fitch or Duff or as low as the lowest rating
assigned by Moody's, S&P, Fitch or Duff (commonly known as junk bonds). They 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.  The retail secondary market for these securities may be less liquid
than that of higher rated securities; adverse conditions could make it difficult

                               [Page 7]

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. See "Appendix
- -- Certain Portfolio Securities--Ratings."

   
USE  OF  DERIVATIVES  --  The  Fund  may  invest  in, or enter into, derivatives
("Derivatives"). These are financial instruments which derive their performance,
at least in part, from the performance of an underlying asset, index or interest
rate.   The   Derivatives  the  Fund  may  use  include  options  and  futures,
mortgage-related  securities,  asset-backed  securities and interest rate swaps.
While  Derivatives  can  be  used  effectively  in  furtherance  of  the  Fund's
investment  objective,  under  certain  market conditions, they can increase the
volatility  of  the Fund's net asset value, decrease the liquidity of the Fund's
portfolio  and make more difficult the accurate pricing of the Fund's portfolio.
See  "Appendix--Investment Techniques--Use of Derivatives" below and "Investment
Objective  and  Management  Policies--Management  Policies--Derivatives"  in the
Statement of Additional Information.
    

NON-DIVERSIFIED  STATUS -- The classification of the Fund 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 1940 Act. A
" diversified"  investment  company  is required by the 1940 Act generally, with
respect to 75% of its total assets, to invest not more than 5% of such assets in
the  securities  of a single issuer. Because a relatively high percentage of the
Fund's assets may be invested in the securities of a limited number of issuers,
some  of which may be within the same industry, the Fund's portfolio may be more
sensitive  to  changes  in  the  market  value  of  a single issuer or industry.
However, to meet Federal tax requirements, at the close of each quarter the Fund
may  not  have more than 25% of its total assets invested in any one issuer and,
with  respect  to  50%  of  total  assets,  not more than 5% of its total assets
invested  in  any  one issuer. These limitations do not apply to U.S. Government
securities.

SIMULTANEOUS   INVESTMENTS  --  Investment  decisions  for  the  Fund  are  made
independently  from  those  of other investment companies advised by The Dreyfus
Corporation.  If,  however, such other investment companies desire to invest in,
or  dispose  of,  the  same  securities  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.

   
YEAR 2000 RISKS -- Like other mutual funds, financial and business organizations
and  individuals  around  the world, the Fund could be adversely affected if the
computer  systems  used  by The Dreyfus Corporation and the Fund's other service
providers  do  not  properly  process and calculate date-related information and
data  from  and  after January 1, 2000. This is commonly known as the "Year 2000
Problem."  The  Dreyfus  Corporation  is  taking  steps to address the Year 2000
Problem  with  respect  to  the  computer  systems  that  it  uses and to obtain
assurances  that  comparable  steps  are  being  taken by the Fund's other major
service  providers.  At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
    
                            MANAGEMENT OF THE FUND

   
INVESTMENT  ADVISER  -- 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   July  31,  1998,  The  Dreyfus  Corporation  managed  or  administered
approximately  $110  billion  in  assets  for approximately 1.7 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
authority  of  the  Fund's  Board  in  accordance with Maryland law. The Fund's
primary  portfolio  manager  is  Kevin  M. McClintock. He has held that position
since  May 1996, and has been employed by The Dreyfus Corporation since November
1995.  From  1993  through  October  1995, Mr. McClintock was Managing Director,
Fixed    Income

                                  [Page 8]

Investments,  for  Aeltus Investment Management, Inc., a subsidiary of the Aetna
Corporation.  Prior  thereto,  he  was  employed  in various capacities by Aetna
Corporation  and  its subsidiaries, including head of Separate Account Portfolio
Management  for  Aetna.The Fund's other portfolio managers are identified in the
Statement  of  Additional  Information.  The  Dreyfus  Corporation also provides
research  services  for  the  Fund  and  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  more  than  $350 billion in assets as of June 30,
1998, including approximately $125 billion in proprietary mutual fund assets. As
of  June 30, 1998, Mellon, through various subsidiaries, provided non-investment
services,  such  as  custodial  or administration services, for more than $1.791
trillion in assets, including approximately $54 billion in mutual fund assets.
    
   

   For  the  fiscal  year  ended  April  30,  1998,  the  Fund  paid The Dreyfus
Corporation  a  monthly  management  fee  at the annual rate of .75 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 expense ratio
of the Fund and increasing yield to investors. 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.
    

In allocating brokerage transactions, The Dreyfus Corporation seeks to obtain
the  best  execution  of orders at the most favorable net price. Subject to this
determination,  The  Dreyfus  Corporation  may consider, among other things, the
receipt  of  research  services  and/or  the sale of shares of the Fund or other
funds  managed, advised or administered by The Dreyfus Corporation as factors in
the  selection of broker-dealers to execute portfolio transactions for the Fund.
See "Portfolio Transactions" in the Statement of Additional Information.

   The  Dreyfus  Corporation  may  pay  the  Fund's distributor for shareholder
services  from  The Dreyfus Corporation's own assets, including past profits but
not  including  the  management fee paid by the Fund. The Fund's distributor may
use  part  or  all  of  such  payments to pay Service Agents in respect of these
services.

DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc. (the
" Distributor" ), located  at  60 State Street, Boston, Massachusetts 02109. The
Distributor's ultimate parent is Boston Institutional Group, Inc.

TRANSFER  AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671, Providence,
Rhode  Island  02940-9671,  is the Fund's Transfer and Dividend Disbursing Agent
(the  "Transfer  Agent"). Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, is the Fund's Custodian.

                               HOW TO BUY SHARES

      
   Fund  shares are sold without a sales charge. You may be charged a fee if you
effect  transactions  in  Fund shares through a securities dealer, bank or other
financial  institution.  Stock  certificates  are  issued only upon your written
request. No certificates are issued for fractional shares. The Fund reserves the
right  to  reject  any  purchase  order. See "Appendix -- Additional Information
About Purchases, Exchanges and Redemptions."
    
   

[Page 9]

   The  minimum initial investment is $2,500, or $1,000 if you are a client of a
securities  dealer,  bank  or  other  financial  institution  which maintains an
omnibus  account  in the Fund and has made an aggregate minimum initial purchase
for  its  customers  of  $2,500.  Subsequent  investments must be at least $100.
However,  the  minimum  initial  investment  is $750 for Dreyfus-sponsored Keogh
Plans, IRAs (including regular IRAs, spousal IRAs for a non-working spouse, Roth
IRAs,  SEP-IRAs and rollover IRAs) and 403(b)(7) Plans with only one participant
and  $500  for  Dreyfus-sponsored Education IRAs, with no minimum for subsequent
purchases.   The   initial   investment  must  be  accompanied  by  the  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 accounts, the
minimum  initial  investment is $50. The Fund reserves the right to offer shares
without  regard  to  minimum purchase requirements to employees participating in
certain  qualified  or  non-qualified  employee  benefit plans or other programs
where  contributions  or  account information can be transmitted in a manner and
form  acceptable  to  the  Fund. The Fund reserves the right to vary further the
initial  and subsequent investment minimum requirements at any time. Fund shares
also  are  offered without regard to the minimum initial investment requirements
through  Dreyfus-Automatic  Asset  Builder(reg.tm) , Dreyfus  Government  Direct
Deposit  Privilege  or Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step
Program  described  under  "Shareholder  Services." These services enable you to
make  regularly  scheduled investments and may provide you with a convenient way
to  invest  for  long-term  financial  goals. You should be aware, however, that
periodic  investment  plans  do  not  guarantee a profit and will not protect an
investor against loss in a declining market.
    

   You  may  purchase  Fund  shares  by  check  or  wire, or through the Dreyfus
TELETRANSFER  Privilege  described  below. Checks should be made payable to "The
Dreyfus  Family  of Funds," or, if for Dreyfus retirement plan accounts, to "The
Dreyfus  Trust  Company,  Custodian."  Payments  to  open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode  Island 02940-9387, together with your Account Application. For subsequent
investments,  your  Fund  account  number  should  appear  on  the  check and an
investment slip should be enclosed and sent to The Dreyfus Family of Funds, P.O.
Box  105,  Newark,  New Jersey 07101-0105. For Dreyfus retirement plan accounts,
both  initial  and  subsequent  investments  should be sent to The Dreyfus Trust
Company,  Custodian, P.O. Box 6427, Providence, Rhode Island 02940-6427. Neither
initial nor subsequent investments should be made by third party check. Purchase
orders  may  be  delivered  in  person only to a Dreyfus Financial Center. THESE
ORDERS  WILL  BE  FORWARDED  TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY.  For  the location of the nearest Dreyfus Financial Center, please call
one of the telephone numbers listed under "General Information."

   Wire  payments  may be made if your bank account is in a commercial bank that
is  a  member  of  the  Federal  Reserve  System  or  any  other  bank  having a
correspondent  bank  in  New  York  City.  Immediately  available  funds  may be
transmitted  by  wire  to  The  Bank  of  New York, DDA#8900118202/Dreyfus Asset
Allocation  Fund,  Inc.  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 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  Account  Application  and  promptly  mail  the Account
Application  to  the Fund, as no redemptions will be permitted until the Account
Application  is  received.  You  may  obtain further information about remitting
funds in this manner from your bank. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. A charge will
be    imposed    if

[Page 10]


any  check  used  for  investment in your account does not clear. The Fund makes
available   to   certain  large  institutions  the  ability  to  issue  purchase
instructions through compatible computer facilities.

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

      
   Fund  shares  are sold on a continuous basis at the net asset value per share
next  determined after an order in proper form is received by the Transfer Agent
or  other  entity  authorized to receive orders on behalf of the Fund. Net asset
value per share is determined as of the close of trading on the floor of the New
York  Stock  Exchange  (currently 4:00 p.m., New York time), on each day the New
York  Stock Exchange is open for business. For purposes of determining net asset
value,  options and futures will be valued 15 minutes after the close of trading
on  the  floor  of  the  New  York  Stock Exchange. Net asset value per share is
computed  by dividing the value of the Fund's net assets (i.e., the value of its
assets  less  liabilities)  by  the total number of Fund shares outstanding. The
Fund's investments are valued based on market value or, where market quotations
are  not  readily  available, based on fair value as determined in good faith by
the  Fund's  Board.  Certain securities may be valued by an independent pricing
service  approved by the Fund's Board and are valued at fair value as determined
by  the  pricing service. For further information regarding the methods employed
in valuing the Fund's investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
    

   For   certain  institutions  that  have  entered  into  agreements  with  the
Distributor,  payment  for  the  purchase of Fund shares may be transmitted, and
must  be  received  by  the Transfer Agent, within three business days after the
order  is  placed.  If  such  payment is not received within three business days
after  the  order is placed, the order may be canceled and the institution could
be held liable for resulting fees and/or losses.

   The  Distributor  may  pay  dealers a fee of up to .5% of the amount invested
through  such  dealers  in  shares  by  employees  participating in qualified or
non-qualified  employee  benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of 250
employees  eligible  for  participation  in  such plans or programs or (ii) such
plan's  or  program's  aggregate  investment in the Dreyfus Family of Funds or
certain  other  products  made  available  by  the  Distributor to such plans or
programs  exceeds  $1,000,000 ("Eligible Benefit Plans"). Shares of funds in the
Dreyfus  Family  of Funds then held by Eligible Benefit Plans will be aggregated
to determine the fee payable. The Distributor reserves the right to cease paying
these  fees  at any time. The Distributor will pay such fees from its own funds,
other  than  amounts received from the Fund, including past profits or any other
source available to it.

   Federal  regulations require that you provide a certified TIN upon opening or
reopening  an  account. See "Dividends, Distributions and Taxes" and the 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 shares (minimum $500, maximum $150,000 per day) by telephone
if  you  have checked the appropriate box and supplied the necessary information
on  the  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.

[Page 11]



   If  you  have  selected the Dreyfus TELETRANSFER Privilege, you may request a
Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561 or, if you are
calling    from    overseas,    call    516-794-5452.

                             SHAREHOLDER SERVICES

FUND EXCHANGES

   
You may purchase, in exchange for shares of the Fund, shares of certain other
funds  managed  or  administered  by The Dreyfus Corporation, to the extent such
shares  are  offered  for  sale  in  your  state  of residence. These funds have
different  investment  objectives which may be of interest to you. If you desire
to   use   this   service,  you  should  consult  your  Service  Agent  or  call
1-800-645-6561  to  determine  if it is available and whether any conditions are
imposed  on  its  use.  If  you  are  calling  from overseas, call 516-794-5452
    
   
   To  request  an exchange, you must give exchange instructions to the Transfer
Agent  in  writing  or  by  telephone.  Before any exchange, you must obtain and
should  review  a  copy  of  the  current  prospectus of the fund into which the
exchange  is being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of personal retirement plans, the shares being exchanged must
have  a  current  value  of  at least $500; furthermore, when establishing a new
account  by  exchange,  the shares being exchanged must have a value of at least
the  minimum initial investment required for the fund into which the exchange is
being  made. The ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this privilege.
The  Telephone  Exchange Privilege may be established for an existing account by
written  request signed by all shareholders on the account, by a separate signed
Shareholder  Services  Form,  or  by  oral  request  from  any of the authorized
signatories  on  the  account.  If  you  have established the Telephone Exchange
Privilege,  you  may telephone exchange instructions (including over The Dreyfus
Touch(reg.tm)  automated  telephone  system)  by  calling  one  of the telephone
numbers  set  forth  above.  See  "How  to Redeem Shares -- Procedures." Upon an
exchange  into a new account, the following shareholder services and privileges,
as  applicable  and  where  available, will be automatically carried over to the
fund  into  which  the  exchange  is  made:  Telephone  Exchange Privilege, Wire
Redemption  Privilege,  Telephone  Redemption  Privilege,  Dreyfus  TELETRANSFER
Privilege  and the dividend/capital gain distribution option (except for Dreyfus
Dividend Sweep) selected by the investor.
    
   
   Shares  will  be exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into funds sold with a sales
load.  If  you  are  exchanging  into  a fund that charges a sales load, you may
qualify  for share prices which do not include the sales load or which reflect a
reduced  sales load, if the shares 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  the  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   administrative  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. See "Appendix -- Additional Information
About  Purchases, Exchanges and Redemptions." The availability of Fund Exchanges
may  be  modified  or  terminated  at  any time upon notice to shareholders. See
"Dividends, Distributions and Taxes."
    

[Page 12]


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 certain other funds in the Dreyfus Family of Funds of which
you  a  shareholder.  The amount you designate, which can be expressed either in
terms  of  a  specific  dollar or share amount ($100 minimum), will be exchanged
automatically  on  the  first and/or fifteenth day of the month according to the
schedule  you  have  selected.  Shares will be exchanged at the then-current net
asset value; however, a sales load may be charged with respect to exchanges into
funds  sold  with  a  sales load. See "Shareholder Services" in the Statement of
Additional  Information. The right to exercise this Privilege may be modified or
cancelled  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.  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. See "Dividends, Distributions and Taxes."

DREYFUS-AUTOMATIC ASSET BUILDER(reg.tm)

   
   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.  Only  an  account  maintained  at  a  domestic  financial
institution which is an Automated Clearing House member may be so designated. To
establish   a   Dreyfus-Automatic  Asset  Builder  account,  you  must  file  an
authorization  form  with  the  Transfer  Agent.  You  may  obtain the necessary
authorization  form by calling 1-800-645-6561. You may cancel your participation
in  this  Privilege  or  change  the  amount  of purchase at any time by mailing
written  notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence,
Rhode  Island  02940-9671,  or,  if for Dreyfus retirement plan accounts, to The
Dreyfus  Trust  Company,  Custodian,  P.O.  Box  6427,  Providence, Rhode Island
02940-6427, and the notification will be effective three business days following
receipt. The Fund may modify or terminate this Privilege at any time or charge a
service    fee.    No    such    fee    currently    is    contemplated.
    

DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE

   
   Dreyfus  Government  Direct  Deposit  Privilege  enables you to purchase Fund
shares  (minimum  of  $100  and  maximum  of  $50,000 per transaction) by having
Federal  salary,  Social  Security,  or  certain  veterans' , military  or other
payments  from  the  Federal  government  automatically deposited into your Fund
account.  You  may  deposit  as much of such payments as you elect. To enroll in
Dreyfus  Government  Direct  Deposit,  you  must  file with the Transfer Agent a
completed  Direct  Deposit Sign-Up Form for each type of payment that you desire
to  include  in  the  Privilege. The appropriate form may be obtained by calling
1-800-645-6561.  Death  or legal incapacity will terminate your participation in
this  Privilege.  You  may  elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. The Fund may terminate your
participation    upon    30    days'    notice    to    you.
    

DREYFUS PAYROLL SAVINGS PLAN

   Dreyfus  Payroll Savings Plan permits you to purchase Fund shares (minimum of
$100  per  transaction)  automatically  on  a regular basis. Depending upon your
employer's  direct  deposit  program, you may have part or all of your paycheck
transferred   to  your  existing  Dreyfus  account  electronically  through  the
Automated  Clearing  House  system  at  each  pay period. To establish a Dreyfus
Payroll  Savings  Plan  account,  you  must file an authorization form with your
employer's  payroll department. Your employer must complete the reverse side of
the    form    and    return    it    to    The    Dreyfus    Family    of

[Page 13]


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.

DREYFUS STEP PROGRAM

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

DREYFUS DIVIDEND OPTIONS

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

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

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 Automatic Withdrawal Plan may be
established by filing an Automatic Withdrawal Plan application with the Transfer
Agent  or  by oral request from any of the authorized signatories on the account
by  calling  1-800-645-6561.  The  Automatic Withdrawal Plan may be ended at any
time    by    you,    the    Fund    or

[Page 14]


the  Transfer  Agent.  Shares for which certificates have been issued may not be
redeemed    through    the    Automatic    Withdrawal    Plan.
    


RETIREMENT PLANS

   
   The  Fund  offers  a  variety  of pension and profit-sharing plans, including
Keogh  Plans,  IRAs  (including  regular  IRAs,  spousal  IRAs for a non-working
spouse,  Roth  IRAs,  SEP-IRAs, rollover IRAs and Education IRAs), 401(k) Salary
Reduction  Plans  and 403(b)(7) Plans. Plan support services also are available.
You  can  obtain  details  on the various plans by calling the following numbers
toll  free:  for  Keogh  Plans,  please  call  1-800-358-5566;  for IRAs (except
SEP-IRAs) , please call 1-800-645-6561; or for SEP-IRAs, 401(k) Salary Reduction
Plans and 403(b)(7) Plans, please call 1-800-322-7880.
    

                             HOW TO REDEEM 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 by the Transfer Agent or other entity authorized to
receive  orders  on  behalf  of the Fund, the Fund will redeem the shares at the
next  determined  net asset value. See "Appendix -- Additional Information About
Purchases, Exchanges and Redemptions."
    
   
   The  Fund  imposes  no  charges when shares are redeemed. Securities dealers,
banks  and  other  financial  institutions  may  charge  their clients a 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(reg.tm) AND SUBSEQUENTLY
SUBMIT  A  WRITTEN  REDEMPTION  REQUEST  TO  THE  TRANSFER AGENT, THE REDEMPTION
PROCEEDS  WILL  BE  TRANSMITTED  TO  YOU  PROMPTLY  UPON  BANK CLEARANCE OF YOUR
PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER
ORDER,  WHICH  MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND
WILL  REJECT  REQUESTS  TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
DREYFUS TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT
BY  THE  TRANSFER AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR  THE  DREYFUS-AUTOMATIC  ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE
PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT
TO  COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE,
DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE  ALL  OTHER  RIGHTS  OF  BENEFICIAL  OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.

   The  Fund  reserves  the  right to redeem your account at its option upon not
less  than  45 days' written notice if your account's net asset value is $500 or
less    and    remains    so    during    the    notice    period.

PROCEDURES

      
   You  may  redeem shares by using the regular redemption procedure through the
Transfer  Agent, or through the Telephone Redemption Privilege, which is granted
automatically  unless you specifically refuse it by checking the applicable "No"
box  on  the  Account  Application.  The  Telephone  Redemption Privilege may be
established   for   an   existing  account  by  a  separate  signed  Shareholder

[Page 15]


Services  Form  or by oral request from any of the authorized signatories on the
account  by  calling 1-800-645-6561. You also may redeem shares through the Wire
Redemption  Privilege or the Dreyfus TELETRANSFER Privilege, if you have checked
the  appropriate  box  and  supplied  the  necessary  information on the Account
Application  or  have filed a Shareholder Services Form with the Transfer Agent.
The  Fund  makes  available  to  certain large institutions the ability to issue
redemption   instructions  through  compatible  computer  facilities.  The  Fund
reserves  the  right  to refuse any request made by wire or 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 any
redemption  Privilege  at  any  time  or  charge  a  service  fee upon notice to
shareholders.  No  such  fee  currently is contemplated. Shares held under Keogh
Plans,  IRAs  or  other retirement plans, and shares for which certificates have
been  issued,  are not eligible for the Wire Redemption, Telephone Redemption or
Dreyfus TELETRANSFER Privilege.
    

The Telephone Redemption Privilege or Telephone Exchange Privilege authorizes
the  Transfer Agent to act on telephone instructions (including over The Dreyfus
Touch((reg.tm)) automated telephone system) from any person representing himself
or  herself  to  be  you,  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,  or,  if  for  Dreyfus  retirement  plan
accounts,  to  The  Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode  Island 02940-6427. Redemption requests may be delivered in person only to
a  Dreyfus  Financial  Center.  THESE REQUESTS WILL BE FORWARDED TO THE FUND AND
WILL  BE  PROCESSED  ONLY  UPON RECEIPT THEREBY. For the location of the nearest
Dreyfus  Financial Center, please call one of the telephone numbers listed under
" General  Information." Redemption requests must be signed by each shareholder,
including  each owner of a joint account, and each signature must be guaranteed.
The  Transfer  Agent  has  adopted  standards  and  procedures pursuant to which
signature-guarantees  in  proper  form  generally will be accepted from domestic
banks,   brokers,   dealers,  credit  unions,  national  securities  exchanges,
registered  securities associations, clearing agencies and savings associations,
as  well as from participants in the New York Stock Exchange Medallion Signature
Program,  the  Securities  Transfer  Agents  Medallion Program ("STAMP") and the
Stock  Exchanges  Medallion  Program.  If you have 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.

   
WIRE  REDEMPTION  PRIVILEGE -- You may request by wire, telephone or letter 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.  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 1-800-645-6561 or, if you are
calling from overseas,

[Page 16]


call  516-794-5452.  The  Statement  of Additional Information sets forth
instructions for transmitting redemption requests by wire.
    


TELEPHONE  REDEMPTION  PRIVILEGE--You  may  request by telephone that redemption
proceeds (maximum $150,000 per day) be paid by check and mailed to your address.
You  may  telephone redemption instructions by calling 1-800-645-6561 or, if you
are calling from overseas, call 516-794-5452. The Telephone Redemption Privilege
is granted automatically unless you refuse it.

DREYFUS  TELETRANSFER  PRIVILEGE -- You may request by telephone that redemption
proceeds  (minimum  $500  per  day) be transferred between your Fund account and
your  bank  account.  Only  a  bank  account  maintained in a domestic financial
institution  which  is  an  Automated  Clearing  House member may be designated.
Redemption  proceeds will be on deposit in your account at an Automated Clearing
House  member  bank ordinarily two days after receipt of the redemption request.
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.

   If  you  have  selected the Dreyfus TELETRANSFER Privilege, you may request a
Dreyfus  TELETRANSFER  redemption of shares by calling 1-800-645-6561 or, if you
are calling from overseas, call 516-794-5452.

                           SHAREHOLDER SERVICES PLAN

   The  Fund  has adopted a Shareholder Services Plan, pursuant to which it pays
the  Distributor  for the provision of certain services to shareholders a fee at
the  annual  rate  of  .25  of  1%  of the value of the Fund's average daily net
assets.  The  services  provided  may  include  personal  services  relating  to
shareholder accounts, such as answering shareholder inquiries regarding the Fund
and  providing  reports  and  other  information,  and  services  related to the
maintenance  of  shareholder  accounts.  The  Distributor  may  make payments to
Service  Agents  in  respect  of  these services. The Distributor determines the
amounts    to    be    paid    to    Service    Agents.

                      DIVIDENDS, DISTRIBUTIONS AND TAXES

   
The Fund ordinarily pays dividends from net investment income and distributes
net   realized  securities  gains,  if  any,  once  a  year,  but  it  may  make
distributions  on  a  more  frequent  basis  to  comply  with  the  distribution
requirements  of  the Internal Revenue Code of 1986, as amended (the "Code"), in
all  events in a manner consistent with the provisions of the 1940 Act. The Fund
will  not  make  distributions from net realized securities gains unless capital
loss  carryovers,  if  any,  have  been utilized or have expired. You may choose
whether  to  receive  dividends  and  distributions  in  cash  or to reinvest in
additional  shares  at  net  asset  value. If you elect to receive dividends and
distributions in cash and your dividend or distribution check is returned to the
Fund  as undeliverable or remains uncashed for six months, the Fund reserves the
right  to  reinvest  such  dividend or distribution and all future dividends and
distributions  payable  to  you in additional Fund shares at net asset value. No
interest  will  accrue  on  amounts  represented  by  uncashed  distribution  or
redemption   checks.   All  expenses  are  accrued  daily  and  deducted  before
declaration    of    dividends    to    investors.
    
   
   Dividends  derived  from  net  investment income, together with distributions
from  net  realized short-term securities gains and all or a portion of any gain
realized  from  the  sale or other disposition of certain market discount bonds,
paid by the Fund will be taxable to U.S. shareholders as ordinary income whether
received  in  cash  or  reinvested  in additional shares. Distributions from net
realized  long-term  securities  gains  of  the  Fund  will  be  taxable to U.S.
shareholders  as  long-term  capital  gains  for  Federal  income  tax purposes,
regardless  of  how  long  shareholders  have held their shares and whether such
distributions  are  received  in  cash  or  reinvested  in Fund shares. The Code
provides  that  an  individual generally will be taxed on his or her net capital
gain at a maximum rate of 20% with respect to capital gains from securities held
for  more than one year. Dividends and distributions may be subject to state and
local taxes.
    


[Page 17]

   Dividends  derived  from  net  investment income, together with distributions
from  net  realized short-term securities gains and all or a portion of any gain
realized  from  the  sale or other disposition of certain market discount bonds,
paid by the Fund to a foreign investor generally are subject to U.S. nonresident
withholding  taxes  at  the  rate of 30%, unless the foreign investor claims the
benefit  of  a  lower  rate  specified  in  a tax treaty. Distributions from net
realized  long-term  securities  gains paid by the Fund to a foreign investor as
well  as  the  proceeds  of  any  redemptions from a foreign investor's account,
regardless  of  the extent to which gain or loss may be realized, generally will
not  be subject to U.S. nonresident withholding tax. However, such distributions
may  be  subject  to  backup withholding, as described below, unless the foreign
investor certifies his non-U.S. residency status.

   Notice  as  to  the  tax  status  of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your account
which will include information as to dividends and distributions from securities
gains, if any, paid during the year.

   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.

   Federal   regulations  generally  require  the  Fund  to  withhold  (" backup
withholding" ) and  remit  to  the U.S. Treasury 31% of dividends, distributions
from  net  realized  securities  gains  and  the  proceeds  of  any  redemption,
regardless  of  the  extent  to  which  gain  or loss may be realized, paid to a
shareholder  if  such shareholder fails to certify either that the TIN furnished
in  connection  with  opening an account is correct or that such shareholder has
not  received  notice  from  the IRS of being subject to backup withholding as a
result  of a failure to properly report taxable dividend or interest income on a
Federal income tax return. Furthermore, the IRS may notify the Fund to institute
backup  withholding if the IRS determines a shareholder's TIN is incorrect or if
a shareholder has failed to properly report taxable dividend and interest income
on a Federal income tax return.

   A  TIN  is either the Social Security number, IRS individual taxpayer 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  April  30, 1998 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. Qualification as a "regulated investment company"
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 the basis of
average annual total return and/or total return.

   Average  annual total return is calculated pursuant to a standardized formula
which  assumes  that  an  investment  in  the Fund was purchased with an initial
payment  of  $1,000  and that the investment was redeemed at the end of a stated
period  of  time,  after  giving  effect  to  the  reinvestment of dividends and
distributions  during  the  period. The return is expressed as a percentage rate
which,  if  applied on a compounded annual basis, would result in the redeemable
value  of  the investment at the end of the period. Advertisements of the Fund's
performance  will  include  the Fund's average annual total return for one, five
and  ten  year periods, or for shorter periods depending upon the length of time
the    Fund    has    operated.

[Page 18]


Total return is computed on a per share basis and assumes the reinvestment of
dividends and distributions. Total return generally is expressed as a percentage
rate  which  is  calculated  by combining the income and principal changes for a
specified  period and dividing by the net asset value per share at the beginning
of the period. Advertisements may include the percentage rate of total return or
may  include  the  value  of  a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return.

   Performance  will vary from time to time and past results are not necessarily
representative  of  future  results.  You  should remember that performance is a
function  of portfolio management in selecting the type and quality of portfolio
securities  and is affected by operating expenses. Performance information, such
as  that  described  above,  may  not  provide a basis for comparison with other
investments   or   other  investment  companies  using  a  different  method  of
calculating performance.

   Comparative  performance  information  may  be  used  from  time  to  time in
advertising  or  marketing  the  Fund's  shares,  including  data  from  Lipper
Analytical Services, Inc., Morningstar, Inc., Standard & Poor's 500 Stock Index,
the  Dow  Jones Industrial Average, Moody's Bond Survey Bond Index, Bond Buyer's
20-Bond Index, Wilshire 5000 Index and other industry publications.

                              GENERAL INFORMATION

   The  Fund  was incorporated under Maryland law on May 12, 1993, and commenced
operations  on  July 1, 1993. The Fund is authorized to issue 300 million shares
of Common Stock, par value $.001 per share. Each share has one vote.

   Unless  otherwise  required  by  the  1940  Act,  ordinarily  it  will not be
necessary  for  the  Fund  to hold annual meetings of shareholders. As a result,
Fund  shareholders  may  not consider each year the election of Board members or
the  appointment  of  auditors.  However,  pursuant  to  the Fund's By-Laws, the
holders  of  at  least  10%  of  the shares outstanding and entitled to vote may
require  the  Fund  to  hold  a  special meeting of shareholders for purposes of
removing  a Board member from office or for any other purpose. Fund shareholders
may  remove  a  Board member by the affirmative vote of a majority of the Fund's
outstanding  voting shares. In addition, the Fund's Board will call a meeting of
shareholders  for  the  purpose  of electing Board members if, at any time, less
than  a  majority  of the Board members then holding office have been elected by
shareholders.

   The  Transfer  Agent  maintains  a  record  of  your  ownership and sends you
confirmation 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., call 516-794-5452.


[Page 19]
                                   APPENDIX

INVESTMENT TECHNIQUES

FOREIGN  CURRENCY  TRANSACTIONS  -- Foreign currency transactions may be entered
into for a variety of purposes, including: to fix in U.S. dollars, between trade
and settlement date, the value of a security the Fund has agreed to buy or sell;
to hedge the U.S. dollar value of securities the Fund already owns, particularly
if  it  expects  a  decrease  in  the value of the currency in which the foreign
security  is  denominated;  or  to  gain  exposure to the foreign currency in an
attempt    to    realize    gains.

   Foreign  currency  transactions may involve, for example, the Fund's purchase
of  foreign currencies for U.S. dollars or the maintenance of short positions in
foreign  currencies, which would involve the Fund agreeing to exchange an amount
of  a currency it did not currently own for another currency at a future date in
anticipation  of  a  decline  in  the value of the currency sold relative to the
currency  the  Fund contracted to receive in the exchange. The Fund's success in
these  transactions will depend principally on The Dreyfus Corporation's ability
to  predict  accurately the future exchange rates between foreign currencies and
the    U.S.    dollar.

   Currency  exchange  rates  may  fluctuate significantly over short periods of
time.  They  generally  are determined by the forces of supply and demand in the
foreign  exchange  markets  and  the relative merits of investments in different
countries,  actual  or  perceived  changes  in  interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates also
can  be affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.

LEVERAGE -- Leveraging exaggerates the effect on net asset value of any increase
or  decrease  in  the  market  value of the Fund's portfolio. Money borrowed for
leveraging is limited to 33(1)/3% of the value of the Fund's total assets. These
borrowings  will  be subject to interest costs which may or may not be recovered
by  appreciation  of  the securities purchased; in certain cases, interest costs
may exceed the return received on the securities purchased.

   The  Fund may enter into reverse repurchase agreements with banks, brokers or
dealers.  This  form  of  borrowing  involves  the  transfer  by  the Fund of an
underlying  debt instrument in return for cash proceeds based on a percentage of
the  value  of  the security. The Fund retains the right to receive interest and
principal  payments  on  the  security.  At an agreed upon future date, the Fund
repurchases  the  security  at principal plus accrued interest. Except for these
transactions, the Fund's borrowings generally will be unsecured.

SHORT-SELLING  --  In  these transactions, the Fund sells a security it does not
own  in  anticipation  of  a  decline  in  the  market value of the security. To
complete  the transaction, the Fund must borrow the security to make delivery to
the  buyer. The Fund is obligated to replace the security borrowed by purchasing
it  subsequently  at  the  market price at the time of replacement. The price at
such  time  may be more or less than the price at which the security was sold by
the Fund, which would result in a loss or gain, respectively.

Securities will not be sold short if, after effect is given to any such short
sale,  the  total  market value of all securities sold short would exceed 25% of
the  value  of  the  Fund's net assets. The Fund may not make a short sale which
results  in  the  Fund  having  sold  short in the aggregate more than 5% of the
outstanding securities of any class of an issuer.

   The  Fund  also  may  make  short  sales "against the box," in which the Fund
enters  into  a short sale of a security it owns in order to hedge an unrealized
gain  on  the security. At no time will more than 15% of the value of the Fund's
net assets be in deposits on short sales against the box.

USE  OF  DERIVATIVES  --  The  Fund  may  invest in, or enter into, the types of
Derivatives   enumerated   under   "Description   of   the  Fund  --  Investment
Considerations    and    Risks    --    Use    of    Derivatives."

[Page 20]

These  instruments  and  certain  related  risks are described more specifically
under  "Investment  Objective  and Management Policies -- Management Policies --
Derivatives" in the Statement of Additional Information.

   Derivatives  can  be  volatile and involve various types and degrees of risk,
depending  upon  the  characteristics  of  the  particular  Derivative  and  the
portfolio  as  a  whole. Derivatives permit the Fund to increase or decrease the
level  of  risk,  or change the character of the risk, to which its portfolio is
exposed  in  much the same way as the Fund can increase or decrease the level of
risk,  or  change  the  character  of  the  risk,  of  its  portfolio  by making
investments in specific securities.

   Derivatives  may entail investment exposures that are greater than their cost
would suggest, meaning that a small investment in Derivatives could have a large
potential impact on the Fund's performance.

     
   If  the  Fund  invests  in  Derivatives at inopportune times or judges market
conditions  incorrectly,  such investments may lower the Fund's return or result
in  a loss. The Fund also could experience losses if its Derivatives were poorly
correlated  with  its other investments, or if the Fund were unable to liquidate
its  position  because  of  an  illiquid  secondary  market. The market for many
Derivatives  is,  or  suddenly  can  become,  illiquid. Changes in liquidity may
result  in  significant,  rapid  and  unpredictable  changes  in  the prices for
Derivatives.
       

   Although  the  Fund will not be a commodity pool, certain Derivatives subject
the  Fund  to  the rules of the Commodity Futures Trading Commission which limit
the extent to which the Fund can invest in such Derivatives. The Fund may invest
in  futures  contracts  and  options  with  respect thereto for hedging purposes
without  limit.  However,  the Fund may not invest in such contracts and options
for  other  purposes  if  the  sum  of the amount of initial margin deposits and
premiums  paid  for unexpired options with respect to such contracts, other than
for  bona  fide  hedging  purposes,  exceeds  5% of the liquidation value of the
Fund's  assets,  after  taking  into  account unrealized profits and unrealized
losses  in such contracts and options; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5% limitation.

   The  Fund may invest up to 5% of its assets, represented by the premium paid,
in the purchase of call and put options. The Fund may write (i.e., sell) covered
call  and  put  options  contracts  to the extent of 20% of the value of its net
assets  at  the  time  such  options contracts are written. When required by the
Securities  and  Exchange Commission, the Fund will set aside permissible liquid
assets  in  a  segregated  account  to  cover  its  obligations  relating to its
transactions  in Derivatives. To maintain this required cover, the Fund may have
to sell portfolio securities at disadvantageous prices or times since it may not
be  possible  to  liquidate  a  Derivative  position  at  a  reasonable  price.

LENDING  PORTFOLIO SECURITIES -- The Fund may lend securities from its portfolio
to   brokers,  dealers  and  other  financial  institutions  needing  to  borrow
securities  to  complete certain transactions. The Fund continues to be entitled
to  payments  in amounts equal to the interest, dividends or other distributions
payable  on  the loaned securities which affords the Fund an opportunity to earn
interest  on  the  amount  of the loan and on the loaned securities' collateral.
Loans of portfolio securities may not exceed 33(1)/3% of the value of the Fund's
total  assets,  and  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.  Such loans are terminable by the Fund 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.

   
FORWARD  COMMITMENTS  --  The  Fund may purchase or sell securities on a forward
commitment, when-issued or delayed delivery basis, which means that delivery and
payment take place a number of days after the date of the commitment to purchase
or  sell  the  securities  at  a predetermined price and/or yield. Typically, no
interest  accrues  to  the  purchaser  until  the  security  is  delivered. When
purchasing    a    security    on

[Page 21]


a  forward  commitment basis, the Fund assumes the rights and risks of ownership
of  the  security,  including  the  risk  of  price fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the Fund
is not required to pay for these securities until the delivery date, these risks
are  in  addition  to the risks associated with the Fund's other investments. If
the Fund is fully or almost fully invested when forward commitment purchases are
outstanding,  such  purchases may result in a form of leverage. The Fund intends
to  engage in forward commitments to increase its portfolio's financial exposure
to the types of securities in which it invests. Leveraging the portfolio in this
manner  will  increase the Fund's exposure to changes in interest rates and will
increase  the volatility of its returns. The Fund will set aside in a segregated
account  permissible  liquid assets at least equal at all times to the amount of
the  commitments. At no time will the Fund have more than 33 1/3% of its assets
committed to purchase securities on a forward commitment basis.
    

FORWARD  ROLL TRANSACTIONS -- To enhance current income, the Fund may enter into
forward  roll  transactions  with  respect  to mortgage-related securities. In a
forward  roll  transaction,  the  Fund  sells  a  mortgage-related security to a
financial  institution,  such  as  a  bank  or broker-dealer, and simultaneously
agrees to purchase a similar security from the institution at a later date at an
agreed upon price. The securities that are purchased will bear the same interest
rate  as  those sold, but generally will be collateralized by different pools of
mortgages  with  different  pre-payment  histories  than  those sold. During the
period  between  the sale and purchase, the Fund will not be entitled to receive
interest  and  principal  payments  on the securities sold. Proceeds of the sale
typically  will  be  invested in short-term investments, particularly repurchase
agreements,  and the income from these investments, together with any additional
fee  income  received  on  the sale, will be expected to generate income for the
Fund  exceeding  the  yield  on  the  securities sold. Forward roll transactions
involve  the  risk  that the market value of the securities sold by the Fund may
decline  below  the  purchase price of those securities. A segregated account of
the  Fund  consisting  of cash, U.S. Government securities or other high quality
liquid  debt  securities  at  least  equal to the amount of the repurchase price
(including  accrued  interest)  will be established and maintained at the Fund's
custodian bank.

CERTAIN PORTFOLIO SECURITIES

CONVERTIBLE  SECURITIES  --  Convertible securities may be converted at either a
stated  price or stated rate into underlying shares of common stock. Convertible
securities   have  characteristics  similar  to  both  fixed-income  and  equity
securities.  Convertible  securities generally are subordinated to other similar
but  non-convertible  securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all equity
securities,  and  convertible  preferred stock is senior to common stock, of the
same   issuer.  Because  of  the  subordination  feature,  however,  convertible
securities typically have lower ratings than similar non-convertible securities.
The  Fund  also  may  invest in convertible preferred stocks that offer enhanced
yield  features  and  higher  dividend income than is available from an issuer's
common stock.

MORTGAGE-RELATED  SECURITIES  --  Mortgage-related  securities  are  a  form  of
Derivative collateralized by pools of commercial or residential mortgages. Pools
of  mortgage  loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations. These securities may
include  complex  instruments  such  as  collateralized  mortgage  obligations,
stripped mortgage-backed securities, mortgage pass-through securities, interests
in  real  estate  mortgage  investment  conduits  (" REMICs" ), adjustable  rate
mortgages, real estate investment trusts ("REITs"), including debt and preferred
stock  issued  by  REITs,  as  well as other real estate-related securities. The
mortgage-related  securities  in  which  the  Fund may invest include those with
fixed,  floating  or  variable  interest  rates,  those with interest rates that
change  based on multiples of changes in a specified index of interest rates and
those with interest rates that change inversely to changes in interest rates, as
well as those that do not bear interest. Mortgage-related securities are subject
to  credit  risks  associated  with  the  performance of the underlying mortgage
properties.

[Page 22]

Adverse changes in economic conditions and circumstances are more likely to have
an  adverse  impact  on  mortgage-related securities secured by loans on certain
types  of  commercial  properties  than on those secured by loans on residential
properties.  In  addition,  these  securities  are  subject  to prepayment risk,
although commercial mortgages typically have shorter maturities than residential
mortgages  and  prepayment protection features. In certain instances, the credit
risk  associated  with mortgage-related securities can be reduced by third party
guarantees  or  other  forms  of  credit  support. Improved credit risk does not
reduce  prepayment  risk  which  is  unrelated  to  the  rating  assigned to the
mortgage-related  security. Prepayment risk can lead to fluctuations in value of
the  mortgage-related  security  which  may be pronounced. If a mortgage-related
security  is  purchased  at a premium, all or part of the premium may be lost if
there  is  a decline in the market value of the security, whether resulting from
changes  in interest rates or prepayments on the underlying mortgage collateral.
Certain  mortgage-related  securities that may be purchased by the Fund, such as
inverse  floating  rate  collateralized  mortgage obligations, have coupons that
move  inversely  to a multiple of a specific index which may result in a form of
leverage.  As  with  other  interest-bearing  securities,  the prices of certain
mortgage-related securities are inversely affected by changes in interest rates.
However,  although  the  value  of  a mortgage-related security may decline when
interest  rates  rise, the converse is not necessarily true, since in periods of
declining  interest  rates the mortgages underlying the security are more likely
to  be prepaid. For this and other reasons, a mortgage-related security's stated
maturity   may  be  shortened  by  unscheduled  prepayments  on  the  underlying
mortgages,  and,  therefore,  it  is  not  possible  to  predict  accurately the
security's  return  to  the  Fund.  Moreover,  with respect to certain stripped
mortgage-backed  securities,  if  the  underlying mortgage securities experience
greater  than  anticipated  prepayments of principal, the Fund may fail to fully
recoup  its  initial  investment even if the securities are rated in the highest
rating  category  by  a  nationally  recognized statistical rating organization.
During periods of rapidly rising interest rates, prepayments of mortgage-related
securities   may  occur  at  slower  than  expected  rates.  Slower  prepayments
effectively  may  lengthen a mortgage-related security's expected maturity which
generally  would  cause  the  value of such security to fluctuate more widely in
response  to  changes  in  interest  rates.  Were  the prepayments on the Fund's
mortgage-related  securities to decrease broadly, the Fund's effective duration,
and  thus sensitivity to interest rate fluctuations, would increase. For further
discussion  concerning  the investment considerations involved, see "Description
of  the  Fund -- Investment Considerations and Risks -- Fixed-Income Securities"
and "Illiquid Securities" below.

ASSET-BACKED SECURITIES -- Asset-backed securities are a form of Derivative. The
securitization  techniques used for asset-backed securities are similar to those
used  for  mortgage-related  securities. The collateral for these securities has
included  home equity loans, automobile and credit card receivables, boat loans,
computer  leases, airplane leases, mobile home loans, recreational vehicle loans
and  hospital  account receivables. The Fund may invest in these and other types
of asset-backed securities that may be developed in the future.

   Asset-backed  securities  present  certain  risks  that  are not presented by
mortgage-backed  securities.  Primarily,  these  securities may provide the Fund
with  a  less  effective  security  interest  in  the related collateral than do
mortgage-backed  securities. Therefore, there is the possibility that recoveries
on  the  underlying  collateral  may not, in some cases, be available to support
payments on these securities.

WARRANTS  --  A warrant is an instrument issued by a corporation which gives the
holder the right to subscribe to a specified amount of the corporation's capital
stock  at  a set price for a specified period of time. The Fund may invest up to
5%  of its net assets in warrants, except that this limitation does not apply to
warrants  purchased  by  the  Fund  that are sold in units with, or attached to,
other    securities.

   
MUNICIPAL  OBLIGATIONS  --  Municipal obligations are debt obligations issued by
states,  territories  and  possessions  of the United States and the District of
Columbia  and  their  political subdivisions, agencies and instrumentalities, or
multistate  agencies  or authorities. Municipal obligations bear fixed, floating
or  variable  rates  of  interest.  Certain municipal obligations are subject to
redemption    at    a    date    earlier    than

[Page 23]

their  stated maturity pursuant to call options, which may be separated from the
related  municipal  obligations and purchased and sold separately. 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.
    

   While,  in  general,  municipal  obligations are tax exempt securities having
relatively  low  yields  as  compared  to  taxable, non-municipal obligations of
similar quality, certain municipal obligations are taxable obligations, offering
yields  comparable  to,  and in some cases greater than, the yields available on
other  permissible  Fund investments. Dividends received by shareholders on Fund
shares  which  are  attributable  to  interest  income received by the Fund from
municipal  obligations generally will be subject to Federal income tax. The Fund
may  invest  in  municipal obligations, the ratings of which correspond with the
ratings  of  other  permissible  Fund investments. The Fund currently intends to
invest  no  more  than 25% of its assets in municipal obligations. However, this
percentage may be varied from time to time without shareholder approval.

   
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS -- The Fund may invest in
the  securities  of  foreign issuers in the form of American Depositary Receipts
(" ADRs" ) and  European  Depositary Receipts ("EDRs"). These securities may not
necessarily  be  denominated  in  the same currency as the securities into which
they  may  be  converted.  ADRs are receipts typically issued by a United States
bank  or  trust company which evidence ownership of underlying securities issued
by  a  foreign corporation. EDRs, which are sometimes referred to as Continental
Depositary  Receipts  (" CDRs" ), are  receipts  issued  in  Europe typically by
non-United  States  banks  and trust companies that evidence ownership of either
foreign  or domestic securities. Generally, ADRs in registered form are designed
for use in the United States securities markets and EDRs and CDRs in bearer form
are designed for use in Europe.
    
`
MONEY  MARKET INSTRUMENTS -- The Fund may invest in the following types of money
market instruments.

   U.S.  GOVERNMENT  SECURITIES.  Securities  issued  or  guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury securities
that  differ  in  their  interest  rates, maturities and times of issuance. Some
obligations   issued   or   guaranteed   by   U.S.   Government   agencies   and
instrumentalities  are  supported  by  the  full  faith  and  credit of the U.S.
Treasury;  others by the right of the issuer to borrow from the Treasury; others
by   discretionary   authority  of  the  U.S.  Government  to  purchase  certain
obligations  of  the agency or instrumentality; and others only by the credit of
the agency or instrumentality. These securities bear fixed, floating or variable
rates  of interest. While the U.S. Government provides financial support to such
U.S.  Government-sponsored  agencies  and instrumentalities, no assurance can be
given  that  it  will  always  do  so  since  it  is  not  so  obligated by law

   REPURCHASE  AGREEMENTS.  In  a  repurchase  agreement, the Fund buys, and the
seller agrees to repurchase, a security at a mutually agreed upon time and price
(usually  within  seven  days) . The repurchase agreement thereby determines the
yield  during  the  purchaser's holding period, while the seller's obligation to
repurchase  is  secured  by  the  value  of  the underlying security. Repurchase
agreements  could  involve  risks in the event of a default or insolvency of the
other party to the agreement, including possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities. The Fund may enter into
repurchase agreements with certain banks or non-bank dealers.

   BANK  OBLIGATIONS.  The  Fund  may  purchase  certificates  of  deposit, time
deposits,  bankers'  acceptances  and  other  short-term  obligations  issued by
domestic  banks,  foreign  subsidiaries  or  foreign branches of domestic banks,
domestic  and  foreign  branches  of  foreign  banks,  domestic savings and loan
associations  and  other  banking  institutions. With respect to such securities
issued  by  foreign  subsidiaries  or  foreign  branches  of domestic banks, and
domestic    and    foreign    branches    of    foreign    banks,    the    Fund

[Page 24]

may  be  subject  to  additional  investment  risks  that  are different in some
respects from those incurred by a fund which invests only in debt obligations of
U.S. domestic issuers. See "Description of the Fund -- Investment Considerations
and Risks -- Foreign Securities."

Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.

Time deposits are non-negotiable deposits maintained in a banking institution
for  a specified period of time (in no event longer than seven days) at a stated
interest    rate.

   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  the  drawer  to pay the face amount of the
instrument   upon   maturity.  The  other  short-term  obligations  may  include
uninsured,  direct  obligations  bearing  fixed,  floating  or variable interest
rates.

   COMMERCIAL   PAPER.   Commercial  paper  consists  of  short-term,  unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by the Fund will consist only of direct obligations which, at the time
of their purchase, are (a) rated not lower than Prime-1 by Moody's,  A-1 by S&P,
F-1  by  Fitch  or Duff-1 by Duff, (b) issued by companies having an outstanding
unsecured  debt issue currently rated at least A3 by Moody's or A- by S&P, Fitch
or  Duff,  or  (c)  if  unrated,  determined by The Dreyfus Corporation to be of
comparable  quality  to  those  rated  obligations which may be purchased by the
Fund.

ZERO  COUPON  SECURITIES  --  The  Fund  may invest in zero coupon U.S. Treasury
securities,  which are Treasury Notes and Bonds that have been stripped of their
unmatured  interest coupons, the coupons themselves and receipts or certificates
representing  interests  in  such  stripped  debt  obligations and coupons. Zero
coupon  securities  also  are  issued by corporations and financial institutions
which  constitute  a  proportionate ownership of the issuer's pool of underlying
U.S.  Treasury securities. A zero coupon security pays no interest to its holder
during  its  life  and  is sold at a discount to its face value at maturity. The
market  prices  of  zero  coupon securities generally are more volatile than the
market  prices  of  securities  that pay interest periodically and are likely to
respond  to  a  greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.

ILLIQUID  SECURITIES  --  The  Fund may invest up to 15% of the value of its net
assets  in  securities  as  to  which  a  liquid  trading market does not exist,
provided  such  investments are consistent with the Fund's investment 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,  repurchase  agreements providing for settlement in more than seven days
after  notice, and certain privately negotiated, non-exchange traded options and
securities  used  to  cover  such  options.  As to these securities, the Fund is
subject to a risk that should the Fund desire to sell them when a ready buyer is
not available at a price the Fund deems representative of their value, the value
of the Fund's net assets could be adversely affected.

RATINGS  --  Securities  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. Securities
rated BB by S&P, Fitch or Duff, are regarded as having predominately 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.
Securities rated C by Moody's are regarded as having extremely poor prospects of
ever  attaining any real investment standing. Securities rated D by S&P or Fitch
or  DD  by  Duff  are  in  default,  and payment of interest and/or repayment of
principal   is   in   arrears.   Such  securities,  though  high  yielding,  are
characterized  by  great  risk.  See  "Appendix"  in the Statement of Additional
Information for a general description of securities ratings.

[Page 25]


   The  ratings  of  Moody's, S&P, Fitch and Duff represent their opinions as to
the  quality  of  the  obligations  which  they  undertake  to rate. 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 such obligations. 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.

ADDITIONAL  INFORMATION  ABOUT PURCHASES, EXCHANGES AND REDEMPTIONS. The Fund is
intended  to  be  a  long-term investment vehicle and is not designed to provide
investors  with a means of speculation on short-term market movements. A pattern
of  frequent  purchases  and  exchanges can be disruptive to efficient portfolio
management  and,  consequently, can be detrimental to the Fund's performance and
its  shareholders.  Accordingly,  if  the  Fund's management determines that an
investor  is  engaged  in  excessive  trading,  the  Fund, with or without prior
notice,  may  temporarily  or  permanently  terminate  the  availability of Fund
Exchanges,  or  reject  in  whole or part any purchase or exchange request, with
respect  to  such  investor's  account.  Such investors also may be barred from
purchasing  other  funds  in the Dreyfus Family of Funds. Generally, an investor
who makes more than four exchanges out of the Fund during any calendar year (for
calendar  year  1998,  beginning  on  January  15th) or who makes exchanges that
appear  to  coincide  with  an active market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control will be
considered  as  one  account  for purposes of determining a pattern of excessive
trading.  In  addition,  the  Fund  may  refuse or restrict purchase or exchange
requests  by  any  person or group if, in the judgment of the Fund's management,
the  Fund would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the  Fund  receives  or  anticipates  receiving  simultaneous  orders  that  may
significantly  affect  the Fund (e.g., amounts equal to 1% or more of the Fund's
total  assets) . If  an exchange request is refused, the Fund will take no other
action  with  respect  to the shares until it receives further instructions from
the  investor. The Fund may delay forwarding redemption proceeds for up to seven
days  if the investor redeeming shares is engaged in excessive trading or if the
amount  of  the  redemption  request  otherwise would be disruptive to efficient
portfolio  management  or  would adversely affect the Fund. The Fund's policy on
excessive  trading  applies  to  investors  who  invest  in the Fund directly or
through   financial   intermediaries,   but   does  not  apply  to  the  Dreyfus
Auto-Exchange  Privilege,  to  any  automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.

   During  times  of drastic economic or market conditions, the Fund may suspend
Fund  Exchanges  temporarily without notice and treat exchange requests based on
their  separate  components  -- redemption orders with a simultaneous request to
purchase  the  other fund's shares. In such a case, the redemption request would
be  processed  at  the  Fund's next determined net asset value but the purchase
order  would  be effective only at the net asset value next determined after the
fund  being  purchased receives the proceeds of the redemption, which may result
in the purchase being delayed.
          -----------------------------------------------------------

   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 26]

                     [This Page Intentionally Left Blank]
[Page 27]


Dreyfus

Asset Allocation Fund, Inc.

PROSPECTUS

(c) 1998 Dreyfus Service Corporation

                                                                       AAFp0998

              DREYFUS ASSET ALLOCATION FUND, INC.
                             PART B
             (STATEMENT OF ADDITIONAL INFORMATION)
   
                        SEPTEMBER 1, 1998
    

   
     This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Asset Allocation Fund, Inc. (the "Fund"), dated September 1, 1998,
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 11566-0144, 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. -- 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-17
Management Agreement....................................  B-21
Purchase of Shares......................................  B-23
Shareholder Services Plan...............................  B-24
Redemption of Shares....................................  B-25
Shareholder Services....................................  B-26
Determination of Net Asset Value........................  B-29
Dividends, Distributions and Taxes......................  B-30
Portfolio Transactions..................................  B-32
Performance Information.................................  B-33
Information About the Fund..............................  B-34
Transfer and Dividend Disbursing Agent, Custodian,
  Counsel and Independent Auditors......................  B-34
   
Financial Statements and Report of Independent
    
Auditors................................................  B-35

Appendix................................................  B-36

          INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

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

Portfolio Securities

     Repurchase Agreements.  The Fund's custodian or subcustodian will have
custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement.  Repurchase agreements are considered
by the staff of the Securities and Exchange Commission to be loans by the
Fund that enters into them.  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 $1
billion, 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.

     Commercial Paper and Other Short-Term Corporate Obligations.  These
instruments include variable amount 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 notes permit daily changes in the amounts
borrowed.  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, at any time.  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.  Such obligations frequently are not
rated by credit rating agencies, and  the Fund may invest in them only if at
the time of an investment the borrower meets the criteria set forth in the
Fund's Prospectus for other commercial paper issuers.

     Convertible Securities.  Although to a lesser extent than with fixed-
income securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, tends to increase as
interest rates decline.  In addition, because of the conversion feature, the
market value of convertible securities tends to vary with fluctuations in
the market value of the underlying common stock.  A unique feature of
convertible securities is that as the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis, and so may not experience market value declines to the same extent as
the underlying common stock.  When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock.  While no securities
investments are without risk, investments in convertible securities
generally entail less risk than investments in common stock of the same
issuer.

     Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stocks.  There can be no
assurance of current income because the issuers of the convertible
securities may default on their obligations.  A convertible security, in
addition to providing fixed income, offers the potential for capital
appreciation through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying common stock.
There can be no assurance of capital appreciation, however, because
securities prices fluctuate.  Convertible securities, however, generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.

     The Fund may invest in convertible preferred stocks that offer enhanced
yield features, such as Preferred Equity Redemption Cumulative Stock
("PERCS"), and higher dividend income than is available on a company's
common stock.  PERCS are preferred stock which generally feature a mandatory
conversion date, as well as a capital appreciation limit that is usually
expressed in terms of a stated price.  The Fund also may invest in other
classes of enhanced convertible securities, such as ACES (Automatically
Convertible Equity Securities), PEPS (Participating Equity Preferred Stock),
PRIDES (Preferred Redeemable Increased Dividend Equity Securities), SAILS
(Stock Appreciation Income Linked Securities), TECONS (Term Convertible
Notes), QICS (Quarterly Income Cumulative Securities) and DECS (Dividend
Enhanced Convertible Securities).  These securities are company issued
convertible preferred stock.  Unlike PERCS, they do not have a capital
appreciation limit.  They are designed to provide the investor with high
current income with some prospect of future capital appreciation, issued
with three or four-year maturities, and typically have some built-in call
protection. Investors have the right to convert them into shares of common
stock at a preset conversion ratio or hold them until maturity. Upon
maturity they will convert mandatorily into either cash or a specified
number of shares of common stock.

     Zero Coupon Securities.  Zero coupon U.S. Treasury securities are
Treasury Notes and Bonds that have been stripped of their unmatured interest
coupons, the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons.  Receipts include
"Treasury Receipts" ("TRs") "Treasury Investment Growth Receipts" ("TIGRs"),
"Liquid Yield Option Notes" ("LYONs"), and "Certificates of Accrual on
Treasury Securities" ("CATS").  TIGRs, LYONs and CATS are interests in
private proprietary accounts while TRs are interests in accounts sponsored
by the U.S. Treasury.

     Municipal Obligations.  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.  Industrial development bonds, in most cases,
are revenue bonds and 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.

     Mortgage Related Securities--Mortgage-related securities are a form of
Derivative collateralized by pools of commercial or residential mortgages.
Pools of mortgage loans are assembled as securities for sale to investors by
various governmental, government-related and private organizations.  These
securities may include complex instruments such as collateralized mortgage
obligations and stripped mortgage-backed securities, mortgage pass-through
securities, interests in REMICs or other kinds of mortgage-backed
securities, including those with fixed, floating and variable interest
rates, those with interest rates that change based on multiples of changes
in a specified index of interest rates and those with interest rates that
change inversely to changes in interest rates.

Government-Agency Securities--Mortgage-related securities issued by the
Government National Mortgage Association ("GNMA") include GNMA Mortgage Pass-
Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee
is backed by the full faith and credit of the United States.  GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing
and Urban Development.  GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Treasury to make payments
under its guarantee.

Government-Related Securities--Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are not backed by or entitled to the full
faith and credit of the United States.  FNMA is a government-sponsored
organization owned entirely by private stockholders.  Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA.

     Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs").  FHLMC is a corporate
instrumentality of the United States created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks.  Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Bank and do not
constitute a debt or obligation of the United States or of any Federal Home
Loan Bank.  Freddie Macs entitle the holder to timely payment of interest,
which is guaranteed by FHLMC.  FHLMC guarantees either ultimate collection
or timely payment of all principal payments on the underlying mortgage
loans.  When FHLMC does not guarantee timely payment of principal, FHLMC may
remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.

Private Entity Securities--These mortgage-related securities are issued by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers.  Timely
payment of principal and interest on mortgage-related securities backed by
pools created by non-governmental issuers often is supported partially by
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance.  The insurance and guarantees are issued by
government entities, private insurers and the mortgage poolers.  There can
be no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies, so that if the issuers default on their
obligations the holders of the security could sustain a loss.  No insurance
or guarantee covers the Fund or the price of the Fund's shares.  Mortgage-
related securities issued by non-governmental issuers generally offer a
higher rate of interest than government agency and government-related
securities because there are no direct or indirect government guarantees of
payment.

Commercial Mortgage-Related Securities--Commercial mortgage related
securities generally are multi-class debt or pass-through certificates
secured by mortgage loans on commercial properties.  These mortgage-related
securities generally are structured to provide protection to the senior
classes investors against potential losses on the underlying mortgage loans.
This protection generally is provided by having the holders of subordinated
classes of securities ("Subordinated Securities") take the first loss if
there are defaults on the underlying commercial mortgage loans.  Other
protection, which may benefit all of the classes or particular classes, may
include issuer guarantees, reserve funds, additional Subordinated
Securities, cross-collateralization and over-collateralization.

     The Fund may invest in Subordinated Securities issued or sponsored by
commercial banks, savings and loan institutions, mortgage bankers, private
mortgage insurance companies and other non-governmental issuers.
Subordinated Securities have no governmental guarantee, and are subordinated
in some manner as to the payment of principal and/or interest to the holders
of more senior mortgage-related securities arising out of the same pool of
mortgages.  The holders of Subordinated Securities typically are compensated
with a higher stated yield than are the holders of more senior mortgage-
related securities.  On the other hand, Subordinated Securities typically
subject the holder to greater risk than senior mortgage-related securities
and tend to be rated in a lower rating category, and frequently a
substantially lower category, than the senior mortgage-related securities
issued in respect of the same pool of mortgage.  Subordinated Securities
generally are likely to be more sensitive to changes in prepayment and
interest rates and the market rates and the market for such securities may
be less liquid than is the case for traditional fixed-income securities and
senior mortgage-related securities.

     The market for commercial mortgage-related securities developed more
recently and in terms of total outstanding principal amount of issues is
relatively small compared to the market for residential single-family
mortgage-related securities.  In addition, commercial lending generally is
viewed as exposing the lender to a greater risk of loss than one- to four-
family residential lending.  Commercial lending, for example, typically
involves larger loans to single borrowers or groups of related borrowers
than residential one- to four-family mortgage loans. In addition the
repayment of loans secured by income producing properties typically is
dependent upon the successful operation of the related real estate project
and the cash flow generated therefrom.  Consequently, adverse changes in
economic conditions and circumstances are more likely to have an adverse
impact on mortgage-related securities secured by loans on commercial
properties than on those secured by loans on residential properties.

Collateralized Mortgage Obligations ("CMOs")--A CMO is a mulitclass bond
backed by a pool of mortgage pass-through certificates or mortgage loans.
CMOs may be collateralized by (a) Ginnie Mae, Fannie Mae, or Freddie Mac
pass-through certificates, (b) unsecuritized mortgage loans insured by the
Federal Housing Administration or guaranteed by the Department of Veterans'
Affairs, (c) unsecuritized conventional mortgages, (d) other mortgage-
related securities, or (e) any combination thereof.  Each class of CMOs,
often referred to as a "tranche," is issued at a specific coupon rate and
has a stated maturity of final distribution date.  Principal prepayments on
collateral underlying a CMO may cause it to be retired substantially earlier
than the stated maturities or final distribution dates.  The principal and
interest on the underlying mortgages may be allocated among the several
classes of a series of a CMO in many ways.  One or more trances of a CMO may
have coupon rates which reset periodically at a specified increment over an
index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes
more than one index).  These floating rate CMOs typically are issued with
lifetime caps on the coupon rate thereon.  The Fund also may invest in
inverse floating rate CMOs.  Inverse floating rate CMOs constitute a tranche
of a CMO with a coupon rate that moves in the reverse direction to an
applicable index such a LIBOR.  Accordingly, the coupon rate thereon will
increase as interest rates decrease.  Inverse floating rate CMOs are
typically more volatile than fixed or floating rate tranches of CMOs.

     Many inverse floating rate CMOs have coupons that move inversely to a
multiple of the applicable indexes.  The effect of the coupon varying
inversely to a multiple of an applicable index creates a leverage factor.
Inverse floaters 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 loss of principal.  The markets
for inverse floating rate CMOs with highly leveraged characteristics at
times may be very thin.  The Fund's ability to dispose of its positions in
such securities will depend on the degree of liquidity in the markets for
such securities.  It is impossible to predict the amount of trading interest
that may exist in such securities, and therefore the future degree of
liquidity.

Stripped Mortgage-Backed Securities--The Fund also may invest in stripped
mortgage-backed securities.  Stripped mortgage-backed securities are created
by segregating the cash flows from underlying mortgage loans or mortgage
securities to create two or more new securities, each with a specified
percentage of the underlying security's principal or interest payments.
Mortgage securities may be partially stripped so that each investor class
receives some interest and some principal.  When securities are completely
stripped, however, all of the interest is distributed to holders of one type
of security, known as an interest-only security, or IO, and all of the
principal is distributed to holders of another type of security known as a
principal-only security, or PO.  Strips can be created in a pass-through
structure or as tranches of a CMO.  The yields to maturity on IOs and POs
are very sensitive to the rate of principal payments (including prepayments)
on the related underlying mortgage assets.  If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the
Fund may not fully recoup its initial investment in IOs.  Conversely, if the
underlying mortgage assets experience less than anticipated prepayments of
principal, the yield on POs could be materially and adversely affected.

Real Estate Investment Trusts--A REIT is a corporation, or a business trust
that would otherwise be taxed as a corporation, which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code").
The Code permits a qualifying REIT to deduct dividends paid, thereby
effectively eliminating corporate level Federal Income tax and making the
REIT a pass-through vehicle for Federal income tax purposes.  To meet the
definitional requirements of the Code, a REIT must, among other things,
invest substantially all of its assets in interests in real estate
(including mortgages and other REITs) or cash and government securities,
derive most of its income from rents from real property or interest on loans
secured by mortgages on real property, and distribute to shareholders
annually a substantial portion of its otherwise taxable income.

     REITs are characterized as equity REITs, mortgage REITs and hybrid
REITs.  Equity REITs, which may include operating or finance companies, own
real estate directly and the value of, and income earned by, the REITs
depends upon the income of the underlying properties and the rental income
they earn.  Equity REITs also can realize capital gains (or losses) by
selling properties that have appreciated (or depreciated) in value.
Mortgage REITs can make construction, development or long-term mortgage
loans and are sensitive to the credit quality of the borrower.  Mortgage
REITs derive their income from interest payments on such loans.  Hybrid
REITs combine the characteristics of both equity and mortgage REITs,
generally by holding both ownership interests and mortgage interests in real
estate.  The value of securities issued by REITs are affected by tax and
regulatory requirements and by perceptions of management skill.  They also
are subject to heavy cash flow dependency, defaults by borrowers or tenants,
self-liquidation and the possibility of failing to qualify for tax-free
status under the Code or to maintain exemption from the Investment Company
Act of 1940, as amended (the "1940 Act").

Adjustable-Rate Mortgage Loans ("ARMs")--ARMs eligible for inclusion in a
mortgage pool will generally provide for a fixed initial mortgage interest
rate for a specified period of time, generally for either the first three,
six, twelve, thirteen, thirty-six, or sixty scheduled monthly payments.
Thereafter, the interest rates are subject to periodic adjustment based on
changes in an index.  ARMs typically have minimum and maximum rates beyond
which the mortgage interest rate may not vary over the lifetime of the
loans.  Certain ARMs provide for additional limitations on the maximum
amount by which the mortgage interest rate may adjust for any single
adjustment period.  Negatively amortizing ARMs may provide limitations on
changes in the required monthly payment.  Limitations on monthly payments
can result in monthly payments that are greater or less than the amount
necessary to amortize a negatively amortizing ARM by its maturity at the
interest rate in effect during any particular month.
   
Other Mortgage-Related Securities--Other mortgage-related securities include
securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage
loans on real property, including CMO residuals.  Other mortgage-related
securities may be equity or debt securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.
    
     Foreign Government Obligations; Securities of Supranational Entities.
The Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable
quality to the other obligations in which the Fund may invest.  Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies.  Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the
Asian Development Bank and the InterAmerican Development Bank.

     Illiquid Securities.  When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
marketable, the Fund will endeavor to obtain the right to registration at
the expense of the issuer.  Generally, there will be a lapse of time between
the Fund's decision to sell any such security and the registration of the
security permitting sale.  During any such period, the price of the
securities will be subject to market fluctuations.  However, where a
substantial market of qualified institutional buyers develops for certain
unregistered securities purchased by the Fund pursuant to Rule 144A under
the Securities Act of 1933, as amended, the Fund intends to treat such
securities as liquid securities in accordance with procedures approved by
the Fund's Board.  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 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 during such period.

Management Policies

     The Fund may engage in the following investment practices in
furtherance of its objective.
   
     Leverage.  For borrowings for investment purposes, the 1940 Act
requires the Fund to maintain continuous asset coverage (that is, total
assets including borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed.  If the required coverage should decline as a
result of market fluctuations or other reasons, the Fund may be required to
sell some of its portfolio securities within three days to reduce the amount
of its borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that
time.  The Fund also may be required to maintain minimum average balances in
connection with such borrowing or pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.  To the extent the Fund enters into
a reverse repurchase agreement, the Fund will maintain in a segregated
custodial account permissible liquid assets at least equal to the aggregate
amount of its reverse repurchase obligations, plus accrued interest, in
certain cases, in accordance with releases promulgated by the Securities and
Exchange Commission.  The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund.
    
     Short-Selling.  Until the Fund closes its short position or replaces
the borrowed security, it will:  (a) maintain a segregated account,
containing permissible liquid assets, at such a level that the amount
deposited in the account plus the amount deposited with the broker as
collateral always equals the current value of the security sold short; or
(b) otherwise cover its short position.
   
     Derivatives.  The Fund may invest in, or enter into, Derivatives (as
defined in the Fund's Prospectus) for a variety of reasons, including to
hedge certain market risks, to provide a substitute for purchasing or
selling particular securities or to increase potential income gain.
Derivatives may provide a cheaper, quicker or more specifically focused way
for the Fund to invest than "traditional" securities would.
    
     Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives.  Exchange-traded Derivatives generally are guaranteed by the
clearing agency that is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk.  As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange.  By contrast, no clearing agency
guarantees over-the-counter Derivatives.  Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested in
bidding for it.

Futures Transactions--In General.  The Fund may enter into futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or, on
exchanges located outside the United States, such as the London
International Financial Futures Exchange and the Sydney Futures Exchange
Limited.  Foreign markets may offer advantages such as trading opportunities
or arbitrage possibilities not available in the United States.  Foreign
markets, however, may have greater risk potential than domestic markets.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and an investor may look only to the broker for
performance of the contract.  In addition, any profits that the Fund might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the Fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not.  Unlike trading on
domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission.

     Engaging in these transactions involves risk of loss to the Fund which
could adversely affect the value of the Fund's net assets.  Although the
Fund intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time.  Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day.  Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day.  Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Fund to substantial losses.

     Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract.  For example,
if the Fund uses futures to hedge against the possibility of a decline in
the market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit
of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions.  Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements.  The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.

     Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity.  The segregation
of such assets will have the effect of limiting the Fund's ability otherwise
to invest those assets.

Specific Futures Transactions.  The Fund may purchase and sell stock index
futures contracts. A stock index future obligates the Fund to pay or receive
an amount of cash equal to a fixed dollar amount specified in the futures
contract multiplied by the difference between the settlement price of the
contract on the contract's last trading day and the value of the index based
on the stock prices of the securities that comprise it at the opening of
trading in such securities on the next business day.

     The Fund may purchase and sell interest rate futures contracts.  An
interest rate future obligates the Fund to purchase or sell an amount of a
specific debt security at a future date at a specific price.

Interest Rate Swaps.  Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive
interest (for example, an exchange of floating rate payments for fixed-rate
payments).  The exchange commitments can involve payments to be made in the
same currency or in different currencies.  The use of interest rate swaps is
a highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio security
transactions.  If the Manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment
performance of the Fund would diminish compared with what it would have been
if these investment techniques were not used.  Moreover, even if the Manager
is correct in its forecasts, there is a risk that the swap position may
correlate imperfectly with the price of the asset or liability being hedged.
There is no limit on the amount of interest rate swap transactions that may
be entered into by the Fund.  These transactions do not involve the delivery
of securities or other underlying assets or principal.  Accordingly, the
risk of loss with respect to interest rate swaps is limited to the net
amount of interest payments that the Fund is contractually obligated to
make.  If the other party to an interest rate swap defaults, the Fund's risk
of loss consists of the net amount of interest payments that the Fund
contractually is entitled to receive.

     The Fund may purchase and sell currency futures.  A foreign currency
future obligates the Fund to purchase or sell an amount of a specific
currency at a future date at a specific price.
   
Options.  The Fund may purchase and write (i.e., sell) call or put options
with respect to specific securities.  A call option gives the purchaser of
the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during
the option period, or at a specific date.  Conversely, a put option gives
the purchaser of the option the right to sell, and obligates the writer to
buy, the underlying security or securities at the exercise price at any time
during the option period, or at a specific date.
    
     A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities.  A put option written
by the Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken.  The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone.  The Fund
receives a premium from writing covered call or put options which it retains
whether or not the option is exercised.

     There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist.  A liquid secondary market in an option may
cease to exist for a variety of reasons.  In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen events,
at times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options.  There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution of
customers' orders, will not recur.  In such event, it might not be possible
to effect closing transactions in particular options.  If, as a covered call
option writer, the Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.

Specific Options Transactions.  The Fund may purchase and sell call and put
options in respect of specific securities (or groups or "baskets" of
specific securities) or stock indices listed on national securities
exchanges or traded in the over-the -counter market.  An option on a stock
index is similar to an option in respect of specific securities, except that
settlement does not occur by delivery of the securities comprising the
index.  Instead, the option holder receives an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in
the case of a call, or less than, in the case of a put, the exercise price
of the option.  Thus, the effectiveness of purchasing or writing stock index
options will depend upon price movements in the level of the index rather
than the price of a particular stock.

     The Fund may purchase and sell call and put options on foreign
currency.  These options convey the right to buy or sell the underlying
currency at a price which is expected to be lower or higher than the spot
price of the currency at the time the option is exercised or expires.

     The Fund may purchase cash-settled options on interest rate swaps,
interest rate swaps denominated in foreign currency and equity index swaps
in pursuit of its investment objective.  Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest (for example, an exchange of floating-rate payments
for fixed-rate payments) denominated in U.S. dollars or foreign currency.
Equity index swaps involve the exchange by the Fund with another party of
cash flows based upon the performance of an index or a portion of an index
of securities which usually includes dividends.  A cash-settled option on a
swap gives the purchaser the right, but not the obligation, in return for
the premium paid, to receive an amount of cash equal to the value of the
underlying swap as of the exercise date.  These options typically are
purchased in privately negotiated transactions from financial institutions,
including securities brokerage firms.

     Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in the prices of individual stocks,
the stock market generally, foreign currencies or interest rates.  To the
extent the Manager's predictions are incorrect, the Fund may incur losses.

     Future Developments.  The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund.  Before entering into such
transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or Statement of Additional
Information.

     Forward Commitments.  Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (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.  Securities purchased on a forward commitment or
when-issued basis may expose the Fund to risks because they may experience
such fluctuations prior to their actual delivery.  Purchasing securities 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.  Purchasing securities on a forward
commitment or 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.

     Investment Company Securities.  The Fund may invest in securities
issued by other investment companies which principally invest in securities
of the type in which the Fund invests.  Under the 1940 Act, the Fund's total
investments in such securities, subject to certain exceptions, currently are
limited to (i) 3% of the total voting stock of any one investment company,
(ii) 5% of the Fund's total assets with respect to any one investment
company and (iii) 10% of the Fund's total assets in the aggregate.
Investments in the securities of other investment companies may involve
duplication of advisory fees and certain other expenses.

     Lending Portfolio Securities.  In connection with its securities
lending transactions, 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 dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection
with the loan; and (6) while voting rights on the loaned securities may pass
to the borrower, the Fund's Board must terminate the loan and regain the
right to vote the securities if a material event adversely affecting the
investment occurs.

Investment Considerations and Risks
   
     Lower Rated Securities.  The Fund is permitted to invest in securities
rated Ba by Moody's Investors Service, Inc. ("Moody's") or BB by Standard &
Poor's Ratings Group ("S&P"), Fitch IBCA, Inc. ("Fitch") or Duff & Phelps
Credit Ratings Co. ("Duff" and with Moody's, S&P and Fitch, the "Rating
Agencies") and as low as the lowest rating assigned by the Rating Agencies.
Such securities, though higher yielding, are characterized by risk.  See
"Description of the Fund--Investment Considerations and Risks--Lower Rated
Securities" in the Prospectus for a discussion of certain risks and the
"Appendix" for a general description of the Rating Agencies' ratings.
Although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
securities.  The Fund will rely on the Manager's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
    
     Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities.  These securities generally are considered by the Rating
Agencies to be, on balance, 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.

     Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing.  Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with the higher rated
securities.  For example, during an economic downturn or a sustained period
of rising interest rates, highly leveraged issuers of these securities may
not have sufficient revenues to meet their interest payment obligations.
The issuer's ability to service its debt obligations also may be affected
adversely by specific corporate developments, forecasts, or the
unavailability of additional financing.  The risk of loss because of default
by the issuer is significantly greater for the holders of these securities
because such securities generally are unsecured and often are subordinated
to other creditors of the issuer.

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

     The Fund may acquire these securities 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.

     The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon securities and pay-in-kind bonds, in which the
Fund may invest up to 5% of its total assets.  Pay-in-kind bonds pay
interest through the issuance of additional securities. Zero coupon
securities and pay-in-kind 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.

Investment Restrictions

     The Fund has adopted investment restrictions numbered 1 through 8 as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares.  Investment restrictions numbered 9 through 14 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Board members at any time.  The Fund may not:

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

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

     3.        Borrow money, except to the extent permitted under the 1940 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.

     4.        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.

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

     6.        Invest more than 25% of the value of its assets in the securities
of issuers in any single industry, provided that, there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

     7.        Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent the activities permitted in
Investment Restriction Nos. 1, 3, 10 and 11 may be deemed to give rise to a
senior security.

     8.        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.

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

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

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

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

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

     14.       Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.

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

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

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


                           MANAGEMENT OF THE FUND

     Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below.

Board Members of the Fund

LUCY WILSON BENSON, Board Member.  President of Benson and Associates,
     consultants to business and government.  Mrs. Benson is a director of
     Communications Satellite Corporation, General RE Corporation and
     Logistics Management Institute.  She is also a trustee of the Alfred P.
     Sloan Foundation, Vice Chairman of the Board of Trustees of Lafayette
     College, Vice Chairman of the Citizens Network for Foreign Affairs and
     a member of the Council on Foreign Relations.  From 1980 to 1994, Mrs.
     Benson was a director of The Grumman Corporation.  Mrs. Benson served
     as a consultant to the U.S. Department of State and to SRI
     International from 1980 to 1981.  From 1977 to 1980, she was Under
     Secretary of State for Security Assistance, Science and Technology.
     She is 70 years old and her address is 46 Sunset Avenue, Amherst,
     Massachusetts 01002.
   
DAVID W. BURKE, Board Member.  Chairman of the Broadcasting Board of
     Governors, an independent board within the United States Information
     Agency, since August 1995.  From August 1994 to February 1995, Mr.
     Burke was a Consultant to the Manager, and from October 1990 to August
     1994, he was Vice President and Chief Administrative Officer of the
     Manager.  From 1977 to 1990, Mr. Burke was involved in the management
     of national television news, as Vice President and Executive Vice
     President  of ABC News, and subsequently as President of CBS News.  He
     is 61 years old and his address is 197 Eighth Street, Charleston,
     Massachusetts 02109.
    
   
JOSEPH S. DiMARTINO, Chairman of the Board.  Since January 1995, Chairman of
     the Board of various funds in the Dreyfus Family of Funds. He also is a
     director of The Noel Group, Inc., a venture capital company (for which,
     from February 1995 until November 1997, he was Chairman of the Board),
     The Muscular Dystrophy Association, HealthPlan Services Corporation, a
     provider of marketing, administrative and risk management services to
     health and other benefit programs, Carlyle Industries, Inc. (formerly
     Belding Heminway Company, Inc.), a button packager and distributor,
     Century Business Services, Inc., a provider of various outsourcing
     functions for small and medium sized companies, and Career Blazers,
     Inc. (formerly, Staffing Resources, Inc.), a temporary placement firm.
     For more than five years prior to January 1995, he was President, a
     director and, until August 1994, Chief Operating Officer of the Manager
     and Executive Vice President and a director of Dreyfus Service
     Corporation, a wholly-owned subsidiary of the Manager and, until August
     24, 1994, the Fund's distributor.  From August 1994 to December 31,
     1994, he was a director of Mellon Bank Corporation.  He is 54 years old
     and his address is 200 Park Avenue, New York, New York 10166.
    
   
MARTIN D. FIFE, Board Member.  Chairman of the Board of Magar, Inc., a
     company specializing in financial products and developing early stage
     companies.  In addition, Mr. Fife is Chairman of the Board and Chief
     Executive Officer of Skysat Communications Network Corporation, a
     company developing telecommunications systems.  Mr. Fife also serves on
     the boards of various other companies.  He is 69 years old and his
     address is 405 Lexington Avenue, New York, New York 10174.
    
WHITNEY I. GERARD, Board Member.  Partner of the New York City law firm of
     Chadbourne & Parke.  He is 62 years old and his address is 30
     Rockefeller Plaza, New York, New York 10112.
   
ROBERT R. GLAUBER, Board Member.  Research Fellow, Center for Business and
     Government at the John F. Kennedy School of Government, Harvard
     University, since January 1992.  Mr. Glauber was Under Secretary of the
     Treasury for Finance at the U.S. Treasury Department from May 1989 to
     January 1992.  For more than 5 years prior thereto, he was a Professor
     of Finance at the Graduate School of Business Administration of Harvard
     University and, from 1985 to 1989, Chairman of its Advanced Management
     Program.  He is also a director of Mid Ocean Reinsurance Co. Ltd. and
     Cooke Bieler, Inc., investment counselors, NASD Regulations, Inc. and
     the Federal Reserve Bank of Boston.  He is 57 years old and his address
     is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138.
    
   
ARTHUR A. HARTMAN, Board Member.  Senior consultant with APCO Associates
     Inc.  From 1981 to 1987, he was United States Ambassador to the former
     Soviet Union.  He is a director of the ITT Hartford Insurance Group,
     Ford Meter Box Corporation and Lawter International and a member of the
     advisory councils of several other companies, research institutes and
     foundations.  Ambassador Hartman is Chairman of the First NIS Regional
     Fund (ING/Barings Management).  He is a former President of the Harvard
     Board of Overseers.  He is 71 years old and his address is 2738
     McKinley Street, N.W., Washington, D.C. 20015.
    
GEORGE L. PERRY, Board Member.  An economist and Senior Fellow at the
     Brookings Institution since 1969.  He is co-director of the Brookings
     Panel on Economic Activity and editor of its journal, The Brookings
     Papers.  He is also a director of the State Farm Mutual Automobile
     Association, State Farm Life Insurance Company and Federal Realty
     Investment Trust.  He is 62 years old and his address is 1775
     Massachusetts Avenue, N.W., Washington, D.C. 20036.
   
PAUL D. WOLFOWITZ, Board Member.  Dean of The Paul H. Nitze School of
     Advanced International Studies at Johns Hopkins University.  From 1989
     to 1993, he was Under Secretary of Defense for Policy.  From 1986 to
     1989, he was the U.S. Ambassador to the Republic of Indonesia.  From
     1982 to 1986, he was Assistant Secretary of State for East Asian and
     Pacific Affairs of the Department of State.  He is 52 years old and his
     address is 1740 Massachusetts Avenue, N.W., Washington, D.C. 20036.
    
     For so long as the Fund plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board members who are not "interested
persons" of the Fund.
   
     The Fund typically pays its Board members 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.  Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half of the amount paid to them as Board members.  The aggregate amount
of compensation paid to each Board member by the Fund for the fiscal year
ended April 30, 1998, and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member (the numbers of which is set forth
in parenthesis next to each Board member's total compensation) for the year
ended December 31, 1997, were as follows:
    
   
                                        Total Compensation
                       Aggregate        from Fund and Fund
    Name of Board   Compensation from     Complex Paid to
      Member              Fund*            Board Members

Lucy Wilson Benson    $2,250               $ 74,055 (14)

David W. Burke        $2,250               $239,000 (51)

Joseph S. DiMartino   $2,813               $597,128 (96)

Martin D. Fife        $2,250               $ 60,500 (12)

Whitney I. Gerard     $2,250               $ 60,500 (12)

Robert R. Glauber     $2,250               $102,500 (20)

Arthur A. Hartman     $2,000               $ 55,750 (12)

George L. Perry       $2,250               $ 60,500 (12)

Paul D. Wolfowitz     $2,000               $ 52,750 (10)
    
   
______________________________
*    Amount does not include reimbursed expenses for attending Board
     meetings, which amounted to $924 for all Board members as a group.
    
Officers of the Fund
   
MARIE E. CONNOLLY, President and Treasurer.  President, Chief Executive
     Officer, Chief Compliance Officer and a director of the Distributor and
     Funds Distributor, Inc. the ultimate parent of which is Boston
     Institutional Group, Inc., and an officer of other investment companies
     advised or administered by the Manager. She is 40 years old.
    
   
MARGARET W. CHAMBERS, Vice President and Secretary.  Senior Vice President
     and General Counsel of Funds Distributor, Inc., and an officer of other
     investment companies advised or administered by the Manager.  From
     August 1996 to March 1998, she was Vice President and Assistant General
     Counsel for Loomis, Sayles & Company, L.P.  From January 1986 to July
     1996, she was an associate with the law firm of Ropes & Gray.  She is
     38 years old.
    
   
MICHAEL S. PETRUCELLI, Vice President, Assistant Treasurer and Assistant
     Secretary.  Senior Vice President of Funds Distributor, Inc., and an
     officer of certain other investment companies advised or administered
     by the Manager.  From December 1989 through November 1996, he was
     employed by GE Investment Services where he held various financial,
     business development and compliance positions.  He also served as
     Treasurer of the GE Funds and as a Director of GE Investment Services.
     He is 36 years old.
    
   
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
     Treasurer.  Vice President and Client Development Manager of Funds
     Distributor, Inc., and an officer of other investment companies advised
     or administered by the Manager.  From April 1997 to March 1998, she was
     employed as a Relationship Manager with Citibank, N.A.  She is 29 years
     old.
    
MARY A. NELSON, Vice President and Assistant Treasurer.  Vice President of
     the Distributor and Funds Distributor, Inc., and an officer of other
     investment companies advised or administered by the Manager.  From
     September 1989 to July 1994, she was an Assistant Vice President and
     Client Manager for The Boston Company, Inc.  She is 34 years old.
   
GEORGE A. RIO, Vice President and Assistant Treasurer.  Executive Vice
     President and Client Service Director of Funds Distributor, Inc., and
     an officer of other investment companies advised or administered by the
     Manager.  From June 1995 to March 1998, he was Senior Vice President
     and Senior Key Account Manager for Putnam Mutual Funds.  From May 1994
     to June 1995, he was Director of Business Development for First Data
     Corporation.  From September 1983 to May 1994, he was Senior Vice
     President & Manager of Client Services and Director of Internal Audit
     at The Boston Company.  He is 43 years old.
    
   
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer.  Senior Vice
     President, Treasurer, Chief Financial Officer and a director of the
     Distributor and Funds Distributor, Inc., 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 35 years old.
    
DOUGLAS C. CONROY, Vice President and Assistant Secretary.  Assistant Vice
     President of Funds Distributor, Inc., and an officer of other
     investment companies advised or administered by the Manager.  From
     April 1993 to January 1995, he was a Senior Fund Accountant for
     Investors Bank & Trust Company.  From December 1991 to March 1993, he
     was employed as a Fund Accountant at The Boston Company, Inc.  He is 29
     years old.
   
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary.  Vice
     President and Senior Associate General Counsel of Funds Distributor,
     Inc., and an officer of other investment companies advised or
     administered by the Manager.  From April 1994 to July 1996, he was
     Assistant Counsel at Forum Financial Group.  From October 1992 to March
     1994, he was employed by Putnam Investments in legal and compliance
     capacities.  He is 33 years old.
    
   
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary.  Manager of
     Treasury Services Administration of Funds Distributor, Inc., and an
     officer of other investment companies advised or administered by the
     Manager.  From July 1994 to November 1995, she was a Fund Accountant
     for Investors Bank & Trust Company.  She is 25 years old.
    
   
ELBA VASQUEZ, Vice President and Assistant Secretary.  Assistant Vice
     President of Funds Distributor, Inc., and an officer of other
     investment companies advised or administered by the Manager.  From
     March 1990 to May 1996, she was employed by U.S. Trust Company of New
     York where she held various sales and marketing positions.  She is 36
     years old.
    
   
     The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
    
   
     The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on August 10, 1998.
    
                      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 or (ii) vote of a
majority (as defined in the 1940 Act) of the Fund's outstanding voting
securities, provided that in either event the continuance also is approved
by a majority of the Board members who are not "interested persons" (as
defined in the 1940 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 4, 1994, and was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting
held on August 6, 1998.  The Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board or by vote of the holders of a majority of
the Fund's shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
    
   
     The following persons are officers and/or directors of the Manager:  W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; Ronald P. O'Hanley III,
Vice Chairman; J. David Officer, Vice Chairman and a director; William T.
Sandalls, Jr., Senior Vice President and Chief Financial Officer; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Patrice M. Kozlowski,
Vice President-Corporate Communications; Mary Beth Leibig, Vice President-
Human Resources; Andrew S. Wasser, Vice President-Information Systems; James
Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary; and
Mandell L. Berman, Burton C., Frank V. Cahouet and Richard F. Syron,
directors.
    
     The Manager manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the approval of the Fund's Board.
The Manager is responsible for investment decisions, and provides the Fund
with portfolio managers who are authorized by the Board to execute purchases
and sales of securities.  The Fund's portfolio managers are Timothy Ghriskey
and Kevin McClintock.  The Manager also maintains a research department with
a professional staff of portfolio managers and securities analysts who
provide research services for the Fund and for other funds advised by the
Manager.

     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: organizational costs, taxes, interest,
loan commitment fees, interest and distributions paid on securities sold
short, brokerage fees and commissions, if any, fees of Board members 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 the Fund's existence, costs of independent
pricing services, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders and any extraordinary
expenses.  In addition, Fund shares are subject to an annual service fee.
See "Shareholder Services 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 its services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .75 of 1% of the
value of the Fund's average daily net assets.  For the fiscal years ended
April 30, 1996, 1997 and 1998, the management fees payable to the Manager
amounted to $469,019, $451,732 and $586,043, respectively.  The management
fee for the fiscal year ended April 30, 1996 was reduced by $170,503
pursuant to an undertaking by the Manager, resulting in a net fee of
$298,516.
    
     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 the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law.  Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a monthly
basis.

     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 SHARES


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

     The Distributor.  The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually.
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 at any time.  Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day the
Transfer Agent and the New York Stock Exchange are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the New York
Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order.  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
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, provided the information on the old Account Application is
still applicable.


                   SHAREHOLDER SERVICES PLAN

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

     The Fund has adopted a Shareholder Services Plan, pursuant to which the
Fund pays the Distributor for the provision of certain services to the
Fund's shareholders.  The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts.  Under the Shareholder
Services Plan, the Distributor may make payments to certain financial
institutions, securities dealers and other financial industry professionals
(collectively, "Service Agents") in respect to these services.
   
     A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Board for its review.  In addition, the Shareholder
Services Plan provides that material amendments of the Shareholder Services
Plan must be approved by the Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments.  The Shareholder Services Plan
is subject to annual approval by such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Shareholder
Services Plan.  The Shareholder Services Plan was last so approved by the
Board at a meeting held on August 6, 1998.  The Shareholder Services Plan is
terminable at any time by vote of a majority of the Board members who are
not "interested persons" and have no direct or indirect financial interest
in the operation of the Shareholder Services Plan or in any agreements
entered into in connection with the Shareholder Services Plan.
    
   
     For the fiscal year ended April 30, 1998, the Fund was charged $195,348
pursuant to the Shareholder Services Plan.
    

                      REDEMPTION OF SHARES

     The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
   
     Wire Redemption Privilege.  By using this Privilege, the investor
authorizes the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine.  Ordinarily, the
Fund will initiate payment for shares redeemed pursuant to this Privilege on
the next business day after receipt if the Transfer Agent receives the
redemption request in proper form.  Redemption proceeds ($1,000 minimum)
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, or to a correspondent bank if the investor's bank is not a
member of the Federal Reserve System.  Fees ordinarily are imposed by such
bank and 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 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 Shares--Dreyfus
TeleTransfer Privilege."

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

     Redemption Commitment.  The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of the Fund, 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 reserves the right to make payments in whole or in part in
securities or other assets 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 securities are 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 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 (including
over The Dreyfus Touchr automated telephone system) from any person
representing himself or herself to be the investor, and reasonably believed
by the Transfer Agent to be genuine.  Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted.  Shares issued in certificate form are not eligible for telephone
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.
    
     Dreyfus Auto-Exchange Privilege.  Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Portfolio,
shares of one of the other Portfolios of the Fund or 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 set forth under "Fund Exchanges" above.  Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor.  An investor will be notified
if his account falls below the amount designated to be exchanged under this
Privilege.  In this case, an investor's account will fall to zero unless
additional investments are made in excess of the designated amount prior to
the next Auto-Exchange transaction.  Shares held under IRA and other
retirement plans are eligible for this Privilege.  Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA accounts,
but not from IRA accounts to regular accounts.  With respect to all other
retirement accounts, exchanges may be made only among those accounts.

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

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

     Automatic Withdrawal Plan.  The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares.  If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted.  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 automatically 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 and the applicable contingent deferred sales charge, if
          any, will be imposed upon redemption of such shares.
   
     Corporate Pension/Profit-Sharing and Retirement Plans.  The Fund makes
available to corporations a variety of prototype pension and profit-sharing
plans including a 401(k) Salary Reduction Plan.  In addition, the Fund makes
available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-
working spouse, IRAs set up under a Simplified Employee Pension Plan ("SEP-
IRAs"), Roth IRAs, Education IRAs and IRA "Rollover Accounts") and 403(b)(7)
Plans.  Plan support services also are available.
    
   
     Investors who wish to purchase Fund shares in conjunction with a Keogh
Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, may request from the
Distributor forms for adopting such plans.
    
     The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.

     Shares may be purchased in connection with these plans only by direct
remittance to the entity acting as custodian.  Purchases for these plans may
not be made in advance of receipt of funds.
   
     The minimum initial investment for corporate plans, Salary Reduction
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, is
$2,500, with no minimum on subsequent purchases.  The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus - sponsored Education IRAs, with no minimum on subsequent purchases.
    
     The investor should read the Prototype Retirement Plan and the
appropriate form of Custodial Agreement for further details on eligibility,
service fees and tax implications, and should consult a tax adviser.


                DETERMINATION OF NET ASSET VALUE

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

     Valuation of Portfolio Securities.  The Fund's securities, including
covered call options written by the Fund, are valued at the last sale price
on the securities exchange or national securities market on which such
securities primarily are traded.  Securities not listed on an exchange or
national securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked
prices, except in the case of open short positions where the asked price is
used for valuation purposes.  Bid price is used when no asked price is
available.  Short-term investments are carried at amortized cost, which
approximates value.  Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined
in good faith by the Fund's Board.  Expenses and fees of the Fund, including
the management fee paid by the Fund and fees pursuant to the Fund's
Shareholder Services Plan, are accrued daily and taken into account for the
purpose of determining the net asset value of Fund shares.

     Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board, are valued at fair value as determined in
good faith by the Board.  The Board will review the method of valuation on a
current basis.  In making their good faith valuation of restricted
securities, the Board members generally will take the following factors into
consideration: restricted securities which are securities of the same class
of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased.  This
discount will be revised periodically by the Board if the Board members
believe that it no longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for which a public
market exists usually will be valued initially at cost.  Any subsequent
adjustment from cost will be based upon considerations deemed relevant by
the Board.

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


               DIVIDENDS, DISTRIBUTIONS AND TAXES

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

     Management of the Fund believes the Fund qualified as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), for the fiscal year ended April 30, 1998.  The Fund intends to
continue to so qualify, as long as such qualification is in the best
interests of its shareholders.  Qualification as a regulated investment
company relieves the Fund from any liability for Federal income taxes to the
extent its earnings are distributed in accordance with applicable provisions
of the Code.  The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.

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

     Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain and loss.  However, a portion of the gain or loss
from the disposition of non-U.S. dollar denominated securities (including
debt instruments, certain financial forward futures and option contracts and
certain preferred stock) may be treated as ordinary income or loss under
Section 988 of the Code.  In addition, all or a portion of the gain realized
from the disposition of certain market discount bonds will be treated as
ordinary income under Section 1276.  Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as
ordinary income under Section 1258.  "Conversion transactions" are defined
to include certain forward, futures, option and straddle transactions,
transactions marketed or sold to produce capital gains, or transactions
described in Treasury regulations to be issued in the future.
   
     Under Section 1256 of the Code, any gain or loss realized by the Fund
from certain forward contracts and options transactions (other than those
taxed under Section 988 of the Code) will be treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss.  Gain or loss
will arise upon exercise or lapse of such contracts and options as well as
from closing transactions.  In addition, any such contracts or options
remaining unexercised at the end of the Fund's taxable year will be treated
as sold for its then fair market value, resulting in additional gain or loss
characterized in the manner described above.
    
   
     Offsetting positions held by the Fund involving certain forward
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property.  The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Sections 1256
and 988 of the Code.  As such, all or a portion of any short-term or long-
term capital gain from certain "straddle" transactions may be
recharacterized to ordinary income.
    
   
     If the Fund were treated as entering into "straddles" by reason of its
engaging in certain forward contracts or options transactions, such
"straddles" could be characterized as "mixed straddles" if the forward
contracts or options transactions comprising a part of such "straddles" were
governed by Section 1256 of the Code.  The Fund may make one or more
elections with respect to "mixed straddles."  If no election is made, to the
extent the "straddle" rules apply to positions established by the Fund,
losses realized by the Fund will be deferred to the extent of unrealized
gain in the offsetting position.  Moreover, as a result of the "straddle"
and conversion transaction rules, short-term capital loss on "straddle"
positions may be recharacterized as long-term capital loss, and long-term
capital gains may be treated as short-term capital gains or ordinary income.
    
   
     The Taxpayer Relief Act of 1997 included constructive sale provisions
that generally will apply if the Fund either (1) holds an appreciated
financial position with respect to stock, certain debt obligations, or
partnership interests ("appreciated financial position") and then enters
into a short sale, futures, forward, or offsetting notional principal
contract (collectively, a "Contract") respecting the same or substantially
identical property (2) holds an appreciated financial position that is a
Contract and then acquires property that is the same as, or substantially
identical to, the underlying property.  In each instance, with certain
exceptions, the Fund generally will be taxed as if the appreciated financial
position were sold at its fair market value on the date the Fund enters into
the financial position or acquires the property, respectively.  Transactions
that are identified hedging or straddle transactions under other provisions
of the Code can be subject to the constructive sale provisions.
    
     Investment by the Fund in securities issued or acquired 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 by causing the Fund to
recognize income prior to the receipt of cash payments.  For example, the
Fund could be required to accrue a portion of the discount (or deemed
discount) at which the securities were issued and to distribute such income
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.

                     PORTFOLIO TRANSACTIONS

     The Manager supervises the placement of orders on behalf of the Fund
for the purchase or sale of portfolio securities.  Allocation of brokerage
transactions, including their frequency, is made in the Manager's best
judgment and in a manner deemed fair and reasonable to shareholders.  The
primary consideration is prompt execution of orders at the most favorable
net price.  Subject to this consideration, the brokers selected will include
those that supplement the Manager's research facilities with statistical
data, investment information, economic facts and opinions.  Information so
received is in addition to and not in lieu of services required to be
performed by the Manager and the fee of the Manager is not reduced as a
consequence of the receipt of such supplemental information.  Such
information may be useful to the Manager in serving both the Fund and other
clients which it advises and, conversely, supplemental information obtained
by the placement of business of other clients may be useful to the Manager
in carrying out its obligation to the Fund.  Brokers are also selected
because of their ability to handle special executions such as are involved
in large block trades or broad distributions, provided the primary
consideration is met.  Large block trades may, in certain cases, result from
two or more clients the Manager might advise being engaged simultaneously in
the purchase or sale of the same security.  Certain transactions in
securities of foreign issuers may not benefit from the negotiated commission
rates available to the Fund for transactions in securities of domestic
issuers.  When transactions are executed in the over-the-counter market, the
Fund will deal with the primary market makers unless a more favorable price
or execution otherwise is obtainable.
   
     For the fiscal years ended April 30, 1996, 1997 and 1998, the Fund paid
total brokerage commissions of $500,390, $241,623 and $429,140,
respectively, none of which was paid to the Distributor.  The Fund paid no
gross spreads and concessions on principal transactions for the fiscal year
ended April 30, 1996.  For the fiscal years ended April 30, 1997 and 1998,
the Fund paid $232,985 and $100,796, respectively, in concessions.
    
   
     The aggregate amount of transactions during the last fiscal year in
securities effected on an agency basis through a broker for, among other
things, research services, and the commissions and concessions related to
such transactions were as follows:
    
   
          Transaction                   Commissions and
          Amount                        Concessions

          $59,294,645                        $59,867
    
                    PERFORMANCE INFORMATION

     The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
   
     The Fund's average annual total return for the 1 and 4.84 year periods
ended April 30, 1998 was 34.33% and 16.46%, respectively.  Average annual
total return is calculated by determining the ending redeemable value of an
investment purchased at net asset value per share 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 July 1, 1993 (commencement of
operations) through April 30, 1998 was 108.78%.  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.
    
     Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc., Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average, Money Magazine, Wilshire 5000 Index and other
industry publications.  From time to time, the Fund may compare its
performance against inflation with the performance of other instruments
against inflation, such as short-term Treasury Bills (which are direct
obligations of the U.S. Government) and FDIC-insured bank money market
accounts.  In addition, advertising for the Fund may indicate that investors
may consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation.  From time to
time, advertising materials for the Fund may refer to or discuss then-
current or past economic or financial conditions, developments and/or
events.

     From time to time, advertising materials for the Fund may refer to
Morningstar ratings and related analyses supporting such ratings.


                   INFORMATION ABOUT THE FUND

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

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

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


   TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL
                    AND INDEPENDENT AUDITORS
   
     Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent.  Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund.  For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses.  For the fiscal year ended April 30, 1998, the Fund paid
the Transfer Agent $41,063.
    
   
     Mellon Bank, N.A. (the "Custodian"), the Manager's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, serves as custodian of the
Fund's investments.  Under a custody agreement with the Fund, the Custodian
holds the Fund's securities and keeps all necessary accounts and records.
For its custody services, the Custodian receives a monthly fee based on the
market value of the Fund's assets held in custody and receives certain
securities transactions charges.  For the fiscal year ended April 30, 1998,
the Fund paid the Custodian $24,037.
    
     Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.

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

   
           FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS

     The Fund's Annual Report to Shareholders for the fiscal year ended
April 30, 1998 is a separate document supplied with this Statement of
Additional Information, and the financial statements, accompanying notes,
and report of independent auditors appearing therein are incorporated by
reference into this Statement of Additional Information.
    
                            APPENDIX

   
     Description of certain ratings assigned by Standard & Poor's Ratings
Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc.
("Fitch") and Duff & Phelps Credit Rating Co. ("Duff"):
    
S&P

Bond Ratings

                              AAA

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

                               AA

     Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

                               A

     Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher rated categories.

                              BBB

     Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal.  Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.

                       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.

                               BB

     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.

                               B

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

                              CCC

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

                               CC

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

                               C

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

                               D

     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.

Commercial Paper Rating

     The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.  Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus sign (+) designation.

Moody's 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.

                               Aa

     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.

                               A

     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.

                               Ba

     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.

                               B

     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.

                               Ca

     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.

                               C

     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 ratings categories, except in the Aaa category and
in 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.

Commercial Paper Rating

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

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

                              AAA

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

                               AA

     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+.

                               A

     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.

                               BB

     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.

                               B

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

                              CCC

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

                               CC

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

                               C

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

                         DDD, DD and D

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

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

Short-Term Ratings

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

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

                              F-1+

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

                              F-1

     Very Strong Credit Quality.  Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
                              F-2

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

Duff

                              AAA

     Bonds rated AAA are considered highest credit quality.  The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

                               AA

     Bonds rated AA are considered high credit quality.  Protection factors
are strong.  Risk is modest but may vary slightly from time to time because
of economic conditions.

                               A

     Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.

                              BBB

     Bonds rated BBB are considered to have below average protection factors
but still considered sufficient for prudent investment.  Considerable
variability in risk during economic cycles.

                               BB

     Bonds rated BB are below investment grade but are deemed by Duff as
likely to meet obligations when due.  Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes.  Overall quality may move up or down frequently within the
category.

                               B

     Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due.  Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes.  Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.

                              CCC

     Bonds rated CCC are well below investment grade securities.  Such bonds
may be in default or have considerable uncertainty as to timely payment of
interest, preferred dividends and/or principal.  Protection factors are
narrow and risk can be substantial with unfavorable economic or industry
conditions and/or with unfavorable company developments.

                               DD

     Defaulted debt obligations.  Issuer has failed to meet scheduled
principal and/or interest payments.

     Plus (+) and minus (-) signs are used with a rating symbol (except AAA)
to indicate the relative position of a credit within the rating category.

Commercial Paper Rating

     The rating Duff-1 is the highest commercial paper rating assigned by
Duff.  Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection.  Risk factors are minor.



                     DREYFUS ASSET ALLOCATION FUND, INC.

                          PART C. OTHER INFORMATION
                          _________________________


Item 24.  Financial Statements and Exhibits. - List
_______   _________________________________________

     (a)  Financial Statements:

               Included in Part A of the Registration Statement
   
               Condensed Financial Information for the period from July 1,
               1993(commencement of operations) to April 30, 1994 and for
               each of the four years in the period ended April 30, 1998.
    
               Included in Part B of the Registration Statement:
   
                    Statement of Investments-- April 30, 1998*
    
   
                    Statement of Assets and Liabilities-- April 30, 1998*
    
   
                    Statement of Operations--year ended April 30, 1998*
    
   
                    Statement of Changes in Net Assets--for each of the two
                    years ended April 30, 1998*
    
   
                    Notes to Financial Statements*
    
   
                    Report of Ernst & Young LLP, Independent Auditors, dated
                    June 3, 1998*
    
   
___________________________________
*    Incorporated by reference to Registrant's Annual Report on Form N-30D
for the fiscal year ended April 30, 1998 filed with the Commission on July
9, 1998.
    



All Schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.


Item 24.  Financial Statements and Exhibits. - List (continued)
_______   _____________________________________________________

 (b)      Exhibits:

(1)       Registrant's Articles of Incorporation and Articles of Amendment
          are incorporated by reference to Exhibit (1) of Pre-Effective
          Amendment No. to the Registration Statement on Form N-1A, filed on
          June 28, 1993, and Exhibit (1)(b) of Post-Effective Amendment No.
          4 to the Registration Statement on Form N-1A, filed on August 25,
          1994.

(2)       Registrant's By-Laws, as amended, are incorporated by reference to
          Exhibit (2) of Post-Effective Amendment No. 1 to the Registration
          Statement on Form N-1A, filed on June 28, 1993.

(4)       Specimen certificate for the Registrant's securities is
          incorporated by reference to Exhibit (4) of Pre-Effective
          Amendment No. 1 to the Registration Statement on Form N-1A, filed
          on June 28, 1993.

(5)       Management Agreement is incorporated by reference to Exhibit (5)
          of Pre-Effective Amendment No. 4 to the Registration Statement on
          Form N-1A, filed on August 25, 1994.

(6)(a)    Distribution Agreement is incorporated by reference to Exhibit (6)
          of Pre-Effective Amendment No. 4 to the Registration Statement on
          Form N-1A, filed on August 25, 1994.

(6)(b)    Forms of Service Agreement are incorporated by reference to
          Exhibit 6(b) and (6)(c) of Post-Effective Amendment No. 4, to the
          Registration Statement on Form N-1A, filed on August 25, 1994.

(8)(a)    Custody Agreement is incorporated by reference to Exhibit 8(a) of
          Post-Effective Amendment No. 9 to the Registration Statement on
          Form N-1A, filed on July 26, 1996.

(9)       Shareholder Services Plan, as revised, is incorporated by
          reference to Exhibit (6)(c) of Post-Effective Amendment No. 4 to
          the Registration Statement on Form N-1A, filed on August 25, 1994.

(10)      Opinion and consent of Registrant's counsel is incorporated by
          reference to Exhibit (10) of Pre-Effective Amendment No. 4 to the
          Registration Statement on Form N-1A, filed on August 25, 1994.

(11)      Consent of Independent Auditors.

(16)      Schedules of Computation of Performance Data are incorporated by
          reference to Exhibit (16) of Post-Effective Amendment No. 1 to the
          Registration Statement on Form N-1A, filed on January 28, 1994.

(17)      Financial Data Schedule.


Item 24.  Financial Statements and Exhibits. - List (continued)
_______   _____________________________________________________

          Other Exhibits
          ______________

             (a)  Powers of Attorney of the Directors and officers.

             (b)  Certificate of Secretary.

Item 25.  Persons Controlled by or under Common Control with Registrant.
_______   ______________________________________________________________

          Not Applicable

Item 26.  Number of Holders of Securities.
_______   ________________________________
   
            (1)                                   (2)

                                              Number of Record
        Title of Class                      Holders as of August 10, 1998
        ______________                      _____________________________

        Common Stock
        (Par value $.01)                        4,172
    
Item 27.    Indemnification
_______     _______________

        Reference is made to Article SEVENTH of the Registrant's Articles of
        Incorporation filed as Exhibit 1 and to Section 2-418 of the
        Maryland General Corporation Law.  The application of these
        provisions is limited by Article VIII of the Registrant's By-Laws
        filed as Exhibit 2 and by the following undertaking set forth in
        the rules promulgated by the Securities and Exchange Commission:

            Insofar as indemnification for liabilities arising under the
            Securities Act of 1933 may be permitted to directors, officers
            and controlling persons, or otherwise, the registrant has been
            advised that in the opinion of the Securities and Exchange
            Commission such indemnification is against public policy as
            expressed in such Act as is, therefore, unenforceable.  In the
            event that a claim for indemnification against such liabilities
            (other than the payment by the registrant of expenses incurred
            or paid by a director, officer or controlling person of the
            registrant in the successful defense of any such action, suit or
            proceeding) is asserted by such director, officer or controlling
            person in connection with the securities being registered, the
            registrant will, unless in the opinion of its counsel the matter
            has been settled by controlling precedent, submit to a

Item 27.    Indemnification (Continued)
_______     _______________

            court of appropriate jurisdiction the question whether
            such indemnification by it is against public policy as
            expressed in such Act and will be governed by the final
            adjudication of such issue.

        Reference is also made to the Distribution Agreement attached as
        Exhibit (6)(c) of Post-Effective Amendment No. 4 to the
        Registration Statement on Form N-1A, filed on August 25, 1994.


Item 28.   Business and Other Connections of Investment Adviser.
_______    ____________________________________________________

           The Dreyfus Corporation ("Dreyfus") and subsidiary companies
           comprise a financial service organization whose business
           consists primarily of providing investment management services
           as the investment adviser, manager and distributor for sponsored
           investment companies registered under the Investment Company Act
           of 1940 and as an investment adviser to institutional and
           individual accounts.  Dreyfus also serves as sub-investment
           adviser to and/or administrator of other investment companies.
           Dreyfus Service Corporation, a wholly-owned subsidiary of
           Dreyfus, serves primarily as a registered broker-dealer of
           shares of investment companies sponsored by Dreyfus and of other
           investment companies  for which Dreyfus acts as investment
           adviser, sub-investment adviser or administrator.  Dreyfus
           Investment Advisors, Inc., another wholly-owned subsidiary,
           provides investment management services to various pension
           plans, institutions and individuals.


Item 28.  Business and Other Connections of Investment Adviser (continued)
________  ________________________________________________________________

          Officers and Directors of Investment Adviser
          ____________________________________________

Name and Position
with Dreyfus             Other Businesses
_________________        ________________
   
W. KEITH SMITH           Senior Vice Chairman:
Chairman of the               Mellon Bank, N.A.*;
Board                    President and Director:
                              The Bridgewater Land Co., Inc.**;
                              Mellon Preferred Capital Corporation**;
                              TBC Securities Co., Inc.**;
                              Wellington-Medford II Properties, Inc.**;
                         Chairman, President and Chief Executive Officer:
                              Shearson Summit Euromanagement, Inc.*;
                              Shearson Summit EuroPartners, Inc.*;
                              Shearson Summit Management, Inc.*;
                              Shearson Summit Partners, Inc.*;
                              Shearson Venture Capital, Inc.*;
                         Chairman and Chief Executive Officer:
                              The Boston Company, Inc.**;
                              Boston Safe Deposit and Trust Company**;
                              Boston Group Holdings, Inc.**;
                         Director:
                              Dentsply International, Inc.
                              570 West College Avenue
                              York, Pennsylvania 17405;
                              The Boston Company Asset Management, Inc.**;
                              Mellon Europe Limited
                              London, England;
                              Mellon Global Investing Corp.*;
                              Mellon Accounting Services, Inc.*;
                              MGIC-UK Ltd.;
                              Mellon Capital Management Corporation***;
                         Chairman:
                              Mellon Financial Company*;
                              Buck Consultants, Inc.
                              1 Pennsylvania Plaza, 29th Floor
                              New York, New York 10019;
                         Director and Vice Chairman:
                              Mellon Financial Services Corporation*;
                              Mellon Bank Corporation*;
                         Trustee:
                              Laurel Capital Advisors, LLP*;
                              Mellon Equity Associates, LLP*;
                              Mellon Bond Associates, LLP*;
                         Past Director:
                              Access Capital Strategies Corp.
                              124 Mount Auburn Street
                              Suite 200 North
                              Cambridge, MA 02138

W. KEITH SMITH           Past Trustee:
Chairman of the Board         Franklin Portfolio Associates Trust
(continued)                   2 International Place, 22nd Floor
                              Boston, MA 02110
    
MANDELL L. BERMAN        Real estate consultant and private investor
Director                      29100 Northwestern Highway, Suite 370
                              Southfield, Michigan 48034
   
    
BURTON C. BORGELT        Director:
Director                      Dentsply
                              International, Inc.
                              570 West College Avenue
                              York, Pennsylvania 17405;
                              DeVlieg-Bullard, Inc.
                              1 Gorham Island
                              Westport, Connecticut 06880;
                              Mellon Bank Corporation*;
                              Mellon Bank, N.A.*
   
FRANK V. CAHOUET         Chairman of the Board, President and
Director                 Chief Executive Officer:
                              Mellon Bank Corporation*;
                         Director:
                              Avery Dennison Corporation
                              150 North Orange Grove Boulevard
                              Pasadena, California 91103;
                              Saint-Gobain Corporation
                              750 East Swedesford Road
                              Valley Forge, Pennsylvania 19482;
                              Alleghany Teledyne, Inc.
                              1901 Avenue of the Stars
                              Los Angeles, California 90067;
                         Past Chairman, President and Chief Executive Officer:
                              Mellon Bank, N.A.*
    
   
STEPHEN E. CANTER        Chairman and President:
Vice Chairman,                Dreyfus Investment Advisors, Inc.****
Chief Investment Officer,Director:
and a Director                The Dreyfus Trust Company+
    
   
CHRISTOPHER M. CONDRON   President and Chief Operating Officer:
President, Chief              Mellon Bank, N.A.*;
Executive Officer,       President and Director:
Chief Operating               Boston Safe Advisors, Inc.**;
Officer and a            Vice-Chairman and Director:
Director                      Mellon Bank Corporation*;
                              The Boston Company, Inc.**;
                         Director:
                              Certus Asset Advisors Corporation++;
                              Mellon Capital Management Corporation***;
                              Boston Safe Deposit and Trust Company**;
                         Past President and Director:
                              The Boston Company Financial Services, Inc.**;
                         Past President:
                              The Boston Company Financial Strategies, Inc.**;
CHRISTOPHER M. CONDRON        Boston Safe Deposit and Trust Company**;
President, Chief         Past Director:
Executive Officer,            Mellon Preferred Capital Corporation**;
Chief Operating               Access Capital Strategies Corp.
Officer and a Director        124 Mount Auburn Street
(continued)                   Suite 200 North
                              Cambridge, MA 02138;
                         Past Chairman, President, and Chief Executive Officer:
                              The Boston Company Asset Management, Inc.**;
                         Past Partner Representative:
                              Pareto Partners
                              271 Regent Street
                              London, England W1R 8PP;
                         Past Trustee:
                              Franklin Portfolio Associates Trust
                              2 International Place, 22nd Floor
                              Boston, MA. 02710;
                              Mellon Bond Associates, LLP*;
                              Mellon Equity Associates, LLP*;
    
   
LAWRENCE S. KASH         Executive Vice President:
Vice Chairman-Distribution    Mellon Bank, N.A.*;
and a Director           Chairman, President and Director:
                              The Dreyfus Consumer Credit Corporation****;
                         Trustee, President and Chief Executive Officer:
                              Laurel Capital Advisors, LLP*;
                         Director:
                              Dreyfus Investment Advisors, Inc.****;
                              Seven Six Seven Agency, Inc.****;
                         President and Director:
                              Dreyfus Service Corporation+;
                              Dreyfus Precious Metals, Inc.+;
                              Dreyfus Service Organization, Inc.****;
                              The Boston Company, Inc.**;
                              Boston Group Holdings, Inc.**;
                         Chairman and Chief Executive Officer:
                              Dreyfus Brokerage Services, Inc.
                              401 North Maple Avenue
                              Beverly Hills, CA 90210;
                         Chairman, President and Chief Executive Officer:
                              The Dreyfus Trust Company+;
                              The Boston Company Advisors, Inc.
                              Wilmington, DE.
    
   
J. DAVID OFFICER         Director:
Vice Chairman                 Dreyfus Financial Services Corporation*****;
and a Director                Dreyfus Investment Services Corporation*****;
                              Mellon Trust of Florida
                              2875 Northeast 191st Street
                              North Miami Beach, Florida 33180;
                              Mellon Preferred Capital Corporation**;
                              Boston Group Holdings, Inc.**;
                              Mellon Trust of New York
                              1301 Avenue of the Americas - 41st Floor
                              New York, New York 10019;

J. DAVID OFFICER              Mellon Trust of California
Vice Chairman                 400 South Hope Street
and a Director                Los Angeles, California 90071-2806;
(continued)                   Dreyfus Insurance Agency of Massachusetts, Inc.
                              53 State Street
                              Boston, Massachusetts 02109;
                         Executive Vice President:
                              Dreyfus Service Corporation****;
                              Mellon Bank, N.A.*;
                         Vice Chairman and Director:
                              The Boston Company, Inc.**;
                         President and Director:
                              RECO, Inc.**;
                              The Boston Company Financial Services, Inc.**;
                              Boston Safe Deposit and Trust Company**;
    
   
RICHARD F. SYRON         Chairman of the Board and Chief Executive Officer:
Director                      American Stock Exchange
                              86 Trinity Place
                              New York, New York 10006;
                         Director:
                              John Hancock Mutual Life Insurance Company
                              John Hancock Place, Box 111
                              Boston, Massachusetts 02117;
                              Thermo Electron Corporation
                              81 Wyman Street, Box 9046
                              Waltham, Massachusetts 02254-9046;
                              American Business Conference
                              1730 K Street, NW, Suite 120
                              Washington, D.C. 20006;
                         Trustee:
                              Boston College - Board of Trustees
                              140 Commonwealth Ave.
                              Chestnut Hill, Massachusetts 02167-3934
    
   
RONALD P. O'HANLEY III   Director:
Vice Chairman                 The Boston Company Asset Management, LLC**;
                              TBCAM Holding, Inc.**;
                              Franklin Portfolio Holdings, Inc.
                              Two International Place - 22nd Floor
                              Boston, Massachusetts 02110;
                              Mellon Capital Management Corporation***;
                              Certus Asset Advisors Corporation++;
                              Mellon-France Corporation***;
                         Chairman and Director:
                              Boston Safe Advisors, Inc.**;
                         Partner Representative:
                              Pareto Partners
                              271 Regent Street
                              London, England W1R 8PP;
                         Chairman and Trustee:
                              Mellon Bond Associates, LLP*;
                              Mellon Equity Associates, LLP*;
                         Trustee:
                              Laurel Capital Advisors, LLP*;

RONALD P. O'HANLEY III   Chairman, President and Chief Executive Officer:
Vice Chairman                 Mellon Global Investing Corp.*;
(continued)              Partner:
                              McKinsey & Company, Inc.
                              Boston, Massachusetts
    
   
WILLIAM T. SANDALLS, JR. Chairman and Director:
Senior Vice President and     Dreyfus Transfer, Inc.
Chief Financial Officer       One American Express Plaza
                              Providence, Rhode Island 02903;
                         President and Director:
                              Dreyfus-Lincoln, Inc.
                              4500 New Linden Hill Rd.
                              Wilmington, DE 19808;
                         Executive Vice President and Chief Financial Officer:
                              Dreyfus Service Corporation****;
                         Executive Vice President, Treasurer and Director:
                              Dreyfus Service Organization, Inc.****;
                         Director and Treasurer:
                              Dreyfus Investment Advisors, Inc.****;
                              Seven Six Seven Agency, Inc.****;
                              Dreyfus Precious Metals, Inc.+;
                         Director, Vice President and Treasurer:
                              The Dreyfus Consumer Credit Corporation****;
                              The TruePenny Corporation****
                         Director, Treasurer and Chief Financial Officer:
                              The Dreyfus Trust Company+;
                         Past Director and President:
                              Lion Management, Inc.****;
                              Dreyfus Partnership Management, Inc.****;
                         Past Director and Executive Vice President:
                              Dreyfus Service Organization, Inc.****;
                         Past Director and Treasurer:
                              Dreyfus Personal Management, Inc.****
    
   
MARK N. JACOBS           Director:
Vice President,               Dreyfus Service Organization, Inc.****;
General Counsel               The Dreyfus Trust Company+;
and Secretary                 Dreyfus Investment Advisors, Inc.****;
                         Director and Secretary:
                              The TruePenny Corporation****;
                         Past Director, Vice President and Secretary:
                              Lion Management, Inc.****
    
PATRICE M. KOZLOWSKI     None
Vice President-
Corporate Communications

MARY BETH LEIBIG         None
Vice President-
Human Resources

ANDREW S. WASSER         Vice President:
Vice President-Information    Mellon Bank Corporation*
Services
   
JAMES BITETTO            Assistant Secretary:
Assistant Secretary           Dreyfus Service Corporation****;
                              Dreyfus Investment Advisers, Inc.****;
                              Dreyfus Service Organization, Inc.****
    
   
STEVEN F. NEWMAN         Vice President, Secretary and Director:
Assistant Secretary           Dreyfus Transfer, Inc.
                              One American Express Plaza
                              Providence, Rhode Island 02903;
                         Secretary:
                              Dreyfus Service Organization, Inc.****
    
______________________________________
   
*    The address of the business so indicated is One Mellon Bank Center,
     Pittsburgh, Pennsylvania 15258.
    
   
**   The address of the business so indicated is One Mellon Bank Place, Boston,
     Massachusetts, 02108.
    
   
***  The address of the business so indicated is 595 Market Street, Suite 3000,
     San Francisco CA 94105.
    
   
**** The address of the business so indicated is 200 Park Avenue, New York, New
     York 10166.
    
   
*****The address of the business so indicated is Union Trust Building, 501
     Grant Street, Pittsburgh, PA 15259.
    
   
+    The address of the business so indicated is 144 Glenn Curtiss Boulevard,
     Uniondale, New York, 11556-0144.
    
   
++   The address of the business so indicated is One Bush Street, Suite 450,
     San Francisco, CA. 94104.
    

Item 29.  Principal Underwriters
________  ______________________

     (a)  Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:

1)        Comstock Partners Funds, Inc.
2)        Dreyfus A Bonds Plus, Inc.
3)        Dreyfus Appreciation Fund, Inc.
4)        Dreyfus Asset Allocation Fund, Inc.
5)        Dreyfus Balanced Fund, Inc.
6)        Dreyfus BASIC GNMA Fund
7)        Dreyfus BASIC Money Market Fund, Inc.
8)        Dreyfus BASIC Municipal Fund, Inc.
9)        Dreyfus BASIC U.S. Government Money Market Fund
10)       Dreyfus California Intermediate Municipal Bond Fund
11)       Dreyfus California Tax Exempt Bond Fund, Inc.
12)       Dreyfus California Tax Exempt Money Market Fund
13)       Dreyfus Cash Management
14)       Dreyfus Cash Management Plus, Inc.
15)       Dreyfus Connecticut Intermediate Municipal Bond Fund
16)       Dreyfus Connecticut Municipal Money Market Fund, Inc.
17)       Dreyfus Florida Intermediate Municipal Bond Fund
18)       Dreyfus Florida Municipal Money Market Fund
19)       The Dreyfus Fund Incorporated
20)       Dreyfus Global Bond Fund, Inc.
21)       Dreyfus Global Growth Fund
22)       Dreyfus GNMA Fund, Inc.
23)       Dreyfus Government Cash Management Funds
24)       Dreyfus Growth and Income Fund, Inc.
25)       Dreyfus Growth and Value Funds, Inc.
26)       Dreyfus Growth Opportunity Fund, Inc.
27)       Dreyfus Income Funds
   
28)       Dreyfus Index Funds, Inc.
    
29)       Dreyfus Institutional Money Market Fund
30)       Dreyfus Institutional Preferred Money Market Fund
31)       Dreyfus Institutional Short Term Treasury Fund
32)       Dreyfus Insured Municipal Bond Fund, Inc.
33)       Dreyfus Intermediate Municipal Bond Fund, Inc.
34)       Dreyfus International Funds, Inc.
35)       Dreyfus Investment Grade Bond Funds, Inc.
   
36)       Dreyfus Investment Portfolios
    
37)       The Dreyfus/Laurel Funds, Inc.
38)       The Dreyfus/Laurel Funds Trust
39)       The Dreyfus/Laurel Tax-Free Municipal Funds
40)       Dreyfus LifeTime Portfolios, Inc.
41)       Dreyfus Liquid Assets, Inc.
42)       Dreyfus Massachusetts Intermediate Municipal Bond Fund
43)       Dreyfus Massachusetts Municipal Money Market Fund
44)       Dreyfus Massachusetts Tax Exempt Bond Fund
45)       Dreyfus MidCap Index Fund
46)       Dreyfus Money Market Instruments, Inc.
47)       Dreyfus Municipal Bond Fund, Inc.
48)       Dreyfus Municipal Cash Management Plus
49)       Dreyfus Municipal Money Market Fund, Inc.
50)       Dreyfus New Jersey Intermediate Municipal Bond Fund
51)       Dreyfus New Jersey Municipal Bond Fund, Inc.
52)       Dreyfus New Jersey Municipal Money Market Fund, Inc.
53)       Dreyfus New Leaders Fund, Inc.
54)       Dreyfus New York Insured Tax Exempt Bond Fund
55)       Dreyfus New York Municipal Cash Management
56)       Dreyfus New York Tax Exempt Bond Fund, Inc.
57)       Dreyfus New York Tax Exempt Intermediate Bond Fund
58)       Dreyfus New York Tax Exempt Money Market Fund
59)       Dreyfus 100% U.S. Treasury Intermediate Term Fund
60)       Dreyfus 100% U.S. Treasury Long Term Fund
61)       Dreyfus 100% U.S. Treasury Money Market Fund
62)       Dreyfus 100% U.S. Treasury Short Term Fund
63)       Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64)       Dreyfus Pennsylvania Municipal Money Market Fund
65)       Dreyfus Premier California Municipal Bond Fund
66)       Dreyfus Premier Equity Funds, Inc.
   
67)       Dreyfus Premier International Funds, Inc.
    
68)       Dreyfus Premier GNMA Fund
69)       Dreyfus Premier Worldwide Growth Fund, Inc.
70)       Dreyfus Premier Insured Municipal Bond Fund
71)       Dreyfus Premier Municipal Bond Fund
72)       Dreyfus Premier New York Municipal Bond Fund
73)       Dreyfus Premier State Municipal Bond Fund
74)       Dreyfus Premier Value Fund
   
    
75)       Dreyfus Short-Intermediate Government Fund
76)       Dreyfus Short-Intermediate Municipal Bond Fund
77)       The Dreyfus Socially Responsible Growth Fund, Inc.
78)       Dreyfus Stock Index Fund, Inc.
79)       Dreyfus Tax Exempt Cash Management
80)       The Dreyfus Third Century Fund, Inc.
81)       Dreyfus Treasury Cash Management
82)       Dreyfus Treasury Prime Cash Management
83)       Dreyfus Variable Investment Fund
84)       Dreyfus Worldwide Dollar Money Market Fund, Inc.
85)       General California Municipal Bond Fund, Inc.
86)       General California Municipal Money Market Fund
87)       General Government Securities Money Market Fund, Inc.
88)       General Money Market Fund, Inc.
89)       General Municipal Bond Fund, Inc.
90)       General Municipal Money Market Fund, Inc.
91)       General New York Municipal Bond Fund, Inc.
92)       General New York Municipal Money Market Fund

(b)
                                                            Positions and
Name and principal       Positions and offices with         offices with
business address         the Distributor                    Registrant
__________________       ___________________________        _____________

Marie E. Connolly+       Director, President, Chief         President and
                         Executive Officer and Compliance   Treasurer
                         Officer

Joseph F. Tower, III+    Director, Senior Vice President,   Vice President
                         Treasurer and Chief Financial      and Assistant
                         Officer                            Treasurer
   
    
Mary A. Nelson+          Vice President                     Vice President
                                                            and Assistant
                                                            Treasurer

Paul Prescott+           Vice President                     None

Jean M. O'Leary+         Assistant Secretary and            None
                         Assistant Clerk
   
John W. Gomez+           Director                           None
    
William J. Nutt+         Director                           None




________________________________
 +  Principal business address is 60 State Street, Boston, Massachusetts
    02109.
++  Principal business address is 200 Park Avenue, New York, New York
    10166.

Item 30.   Location of Accounts and Records
           ________________________________

           1.  First Data Investor Services Group, Inc.,
               a subsidiary of First Data Corporation
               P.O. Box 9671
               Providence, Rhode Island 02940-9671

           2.  Mellon Bank, N.A.
               One Mellon Bank Center
               Pittsburgh, Pennsylvania 15258

           3.  Dreyfus Transfer, Inc.
               P.O. Box 9671
               Providence, Rhode Island 02940-9671

           4.  The Dreyfus Corporation
               200 Park Avenue
               New York, New York 10166

Item 31.   Management Services
_______    ___________________

           Not Applicable

Item 32.   Undertakings
________   ____________

  (1)      To call a meeting of shareholders for the purpose of voting upon
           the question of removal of a Board member or Board members when
           requested in writing to do so by the holders of at least 10% of
           the Registrant's outstanding shares and in connection with such
           meeting to comply with the provisions of Section 16(c) of the
           Investment Company Act of 1940 relating to shareholder
           communications.

  (2)      To furnish each person to whom a prospectus is delivered with a
           copy of the Fund's latest Annual Report to Shareholders, upon
           request and without charge.


                                 SIGNATURES
   
     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 27th day of August, 1998.
    
                    DREYFUS ASSET ALLOCATION FUND, INC.


            BY:    /s/   Marie E. Connolly*
                   __________________________________________
                   MARIE E. CONNOLLY, PRESIDENT

          Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

        Signatures                     Title                           Date
_____________________________   ______________________               ________
   
/s/Marie E.  Connolly*          President and Treasurer              8/27/98
_____________________________   (Principal Executive, Financial
Marie E. Connolly               and Accounting Officer)
    
   
/s/Joseph F. Tower, III         Vice President and Assistant         8/27/98
_____________________________   Treasurer (Principal Accounting
Joseph F. Tower, III            Officer)
    
   
/s/Joseph S. DiMartino*         Chairman of the Board                8/27/98
_____________________________
Joseph S. DiMartino
    
   
/s/David W. Burke*              Director                             8/27/98
_____________________________
David W. Burke
    
   
/s/Lucy Wilson Benson*          Director                             8/27/98
______________________________
Lucy Wilson Benson
    
   
/s/Martin D. Fife*              Director                             8/27/98
_____________________________
Martin D. Fife
    
   
/s/Whitney I. Gerard*           Director                             8/27/98
_____________________________
Whitney I. Gerard
    
   
/s/Robert R. Glauber*           Director                             8/27/98
_____________________________
Robert R. Glauber
    
   
/s/Arthur A. Hartman*           Director                             8/27/98
_____________________________
Arthur A. Hartman
    
   
/s/George L. Perry*             Director                             8/27/98
_____________________________
George L. Perry
    
   
/s/Paul D. Wolfowitz*           Director                             8/27/98
_____________________________
Paul D. Wolfowitz
    

*BY:     /s/ Michael S. Petrucelli
         __________________________
         Michael S. Petrucelli,
         Attorney-in-Fact



                              EXHIBIT INDEX


Exhibits

          (11)      Consent of Independent Auditors

          (17)      Financial Data Schedule

          Other     Power of Attorney

          Other     Certificate of Assistant Secretary










                CONSENT OF INDEPENDENT AUDITORS



We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors" and to the use of our report dated June 3,
1998,  which is incorporated by reference, in this Registration Statement
(Form N-1A No. 33-62626) of Dreyfus Asset Allocation Fund, Inc.



                                               ERNST & YOUNG LLP

New York, New York
August 28, 1998



<TABLE> <S> <C>

<ARTICLE> 6
<CIK> 0000904818
<NAME> DREYFUS ASSET ALLOCATION FUND, INC.
<MULTIPLIER> 1000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          APR-30-1998
<PERIOD-END>                               OCT-31-1998
<INVESTMENTS-AT-COST>                            71219
<INVESTMENTS-AT-VALUE>                           75551
<RECEIVABLES>                                     6030
<ASSETS-OTHER>                                     116
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                   81697
<PAYABLE-FOR-SECURITIES>                          4556
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          482
<TOTAL-LIABILITIES>                               5038
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                         55649
<SHARES-COMMON-STOCK>                             4364
<SHARES-COMMON-PRIOR>                             4144
<ACCUMULATED-NII-CURRENT>                          798
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                          15732
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                          4481
<NET-ASSETS>                                     76659
<DIVIDEND-INCOME>                                  373
<INTEREST-INCOME>                                  622
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                     470
<NET-INVESTMENT-INCOME>                            526
<REALIZED-GAINS-CURRENT>                         12148
<APPREC-INCREASE-CURRENT>                          769
<NET-CHANGE-FROM-OPS>                            11905
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                           1389
<NUMBER-OF-SHARES-REDEEMED>                     (1169)
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                           15803
<ACCUMULATED-NII-PRIOR>                            272
<ACCUMULATED-GAINS-PRIOR>                         3583
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                              268
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                    470
<AVERAGE-NET-ASSETS>                             70967
<PER-SHARE-NAV-BEGIN>                            14.68
<PER-SHARE-NII>                                    .12
<PER-SHARE-GAIN-APPREC>                           2.77
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              17.57
<EXPENSE-RATIO>                                   .007
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        


</TABLE>


                              POWER OF ATTORNEY

     The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Michael S.
Petrucelli, Stephanie Pierce and Elba Vasquez and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or
her, and in his or her name, place and stead, in any and all capacities
(until revoked in writing) to sign any and all amendments to the
Registration Statement as to each Fund enumerated on Exhibit A attached
hereto (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.



                                      June 15, 1998
/s/ Lucy Wilson Benson
Lucy Wilson Benson


                                      June 15, 1998
/s/ David W. Burke
David W. Burke


                                      June 15, 1998
/s/ Joseph S. DiMartino
Joseph S. DiMartino


                                      June 15, 1998
/s/ Martin D. Fife
Martin D. Fife


                                      June 15, 1998
/s/ Whitney I. Gerard
Whitney I. Gerard


                                      June 15, 1998
/s/ Robert R. Glauber
Robert R. Glauber


                                      June 15, 1998
/s/ Ambassador Arthur A. Hartman
Ambassador Arthur A. Hartman


                                 APPENDIX A

                     Dreyfus Asset Allocation Fund, Inc.
                  Dreyfus California Municipal Income, Inc.
                        The Dreyfus Fund Incorporated
               Dreyfus Institutional Short Term Treasury Fund
                      Dreyfus LifeTime Portfolios, Inc.
                         Dreyfus Liquid Assets, Inc.
                       Dreyfus Municipal Income, Inc.
                   Dreyfus New York Municipal Income, Inc.
                 Dreyfus Short-Intermediate Government Fund
               Dreyfus Short-Intermediate Municipal Bond Fund
                    Dreyfus Short-Term Income Fund, Inc.
              Dreyfus Worldwide Dollar Money Market Fund, Inc.



                          POWER OF ATTORNEY


     The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Michael S.
Petrucelli, Stephanie Pierce and Elba Vasquez and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or
her, and in his or her name, place and stead, in any and all capacities
(until revoked in writing) to sign any and all amendments to the
Registration Statement as to each Fund enumerated on Exhibit A attached
hereto (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

                                      June 15, 1998
/s/ Marie E. Connolly
Marie E. Connolly

                                 APPENDIX A

                     Dreyfus Asset Allocation Fund, Inc.
                  Dreyfus California Municipal Income, Inc.
                        The Dreyfus Fund Incorporated
               Dreyfus Institutional Short Term Treasury Fund
                      Dreyfus LifeTime Portfolios, Inc.
                         Dreyfus Liquid Assets, Inc.
                       Dreyfus Municipal Income, Inc.
                   Dreyfus New York Municipal Income, Inc.
                 Dreyfus Short-Intermediate Government Fund
               Dreyfus Short-Intermediate Municipal Bond Fund
                    Dreyfus Short-Term Income Fund, Inc.
              Dreyfus Worldwide Dollar Money Market Fund, Inc.





                      ASSISTANT SECRETARY'S CERTIFICATE


     I, Elba Vasquez, Vice President and Assistant Secretary of each Fund
set forth below (the "Funds"), hereby certify the following resolution was
adopted by written consent dated August 28, 1998 as to each Fund, and
remains in full force and effect:

          RESOLVED, that the Registration Statement and any and
          all amendments and supplements thereto may be signed by
          any one of Margaret W. Chambers, Marie E. Connolly,
          Christopher J. Kelly, Kathleen K. Morrisey, Michael S.
          Petrucelli, Stephanie Pierce and Elba Vasquez as the
          attorney-in-fact for the proper officers of the Fund, a
          with full power of substitution and re-substitution; and
          that the appointment of each of such persons as such
          attorney-in-fact hereby is authorized and approved; and
          that such attorneys-in-fact, and each of them, shall
          have full power and authority to do and perform each and
          every act and thing requisite and necessary to be done
          in connection with such Registration Statement and any
          and all amendments and supplements thereto, as whom he
          or she is acting as attorney-in-fact, might or could do
          in person.

     IN WITNESS WHEREOF, I have hereunto set my hand as Assistant Secretary
of the Funds and affixed the seal this 25th day of August, 1998.


                                        /s/ Elba Vasquez
                                        ELBA VASQUEZ
AS TO:

Dreyfus Asset Allocation Fund, Inc.
Dreyfus California Municipal Income, Inc.
The Dreyfus Fund Incorporated
Dreyfus Institutional Short Term Treasury Fund
Dreyfus LifeTime Portfolios, Inc.
Dreyfus Liquid Assets, Inc.
Dreyfus Municipal Income, Inc.
Dreyfus New York Municipal Income, Inc.
Dreyfus Short-Intermediate Government Fund
Dreyfus Short-Intermediate Municipal Bond Fund
Dreyfus Short-Term Income Fund, Inc.
Dreyfus Worldwide Dollar Money Market Fund, Inc.




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