PREMIER STATE MUNICIPAL BOND FUND
PROSPECTUS SEPTEMBER 3, 1996
Premier State Municipal Bond Fund (the "Fund") is an open-end,
non-diversified, management investment company, known as a mutual fund. The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk.
The Fund permits you to invest in any of twelve separate portfolios
(each, a "Series"): the Connecticut Series, the Florida Series, the Georgia
Series, the Maryland Series, the Massachusetts Series, the Michigan Series,
the Minnesota Series, the North Carolina Series, the Ohio Series, the
Pennsylvania Series, the Texas Series and the Virginia Series. Each Series
seeks to achieve the Fund's investment objective by investing in Municipal
Obligations primarily issued by issuers in the State after which it is named
and believed to be exempt from Federal and, where applicable, from that
State's income tax. It is anticipated that substantially all dividends paid
by each Series will be exempt from Federal income tax and also, where
applicable, will be exempt from the personal income tax of the State after
which the Series is named.
By this Prospectus, each Series is offering three Classes of
shares-Class A, Class B and Class C-which are described herein. See
"Alternative Purchase Methods."
The Fund provides free redemption checks with respect to Class A
shares, which you can use in amounts of $500 or more for cash or to pay
bills. You can purchase or redeem all classes of shares by telephone using
the TELETRANSFER Privilege.
The Dreyfus Corporation serves as the Fund's investment adviser and,
in that capacity, is responsible for determining whether investing in
particular securities is consistent with the Fund's investment objective,
including whether the securities subject the Fund to undue risk.
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 3, 1996,
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, a
nd 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 1-800-554-4611. 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. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- ------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
FEE TABLE.......................................... 3
CONDENSED FINANCIAL INFORMATION.................... 6
ALTERNATIVE PURCHASE METHODS....................... 28
DESCRIPTION OF THE FUND............................ 29
MANAGEMENT OF THE FUND............................. 35
HOW TO BUY SHARES.................................. 37
SHAREHOLDER SERVICES............................... 41
HOW TO REDEEM SHARES............................... 45
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN.... 49
DIVIDENDS, DISTRIBUTIONS AND TAXES................. 49
PERFORMANCE INFORMATION............................ 57
GENERAL INFORMATION................................ 58
APPENDIX........................................... 59
Page 2
FEE TABLE
<TABLE>
<CAPTION>
CONNECTICUT SERIES FLORIDA SERIES
---------------------------- ---------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees...................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees........................................... None .50% .75% None .50% .75%
Other Expenses....................................... .37% .39% .34% .36% .36% .69%
Total Fund Operating Expenses........................ .92% 1.44% 1.64% .91% 1.41% 1.99%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR............................................. $ 54 $45/15** $27/17** $ 54 $44/14** $30/20**
3 YEARS............................................ $ 73 $66/46** $52 $ 73 $65/45** $62
5 YEARS............................................ $ 94 $89/79** $89 $ 93 $87/77** $107
10 YEARS........................................... $153 $145*** $194 $152 $143*** $232
</TABLE>
<TABLE>
<CAPTION>
GEORGIA SERIES MARYLAND SERIES
----------------------------- ---------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees..................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees.......................................... None .50% .75% None .50% .75%
Other Expenses...................................... .40% .39% .68% .35% .38% .50%
Total Fund Operating Expenses....................... .95% 1.44% 1.98% .90% 1.43% 1.80%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR............................................. $ 54 $45/15** $30/20** $ 54 $45/15** $28/18**
3 YEARS............................................ $ 74 $66/46** $62 $ 72 $65/45** $57
5 YEARS............................................ $ 95 $89/79** $107 $ 93 $88/78** $97
10 YEARS........................................... $156 $147*** $231 $151 $144*** $212
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
</TABLE>
Page 3
<TABLE>
<CAPTION>
FEE TABLE
MASSACHUSETTS SERIES MICHIGAN SERIES
----------------------------- ---------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees..................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees.......................................... None .50% .75% None .50% .75%
Other Expenses...................................... .37% .38% .39% .38% .39% .40%
Total Fund Operating Expenses....................... .92% 1.43% 1.69% .93% 1.44% 1.70%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR............................................. $ 54 $45/15** $27/17** $ 54 $45/15** $27/17**
3 YEARS............................................ $ 73 $65/45** $53 $ 73 $66/46** $54
5 YEARS............................................ $ 94 $88/78** $92 $ 94 $89/79** $92
10 YEARS........................................... $153 $145*** $200 $154 $146*** $201
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA SERIES NORTH CAROLINA SERIES
----------------------------- ---------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees..................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees.......................................... None .50% .75% None .50% .75%
Other Expenses...................................... .35% .38% .12% .45% .46% .43%
Total Fund Operating Expenses....................... .90% 1.43% 1.42% 1.00% 1.51% 1.73%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
except where noted, redemption at the end of each
time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year............................................. $ 54 $45/15** $24/14** $ 55 $45/15** $28/18**
3 Years............................................ $ 72 $65/45** $45 $ 75 $68/48** $54
5 Years............................................ $ 93 $88/78** $78 $ 98 $92/82** $94
10 Years........................................... $151 $144*** $170 $162 $154*** $204
*A contingent deferred sales charge of 1% may be
assessed on certain redemptions of Class A shares
purchased without an initial sales charge as part of
an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares
to Class A shares at the end of the sixth year
following the date of purchase.
</TABLE>
Page 4
<TABLE>
<CAPTION>
FEE TABLE
OHIO SERIES PENNSYLVANIA SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees...................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees........................................... None .50% .75% None .50% .75%
Other Expenses....................................... .34% .37% .33% .37% .38% .40%
Total Fund Operating Expenses........................ .89% 1.42% 1.63% .92% 1.43% 1.70%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
except where noted, redemption at the end of each
time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year............................................. $ 54 $44/14** $27/17** $ 54 $45/15** $28/18**
3 Years............................................ $ 72 $65/45** $51 $ 73 $65/45** $55
5 Years............................................ $ 92 $88/78** $89 $ 94 $88/78** $95
10 Years........................................... $150 $143*** $193 $153 $145*** $207
</TABLE>
<TABLE>
<CAPTION>
TEXAS SERIES VIRGINIA SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees..................................... .55% .55% .55% .55% .55% .55%
12b-1 Fees.......................................... None .50% .75% None .50% .75%
Other Expenses...................................... .37% .38% .46% .50% .51% .43%
Total Fund Operating Expenses....................... .92% 1.43% 1.76% 1.05% 1.56% 1.73%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
except where noted, redemption at the end of each
time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year............................................. $ 54 $45/15** $27/17** $ 55 $46/16** $28/18**
3 Years............................................ $ 73 $65/45** $54 $ 77 $69/49** $54
5 Years............................................ $ 94 $88/78** $92 $100 $95/85** $94
10 Years........................................... $153 $145*** $201 $167 $159*** $204
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
</TABLE>
- ------------------------------------------------------------------------------
The amounts listed in the examples 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, each
Series' actual performance will vary and may result in an actual return
greater or less than 5%.
- ------------------------------------------------------------------------------
Page 5
The purpose of the foregoing tables is to assist you in understanding
the costs and expenses borne by each Series of the Fund, the payment of which
will reduce investors' annual return. Other expenses for Class C are based on
estimated amounts for the current fiscal year. Long-term investors in Class B
or Class C could pay more in 12b-1 fees than the economic equivalent of
paying a front-end sales charge. The information in the foregoing tables does
not reflect any fee waivers or expense reimbursement arrangements that may be
in effect. Certain Service Agents (as defined below) may charge their clients
direct fees for effecting transactions in the relevant Series' shares; such
fees are not reflected in the foregoing tables. See "Management of the Fund,"
"How to Buy Shares" and "Distribution Plan and Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
Page 6
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data for each Series for
each year indicated. This information has been derived from the Series'
financial statements.
<TABLE>
<CAPTION>
CONNECTICUT SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $11.00 $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net .76 .81 .80 .77 .72 .71 .68 .67 .66
Net realized and unrealized gain
(loss) on investments (.28) .38 (.15) .40 .17 .81 (.42) (.05) .14
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT OPERATIONS .48 1.19 .65 1.17 .89 1.52 .26 .62 .80
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income--net........ (.76) (.81) (.80) (.77) (.72) (.71) (.68) (.67) (.66)
Dividends from net realized
gain on investments _ (.05) (.02) _ _ _ (.03) _ _
Dividends in excess of net
realized gain on investments _ _ _ _ _ _ _ _ _
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.76) (.86) (.82) (.77) (.72) (.71) (.71) (.67) (.66)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year........ $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76 $11.90
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 5.00%(3) 11.54% 5.93% 11.10% 8.14% 13.62% 1.92% 5.47% 6.85%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ .21% .52% .69% .80% .89% .92%
Ratio of net investment income to
average net assets. 7.31%(3) 7.24% 7.05% 6.81% 6.30% 5.93% 5.44% 5.77% 5.45%
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement) 1.50%(3) 1.42% 1.10% .75% .41% .21% .09% .01% _
Portfolio Turnover Rate 91.09%(4) 72.52% 12.62% 6.30% 8.53% 24.22% 10.83% 10.48% 28.83%
Net Assets, end of year
(000's omitted).... $11,641 $31,056 $83,206 $183,788 $280,305 $360,020 $364,182 $335,964 $321,559
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 7
<TABLE>
<CAPTION>
CONNECTICUT SERIES (CONTINUED)
-------------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year.. $11.89 $12.26 $11.80 $11.76 $11.84
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net.............. .18 .61 .61 .60 .40
Net realized and unrealized gain (loss)
on investments...................... .37 (.43) (.04) .13 .05
------- ------- ------- ------- -------
Total from Investment Operations.... .55 .18 .57 .73 .45
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income--net (.18) (.61) (.61) (.60) (.40)
Dividends from net realized gain
on investments...................... _ (.03) _ _ _
------- ------- ------- ------- -------
Total Distributions................. (.18) (.64) (.61) (.60) (.40)
------- ------- ------- ------- -------
Net asset value, end of year........ $12.26 $11.80 $11.76 $11.89 $11.89
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.08%(4) 1.26% 4.99% 6.20% 5.31%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.12%(4) 1.36% 1.41% 1.44% 1.64%(4)
Ratio of net investment income to
average net assets.................. 4.57%(4) 4.78% 5.21% 4.92% 4.31%(4)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation (limited to the expense limitation
provision of the Management Agreement) .12%(4) .08% .01% _ _
Portfolio Turnover Rate............. 24.22% 10.83% 10.48% 28.83% 28.83%
Net Assets, end of year (000's omitted) $9,492 $32,246 $35,425 $38,838 $1,007
_____________
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 8
<TABLE>
<CAPTION>
FLORIDA SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $12.00 $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .92 1.02 1.02 .99 .95 .92 .85 .81 .79
Net realized and unrealized gain
(loss) on investments .85 .63 (.11) .61 .41 .86 (.51) .12 .17
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 1.77 1.65 .91 1.60 1.36 1.78 .34 .93 .96
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.92) (1.02) (1.02) (.99) (.95) (.92) (.85) (.81) (.79)
Dividends from net realized
gain on investments _ _ (.03) (.02) (.01) (.17) (.04) (.04) (.20)
Dividends in excess of net
realized gain on investments _ _ _ _ _ _ (.04) _ _
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.92) (1.02) (1.05) (1.01) (.96) (1.09) (.93) (.85) (.99)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51 $14.48
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 16.24%(3) 13.32% 6.83% 12.40% 10.09% 12.84% 2.14% 6.71% 6.63%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets. _ _ _ .21% .52% .69% .80% .90% .91%
Ratio of net investment income
to average net assets 7.76%(3) 7.26% 7.24% 7.11% 6.65% 6.21% 5.61% 5.67% 5.29%
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement) 1.50%(3) 1.50% 1.08% .74% .41% .21% .10% .01% -
Portfolio Turnover Rate 31.25%(4) 17.16% 27.69% .28% 20.99% 33.18% 20.84% 50.62% 54.37%
Net Assets, end of year
(000's omitted).... $1,493 $15,061 $67,416 $177,927 $245,474 $299,775 $289,791 $252,406 $227,478
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 9
<TABLE>
<CAPTION>
FLORIDA SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $14.59 $15.01 $14.42 $14.51 $14.65
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .77 .73 .71 .48
Net realized and unrealized gain (loss)
on investments...................... .42 (.51) .13 .16 .02
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .66 .26 .86 .87 .50
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.77) (.73) (.71) (.48)
Dividends from net realized gain
on investments...................... _ (.04) (.04) (.20) (.20)
Dividends in excess of net realized gain
on investments...................... _ (.04) _ _ _
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.85) (.77) (.91) (.68)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.01 $14.42 $14.51 $14.47 $14.47
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.60%(4) 1.54% 6.21% 6.01% 4.69%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.12%(4) 1.34% 1.41% 1.41% 1.99%(4)
Ratio of net investment income to
average net assets.................. 4.87%(4) 4.91% 5.13% 4.77% 4.20%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to the
expense limitation provision of the
Management Agreement)................. .12%(4) .09% .01% _ _
Portfolio Turnover Rate............. 33.18% 20.84% 50.62% 54.37% 54.37%
Net Assets, end of year (000's omitted) $5,916 $22,476 $25,282 $27,023 $35
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 10
<TABLE>
<CAPTION>
GEORGIA SERIES
------------------------------------------------------------------------------------------
CLASS C
CLASS A SHARES CLASS B SHARES SHARES
-------------------------------- -------------------------------- ----------------
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
-------------------------------- ------------------------------------ ----------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1993(2) 1994 1995 1996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.50 $13.27 $12.69 $12.80 $12.71 $13.27 $12.69 $12.80 $12.85
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .51 .73 .73 .66 .20 .67 .66 .59 .38
Net realized and unrealized gain
(loss) on investments .77 (.58) .11 .25 .56 (.58) .11 .26 .20
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS...... 1.28 .15 .84 .91 .76 .09 .77 .85 .58
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net...... (.51) (.73) (.73) (.66) (.20) (.67) (.66) (.59) (.38)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year..... $13.27 $12.69 $12.80 $13.05 $13.27 $12.69 $12.80 $13.06 $13.05
======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(4) 15.91%(5) .97% 6.87% 7.14% 20.66%(5) .46% 6.33% 6.69% 6.28%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ .07% .25% .74% .50%(5) .58% .75% 1.24% 1.98%(5)
Ratio of net investment income
to average net assets 5.55%(5) 5.41% 5.80% 5.00% 4.60%(5) 4.85% 5.27% 4.46% 3.73%(5)
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.46%(5) 1.02% .78% .21% 1.37%(5) 1.02% .80% .20% _
Portfolio Turnover Rate 37.79%(6) 6.76% 34.04% 33.09% 37.79%(6) 6.76% 34.04% 33.09% 33.09%
Net Assets, end of year
(000's omitted). $7,304 $10,058 $8,985 $8,346 $6,319 $16,243 $19,429 $20,106 $88
(1)From September 3, 1992 (commencement of operations) to April 30, 1993.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
</TABLE>
Page 11
<TABLE>
<CAPTION>
MARYLAND SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $12.50 $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .80 .87 .86 .85 .79 .76 .73 .70 .67
Net realized and unrealized gain
(loss) on investments (1.12) .34 (.09) .53 .35 .68 (.53) .08 .23
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... (.32) 1.21 .77 1.38 1.14 1.44 .20 .78 .90
DISTRIBUTIONS:
Dividends from investment
income-net......... (.80) (.87) (.86) (.85) (.79) (.76) (.73) (.70) (.67)
Dividends from net realized
gain on investments _ _ (.02) (.01) (.05) (.09) (.03) _ (.08)
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.80) (.87) (.88) (.86) (.84) (.85) (.76) (.70)( .75)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54 $12.69
======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (2.50%)(3) 11.05% 6.69% 12.24% 9.68% 11.93% 1.33% 6.52% 7.24%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ .21% .53% .69% .80% .90% .90%
Ratio of net investment income
to average net assets 7.44%(3) 7.26% 7.12% 6.98% 6.40% 5.93% 5.51% 5.69% 5.23%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.11% .75% .41% .22% .10% .01% _
Portfolio Turnover Rate 75.21%(4) 8.67% 30.03% 1.45%16.21% 17.92%10.27% 35.39%41.65%
Net Assets, end of year
(000's omitted).... $4,353 $24,383 $85,794 $179,959 $254,240 $337,307 $335,518 $301,834 $283,878
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 12
<TABLE>
<CAPTION>
MARYLAND SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.64 $13.02 $12.46 $12.54 $12.67
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .20 .65 .63 .61 .41
Net realized and unrealized gain (loss)
on investments...................... .38 (.53) .08 .23 .10
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .58 .12 .71 .84 .51
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.65) (.63) (.61) (.41)
Dividends from net realized gain on investments _ (.03) _ (.08) (.08)
Dividends in excess of net realized gain
on investments...................... _ _ _ _ _
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.20) (.68) (.63) (.69) (.49)
------- ------- ------- ------- -------
Net asset value, end of year........ $13.02 $12.46 $12.54 $12.69 $12.69
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.74%(4) .75% 5.94% 6.66% 5.57%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.09%(4) 1.37% 1.44% 1.43% 1.80%(4)
Ratio of net investment income to
average net assets.................. 4.55%(4) 4.82% 5.13% 4.68% 4.59%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement)............. .12%(4) .08% .01% _ _
Portfolio Turnover Rate............. 17.92% 10.27% 35.39% 41.65% 41.65%
Net Assets, end of year (000's omitted) $5,931 $30,527 $35,090 $41,179 $27
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 13
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $11.50 $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .76 .83 .82 .79 .75 .73 .71 .69 .66
Net realized and unrealized gain
(loss) on investments (.96) .38 (.23) .37 .36 .73 (.44) (.06) ._
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... (.20) 1.21 .59 1.16 1.11 1.46 .27 .63 .66
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.76) (.83) (.82) (.79) (.75) (.73) (.71) (.69) (.66)
Dividends from net realized
gain on investments _ _ _ (.01) _ (.01) (.05) _ (.03)
Dividends in excess of net
realized gain on investments _ _ _ _ _ _ _ (.05) _
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.76) (.83) (.82) (.80) (.75) (.74) (.76) (.74) (.69)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53 $11.50
======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (1.67%)(3) 11.91% 5.49% 11.23% 10.32% 13.14% 2.08% 5.72% 5.69%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets. _ _ _ .19% .55% .69% .82% .94% .92%
Ratio of net investment income
to average net assets 7.63%(3) 7.58% 7.40% 7.21% 6.65% 6.16% 5.80% 6.04% 5.57%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation provision
of the Management Agreement) 1.50%(3) 1.48% 1.11% .78% .41% .24% .11% .01% _
Portfolio Turnover Rate 36.11%(4) 17.76% 28.44% 47.07% 24.75% 11.36% 12.04% 13.62% 34.86%
Net Assets, end of year
(000's omitted).... $5,174 $21,578 $43,375 $57,328 $66,873 $79,701 $76,865 $72,731 $68,812
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 14
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $11.79 $12.13 $11.63 $11.52 $11.59
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .19 .64 .63 .60 .40
Net realized and unrealized gain (loss)
on investments...................... .34 (.45) (.06) _ (.08)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .53 .19 .57 .60 .32
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.19) (.64) (.63) (.60) (.40)
Dividends from net realized gain on investments _ (.05) _ (.03) (.03)
Dividends in excess of net realized gain
on investments...................... _ _ (.05) _ _
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.19) (.69) (.68) (.63) (.43)
------- ------- ------- ------- -------
Net asset value, end of year........ $12.13 $11.63 $11.52 $11.49 $11.48
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.56%(4) 1.44% 5.15% 5.15% 3.76%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.15%(4) 1.36% 1.45% 1.43% 1.69%(4)
Ratio of net investment income to
average net assets 4.92%(4) 5.18% 5.47% 5.03% 4.72%(4)
Decrease reflected in above expense
ratios due to undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of the
Management Agreement)................. .13%(4) .10% .01% _ _
Portfolio Turnover Rate............. 11.36% 12.04% 13.62% 34.86% 34.86%
Net Assets, end of year (000's omitted) $1,066 $3,702 $4,220 $5,255 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 15
<TABLE>
<CAPTION>
MICHIGAN SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
--------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $13.00 $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net 1.00 1.07 1.05 1.01 .95 .92 .89 .85 .83
Net realized and unrealized gain
(loss) on investments .45 .65 (.27) .54 .46 .98 (.30) .11 .20
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 1.45 1.72 .78 1.55 1.41 1.90 .59 .96 1.03
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (1.00) (1.07) (1.05) (1.01) (.95) (.92) (.89) (.85) (.83)
Dividends from net realized
gain on investments _ _ (.03) _ _ (.13) (.08) (.24) (.19)
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.00) (1.07) (1.08) (1.01) (.95) (1.05) (.97) (1.09) (1.02)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14 $15.15
======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 12.32%(3) 13.25% 5.59% 11.61% 10.12% 13.25% 3.65% 6.65% 6.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ .20% .53% .69% .81% .92% .93%
Ratio of net investment income
to average net assets 7.97%(3) 7.49% 7.23% 7.07% 6.47% 6.01% 5.56% 5.66% 5.35%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.16% .79% .42% .25% .11% .01% _
Portfolio Turnover Rate 48.80%(4) 32.72% 20.23% 27.31% 21.42% 14.99% 19.96% 48.30% 56.88%
Net Assets, end of year
(000's omitted).... $1,671 $8,548 $56,699 $111,696 $145,159 $184,138 $187,405 $176,604 $166,538
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 16
<TABLE>
<CAPTION>
MICHIGAN SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $15.20 $15.64 $15.27 $15.13 $15.18
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .80 .77 .75 .50
Net realized and unrealized gain (loss)
on investments...................... .44 (.29) .10 .21 .17
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .68 .51 .87 .96 .67
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.80) (.77) (.75) (.50)
Dividends from net realized gain on investments _ (.08) (.24) (.19) (.19)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.88) (1.01) (.94) (.69)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.64 $15.27 $15.13 $15.15 $15.16
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.50%(4) 3.11% 6.01% 6.33% 6.12%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.18%(4) 1.38% 1.44% 1.44% 1.70%(4)
Ratio of net investment income to
average net assets.................. 4.85%(4) 4.88% 5.10% 4.82% 4.47%(4)
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation
(limited to the expense limitation provision of the
Management Agreement)................. .14%(4) .09% .01% _ _
Portfolio Turnover Rate............. 14.99% 19.96% 48.30% 56.88% 56.88%
Net Assets, end of year (000's omitted) $3,581 $13,861 $16,471 $19,031 $133
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 17
<TABLE>
<CAPTION>
MINNESOTA SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $13.50 $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .97 1.07 1.04 1.02 .96 .92 .87 .83 .82
Net realized and unrealized gain
(loss) on investments (.13) .55 (.13) .56 .36 .77 (.53) .18 .08
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... .84 1.62 .91 1.58 1.32 1.69 .34 1.01 .90
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.97) (1.07) (1.04) (1.02) (.96) (.92) (.87) (.83) (.82)
Dividends from net realized
gain on investments _ _ (.05) (.02) (.01) (.09) (.06) _ _
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.97) (1.07) (1.09) (1.04) (.97) (1.01) (.93) (.83) (.82)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year........ $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90 $14.98
======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(2) 7.01%(3) 12.57% 6.67% 11.89% 9.45% 11.96% 2.08% 7.14% 6.11%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ .20% .53% .69% .80% .90% .90%
Ratio of net investment income
to average net assets 7.79%(3) 7.66% 7.25% 7.19% 6.53% 6.13% 5.61% 5.68% 5.41%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.16% .79% .41% .24% .11% .01% _
Portfolio Turnover Rate 70.26%(4) 31.64% 23.48% 14.04% 12.32% 23.42% 12.21% 51.95% 35.47%
Net Assets, end of year
(000's omitted).... $4,331 $13,019 $46,428 $85,066 $122,782 $148,765 $155,657 $145,444 $138,058
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 18
<TABLE>
<CAPTION>
MINNESOTA SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $14.86 $15.32 $14.74 $14.92 $14.96
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .78 .75 .74 .50
Net realized and unrealized gain (loss)
on investments...................... .46 (.52) .18 .09 .05
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .70 .26 .93 .83 .55
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.78) (.75) (.74) (.50)
Dividends from net realized gain on investments _ (.06) _ _ _
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.84) (.75) (.74) (.50)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.32 $14.74 $14.92 $15.01 $15.01
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.32%(4) 1.55% 6.57% 5.62% 5.15%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.16%(4) 1.38% 1.44% 1.43% 1.42%(4)
Ratio of net investment income to
average net assets.................. 4.83%(4) 4.91% 5.13% 4.87% 4.00%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .14%(4) .09% .01% _ _
Portfolio Turnover Rate............. 23.42% 12.21% 51.95% 35.47% 35.47%
Net Assets, end of year (000's omitted) $4,633 $21,004 $23,217 $25,617 $373
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 19
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES
----------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
---------------------------------- ------------------------------------ -----------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------------------------- ------------------------------------ -----------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1993(2) 1994 1995 1 996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.00 $12.39 $13.40 $12.73 $12.72 $12.90 $13.39 $12.72 $12.71 $12.76
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.. .62 .78 .74 .70 .67 .20 .66 .64 .60 .40
Net realized and unrealized gain
(loss) on investments.. .39 1.02 (.67) (.01) .19 .49 (.67) (.01) .19 .14
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS. 1.01 1.80 .07 .69 .86 .69 (.01) .63 .79 .54
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net.................... (.62) (.78) (.74) (.70) (.67) (.20) (.66) (.64) (.60) (.40)
Dividends from net realized
gain on investments......... _ (.01) _ _ _ _ _ _ _ _
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS............. (.62) (.79) (.74) (.70) (.67) (.20) (.66) (.64) (.60) (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year...... $12.39 $13.40 $12.73 $12.72 $12.91 $13.39 $12.72 $12.71 $12.90 $12.90
======= ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(4). 11.36%(5) 14.97% .29% 5.70% 6.79% 18.53%(5) (.27%) 5.12% 6.25% 5.92%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................. _ .29% .44% .65% .98% .79%(5) 1.00% 1.18% 1.49% 1.73%(5)
Ratio of net investment income
to average net assets.... 6.35%(5) 5.94% 5.38% 5.63% 5.11% 4.47%(5) 4.78% 5.08% 4.59% 4.31%(5)
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement)........ 1.14%(5) .76% .50% .31% .02% .56%(5) .48% .30% .02% _
Portfolio Turnover Rate..........15.01%(6) 5.76% 11.62% 12.02% 47.15% 5.76% 11.62% 12.02% 47.15% 47.15%
Net Assets, end of year
(000's omitted).... $26,387 $56,284 $68,074 $50,205 $47,042 $13,145 $38,968 $42,310 $42,668 $1
(1)From August 1, 1991 (commencement of operations ) to April 30, 1992.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
</TABLE>
Page 20
<TABLE>
<CAPTION>
OHIO SERIES
-------------------------------------------------------------------------------------
Class A Shares
-------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year... $14.50 $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .80 .89 .88 .86 .80 .77 .74 .73 .71
Net realized and unrealized gain
(loss) on investments (3.32) .48 (.08) .46 .36 .81 (.36) (.05) .14
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS.......... (2.52) 1.37 .80 1.32 1.16 1.58 .38 .68 .85
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net.......... (.80) (.89) (.88) (.86) (.80) (.77) (.74) (.73) (.71)
Dividends from net realized
gain on investments. _ _ (.04) _ (.01) (.07) (.03) (.03) (.18)
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS. (.80) (.89) (.92) (.86) (.81) (.84) (.77) (.76) (.89)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62 $12.58
======== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (18.49%)(3) 12.72% 6.95% 11.84% 9.97% 13.24% 2.78% 5.63% 6.77%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.......... _ _ _ .21% .52% .70% .81% .92% .89%
Ratio of net investment
income to average net assets 7.79%(3) 7.57% 7.30% 7.20% 6.53% 6.03% 5.57% 5.84% 5.49%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.12% .78% .41% .23% .12% .01% _
Portfolio Turnover Rate 11.10%(4) 14.49% 14.58% 3.00% 13.68% 6.08% 7.73% 39.53% 43.90%
Net Assets, end of year
(000's omitted)..... $8,043 $31,420 $92,864 $176,223 $243,074 $295,564 $293,706 $273,225 $257,639
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 21
<TABLE>
<CAPTION>
OHIO SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
--------------------------------- -------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.69 $13.09 $12.71 $12.63 $12.68
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .20 .66 .66 .64 .43
Net realized and unrealized gain (loss)
on investments...................... .40 (.35) (.05) .14 .09
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .60 .31 .61 .78 .52
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.66) (.66) (.64) (.43)
Dividends from net realized gain on investments _ (.03) (.03) (.18) (.18)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.20) (.69) (.69) (.82) (.61)
------- ------- ------- ------- -------
Net asset value, end of year........ $13.09 $12.71 $12.63 $12.59 $12.59
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.36%(4) 2.24% 5.06% 6.19% 5.66%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.17%(4) 1.38% 1.44% 1.42% 1.63%(4)
Ratio of net investment income to
average net assets.................. 4.62%(4) 4.89% 5.29% 4.94% 4.66%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .13%(4) .10% .01% _ _
Portfolio Turnover Rate............. 6.08% 7.73% 39.53% 43.90% 43.90%
Net Assets, end of year (000's omitted) $8,482 $27,657 $32,797 $40,476 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 22
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $15.00 $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .85 1.13 1.13 1.12 1.06 1.02 .95 .91 .87
Net realized and unrealized gain
(loss) on investments (.77) .55 (.08) .55 .56 .99 (.57) .11 .32
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... .08 1.68 1.05 1.67 1.62 2.01 .38 1.02 1.19
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.85) (1.13) (1.13) (1.12) (1.06) (1.02) (.95) (.91) (.87)
Dividends from net realized gain
on investments................ _ _ (.02) (.02) (.04) (.11) (.03) _ (.27)
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.85) (1.13) (1.15) (1.14) (1.10) (1.13) (.98) (.91) (1.14)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12 $16.17
======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(2) .87%(3) 12.21% 7.20% 11.74% 10.97% 13.19% 2.17% 6.65% 7.46%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ .22% .56% .69% .81% .92% .92%
Ratio of net investment income
to average net assets 7.08%(3) 7.46% 7.38% 7.32% 6.75% 6.24% 5.61% 5.77% 5.28%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.24% .79% .41% .25% .12% .01% _
Portfolio Turnover Rate 67.48%(4) 25.10% 59.15% 25.74% 38.97% 8.64% 7.21% 55.19% 52.69%
Net Assets, end of year
(000's omitted).... $2,870 $12,083 $51,418 $113,439 $158,437 $220,920 $235,619 $219,949 $216,802
(1)From July 30, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 23
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES (CONTINUED)
----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------------ --------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.69 $13.09 $12.71 $12.63 $12.68
------- ------- ------- ------- -------
Net asset value, beginning of year.. $16.10 $16.60 $16.01 $16.11 $16.18
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .26 .85 .83 .79 .53
Net realized and unrealized gain (loss)
on investments...................... .50 (.56) .10 .32 .25
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .76 .29 .93 1.11 .78
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.26) (.85) (.83) (.79) (.53)
Dividends from net realized gain on investments _ (.03) _ (.27) (.27)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.26) (.88) (.83) (1.06) (.80)
------- ------- ------- ------- -------
Net asset value, end of year........ $16.60 $16.01 $16.11 $16.16 $16.16
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.39%(4) 1.65% 6.02% 6.92% 6.71%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.14%(4) 1.38% 1.44% 1.43% 1.70%(4)
Ratio of net investment income to
average net assets.................. 4.90%(4) 4.95% 5.22% 4.76% 4.46%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .15%(4) .10% .01% _ _
Portfolio Turnover Rate............. 8.64% 7.21% 55.19% 52.69% 52.69%
Net Assets, end of year (000's omitted) $14,631 $59,057 $70,062 $72,610 $21
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 24
<TABLE>
<CAPTION>
TEXAS SERIES
-----------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $15.50 $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69
------- ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net 1.33 1.45 1.44 1.40 1.36 1.29 1.25 1.22 1.20
Net realized and unrealized gain
(loss) on investments 2.39 .75 (.05) .67 .69 1.37 (.66) .28 .45
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 3.72 2.20 1.39 2.07 2.05 2.66 .59 1.50 1.65
------- ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (1.33) (1.45) (1.44) (1.40) (1.36) (1.29) (1.25) (1.22) (1.20)
Dividends from net realized gain
on investments..... _ _ (.01) _ (.05) (.03) (.13) _ (.30)
Dividends in excess of net realized
gain on investments _ _ _ _ _ _ (.03) _ _
------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.33) (1.45) (1.45) (1.40) (1.41) (1.32) (1.41) (1.22) (1.50)
------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69 $20.84
======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 26.23%(3) 12.79% 7.55% 11.54% 10.97% 13.80% 2.62% 7.63% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... _ _ _ _ .15% .36% .39% .37% .37%
Ratio of net investment income to
average net assets. 7.94%(3) 7.90% 7.50% 7.29% 6.78% 6.18% 5.78% 6.01% 5.64%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.50% 1.27% .88% .62% .55% .55% .55%
Portfolio Turnover Rate 47.85%(4) 6.84% 2.62% 1.95% 7.49% 14.94% 9.68% 38.68% 49.24%
Net Assets, end of year
(000's omitted).... $1,553 $2,902 $5,642 $15,139 $37,208 $72,037 $76,277 $68,103 $62,864
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 25
<TABLE>
<CAPTION>
TEXAS SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
--------------------------------- -------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $20.52 $21.23 $20.41 $20.69 $20.78
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .33 1.13 1.10 1.09 .73
Net realized and unrealized gain (loss)
on investments...................... .71 (.66) .28 .45 .35
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... 1.04 .47 1.38 1.54 1.08
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.33) (1.13) (1.10) (1.09) (.73)
Dividends from net realized gain on investments _ (.13) _ (.30) (.30)
Dividends in excess of net realized gain
on investments...................... _ (.03) _ _ _
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.33) (1.29) (1.10) (1.39) (1.03)
------- ------- ------- ------- -------
Net asset value, end of year........ $21.23 $20.41 $20.69 $20.84 $20.83
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 17.60%(4) 2.05% 7.05% 7.51% 7.29%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .82%(4) .94% .89% .88% 1.18%(4)
Ratio of net investment income to
average net assets.................. 4.81%(4) 5.15% 5.46% 5.13 4.77%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .49%(4) .54% .55% .55% .58%(4)
Portfolio Turnover Rate............. 14.94% 9.68% 38.68% 49.24% 49.24%
Net Assets, end of year (000's omitted) $6,373 $15,878 $16,818 $17,461 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
</TABLE>
Page 26
<TABLE>
<CAPTION>
VIRGINIA SERIES
------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------------------------- ------------------------------- -------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
----------------------------------- ------------------------------- -------------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1993(2) 1994 1995 1996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year. $15.00 $15.50 $16.80 $16.02 $16.03 $16.25 $16.80 $16.02 $16.03 $16.17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net..... .78 1.00 .97 .94 .93 .26 .88 .85 .84 .57
Net realized and unrealized gain
(loss) on investments.. .50 1.31 (.75) .04 .24 .55 (.75) .04 .24 .09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.28 2.31 .22 .98 1.17 .81 .13 .89 1.08 .66
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net.................... (.78) (1.00) (.97) (.94) (.93) (.26) (.88) (.85) (.84) (.57)
Dividends from net realized
gain on investments......... _ (.01) (.01) (.03) _ _ (.01) _ _ _
Dividends in excess of net
realized gain on investments. _ _ (.02) _ _ _ (.02) (.03) _ _
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS....... (.78) (1.01) (1.00) (.97) (.93) (.26) (.91) (.88) (.84) (.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year.... $15.50 $16.80 $16.02 $16.03 $16.27 $16.80 $16.02 $16.03 $16.27 $16.26
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(4).... 11.54%(5) 15.32% 1.10% 6.39% 7.32% 17.22%(5) .54% 5.83% 6.77% 5.64%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................. _ .27% .46% .39% .50% .83%(5) 1.01% .90% 1.01% 1.21%(5)
Ratio of net investment income
to average net assets.... 6.42%(5) 6.02% 5.64% 5.93% 5.58% 4.62%(5) 5.02% 5.40% 5.06% 4.55%(5)
Decrease reflected in above
expense ratios due to undertakings
by The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement)... 1.22%(5) .76% .55% .55% .55% .54%(5) .54% .55% .55% .52%(5)
Portfolio Turnover Rate..... 5.96%(6) 9.32% 30.69% 21.60% 50.06% 9.32% 30.69% 21.60% 50.06% 50.06%
Net Assets, end of year
(000's omitted)..... $23,096 $55,627 $65,279 $62,428 $61,149 $8,402. $25,254 $28,813 $33,120 $166
(1)From August 1, 1991 (commencement of operations) to April 30, 1992.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
</TABLE>
Page 27
Further information about each Series' 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.
ALTERNATIVE PURCHASE METHODS
The Fund offers you three methods of purchasing each Series'
shares; you may choose the Class of shares that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your shares and any other relevant circumstances. Each Series' share
represents an identical pro rata interest in the Series' investment
portfolio.
As to each Series, Class A shares are sold at net asset value
per share plus a maximum initial sales charge of 4.50% of the public
offering price imposed at the time of purchase. The initial sales charge
may be reduced or waived for certain purchases. See "How to Buy Shares -
Class A Shares." These shares are subject to an annual service fee at the
rate of .25 of 1% of the value of the average daily net assets of Class
A. See "Distribution Plan and Shareholder Services Plan - Shareholder
Services Plan."
As to each Series, Class B shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Fund.
Class B shares are subject to a maximum 3% contingent deferred sales
charge ("CDSC"), which is assessed only if you redeem Class B shares
within the first five years of their purchase. See "How to Buy Shares -
Class B Shares" and "How to Redeem Shares - Contingent Deferred Sales
Charge _ Class B Shares." These shares also are subject to an annual
service fee at the rate of .25 of 1% of the value of the average daily
net assets of Class B. In addition, Class B shares are subject to an
annual distribution fee at the rate of .50 of 1% of the value of the
average daily net assets of Class B. See "Distribution Plan and Shareholder
Services Plan." The distribution fee paid by Class B will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A. Approximately six years after the date of purchase, Class B
shares of a Series automatically will convert to Class A shares of such
Series, based on the relative net asset values for shares of each such
Class, and will no longer be subject to the distribution fee. Class B
shares that have been acquired through the reinvestment of dividends and
distributions will be converted on a pro rata basis together with other
Class B shares, in the proportion that a shareholder's Class B shares
converting to Class A shares bears to the total Class B shares not
acquired through the reinvestment of dividends and distributions.
As to each Series, Class C shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Series.
Class C shares are subject to a 1% CDSC, which is assessed only if you
redeem Class C shares within one year of purchase. See "How to Buy Shares
-- Class C Shares" and "How to Redeem Shares -- Contingent Deferred Sales
Charge -- Class C Shares." These shares also are subject to an annual
service fee at the rate of .25 of 1%, and an annual distribution fee at
the rate of .75 of 1%, of the value of the average daily net assets of
Class C. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class C will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution fees on Class B or Class C shares may exceed the initial
sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of
Page 28
your own investment time frame. For example, while Class C shares have a
shorter CDSC period than Class B shares, Class C shares do not have a
conversion feature and, therefore, are subject to an ongoing distribution
fee. Thus, Class B shares may be more attractive than Class C shares to
investors with long-term investment outlooks. Generally, Class A shares
may be more appropriate for investors who invest $1,000,000 or more in
Fund shares, and for investors who invest between $250,000 and $999,999 in
Fund shares with long-term investment outlooks. Class A shares will not be
appropriate for investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios. Each portfolio is treated as a separate entity
for certain matters under the Investment Company Act of 1940, as amended
(the "1940 Act"), and for other purposes, and a shareholder of one Series
is not deemed to be a shareholder of any other Series. As described
below, for certain matters Fund shareholders vote together as a group; as
to others they vote separately by Series. When used herein, the term
"State" refers to the State after which a Series is named.
INVESTMENT OBJECTIVE
The Fund's investment objective is to maximize current income
exempt from Federal income tax and, where applicable, from State income
taxes for residents of the States of Connecticut, Florida, Georgia,
Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Ohio,
Pennsylvania, Texas and Virginia, without undue risk. To accomplish the
Fund's investment objective, each Series invests primarily in the debt
securities of the State after which it is named, such State's political
subdivisions, authorities and corporations, the interest from which is,
in the opinion of bond counsel to the issuer, exempt from Federal and
such State's personal income taxes (collectively, "State Municipal
Obligations" or when the context so requires, "Connecticut Municipal
Obligations," "Florida Municipal Obligations," "Georgia Municipal
Obligations," "Maryland Municipal Obligations," etc.). To the extent
acceptable State Municipal Obligations are at any time unavailable for
investment, such Series will invest temporarily in other debt securities
the interest from which is, in the opinion of bond counsel to the issuer,
exempt from Federal income tax. Each Series' investment objective cannot
be changed without approval by the holders of a majority (as defined in
the 1940 Act) of such Series' outstanding voting shares. There can be no
assurance that the Series' investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of
bond counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds
for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations
are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest, which are determined in
some instances by formulas under which the Municipal Obligation's interest
rate will change
Page 29
directly or inversely to changes in interest rates or an
index, or multiples thereof, in many cases subject to a maximum and
minimum. Certain Municipal Obligations are subject to redemption at a
date earlier than their stated maturity pursuant to call options, which
may be separated from the related Municipal Obligation and purchased and
sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that at least 80% of
the value of each Series' net assets (except when maintaining a temporary
defensive position) will be invested in Municipal Obligations and at
least 65% of the value of each Series' net assets (except when
maintaining a temporary defensive position) will be invested in bonds,
debentures and other debt instruments. At least 65% of the value of each
Series' net assets will be invested in Municipal Obligations issued by
issuers in such State, as defined above, and the remainder may be
invested in securities that are not State Municipal Obligations and
therefore may be subject to State income taxes. See "Investment
Considerations and Risks - Investing in State Municipal Obligations"
below, and "Dividends, Distributions and Taxes."
At least 70% of the value of each Series' net assets must
consist of Municipal Obligations which, in the case of bonds, are rated
no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or Fitch Investors Service, L.P. ("Fitch"). Each
Series may invest up to 30% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by
Moody's and BBB by S&P and Fitch and as low as the lowest rating assigned
by Moody's, S&P or Fitch. Each Series may invest in short-term Municipal
Obligations which are rated in the two highest rating categories by
Moody's, S&P or Fitch. See "Appendix B" in the Statement of Additional
Information. Municipal Obligations rated Baa by Moody's or BBB by S&P or
Fitch are considered investment grade obligations; those rated Baa by
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics while
those rated BBB by S&P and Fitch are regarded as having an adequate
capacity to pay principal and interest. Investments rated Ba or lower by
Moody's and BB or lower by S&P and Fitch ordinarily provide higher yields
but involve greater risk because of their speculative characteristics.
Each Series may invest in Municipal Obligations rated C by Moody's or D
by S&P or Fitch, which is the lowest rating assigned by such rating
organizations and indicates that the Municipal Obligation is in default
and interest and/or repayment of principal is in arrears. See "Investment
Considerations and Risks - Lower Rated Bonds" below for a further
discussion of certain risks. Each Series also may invest in securities
which, while not rated, are determined by The Dreyfus Corporation to be
of comparable quality to the rated securities in which the Series may
invest; for purposes of the 70% requirement described in this paragraph,
such unrated securities shall be deemed to have the rating so determined.
Each Series also may invest in Taxable Investments of the quality
described under "Appendix-Certain Portfolio Securities-Taxable
Investments." Under normal market conditions, the weighted average
maturity of each Series' portfolio is expected to exceed ten years.
From time to time, a Series may invest more than 25% of the
value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), issued after August 7, 1986, while
exempt from Federal income tax, is a preference item for the purpose of
the alternative minimum tax. Where a regulated investment company
receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a
preference item to shareholders. Each Series may invest without
limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective.
Page 30
Each Series' annual portfolio turnover rate is not expected
to exceed 100%. Each Series may engage in various investment techniques,
such as options and futures transactions, lending portfolio securities
and short-selling. Use of certain of these techniques may give rise to
taxable income. For a discussion of the investment techniques and their
related risks, see "Investment Considerations and Risks,"
"Appendix-Investment Techniques" and "Dividends, Distributions and Taxes"
below and "Investment Objective and Management Policies - Management
Policies" in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments
which promise a stable stream of income, the prices of such securities
are inversely affected by changes in interest rates and, therefore, are
subject to the risk of market price fluctuations. Certain securities that
may be purchased by each Series of the Fund, such as those with interest
rates that fluctuate directly or indirectly based upon multiples of a
stated index, are designed to be highly sensitive to changes in interest
rates and can subject the holders thereof to extreme reductions of yield
and possibly loss of principal. The values of fixed-income securities
also may be affected by changes in the credit rating or financial
condition of the issuing entities. Once the rating of a portfolio
security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to hold the security. Each Series'
net asset value generally will not be stable and should fluctuate based
upon changes in the value of the Fund's portfolio securities. Securities
in which the Series invests may earn a higher level of current income
than certain shorter-term or higher quality securities which generally
have greater liquidity, less market risk and less fluctuation in market
value.
INVESTING IN STATE MUNICIPAL OBLIGATIONS -- You should consider
carefully the special risks inherent in the purchase of shares of each
Series resulting from its purchase of the respective State's Municipal
Obligations. Certain of the States have experienced financial
difficulties, the recurrence of which could result in defaults or
declines in the market values of various Municipal Obligations in which
such Series invests. If there should be a default or other financial
crisis relating to a State or an agency or municipality thereof, the
market value and marketability of outstanding State Municipal Obligations
in a Series' portfolio and the interest income to the Series could be
adversely affected. You should obtain and review a copy of the Statement
of Additional Information which more fully sets forth these and other
risk factors.
CONNECTICUT SERIES -- Connecticut's economy relies in part on
activities that may be adversely affected by cyclical change, and recent
declines in defense spending have had a significant impact on
unemployment levels. Although the State recorded General Fund surpluses
in the fiscal years 1985 through 1987, and 1992 through 1995, Connecticut
reported deficits from its General Fund operations for the fiscal years
1988 through 1991. Together with the deficit carried forward from the
State's 1990 fiscal year, the total General Fund deficit for the 1991
fiscal year was $965.7 million. The total deficit was funded by the
issuance of General Obligation Economic Recovery Notes. Moreover, as of
June 30, 1995, the General Fund had a cumulative deficit under GAAP of
$576.9 million. As a result of the recurring budgetary problems, S&P
downgraded the State's general obligation bonds from AA+ to AA in April
1990 and to AA- in September 1991. Fitch downgraded the State's general
obligation bonds from AA+ to AA in March 1995. Moody's currently rates
Connecticut's bonds Aa.
FLORIDA SERIES -- The Florida Constitution and Statutes mandate that
the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each fiscal
year. Florida's Constitution permits issuance of Florida Municipal
Obligations pledging the full faith and credit of the State, with a vote
of the electors, to finance or refinance fixed capital outlay projects
authorized by the Legislature, provided that the outstanding principal
does not exceed 50% of the total tax revenues of the State for the two
preceding years. Florida's Constitution also provides that the
Legislature shall appropri-
Page 31
ate monies sufficient to pay debt service on State bonds pledging the full
faith and credit of the State as the same becomes due. All State tax
revenues, other than trust funds dedicated by Florida's Constitution for
other purposes, would be available for such an appropriation, if required.
Revenue bonds may be issued by the State or its agencies without a vote of
Florida's electors only to finance or refinance the cost of State fixed
capital outlay projects which may be payable solely from funds derived
directly from sources other than State tax revenues. Fiscal year 1994-95
total General Revenue and Working Capital Funds available are estimated to
have been $15.635 billion, which resulted in estimated unencumbered
reserves of $319.5 million at the end of fiscal 1994-95. The General
Revenue and Working Capital Funds ended the 1993-94 fiscal year with
unencumbered reserves of $351.8 million.
GEORGIA SERIES -- Georgia's Constitution limits appropriation of
funds for any given fiscal year to the sum of the amount of
unappropriated surplus expected to have accrued at the beginning of the
fiscal year and the amount not greater than the total receipts
anticipated, less refunds, as estimated. The State Constitution provides
for supplementary appropriations in accordance with its provisions as
well. Georgia's economy grew rapidly in the 1980's resulting in a general
fund reserve. As a result of a slowdown in the State's economy in the
early 1990's, the general fund reserve was effectively eliminated.
Beginning in fiscal 1993, however, revenues once again began to exceed
appropriations. The State's revenue shortfall reserve at the end of
fiscal 1995 was approximately $288 million. Revenues are estimated to
slightly exceed expenditures for fiscal 1996.
MARYLAND SERIES -- The public indebtedness of the State of Maryland
and its instrumentalities is divided into three basic types: general
obligation bonds for capital improvements and for various State-sponsored
projects to the payment of which the State ad valorem property tax is
exclusively pledged; limited, special obligation bonds issued by the
Maryland Department of Transportation for transportation purposes,
payable primarily from specific, fixed-rate excise taxes and other
revenues related mainly to highway use; and obligations issued by certain
authorities payable solely from specific non-tax, enterprise fund
revenues for which the State has no liability and has given no moral
obligation assurance.
Since at least the end of the Civil War, the State has paid
the principal of and interest on its general obligation bonds when due.
There is no general debt limit imposed by the State Constitution or
public general laws, but the Constitution does require the annual
operating budget to be in balance with estimated revenues. When the
fiscal year 1996 budget was enacted, it was estimated that the General
Fund surplus on a budgetary basis at June 30, 1996, would be
approximately $7.8 million. As of February, 1996, it was estimated that
the General Fund surplus on a budgetary basis at June 30, 1996, will be
$1 million. When the 1997 budget was submitted by the Governor to the
General Assembly, it was estimated that the General Fund surplus on a
budgetary basis at June 30, 1997 would be approximately $500 thousand,
and that the balance in the Revenue Stabilization Account of the State
Reserve Fund would be $538 million.
MASSACHUSETTS SERIES -- Massachusetts' economic and fiscal
difficulties of recent years appear to have abated. While the
Commonwealth's expenditures for state programs and services in each of
the fiscal years 1987 through 1991 exceeded each year's current revenues,
Massachusetts ended each of the fiscal years 1991 through 1996 with a
positive fiscal balance in its general operating funds.
MICHIGAN SERIES -- Michigan's economy has been undergoing certain
basic changes in its underlying structure. These changes reflect a
diversifying economy which is less reliant on the automobile industry. As
a result, it is anticipated that the State's economy in the future will
be less susceptible to cyclical swings and more resilient when national
downturns occur. The principal sectors of Michigan's diversifying economy
are manufacturing of durable goods (including automobile and office
equipment manufacturing), tourism and agriculture. Michigan's
unemployment rate averaged 9.9% in 1985 and averaged 5.3% in 1995.
Page 32
Michigan's Annual Financial Reports for the fiscal years
ended September 30, 1987, 1988 and 1989 showed positive balances in the
State's general cash position representing an improvement from the
negative cash position of 1982. Michigan ended fiscal years 1989-90 and
1990-91 with negative balances of $310 million and $169 million,
respectively. This cumulative deficit was eliminated as of the fiscal
year ended September 30, 1992. Michigan ended fiscal years 1992-93,
1993-94 and 1994 -95 with surpluses of approximately $308 million, $460
million and 67.4 million respectively.
MINNESOTA SERIES -- The structure of Minnesota's economy parallels
the structure of the United States' economy as a whole when viewed at a
highly aggregated level of detail. Diversity and a significant natural
resource base are two important characteristics of the State's economy.
However, the State of Minnesota experienced financial difficulties in the
early 1980s because of a downturn in the State's economy resulting from
the national recession. More recently, real growth has been equal to or
greater than national growth.
There can be no assurance that the financial problems
referred to or similar future problems will not affect the market value
or marketability of the Minnesota Municipal Obligations or the ability of
the issuer thereof to pay interest or principal thereon.
NORTH CAROLINA SERIES -- The economic profile of the State of North
Carolina consists of a combination of agriculture, industry and tourism,
with agriculture as the basic element in the economy. Tobacco production
is the leading source of agricultural income in the State, accounting for
20% of gross agricultural income. The poultry and pork industries also
are significant sources of gross agricultural income.
The North Carolina Constitution requires a balanced budget.
While North Carolina's Governor lacks the power to veto budget or other
legislative actions, the Governor does have the power as ex office
Director of the Budget, after first making adequate provision for the
prompt payment of the principal of and interest on bonds and notes of the
State according to their terms, to reduce all appropriations for a
particular fiscal period on a pro rata basis to prevent an overdraft or
deficit for such fiscal period. The Governor also may take less drastic
action to reduce expenditures to maintain a balanced budget before the
need for across the board appropriations reductions arises.
OHIO SERIES -- Nonmanufacturing industries now employ more than 78.9%
of all payroll employees in Ohio. However, due to the continued
importance of manufacturing industries (including auto-related
manufacturing), economic activity in Ohio tends to be more cyclical than
in some other states and in the nation as a whole. Although Ohio's
economy has improved since the 1980-82 national recession, the State
experienced an economic slow-down during its 1990-91 fiscal year,
consistent with national economic conditions during that period. For
Ohio's fiscal year ended June 30, 1996, the Ohio Office of Budget and
Management reported positive $781.3 million and $1,138.5 million ending
fund and cash balances, respectively. Each of the foregoing factors could
have an effect on the market for issuers generally or may have the effect
of impairing the ability of issuers to pay interest on, or repay
principal of, Ohio Municipal Obligations.
PENNSYLVANIA SERIES -- Pennsylvania has been historically identified
as a heavy industry state although that reputation has recently changed
as the coal, steel and railroad industries declined. A more diversified
economy has developed in Pennsylvania as a long-term shift in jobs,
investment and workers away from the northeast part of the nation took
place. The major new sources of growth are in the service sector,
including trade, medical and health services, education and financial
institutions. Pennsylvania is highly urbanized, with approximately 50% of
the Commonwealth's total population contained in the metropolitan areas
which include the cities of Philadelphia and Pittsburgh. The
Commonwealth's adopted fiscal 1996-97 General Fund budget provided for no
new taxes. As of June 30, 1996, the General Fund had a surplus of $69.8
million or 0.4% above the official estimate for the prior fiscal year.
Page 33
TEXAS SERIES -- Economically and financially the State of Texas
suffered during the 1980s significant damage from the continued depressed
price of oil and gas and the overbuilding in the real estate market. The
decline in oil prices, particularly since 1986, and the recession that
followed have had a severe effect on the Texas banking and savings and
loan industries, resulting in a number of closings among banks and
savings and loans through the early 1990s. In recent years, the State's
overall financial situation has improved significantly, as Texas'
economic growth has been outpacing that of the United States as a whole.
In fiscal years 1991, 1992, 1993, 1994 and 1995, Texas' General Revenue
Fund ended with cash surpluses of $1.005 billion, $615 million, $1.630
billion, $2.225 billion and $2.101 billion,respectively.
to Washington, D.C., and Hampton Roads, which has the nation's largest
concentration of military installations, the Federal government has a
greater impact on Virginia relative to its size than any states other
than Alaska and Hawaii. Virginia's economy has continued to grow over the
last decade, and while per capita income has grown both faster and slower
than the U.S. average from year to year during that period, per capita
income continues to be above the national average. Virginia's unreserved
General Fund balances have continued to grow in recent years from a low
in 1991. The Virginia Constitution requires a balanced budget and, since
1993, the funding of a Revenue Stabilization Fund. Current debt levels
are well below limits established by the Constitution.
INVESTING IN MUNICIPAL OBLIGATIONS -- Each Series may invest more
than 25% of the value of its total assets in Municipal Obligations which
are related in such a way that an economic, business or political
development or change affecting one such security also would affect the
other securities; for example, securities the interest upon which is paid
from revenues of similar types of projects. As a result, each Series may
be subject to greater risk as compared to a fund that does not follow
this practice.
Certain municipal lease/purchase obligations in which the
Series may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by
the leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus
Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions
could be to increase the cost of the Municipal Obligations available for
purchase by the Series and thus reduce the available yield. Shareholders
should consult their tax advisers concerning the effect of these
provisions on an investment in a Series. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations
may be introduced in the future. If any such proposal were enacted that
would reduce the availability of Municipal Obligations for investment by
the Fund so as to adversely affect Fund shareholders, the Fund would
reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to shareholders for their consideration.
If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth
herein.
ZERO COUPON SECURITIES -- Federal income tax law requires the holder
of a zero coupon security or of certain pay-in-kind bonds to accrue
income with respect to these securities prior to the receipt of cash
payments. To maintain its qualification as a regulated investment company,
and avoid liability for Federal income taxes, a Series may be required to
distribute such income accrued with respect to these securities and may
have to dispose of portfolio securi-
Page 34
ties under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
LOWER RATED BONDS -- Each Series may invest up to 30% 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 or Fitch or as low as the
lowest rating assigned by Moody's, S&P or Fitch. They generally are not
meant for short-term investing and may be subject to certain risks with
respect to the issuing entity and to greater market fluctuations than
certain lower yielding, higher rated fixed-income securities. The retail
secondary market for these securities may be less liquid than that of
higher rated securities; adverse market conditions could make it
difficult at times for the Fund to sell certain securities or could
result in lower prices than those used in calculating the Series' net
asset value. See "Appendix - Certain Portfolio Securities - Ratings."
USE OF DERIVATIVES - Each Series may invest, to a limited extent, in
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 Series may
use include options and futures. While Derivatives can be used
effectively in furtherance of a Series' investment objective, under
certain market conditions, they can increase the volatility of the
Series' net asset value, can decrease the liquidity of the Series'
portfolio and make more difficult the accurate pricing of the Series'
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 each
Series' 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. Since a relatively high percentage of a Series' assets may
be invested in the securities of a limited number of issuers, the Series'
portfolio may be more sensitive to changes in the market value of a
single issuer. However, to meet Federal tax requirements, at the close of
each quarter the Series may not have more than 25% of its total assets
invested in anyone 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.
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 June 28, 1996, The Dreyfus
Corporation managed or administered approximately $79 billion in assets
for more than 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
Page 35
Board in accordance with Massachusetts law. The primary portfolio manager
for each of the Florida Series and the Georgia Series is Stephen C. Kris,
who has held that position since February 1996 with respect to the Florida
Series and September 1992 with respect to the Georgia Series, and has been
employed by The Dreyfus Corporation since February 1988. The primary
portfolio manager for each of the Connecticut Series, the Massachusetts
Series, the North Carolina Series and the Virginia Series is Samuel J.
Weinstock, who has held that position with respect to the Connecticut
Series and the Massachusetts Series since August 1987 and with respect to
the North Carolina Series and Virginia Series since August 1991, and has
been employed by The Dreyfus Corporation since March 1987. The primary
portfolio manager for each of the Maryland Series, the Pennsylvania
Series and the Texas Series is Douglas J. Gaylor, who has held that
position since January 1996 and has been employed by The Dreyfus
Corporation since January 1996. Prior to joining The Dreyfus Corporation,
Mr. Gaylor was a Municipal Portfolio Manager at PNC Bank since 1993 and
from 1989 to September 1993 was a Municipal Portfolio Manager at
Wilmington Trust Company. The primary portfolio manager for each of the
Michigan Series, the Minnesota Series and the Ohio Series is Joseph P.
Darcy, who has held that position and has been employed by The Dreyfus
Corporation since May 1994. For more than five years prior to joining The
Dreyfus Corporation, Mr. Darcy was a Vice President and Portfolio Manager
for Merrill Lynch Asset Management. 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 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 $237 billion in assets as
of March 31, 1996, including approximately $83 billion in proprietary
mutual fund assets. As of March 31, 1996, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $886 billion in assets including
approximately $61 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. From
time to time, The Dreyfus Corporation may waive receipt of its fees
and/or voluntarily assume certain expenses of a Series which would have
the effect of lowering the expense ratio of that Series 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.
For the fiscal year ended April 30, 1996, the Fund paid The
Dreyfus Corporation a management fee at the effective annual rate set
forth below with respect to each Series pursuant to undertakings in
effect:
Page 36
EFFECTIVE ANNUAL RATE
AS A PERCENTAGE OF
SERIES AVERAGE DAILY NET ASSETS
-------------------- --------------------------
Connecticut .55 of 1%
Florida .55 of 1%
Georgia .35 of 1%
Maryland .55 of 1%
Massachusetts .55 of 1%
Michigan .55 of 1%
Minnesota .55 of 1%
North Carolina .53 of 1%
Ohio .55 of 1%
Pennsylvania .55 of 1%
Texas .0
Virginia .0
In allocating brokerage transactions for the Fund, 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' 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"). The Bank
of New York, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY SHARES
GENERAL -- Class A shares, Class B shares and Class C shares may be
purchased only by clients of certain financial institutions (which may
include banks), securities dealers ("Selected Dealers") and other
industry professionals (collectively, "Service Agents"), except that
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
may purchase Class A shares directly through the Distributor. Subsequent
purchases may be sent directly to the Transfer Agent or your Service
Agent.
When purchasing Fund shares, you must specify which Class is
being purchased. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified retirement plans. The Fund reserves the right to reject any
purchase order.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on
Page 37
their clients which are different from those described in this Prospectus,
and, to the extent permitted by applicable regulatory authority, may charge
their clients direct fees which would be in addition to any amounts which
might be received under the Distribution Plan or Shareholder Services Plan.
You should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Account Application. The Fund reserves the right to
vary the initial and subsequent investment minimum requirements at any
time.
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"Premier State Municipal Bond Fund," and should specify the Series in
which you are investing. Payments to open new accounts which are mailed
should be sent to Premier State Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to Premier State
Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
Neither initial nor subsequent investments should be made by third party
check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or in 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 as
shown below, for purchase of Fund shares in your name:
DDA #8900119489/Premier State Municipal Bond Fund/Connecticut Series
DDA #8900119381/Premier State Municipal Bond Fund/Florida Series
DDA #8900117087/Premier State Municipal Bond Fund/Georgia Series
DDA #8900119403/Premier State Municipal Bond Fund/Maryland Series
DDA #8900119470/Premier State Municipal Bond Fund/Massachusetts Series
DDA #8900119411/Premier State Municipal Bond Fund/Michigan Series
DDA #8900119438/Premier State Municipal Bond Fund/Minnesota Series
DDA #8900208635/Premier State Municipal Bond Fund/North Carolina Series
DDA #8900119446/Premier State Municipal Bond Fund/Ohio Series
DDA #8900119454/Premier State Municipal Bond Fund/Pennsylvania Series
DDA #8900119462/Premier State Municipal Bond Fund/Texas Series
DDA #8900208678/Premier State Municipal Bond Fund/Virginia Series
The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, please call 1-800-645-6561
after completing your wire payment to obtain your Fund account number.
Please include your Fund account number on the Account Application and
promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank.
All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if
any check used for investment in your account does not clear. The Fund
makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark and the Government Direct Deposit
Privilege 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.
Page 38
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."
Each Series' shares are sold on a continuous basis. 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 contracts will be
valued 15 minutes after the close of trading on the floor of the New York
Stock Exchange. Net asset value per share of each Class is computed by
dividing the value of the net assets of each Series represented by such
Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. Each Series' investments are
valued by an independent pricing service approved by the Fund's Board and
are valued at fair value as determined by the pricing service. The
pricing service's procedures are reviewed under the general supervision
of the Fund's Board. For further information regarding the methods
employed in valuing the Series' investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
If an order is received by the Transfer Agent by the close of
trading on the floor of the New York Stock Exchange (currently, 4:00
p.m., New York time) on any business day, Fund shares will be purchased
at the public offering price determined as of the close of trading on the
floor of the New York Stock Exchange on that day. Otherwise, Fund shares
will be purchased at the public offering price determined as of the close
of trading on the floor of the New York Stock Exchange on the next
business day, except where shares are purchased through a dealer as
provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on a
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next determined public
offering price. It is the dealers' responsibility to transmit orders so
that they will be received by the Distributor or its designee before the
close of its business day. 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 cancelled and the institution could be held liable for
resulting fees and/or losses.
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").
CLASS A SHARES -- The public offering price for Class A
shares is the net asset value per share of that Class plus a sales load
as shown below:
Page 39
<TABLE>
<CAPTION>
SALES LOAD
-----------------------------------------
AS A % OF AS A % OF DEALERS' REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
--------------------------- ---------------- ----------------- ------------------------
<S> <C> <C> <C>
Less than $50,000...... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more..... -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year of purchase.
The terms contained in the section of the Prospectus entitled "How to
Redeem Shares -- Contingent Deferred Sales Charge" (other than the amount
of the CDSC and time periods) are applicable to the Class A shares subject
to a CDSC. Letter of Intent and Right of Accumulation apply to such
purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves, directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at net asset value. In addition, Class A
shares are offered at net asset value to 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.
Class A shares also may be purchased at net asset value
without a sales load through certain broker-dealers and other financial
institutions which have entered into an agreement with the Distributor,
which includes a requirement that such shares be sold for the benefit of
clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by The
Dreyfus Corporation or its affiliates. The purchase of Class A shares of
the Fund must be made within 60 days of such redemption and the
shareholder must have either (i) paid an initial sales charge or a
contingent deferred sales charge or (ii) been obligated to pay at any
time during the holding period, but did not actually pay on redemption, a
deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumentality thereof, (iii) a charitable organization (as defined in
Section 501(c) (3) of the Internal Revenue Code of 1986, as amended (the
"Code") investing $50,000 or more in Fund shares, and (iv) a charitable
remainder trust (as defined in Section 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to
Page 40
dealers that sell shares of funds advised by The Dreyfus Corporation which
are sold with a sales load, such as Class A shares. In some instances,
these incentives may be offered only to certain dealers who have sold or
may sell significant amounts of such shares.
CLASS B SHARES -- The public offering price for Class B shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on certain
redemptions of Class B shares as described under "How to Redeem Shares."
The Distributor compensates certain Service Agents for selling Class B
and Class C shares at the time of purchase from the Distributor's own
assets. The proceeds of the CDSC and the distribution fee, in part, are
used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares" above and "How to Redeem Shares."
RIGHT OF ACCUMULATION -- CLASS A SHARES -- Reduced sales loads apply
to any purchase of Class A shares, shares of other funds in the Premier
Family of Funds, shares of certain other funds advised by The Dreyfus
Corporation which are sold with a sales load and shares acquired by a
previous exchange of such shares (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined in the Statement
of Additional Information, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased
and still hold Class A shares of the Fund, or of any other Eligible Fund
or combination thereof, with an aggregate current market value of $40,000
and subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Service Agent must notify the Distributor if orders are made
by wire, or the Transfer Agent if orders are made by mail. The reduced
sales load is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE -- You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for a Class of a Series, shares
of the same Class of one of the other Series, or of the same Class in
certain other funds managed or administered by The Dreyfus Corporation,
to the extent such shares are offered for sale in your state of
residence.
Page 41
These funds have different investment objectives which may be
of interest to you. You also may exchange your Fund shares that are
subject to a CDSC for shares of Dreyfus Worldwide Dollar Money Market
Fund, Inc. The shares so purchased will be held in a special account
created solely for this purpose ("Exchange Account"). Exchanges of shares
from an Exchange Account only can be made into certain other funds
managed or administered by The Dreyfus Corporation. No CDSC is charged
when an investor exchanges into an Exchange Account; however, the
applicable CDSC will be imposed when shares are redeemed from an Exchange
Account or other applicable Fund account. Upon redemption, the applicable
CDSC will be calculated without regard to the time such shares were held
in an Exchange Account. See "How to Redeem Shares." Redemption proceeds
for Exchange Account Shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for the Auto-Exchange Privilege,
Dividend Sweep and the Automatic Withdrawal Plan. 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 other conditions are imposed on its
use.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of personal retirement plans, the shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, by a separate signed
Shareholder Services Form, also available by calling 1-800-645-6561, or,
by oral request from any of the authorized signatories on the account,
also by calling 1-800-645-6561. If you have established the Telephone
Exchange Privilege, you may telephone exchange instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
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 being made: Telephone Exchange Privilege, Check
Redemption Privilege, TELETRANSFER Privilege, and the dividend/capital
gain distribution option (except for 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 of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged, as the case may be. If you
are exchanging Class A shares 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 your
Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee
in accordance with rules promul-
Page 42
gated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability
of Fund Exchanges may be modified or terminated at any time upon notice to
shareholders. See "Dividends, Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis) in exchange for shares
of a Series, in shares of the same Class of one of the other Series, or
the same Class of other funds in the Premier Family of Funds or certain
other funds in the Dreyfus Family of Funds of which you are 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 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 of Class A shares into funds sold with a sales
load. No CDSC will be imposed on Class B or Class C shares at the time of
an exchange; however, Class B or Class C shares acquired through an
exchange will be subject on redemption to the higher CDSC applicable to
the exchanged or acquired shares. The CDSC applicable on redemption of
the acquired Class B or Class C shares will be calculated from the date
of the initial purchase of the Class B or Class C shares exchanged, as
the case may be. 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 Premier State Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. 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 Premier
Family of Funds or the Dreyfus Family of Funds eligible to participate in
this Privilege, or to obtain an Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on
either the first or fifteenth day, or twice a month, on both days. Only
an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization
form with the Transfer Agent. You may obtain the necessary authorization
form by calling 1-800-645-6561. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing written
notification to Premier State Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587, 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.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
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 Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this Privilege. The appropriate form may be
obtained by calling 1-800-645-6561. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time
to
Page 43
terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or 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 or class that charges a CDSC, the shares purchased
will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the Statement of
Additional Information. 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
Premier State Municipal Bond Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. To select a new fund after cancellation, you must
submit a new Dividend Options Form. 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 Dividend Sweep. The Fund may modify or terminate these privileges at
any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have
been issued may not be redeemed through the Automatic Withdrawal Plan.
Class B or Class C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, which can be obtained by
calling 1-800-645-6561, you become eligible for the reduced sales load
applicable to the total number of Eligible Fund shares purchased in a
13-month period pursuant to the terms and conditions set forth in the
Letter of Intent. A minimum initial purchase of $5,000 is required. To
compute the applicable sales load, the offering price of shares you hold
(on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above
may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount
Page 44
equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent. Purchases pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
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, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents or other institutions may charge
their clients a nominal fee for effecting redemptions of Fund shares. Any
certificates representing 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 Series' then-current
net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REQUEST TO THE
TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER
PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO
EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR
REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT
REQUESTS TO REDEEM SHARES PURSUANT TO THE TELETRANSFER PRIVILEGE, FOR A
PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE 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 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption of Class B shares of a Series which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares
of such Series held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares
redeemed does not
Page 45
exceed (i) the current net asset value of Class B shares acquired through
reinvestment of dividends or capital gain distributions, plus (ii)
increases in the net asset value of Class B shares above the dollar amount
of all your payments for the purchase of Class B shares of such Series
held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has
declined below their original cost as a result of the Series'
performance, a CDSC may be applied to the then-current net asset value
rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
----------------------- ---------------------------------------
<S> <C>
First...................................... 3.00
Second..................................... 3.00
Third...................................... 2.00
Fourth..................................... 2.00
Fifth...................................... 1.00
Sixth...................................... 0.00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the increase in
net asset value of Class B shares above the total amount of payments for
the purchase of Class B shares made during the preceding five years; then
of amounts representing the cost of shares purchased five years prior to
the redemption; and finally, of amounts representing the cost of shares
held for the longest period of time within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired
five additional shares through dividend reinvestment. During the second
year after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 3%
(the applicable rate in the second year after purchase) for a total CDSC
of $7.20.
CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC -- The CDSC applicable to Class B and Class C may be
waived in connection with (a) redemptions made within one year after the
death or disability, as defined in Section 72(m)(7) of the Code, of the
shareholder, (b) redemptions 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 exceeds $1,000,000, (c) redemptions as a result of a
combination of any
Page 46
investment company with the relevant Series by merger, acquisition of
assets or otherwise, and (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70-1/2 in the case of
an IRA or Keogh plan or custodial account pursuant to Section 403(b) of
the Code. If the Fund's Board determines to discontinue the waiver of the
CDSC, the disclosure in the Fund's Prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as
provided in the Fund's Prospectus at the time of the purchase of
such shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, 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, through the Check Redemption Privilege with respect to Class A
shares only, or the TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. If
you have given your Service Agent authority to instruct the Transfer
Agent to redeem shares and to credit the proceeds of such redemptions to
a designated account at your Service Agent, you may redeem shares only in
this manner and in accordance with the regular redemption procedure
described below. If you wish to use the other redemption methods
described below, you must arrange with your Service Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
any redemption Privilege at any time or charge a service fee upon notice
to shareholders. No such fee currently is contemplated. Shares for which
certificates have been issued are not eligible for the Check Redemption
or TELETRANSFER Privilege.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER redemption privilege or telephone exchange privilege (which
is granted automatically unless you refuse it), you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Service Agent,
and reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a redemption or exchange of Series 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 Series' net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Premier State Municipal Bond
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. 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
Page 47
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
contact your Service Agent or call the telephone number listed on the
cover of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- CLASS A SHARES -- You may write
Redemption Checks drawn on your Fund account. Redemption Checks may be
made payable to the order of any person in the amount of $500 or more.
Potential fluctuations in the net asset value of the Class A shares
should be considered in determining the amount of the check. Redemption
Checks should not be used to close your account. Redemption Checks are
free, but the Transfer Agent will impose a fee for stopping payment of a
Redemption Check upon your request or if the Transfer Agent cannot honor
the Redemption Check due to insufficient funds or other valid reason. You
should date your Redemption Checks with the current date when you write
them. Please do not postdate your Redemption Checks. If you do the
Transfer Agent will honor, upon presentment, even if presented before the
date of the check, all postdated Redemption Checks which are dated within
six months of presentment for payment, if they are otherwise in good
order. This Privilege will be terminated immediately, without notice, with
respect to any account which is, or becomes, subject to backup withholding
on redemptions (See "Dividends, Distributions and Taxes"). Any Redemption
Check written on an account which has become subject to backup
withholding on redemptions will not be honored by the Transfer Agent.
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 or, at your request, paid by check
(maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the TELETRANSFER
Privilege for transfer to their bank account not more than $250,000
within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5252.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of
trading on the floor of the New York Stock Exchange, the redemption
request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor has sales
agreements for the repurchase of shares held by shareholders. Repurchase
orders received by dealers by the close of trading on the floor of the
New York
Page 48
Stock Exchange on any business day and transmitted to the
Distributor or its designee by the close of its business day (normally
5:15 p.m., New York time) are effected at the price determined as of the
close of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the shares will be redeemed at the next determined net asset
value. It is the responsibility of the dealer to transmit orders on a
timely basis. The dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE -- CLASS A SHARES
Upon written request, you may reinvest up to the number of
Class A shares you have redeemed, within 30 days of redemption, at the
then-prevailing net asset value without a sales load, or reinstate your
account for the purpose of exercising the Exchange Privilege. The
Reinvestment Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN -- Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares of each Series at an
annual rate of .50 of 1% of the value of the average daily net assets of
Class B and .75 of 1% of the value of the average daily net assets of
Class C.
SHAREHOLDER SERVICES PLAN -- Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of each such
Class. 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
DIVIDENDS AND DISTRIBUTIONS -- Under the code, each Series of the
Fund is treated as a separate entity for purposes of qualification and
taxation as a regulated investment company. Each Series of the Fund
ordinarily declares dividends from its net investment income on each day
the New York Stock Exchange is open for business. Fund shares begin
earning income dividends on the day immediately available funds ("Federal
Funds" (monies of member banks within the Federal Reserve System which
are held on deposit at a Federal Reserve Bank)) are received by the
Transfer Agent in written or telegraphic form. If a purchase order is not
accompanied by remittance in Federal Funds, there may be a delay between
the time the purchase order becomes effective and the time the shares
purchased start earning dividends. If your payment is not made in Federal
Funds, it must be converted into Federal Funds. This usually occurs
within one business day of receipt of a bank wire and within two business
days of receipt of a check drawn on a member bank of the Federal Reserve
System. Checks drawn on banks which are not members of the Federal
Reserve System may take considerably longer to convert into Federal
Funds.
Dividends usually are paid on the last calendar day of each
month and are automatically reinvested in additional shares of the Series
and the same Class from which they were paid at net asset value without a
sales load or, at your option, paid in cash. Each Series' earnings for
Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. If you are an
omnibus accountholder and indicate in a partial redemption request that a
portion of any
Page 49
accrued dividends to which such account is entitled belongs to an
underlying account-holder who has redeemed all shares in his or her
account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption. Distributions by each
Series from its net realized securities gains, if any, generally are
declared and paid once a year, but the Series may make distributions on a
more frequent basis to comply with distribution requirements of the Code,
in all events in a manner consistent with the provisions of the 1940 Act.
No Series will make distributions from its 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 of the Series and the same Class
from which they were paid at net asset value. All expenses are accrued
daily and deducted before declaration of dividends to investors. Dividends
paid by each Class will be calculated at the same time and in the same
manner and will be of the same amount, except that the expenses
attributable solely to a particular Class will be borne exclusively by
such Class. Class B and Class C shares will receive lower per share
dividends than Class A shares because of the higher expenses borne by the
relevant Class. See "Fee Table."
FEDERAL TAX TREATMENT -- Except for dividends from Taxable
Investments, the Fund anticipates that substantially all dividends paid
by a Series from net investment income will not be subject to Federal
income tax. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains and all
or a portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund are subject to Federal
income tax as ordinary income whether received in cash or reinvested in
additional shares. Distributions from net realized long-term securities
gains of a Series generally are subject to Federal income tax as
long-term capital gains if you are a citizen or resident of the United
States. Dividends and distributions attributable to income or gain
derived from securities transactions and from the use of certain of the
investment techniques described under "Appendix _ Investment Techniques,"
will be subject to Federal income tax. No dividend paid by any Series
will qualify for the dividends received deduction allowable to certain
U.S. corporations. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate
in excess of 28%. Under the Code, interest on indebtedness incurred or
continued to purchase or carry shares of any Series which is deemed to
relate to exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid
by each Series may be excluded by shareholders of the Series from their
gross income for Federal income tax purposes, each Series may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for purposes
of the corporate alternative minimum tax as well as a component in
computing the corporate environmental tax or (iii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If a Series purchases such securities, the portion of the
Series' dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on Social
Security benefits and may cause an investor to be subject to such taxes.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares of a Series if you exchange your
Class A shares for shares of another Series or fund advised or
administered by The Dreyfus Corporation within 91 days of purchase and
such other Series or other fund reduces or eliminates its otherwise
applicable sales load charge for the purpose of the exchange. In this
case, the amount of your sales load charge for Class A shares, up to the
amount of the reduction of the sales load charge on the exchange, is not
included in the basis of your Class A shares for purposes of computing
gain or loss on the exchange, and instead is added to the basis of the
other Series or fund shares received on the exchange.
Page 50
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.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt
from Federal tax and the dollar amount, if any, subject to Federal tax.
These dollar amounts will vary depending on the size and length of time
of your investment in a Series. If a Series pays dividends derived from
taxable income, it intends to designate as taxable the same percentage of
the day's dividends as the actual taxable income earned on that day bears
to total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains and the
proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from
the IRS of being subject to backup withholding as a result of a failure
to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect
or if a shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that each Series has
qualified for the fiscal year ended April 30, 1996 as a "regulated
investment company" under the Code. Each Series intends to continue to so
qualify, if such qualification is in the best interests of its
shareholders. Such qualification relieves the Series of any liability for
Federal income taxes to the extent its earnings are distributed in
accordance with applicable provisions of the Code. Each Series of 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, if any.
STATE AND LOCAL TAX TREATMENT -- Each Series will invest primarily in
Municipal Obligations of the State after which the Series is named.
Except to the extent specifically noted below, dividends by a Series are
not subject to an income tax by such State to the extent that the
dividends are attributable to interest on such Municipal Obligations.
However, some or all of the other dividends or distributions by a Series
may be taxable by those States that have income taxes, even if the
dividends or distributions are attributable to income of the Series
derived from obligations of the United States or its agencies or
instrumentalities.
The Fund anticipates that a substantial portion of the
dividends paid by each Series will not be subject to income tax of the
State after which the Series is named. However, to the extent that you
are obligated to pay State or local taxes outside of such State,
dividends earned by an investment in such Series may represent taxable
income. Also, all or a portion of the dividends paid by a Series that are
not subject to income tax of the State after which the Series is named
may be a preference item for such State's alternative minimum tax (where
imposed). Finally, you should be aware that State and local taxes, other
than those described above, may apply to the dividends, distributions or
shares of a Series.
Page 51
The paragraphs below discuss the State tax treatment of
dividends and distributions by each Series to residents of the State
after which the Series is named. Investors should consult their own tax
advisers regarding specific questions as to Federal, State and local
taxes.
CONNECTICUT SERIES -- Dividends by the Series that qualify as
exempt-interest dividends for Federal income tax purposes are not subject
to the Connecticut income tax imposed on individuals, trusts and estates,
to the extent that such dividends are derived from income received by the
Series as interest from Connecticut Municipal Obligations or obligations
the interest with respect to which Connecticut is prohibited by Federal
law from taxing. Dividends that qualify as capital gain dividends for
Federal income tax purposes are not subject to the Connecticut income tax
to the extent they are derived from Connecticut Municipal Obligations.
Dividends derived from other sources are subject to the Connecticut income
tax. In the case of a shareholder subject to the Connecticut income tax
and required to pay the Federal alternative minimum tax, the portion of
exempt-interest dividends paid by the Series that is derived from income
received by the Series as interest from Connecticut Municipal Obligations
or obligations the interest with respect to which Connecticut is
prohibited by Federal law from taxing is not subject to the net
Connecticut minimum tax even though treated as a preference item for
purposes of the Federal alternative minimum tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes that are distributed by the Series to entities taxed
as corporations under the Connecticut corporation business tax are not
exempt from that tax.
The shares of the Series are not subject to property taxation
by the State of Connecticut or its political subdivisions.
FLORIDA SERIES -- Dividends or distributions by the Fund to a Florida
individual resident are not taxable by Florida. However, Florida imposes
an intangible personal property tax on shares of the Series owned by a
Florida resident on January 1 of each year unless such shares qualify for
an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes as well as other Federally taxable dividends and
distributions that are distributed by the Series to entities taxed as
corporations under Florida law may not be exempt from the Florida
corporate income tax.
The Fund has received a Technical Assistance Advisement from
the State of Florida, Department of Revenue, to the effect that Florida
Series' shares owned by a Florida resident will be exempt from the
intangible personal property tax so long as the Series' portfolio
includes only assets, such as notes, bonds, and other obligations issued
by the State of Florida or its municipalities, counties, and other taxing
districts, the United States Government, and its agencies, Puerto Rico,
Guam, and the U.S. Virgin Islands, and other assets which are exempt from
that tax.
GEORGIA SERIES -- Dividends and distributions by the Georgia Series
to a Georgia resident that are attributable to interest on Georgia
Municipal Obligations or direct obligations of the United States and its
territories and possessions are not subject to the State of Georgia
income tax. Dividends or other distributions by the Series which are
attributable to other sources, including all distributions that qualify
as capital gains dividends for Federal income tax purposes, are subject
to the State of Georgia income tax at the applicable rate.
The Georgia intangibles tax previously imposed upon certain
intangible personal property has been repealed, effective as of January
1, 1996. Accordingly, shares of the Georgia Series will not be subject to
an intangibles tax in Georgia.
MARYLAND SERIES -- Dividends and distributions by the Series to a
Maryland resident (including individuals, corporations, estates or trusts
who are subject to Maryland state and local income tax) will not be
subject to income tax in Maryland to the extent that such dividends or
distributions (a) qualify, for Federal income tax purposes, as
exempt-interest dividends of a
Page 52
regulated investment company and are attributable to (i) interest on
Maryland Municipal Obligations or (ii) interest on obligations of the
United States or an authority, commission, instrumentality, possession
or territory of the United States, or (b) are attributable to gain
realized by the Series from the sale or exchange of Maryland Municipal
Obligations or obligations of the United States or an authority,
commission or instrumentality thereof. To the extent that distributions
by the Series are attributable to sources other than those described
above, such as (x) interest on obligations issued by states other than
Maryland or (y) income from repurchase agreements, such distributions
will not be exempt from Maryland state and local income taxes. In
addition, any gain realized by a shareholder upon a redemption or
exchange of Series shares will be subject to Maryland taxation.
Maryland presently includes in taxable net income items of
tax preferences as defined in the Code. Interest paid on certain private
activity bonds constitutes a tax preference. Accordingly, subject to a
threshold amount, 50% of any distributions by the Series attributable to
such private activity bonds will not be exempt from Maryland state and
local income taxes. Interest on indebtedness incurred (directly or
indirectly) by a shareholder of the Series to purchase or carry shares of
the Series will not be deductible for Maryland state and local income tax
purposes to the extent such interest is allocable to exempt-interest
dividends.
In the event the Series fails to qualify as a regulated
investment company, the Series would be subject to corporate Maryland
income tax and distributions generally would be taxable as ordinary
income to the shareholders.
Individuals will not be subject to personal property tax on
their shares of the Maryland Series.
MASSACHUSETTS SERIES -- Dividends by the Series to a Massachusetts
resident are not subject to the Massachusetts personal income tax to the
extent that the dividends are attributable to income received by the
Series from Massachusetts Municipal Obligations or direct U.S. Government
obligations, and are properly designated as such. Distributions of
capital gain dividends by the Series to a Massachusetts resident are not
subject to the Massachusetts personal income tax to the extent such
distributions are attributable to gain from the sale of certain
Massachusetts Municipal Obligations the gain from which is exempt from
the Massachusetts personal income tax, and the distributions are properly
designated as such. Dividends or distributions by the Series to a
Massachusetts resident that are attributable to most other sources are
subject to the Massachusetts personal income tax. In addition,
distributions from the Series may be included in the net income measure
of the corporate excise tax for corporate shareholders who are subject to
the Massachusetts corporate excise tax. The Series believes that
distributions from net realized long-term securities gains that are
taxable by Massachusetts are reportable as long-term capital gains,
irrespective of how long the resident has held shares in the Series. In
1994, the Massachusetts personal income tax statute was modified to
provide for graduated rates of tax (with some exceptions) on long-term
capital gains based on the length of time the asset has been held since
January 1, 1995. There is as yet no official guidance concerning the
treatment under the revised statute of mutual fund shareholders that
receive capital gain distributions. However, the state Department of
Revenue has released "working" draft regulations providing that the
holding period of the mutual fund (rather than that of its shareholders)
will be determinative for purposes of applying the revised statute to
shareholders that receive capital gain distributions, so long as the
mutual fund separately designates each portion of such distributions in a
notice provided to shareholders within 30 days of year-end. A challenge
to the new law is currently pending before the Massachusetts Supreme
Judicial Court. Shareholders should consult their tax advisers with
respect to the Massachusetts personal income tax treatment of capital
gain distributions from the Series.
The shares of the Series are not subject to property taxation
by Massachusetts or its political subdivisions.
Page 53
MICHIGAN SERIES -- Dividends by the Series to a Michigan resident
individual are not subject to the Michigan personal income tax and are
excluded from the taxable income base of the Michigan intangibles tax to
the extent that the dividends are attributable to income received by the
Series as interest from the Series' investment in Michigan Municipal
Obligations, obligations of U.S. possessions, as well as direct U.S.
Government obligations. Dividends or distributions by the Series to a
Michigan resident that are attributable to most other sources are subject
to both the Michigan personal income tax and are included in the taxable
income base of the Michigan intangibles tax.
For Michigan personal income and intangibles tax purposes,
the proportionate share of dividends from the Series' net investment
income from other than Michigan Municipal Obligations and from
distributions from any short-term or long-term capital gains will be
included in Michigan taxable income and will be included in the taxable
income base of the Michigan intangibles tax, except that dividends from
net investment income or distributions from capital gains reinvested in
Series' shares are exempt from such tax. Additionally, for Michigan
personal income tax purposes, any gain or loss realized when the
shareholder sells or exchanges Series' shares will be included in
Michigan taxable income.
Persons engaging in business activities in Michigan may be
subject to the Michigan Single Business Tax and should consult their tax
advisers with respect to the application of such tax in connection with
an investment in the Series.
MINNESOTA SERIES -- Dividends paid by the Series to a Minnesota
resident are not subject to the Minnesota personal income tax to the
extent that the dividends are attributable to income received by the
Series as interest from Minnesota Municipal Obligations, provided such
attributable dividends represent 95% or more of the exempt-interest
dividends that are paid by the Series. Moreover, dividends paid by the
Series to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Series as interest from a Series' investment in direct
U.S. Government obligations. Dividends and distributions by the Series to
a Minnesota resident that are attributable to most other sources are
subject to the Minnesota personal income tax. Dividends and distributions
from the Series will be included in the determination of taxable net
income of corporate shareholders who are subject to Minnesota income
(franchise) taxes. In addition, dividends attributable to interest
received by the Series that is a preference item for Federal income tax
purposes, whether or not such interest is from a Minnesota Municipal
Obligation, may be subject to the Minnesota alternative minimum tax.
The shares of the Series are not subject to property taxation
by Minnesota or its political subdivisions.
NORTH CAROLINA SERIES -- Dividends paid by the North Carolina Series
to a North Carolina resident that are attributable to interest on North
Carolina Municipal Obligations or direct U.S. Government obligations are
not subject to the North Carolina income tax. Dividends or distributions
attributable to gain realized by the Series from the sale or exchange of
certain North Carolina Municipal Obligations issued before July 1, 1995
will not be included in the North Carolina taxable income of a resident
individual, trust or estate. Other dividends or distributions which are
attributable to net realized securities gains and most other sources are
subject to the North Carolina income tax at the applicable rate. Gain
realized by a North Carolina resident shareholder from the sale or
exchange of an interest held in the North Carolina Series also will be
subject to the North Carolina income tax at the applicable rate.
The North Carolina intangibles tax previously imposed upon
certain intangible personal property has been repealed, effective as of
January 1, 1995. Accordingly, shares of the North Carolina Series will
not be subject to an intangibles tax in North Carolina.
Page 54
To the extent that dividends or distributions from the North
Carolina Series increase the surplus of a corporate shareholder required
to file a North Carolina franchise tax return, such increase in the
surplus will be subject to the North Carolina franchise tax.
OHIO SERIES -- Dividends paid by the Series to an Ohio resident, or
to a corporation subject to the Ohio Corporation Franchise Tax, are not
subject to Ohio state and local income taxes or the net income basis of
the Ohio Corporation Franchise Tax to the extent that such dividends are
attributable to income received by the Series as interest from Ohio
Municipal Obligations and direct obligations of the United States,
certain Federal agencies and certain U.S. territories. Dividends or
distributions paid by the Series to an Ohio resident, or to a corporation
subject to the Ohio Corporation Franchise Tax, that are attributable to
most other sources are subject to Ohio state and local income taxes and
are includable in the net income basis of the Ohio Corporation Franchise
Tax. The shares of the Series are not subject to property taxation by the
State of Ohio or its political subdivisions, except when held by a
"dealer in intangibles" (generally, a person in the lending or brokerage
business), a decedent's estate, an Ohio insurance company, or a
corporation taxed on the net worth basis of the Ohio Corporation
Franchise Tax.
PENNSYLVANIA SERIES -- Dividends by the Series will not be subject to
the Pennsylvania personal income tax to the extent that the dividends are
attributable to interest received by the Series from its investments in
Pennsylvania Municipal Obligations and U.S. Government obligations,
including obligations issued by U.S. possessions. Dividends by the Series
will not be subject to the Philadelphia School District investment income
tax to the extent that the dividends are attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. obligations, including obligations issued by U.S.
possessions. Dividends or distributions by the Series to a Pennsylvania
resident that are attributable to most other sources may be subject to
the Pennsylvania personal income tax and (for residents of Philadelphia)
to the Philadelphia School District investment net income tax.
Dividends paid by the Series which are considered
"exempt-interest dividends" for Federal income tax purposes are not
subject to the Pennsylvania Corporate Net Income Tax, but other dividends
or distributions paid by the Series may be subject to that tax. An
additional deduction from Pennsylvania taxable income is permitted for
dividends or distributions paid by the Series attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. Government obligations to the extent included in
Federal taxable income, but such a deduction is reduced by any interest
on indebtedness incurred to carry the securities and other expenses
incurred in the production of such interest income, including expenses
deducted on the Federal income tax return that would not have been
allowed under the Code if the interest were exempt from Federal income
tax. It is the current position of the Department of Revenue of the
Commonwealth of Pennsylvania that Series shares are considered exempt
assets (with a pro rata exclusion based on the value of the Series
attributable to its investments in Pennsylvania Municipal Obligations and
U.S. Government obligations, including obligations issued by U.S.
possessions) for purposes of determining a corporation's capital stock
value subject to the Pennsylvania Capital Stock/Franchise Tax.
Shares of the Series are exempt from Pennsylvania county
personal property taxes to the extent that the portfolio of the Series
consists of Pennsylvania Municipal Obligations and U.S. Government
obligations, including obligations issued by U.S. possessions.
TEXAS SERIES -- All dividends and distributions by the Series to
Texas resident individuals are not subject to taxation by Texas. However,
Texas enacted significant changes to its corporate franchise tax law for
reporting years beginning January 1, 1992 and thereafter. These changes
include the imposition of a tax measured by earned surplus, in addition
to the previously existing tax on a corporation's capital. The earned
surplus component of the Texas franchise tax is
Page 55
applicable only to the extent that it exceeds the taxable capital
component of the franchise tax. For Texas franchise tax purposes, earned
surplus is computed by reference to Federal taxable income. Thus, any
amounts subject to Federal income tax that are payable by the Series to
corporations doing business in or incorporated in Texas generally will be
included in the earned surplus component of the Texas franchise tax, to
the extent such earned surplus is apportioned to Texas. Dividends and
other distributions not subject to Federal income tax generally will be
excluded from the calculation of the earned surplus component of the
franchise tax.
Both the capital tax and earned surplus tax components of the
Texas franchise tax are computed by reference to the portion of the
corporation's capital or earned surplus, respectively, based on the
corporation's gross receipts derived from Texas. To the extent dividend
and interest payments are made by a corporation not incorporated in
Texas, or another type of entity not legally domiciled in Texas, such
dividends and payments are not considered to be Texas sourced receipts
for franchise tax apportionment purposes.
Effective with franchise tax reports originally due after
January l, 1994 (which are based upon accounting years ending in 1993),
other taxable distributions from the Series to corporations doing
business in or incorporated in Texas (such as the proceeds resulting from
net gain upon the sale of Series bonds) may be allocable to Texas as
Texas sourced gross receipts for the earned surplus component of the
franchise tax if: (l) the activities of the recipient corporation do not
have a sufficient unitary connection with that corporation's other
activities conducted within the state giving rise to the underlying sale
of such assets; and (2) the recipient corporation has its commercial
domicile in Texas.
The shares of the Series are not subject to property taxation
by Texas or its political subdivisions.
VIRGINIA SERIES -- Subject to the provisions discussed below,
dividends paid to shareholders and derived from interest on obligations
of the Commonwealth of Virginia or of any political subdivision or
instrumentality of the Commonwealth or derived from interest or dividends
on obligations of the United States excludable from Virginia taxable
income under the laws of the United States, which obligations are issued
in the exercise of the borrowing power of the Commonwealth or the United
States and are backed by the full faith and credit of the Commonwealth or
the United States, will be exempt from Virginia income tax. Dividends
paid to shareholders by the Series and derived from interest on debt
obligations of certain territories and possessions of the United States
(those issued by Puerto Rico, the Virgin Islands and Guam) will be exempt
from Virginia income tax. To the extent any portion of the dividends are
derived from interest on debt obligations other than those described
above, such portion will be subject to Virginia income tax even though it
may be excludable from gross income for Federal income tax purposes.
Generally, dividends distributed to shareholders by
the Series and derived from capital gains will be taxable to the
shareholders. To the extent any portion of the dividends are derived from
taxable interest for Virginia purposes or from net short-term capital
gains, such portion will be taxable to the shareholders as ordinary
income. The character of long-term capital gains realized and distributed
by the Series will flow through to its shareholders regardless of how long
the shareholders have held their shares. Capital gains distributed to
shareholders derived from Virginia obligations issued pursuant to special
Virginia enabling legislation that provides a specific exemption for such
gains will be exempt from Virginia income tax. Generally, interest on
indebtedness incurred by shareholders to purchase or carry shares of the
Fund will not be deductible for Virginia income tax purposes.
As a regulated investment company, the Series may
distribute dividends that are exempt from Virginia income tax to its
shareholders if the Series satisfies all requirements for conduit treatment
under Federal law and, at the close of each quarter of its taxable year,
at least 50% of the value of its total assets consists of obligations the
interest on which is exempt
Page 56
from taxation under Federal law. If the Series fails to qualify, no part of
its dividends will be exempt from Virginia income tax.
When taxable income of a regulated investment company is
commingled with exempt income, all distributions of the income are
presumed taxable to the shareholders unless the portion of income that is
exempt from Virginia income tax can be determined with reasonable
certainty and substantiated. Generally, this determination must be made
for each distribution to each shareholder. The Virginia Department of
Taxation has adopted a policy, however, of allowing shareholders to
exclude from Virginia taxable income the exempt portion of distributions
from a regulated investment company even though the shareholders receive
distributions monthly but receive reports substantiating the exempt
portion of such distributions at less frequent intervals. Accordingly, if
the Series receives taxable income, the Series must determine the portion of
income that is exempt from Virginia income tax and provide such
information to the shareholders in accordance with the foregoing so that
the shareholders may exclude from Virginia taxable income the exempt
portion of the distribution from the Series.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares may be calculated on several bases, including current yield, tax
equivalent yield, average annual total return and/or total return.
These total return figures reflect changes in the price of
the shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and Class C should be expected to
be lower than that of Class A. Performance for each Class will be
calculated separately.
Current yield refers to each Series' annualized net
investment income per share over a 30-day period, expressed as a
percentage of the maximum offering price per share in the case of Class A
or the net asset value in the case of Class B or Class C at the end of
the period. For purposes of calculating current yield, the amount of net
investment income per share during that 30-day period, computed in
accordance with regulatory requirements, is compounded by assuming that
it is reinvested at a constant rate over a six-month period. An identical
result is then assumed to have occurred during a second six-month period
which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of each
Series' current yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in a Series of 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 each
Series' performance will include each Series' average annual total return
for one, five and ten year periods, or for shorter periods depending upon
the length of time during which each Series has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (maximum offering price in the case of Class A) 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
Page 57
the percentage rate of total return. Total return also may be calculated
by using the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC
at the end of the period for Class B or Class C shares. Calculations
based on the net asset value per share do not reflect the deduction of
the applicable sales charge on Class A shares which, if reflected, would
reduce the performance quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. Investors 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 the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman
Brothers Municipal Bond Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated
September 19, 1986. Prior to July 2, 1990, the Fund's name was Premier
State Tax Exempt Bond Fund. The Fund is authorized to issue an unlimited
number of shares of beneficial interest, par value $.001 per share. The
Fund's shares are classified into three classes _ Class A, Class B and
Class C. Each share has one vote and shareholders will vote in the
aggregate and not by class except as otherwise required by law or when
class voting is permitted by the Fund's Board. Only holders of Class B or
Class C shares, as the case may be, will be entitled to vote on matters
submitted to shareholders pertaining to the Distribution Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations, a possibility which management
believes is remote. Upon payment of any liability incurred by the Fund,
the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Fund intends to conduct its
operations in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund. As discussed
under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove
Trustees.
To date, the Trustees have authorized the creation of twelve
Series of shares. All consideration received by the Fund for shares of
one of the Series and all assets in which such consideration is invested,
will belong to that Series (subject only to the rights of creditors of
the Fund) and will be subject to the liabilities related thereto. The
income attributable to, and the expenses of, one Series would be treated
separately from those of the other Series. The Fund has the ability to
create, from time to time, new series without shareholder approval.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Page 58
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- Each Series is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets.
However, each Series currently intends to borrow money only for temporary
or emergency (not leveraging) purposes in an amount up to 15% of the
value of such Series' total assets (including the amount borrowed) valued
at the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While borrowings
exceed 5% of the value of a Series' total assets, such Series will not
make any additional investments.
SHORT-SELLING -- Each Series may make short sales of securities. In
these transactions, a Series sells a security it does not own in
anticipation of a decline in the market value of that security. To
complete the transaction, the Series must borrow the security to make
delivery to the buyer. The Series is obligated to replace the security
borrowed by purchasing it 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 Series, 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 a Series' net assets. A Series may
not sell short the securities of any single issuer listed on a national
securities exchange to the extent of more than 5% of the value of such
Series' net assets. A Series may not make a short sale which results in
the Series having sold short in the aggregate more than 5% of the
outstanding securities of any class of an issuer.
Each Series also may make short sales "against the box," in
which such Series enters into a short sale of a security it owns in order
to hedge an unrealized gain on the security. At no time will a Series
have more than 15% of the value of its net assets in deposits on short
sales against the box.
USE OF DERIVATIVES -- Each Series may invest in the types of
Derivatives enumerated under "Description of the Fund -- Investment
Considerations and Risks -- Use of Derivatives." 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 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 Series'
performance.
If a Series invests in Derivatives at inappropriate times or
judges the market conditions incorrectly, such investments may lower the
Series' return or result in a loss. A Series also could experience losses
if it 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 neither the Fund nor any Series is a commodity pool,
Derivatives subject the Fund to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Series can invest in
certain Derivatives. Each Series may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
each Series may 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 bona fide
hedging purposes, exceed 5% of the liquidation value of the Series'
assets, after taking into account unrealized profits and unrealized
losses on such contracts and options; provided, however, that in the case
of
Page 59
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.
Each Series may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. Each Series may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. When required by the Securities and Exchange Commission, a Series
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 Series 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 -- Each Series may lend securities from
its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Series
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned securities which affords the
Series an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not
exceed 331/3 % of the value of such Series' total assets, and the Series
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 at any time upon specified
notice. The Series might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its
agreement with the Series.
FORWARD COMMITMENTS -- Each Series may purchase Municipal Obligations
and other securities on a forward commitment or when-issued basis, which
means delivery and payment take place a number of days after the date of
the commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when
the Fund enters into the commitment, but the Fund does not make payment
until it receives delivery from the counterparty. The Fund will commit to
purchase such securities only with the intention of actually acquiring
the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the
Fund consisting of cash, cash equivalents or U.S. Government securities
or other high quality liquid debt securities at least equal at all times
to the amount of the commitments will be established and maintained at
the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- Each Series may purchase floating
and variable rate demand notes and bonds, which are tax exempt
obligations ordinarily having stated maturities in excess of one year,
but which permit the holder to demand payment of principal at any time or
at specified intervals. Variable rate demand notes include master demand
notes which are obligations that permit the Series to invest fluctuating
amounts at varying rates of interest, pursuant to direct arrangements
between the Series, as lender, and the borrower. These obligations permit
daily changes in the amount 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.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased will meet the quality criteria
established for the purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS -- Each Series may purchase from
financial institutions participation interests in Municipal Obligations
(such as industrial development
Page 60
bonds and municipal lease/purchase agreements). A participation interest
gives the Series an undivided interest in the Municipal Obligation in the
proportion that the Series' participation interest bears to the total
principal amount of the Municipal Obligation. These instruments may have
fixed, floating or variable rates of interest. If the participation
interest is unrated, it will be backed by an irrevocable letter of credit
or guarantee of a bank that the Series' Board has determined meets the
prescribed quality standards for banks set forth below, or the payment
obligation otherwise will be collateralized by U.S. Government securities.
For certain participation interests, the Series will have the right to
demand payment, on not more than seven days' notice, for all or any part
of the Series' participation interest in the Municipal Obligation, plus
accrued interest. As to these instruments, each Series intends to exercise
its right to demand payment only upon a default under the terms of the
Municipal Obligation, as needed to provide liquidity to meet redemptions,
or to maintain or improve the quality of its investment portfolio.
TENDER OPTION BONDS -- Each Series may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to
a custodial arrangement) having a relatively long maturity and bearing
interest at a fixed rate substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the agreement of a third
party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees
equal to the difference between the Municipal Obligation's fixed coupon
rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities,
coupled with the tender option, to trade at par on the date of such
determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the Fund, will consider on an ongoing basis the creditworthiness of
the issuer of the underlying Municipal Obligations, of any custodian and
of the third party provider of the tender option. In certain instances
and for certain tender option bonds, the option may be terminable in the
event of a default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons.
CUSTODIAL RECEIPTS -- Each Series may purchase custodial receipts
representing the right to receive certain future principal and interest
payments on Municipal Obligations which underlie the custodial receipts.
A number of different arrangements are possible. In a typical custodial
receipt arrangement, an issuer or a third party owner of Municipal
Obligations deposits such obligations with a custodian in exchange for
two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based
on payments received on the underlying Municipal Obligations. One class
has the characteristics of a typical auction rate security, where at
specified intervals its interest rate is adjusted, and ownership changes,
based on an auction mechanism. This class's interest rate generally is
expected to be below the coupon rate of the underlying Municipal
Obligations and generally is at a level comparable to that of a Municipal
Obligation of similar quality and having a maturity equal to the period
between interest rate adjustments. The second class bears interest at a
rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this
case inversely to changes in the rate of interest of the first class. If
the interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate
paid on the second class. In no event will the aggregate interest paid
with respect to the two classes exceed the interest paid by the underlying
Municipal Obligations. The value of the second class and similar
securities
Page 61
should be expected to fluctuate more than the value of a
Municipal Obligation of comparable quality and maturity and their
purchase by a Series should increase the volatility of its net asset
value and, thus, its price per share. These custodial receipts are sold
in private placements. Each Series also may purchase directly from
issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
STAND-BY COMMITMENTS -- The Fund may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under a
stand-by commitment, the Fund obligates a broker, dealer or bank to
repurchase, at the Fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment, therefore, is subject to
the ability of the seller to make payment on demand. The Fund will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
The Fund may pay for stand-by commitments if such action is deemed
necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. Gains realized in connection with stand-by commitments will be
taxable. Each Series also may acquire call options on specific Municipal
Obligations. A Series generally would purchase these call options to
protect the Series from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the
Municipal Obligation before maturity. The sale by the Series of a call
option that it owns on a specific Municipal Obligation could result in
the receipt of taxable income by the Series.
ZERO COUPON SECURITIES -- Each Series may invest in zero coupon
securities which are debt securities issued or sold at a discount from
their face value which do not entitle the holder to any periodic payment
of interest prior to maturity or a specified redemption date (or cash
payment date). The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer.
Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. 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 -- Each Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does
not exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, and repurchase agreements
providing for settlement in more than seven days after notice. As to
these securities, the Series is subject to a risk that should the Series
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 Series' net
assets could be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other
than for temporary defensive purposes (but not to exceed 20% of the value
of a Series' net assets) or for temporary defensive purposes, each Series
may invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of purchase, a
quality rating within the two highest grades of Moody's, S&P or Fitch;
Page 62
obligations of the U.S. Government, its agencies or instrumentalities;
commercial paper rated not lower than P-1 by Moody's, A-1 by S&P or F-1
by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of one billion dollars or
more; time deposits; bankers' acceptances and other short-term bank
obligations; and repurchase agreements in respect of any of the foregoing.
Dividends paid by a Series that are attributable to income earned by the
Series from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more than 20% of the value of a Series' net
assets be invested in Taxable Investments. When a Series has adopted a
temporary defensive position, including when acceptable State Municipal
Obligations are unavailable for investment by a Series, in excess of 35%
of a Series' net assets may be invested in securities that are not exempt
from Federal and, where applicable, State personal income taxes. Under
normal market conditions, each Series anticipates that not more than 5%
of the value of its total assets will be invested in any one category of
Taxable Investments. Taxable Investments are more fully described in the
Statement of Additional Information, to which reference hereby is made.
RATINGS -- Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by Moody's
are regarded as having extremely poor prospects of ever attaining any real
investment standing. Bonds rated D by S&P are in default and the payment
of interest and/or repayment of principal is in arrears. Bonds rated DDD,
DD or D by Fitch are in actual or imminent default, are extremely
speculative and should be valued on the basis of their ultimate recovery
value in liquidation or reorganization of the issuer; DDD represents the
highest potential for recovery of such bonds; and D represents the lowest
potential for recovery. Such bonds, though high yielding, are
characterized by great risk. See "Appendix B" in the Statement of
Additional Information for a general description of Moody's, S&P and
Fitch ratings of Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these bonds. Therefore, although these ratings may
be an initial criterion for selection of portfolio investments, The
Dreyfus Corporation also will evaluate these securities and the ability of
the issuers of such securities to pay interest and principal. The Fund's
ability to achieve its investment objective may be more dependent on The
Dreyfus Corporation's credit analysis than might be the case for a series
that invested in higher rated securities.
The average distribution of investments (at value) in
Municipal Obligations by ratings for the fiscal year ended April 30,
1996, computed on a monthly basis, for each Series indicated was as
follows:
Page 63
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA
FITCH OR MOODY'S OR S & P SERIES SERIES
------------- ------------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
AAA Aaa AAA 38.8% 43.1%
AA Aa AA 8.3 9.1
A A A 23.4 13.6
BBB Baa BBB 18.3 19.8
BB Ba BB 6.7 .8
F-1 MIG1/P-1 SP-1/A-1 1.0 1.8
Not Rated Not Rated Not Rated 3.5(1) 11.8(2)
-------- --------
100.0% 100.0%
======== ========
- -----------------------------
(1) Included under the Not Rated category are securities
comprising 3.5% of the Ohio Series' market value which, while not rated,
have been determined by The Dreyfus Corporation to be of comparable
quality to securities in the following rating categories: Aaa/A AA (1.1%),
A/A (.3%), Baa/BBB (1.8%) and B (.3%).
(2) Included under the Not Rated category are securities
comprising 11.8% of the Pennsylvania Series' market value which, while
not rated, have been determined by The Dreyfus Corporation to be of
comparable quality to securities in the following rating categories:
Aaa/AAA (.9%), A/A (1.7%), Baa/BBB (4.0%), Ba/BB (3.1%) and B (2.1%).
</TABLE>
The actual distribution of the Series' investments by ratings
on any given date will vary. In addition, the distribution of the Series'
investments by ratings as set forth above should not be considered as
representative of the Series' future portfolio composition.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE SERIES'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE
OFFER OF THE SERIES'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE SERIES. 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.
PSTEBP090396
