April 11, 1994
DREYFUS NEW JERSEY
MUNICIPAL BOND FUND, INC.
SUPPLEMENT TO PROSPECTUS
DATED APRIL 11, 1994
The following information supplements and should be read in conjunction
with the section of the Fund's Prospectus entitled "Management of the
Fund."
The Fund's manager, The Dreyfus Corporation ("Dreyfus"), has entered into
an Agreement and Plan of Merger (the "Merger Agreement") providing for
the merger of Dreyfus with a subsidiary of Mellon Bank Corporation
("Mellon").
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including receipt of certain regulatory approvals
and approvals of the stockholders of Dreyfus and of Mellon. The merger is
expected to occur in mid-1994, but could occur significantly later.
As a result of regulatory requirements and the terms of the Merger
Agreement, Dreyfus will seek various approvals from the Fund's board and
shareholders before completion of the merger. Shareholder approval will
be solicited by a proxy statement.
--------------------
The following information supplements and should be read in conjunction
with the section of the Fund's Prospectus entitled "Performance
Information."
From time to time advertising materials for the Fund also may refer to
Value Line Mutual Fund Survey company ratings and related analyses
supporting the rating.
750/stkr041194
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PROSPECTUS APRIL 11, 1994
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC. (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN
AS A MUNICIPAL BOND FUND. ITS GOAL IS TO PROVIDE YOU WITH AS HIGH A
LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND NEW JERSEY INCOME
TAXES AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY IMPOSED BY THE FUND.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO
EARN INCOME ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN
PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S
PORTFOLIO.
THE FUND BEARS CERTAIN COSTS OF ADVERTISING, ADMINISTRATION
AND/OR DISTRIBUTION PURSUANT TO A PLAN ADOPTED IN ACCORDANCE
WITH RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940.
---------------
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND
THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL INFORMATION),
DATED APRIL 11, 1994, WHICH MAY BE REVISED FROM TIME TO TIME,
PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS
AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE
FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-
0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
---------------
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. THE FUND'S SHARES INVOLVE
CERTAIN INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FUND'S SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE AND
ARE NOT GUARANTEED.
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TABLE OF CONTENTS
ANNUAL FUND OPERATING EXPENSES........ ................ 2
CONDENSED FINANCIAL INFORMATION........................ 2
DESCRIPTION OF THE FUND................................ 3
MANAGEMENT OF THE FUND................................. 10
HOW TO BUY FUND SHARES................................. 11
SHAREHOLDER SERVICES................................... 12
HOW TO REDEEM FUND SHARES.............................. 15
SERVICE PLAN........................................... 17
DIVIDENDS, DISTRIBUTIONS AND TAXES..................... 18
PERFORMANCE INFORMATION................................ 20
GENERAL INFORMATION.................................... 21
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................................................ .60%
12b-1 Fee (distribution and servicing)......................... .25%
Other Expenses................................................. .12%
Total Fund Operating Expenses.................................. .97%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $10 $31 $54 $119
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S
ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%.
- -------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. Long-term investors could pay more in 12b-1 fees than the
economic equivalent of paying a front end sales charge. The information in
the foregoing table does not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Certain Service
Agents (as defined below) may charge their clients direct fees for
effecting transactions in Fund shares; such fees are not reflected in the
foregoing table. See "Management of the Fund" and "Service Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst & Young,
the Fund's independent auditors, whose report thereon appears in the
Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available
upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
PER SHARE DATA: 1987(1) 1988 1989 1990 1991 1992 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $11.50 $11.62 $12.16 $12.36 $12.47 $13.06 $13.17
------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net........................ .14 .88 .83 .83 .81 .80 .79
Net realized and unrealized gain on
investments................................ .12 .54 .24 .11 .63 .31 .88
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS........... .26 1.42 1.07 .94 1.44 1.11 1.67
------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income_net......... (.14) (.88) (.83) (.83) (.81) (.80) (.79)
Dividends from net realized gain on
investments................................ __ __ (.04) __ (.04) (.20) (.02)
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.................... (.14) (.88) (.87) (.83) (.85) (1.00) (.81)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of year............... $11.62 $12.16 $12.36 $12.47 $13.06 $13.17 $14.03
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 14.73%(2) 12.59% 9.11% 7.94% 11.95% 8.77% 12.97%
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average
net assets................................. __ .39% .82% .77% .75% .73% .72%
Ratio of net investment income to
average net assets......................... 8.02%(2) 7.36% 6.77% 6.74% 6.36% 6.06% 5.74%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation (limited to the expense
limitation provision of the
management agreement)...................... 1.50%(2) .91% .25% .25% .25% .25% .25%
Portfolio Turnover Rate.................... __ 60.77% 34.96% 25.02% 22.53% 33.58% 6.05%
Net Assets, end of year (000's Omitted).... $37,743 $174,788 $256,902 $350,416 $515,706 $614,529 $725,815
</TABLE>
- ------------------------
(1) From November 6, 1987 (commencement of operations) to December 31, 1987.
(2) Annualized.
(2)
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE - The Fund's goal is to provide you with as high a
level of current income exempt from Federal and New Jersey income taxes
as is consistent with the preservation of capital. To accomplish this goal,
the Fund invests primarily in the debt securities of the State of New
Jersey, its political subdivisions, authorities and corporations, and
certain other specified securities, the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal and New Jersey
income taxes (collectively, "New Jersey Municipal Obligations"). To the
extent acceptable New Jersey Municipal Obligations are at any time
unavailable for investment by the Fund, the Fund may invest temporarily in
other debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal, but not New Jersey, income
tax. The dollar-weighted average maturity of the Fund's portfolio is
expected to exceed ten years. The Fund's investment objective cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares.
There can be no assurance that the Fund's investment objective will be
achieved.
MUNICIPAL OBLIGATIONS - Debt securities the interest from which is, in
the opinion of bond counsel to the issuer, exempt from Federal income tax
("Municipal Obligations") generally include debt obligations issued to
obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and
notes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that generally do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity
on whose behalf they are issued. Notes are short-term instruments which
are obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest, which are determined in some
instances by formulas under which the Municipal Obligation's interest rate
will change directly or inversely to changes in interest rates or an index,
or multiples thereof, in many cases subject to a maximum and minimum.
Certain Municipal Obligations are subject to redemption at a date earlier
than their stated maturity pursuant to call options, which may be
separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES - It is a fundamental policy of the Fund that it will
invest at least 80% of the value of its net assets (except when
maintaining a temporary defensive position) in Municipal Obligations. At
least 65% of the value of the Fund's net assets (except when maintaining a
temporary defensive position) will be invested in bonds and debentures.
Generally, at least 65% of the value of the Fund's net assets will be
invested in New Jersey Municipal Obligations and the remainder may be
invested in securities that are not New Jersey Municipal Obligations and
therefore may be subject to New Jersey income tax. See "Risk Factors -
Investing in New Jersey Municipal Obligations" below, and "Dividends,
Distributions and Taxes."
At least 80% of the value of the Fund's net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than
Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch"). The
Fund may invest up to 20% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by
Moody's and BBB by S&P and Fitch and as low as the lowest rating assigned
by Moody's, S&P or Fitch. The Fund may invest in short-term Municipal
Obligations which are rated in the two highest rating categories by
Moody's, S&P or Fitch. See "Appendix B" in the Statement of Additional
Information.
(3)
Municipal Obligations rated BBB by S&P or Fitch or Baa by
Moody's are considered investment grade obligations; those rated BBB by
S&P and Fitch are regarded as having an adequate capacity to pay principal
and interest, while those rated Baa by Moody's are considered medium
grade obligations which lack outstanding investment characteristics and
have speculative characteristics. Investments rated Ba or lower by
Moody's and BB or lower by S&P and Fitch normally provide higher yields
but involve greater risk because of their speculative characteristics. The
Fund may invest in Municipal Obligations rated C by Moody's or D by S&P or
Fitch, which is the lowest rating assigned by such rating organizations
and indicates that the Municipal Obligation is in default and interest
and/or repayment of principal is in arrears. See "Risk Factors - Lower
Rated Bonds" below for a further discussion of certain risks. The Fund
also may invest in securities which, while not rated, are determined by
The Dreyfus Corporation to be of comparable quality to the rated
securities in which the Fund may invest; for purposes of the 80%
requirement described above, such unrated securities shall be deemed to
have the rating so determined. The Fund also may invest in Taxable
Investments of the quality described below.
The Fund may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security
also would affect the other securities; for example, securities the
interest upon which is paid from revenues of similar types of projects. As
a result, the Fund may be subject to greater risk as compared to a fund
that does not follow this practice.
From time to time, the Fund may invest more than 25% of the value of its
total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified
private activity bonds, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such
interest, a proportionate share of any exempt-interest dividend paid by
the investment company may be treated as such a preference item to
shareholders. The Fund may invest without limitation in such Municipal
Obligations if The Dreyfus Corporation determines that their purchase is
consistent with the Fund's investment objective. See "Risk Factors -
Other Investment Considerations" below.
The Fund may purchase floating and variable rate demand notes and bonds,
which are tax exempt obligations ordinarily having stated maturities in
excess of one year, but which permit the holder to demand payment of
principal at any time or at specified intervals. Variable rate demand notes
include master demand notes which are obligations that permit the Fund
to invest fluctuating amounts, which may change daily without penalty,
pursuant to direct arrangements between the Fund, as lender, and the
borrower. The interest rates on these obligations fluctuate from time to
time. Frequently, such obligations are secured by letters of credit or other
credit support arrangements provided by banks. Use of letters of credit or
other credit support arrangements will not adversely affect the tax
exempt status of these obligations. Because these obligations are direct
lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations,
although they are redeemable at face value. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established for the
purchase of Municipal Obligations. The Dreyfus Corporation, on behalf of
the Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the floating and variable rate demand obligations in the Fund's
portfolio. The Fund will not invest more than 15% of the value of its net
assets in floating or variable rate demand obligations as to which the
Fund cannot exercise the demand feature on not more than seven days'
notice if there is no secondary market available for these obligations, and
in other illiquid securities.
The Fund may purchase from financial institutions participation interests
in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives the
Fund an undivided interest in the Municipal Obligation in the proportion
that the Fund's participation interest
(4)
bears to the total principal amount
of the Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated, the
participation interest will be backed by an irrevocable letter of credit or
guarantee of a bank that the Board of Directors has determined meets the
prescribed quality standards for banks set forth below, or the payment
obligation otherwise will be collateralized by U.S. Government securities.
For certain participation interests, the Fund will have the right to demand
payment, on not more than seven days' notice, for all or any part of the
Fund's participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, the Fund intends to exercise its right to
demand payment only upon a default under the terms of the Municipal
Obligation, as needed to provide liquidity to meet redemptions, or to
maintain or improve the quality of its investment portfolio. The Fund will
not invest more than 15% of the value of its net assets in participation
interests that do not have this demand feature if there is no secondary
market available for these instruments, and in other illiquid securities.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each
case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest
rate is adjusted, and ownership changes, based on an auction mechanism.
This class's interest rate generally is expected to be below the coupon
rate of the underlying Municipal Obligations and generally is at a level
comparable to that of a Municipal Obligation of similar quality and having
a maturity equal to the period between interest rate adjustments. The
second class bears interest at a rate that exceeds the interest rate
typically borne by a security of comparable quality and maturity; this rate
also is adjusted, but in this case inversely to changes in the rate of
interest of the first class. If the interest rate on the first class exceeds
the coupon rate of the underlying Municipal Obligations, its interest rate
will exceed the rate paid on the second class. In no event will the
aggregate interest paid with respect to the two classes exceed the
interest paid by the underlying Municipal Obligations. The value of the
second class and similar securities should be expected to fluctuate more
than the value of a Municipal Obligation of comparable quality and
maturity and their purchase by the Fund should increase the volatility of
its net asset value and, thus, its price per share. These custodial receipts
are sold in private placements. The Fund also may purchase directly from
issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multiclass offering and the interest rate on certain
classes may be subject to a cap or floor.
The Fund may invest up to 15% of the value of its net assets in securities
as to which a liquid trading market does not exist, provided such
investments are consistent with the Fund's investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, and repurchase agreements providing for settlement in more than
seven days after notice. As to these securities, the Fund is subject to a
risk that should the Fund desire to sell them when a ready buyer is not
available at a price that the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected. However, if a
substantial market of qualified institutional buyers develops pursuant to
Rule 144A under the Securities Act of 1933, as amended, for certain of
these securities held by the Fund, the Fund intends to treat such
securities as liquid securities in accordance with procedures approved by
the Fund's Board of Directors. Because it is not possible to predict with
assurance how the market for restricted securities pursuant to Rule 144A
will develop, the Fund's Board of Directors has directed The Dreyfus
Corporation to monitor carefully the Fund's investments in such securities
with particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that for a period
of time qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in the Fund's
portfolio during such period.
(5)
To the extent consistent with the requirements for a "qualified
investment fund" under the New Jersey gross income tax, the Fund may
acquire "stand-by commitments" with respect to Municipal Obligations
held in its portfolio. Under a stand-by commitment, the Fund obligates a
broker, dealer or bank to repurchase, at the Fund's option, specified
securities at a specified price and, in this respect, stand-by commitments
are comparable to put options. The exercise of a stand-by commitment
therefore is subject to the ability of the seller to make payment on
demand. The Fund will acquire stand-by commitments solely to facilitate
its portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by
commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors. Gains realized in connection
with stand-by commitments will be taxable. The Fund also may acquire
call options on specific Municipal Obligations. The Fund generally would
purchase these call options to protect the Fund from the issuer of the
related Municipal Obligation redeeming, or other holder of the call option
from calling away, the Municipal Obligation before maturity. The sale by
the Fund of a call option that it owns on a specific Municipal Obligation
could result in the receipt of taxable income by the Fund.
The Fund may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of
debt securities that have been stripped of their unmatured interest
coupons, the coupons themselves and receipts or certificates representing
interest in such stripped debt obligations and coupons. The market prices
of zero coupon securities generally are more volatile than the market
prices of interest-bearing securities and are likely to respond to a greater
degree to changes in interest rates than interest-bearing securities
having similar maturities and credit qualities. The Fund may invest up to
5% of its assets in zero coupon bonds which are rated below investment
grade. See "Risk Factors - Lower Rated Bonds" and "Other Investment
Considerations" below, and "Investment Objective and Management
Policies - Risk Factors - Lower Rated Bonds" and "Dividends,
Distributions and Taxes" in the Statement of Additional Information.
The Fund may purchase tender option bonds. A tender option bond is a
Municipal Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term tax exempt rates, that has
been coupled with the agreement of a third party, such as a bank, broker-
dealer or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to tender
their securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Obligation's
fixed coupon rate and the rate, as determined by a remarketing or similar
agent at or near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at par on the date of
such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of the
Fund, will consider on an ongoing basis the creditworthiness of the issuer
of the underlying Municipal Obligation, of any custodian and of the third
party provider of the tender option. In certain instances and for certain
tender option bonds, the option may be terminable in the event of a default
in payment of principal or interest on the underlying Municipal Obligations
and for other reasons. The Fund will not invest more than 15% of the value
of its net assets in securities that are illiquid, which could include tender
option bonds as to which it cannot exercise the tender feature on not more
than seven days' notice if there is no secondary market available for these
obligations.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within
the two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
(6)
Government, its agencies or instrumentalities; commercial paper rated
not lower than P-2 by Moody's, A-2 by S&P or F-2 by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic
banks, with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase
agreements in respect of any of the foregoing. Dividends paid by the Fund
that are attributable to income earned by the Fund from Taxable
Investments will be taxable to investors. See "Dividends, Distributions
and Taxes." Except for temporary defensive purposes, at no time will more
than 20% of the value of the Fund's net assets be invested in Taxable
Investments. When the Fund has adopted a temporary defensive position,
including when acceptable New Jersey Municipal Obligations are
unavailable for investment by the Fund, in excess of 35% of the Fund's net
assets may be invested in securities that are not exempt from New Jersey
income tax. Under normal market conditions, the Fund anticipates that not
more than 5% of the value of its total assets will be invested in any one
category of Taxable Investments. Taxable Investments are more fully
described in the Statement of Additional Information, to which reference
hereby is made.
From time to time, the Fund may lend securities from its portfolio to
brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. Such loans may not exceed
331/3% of the value of the Fund's total assets. In connection with such
loans, the Fund will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of
the loaned securities. The Fund can increase its income through the
investment of such collateral. The Fund continues to be entitled to
payments in amounts equal to the interest or other distributions payable
on the loaned security and receives interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. The Fund
might experience risk of loss if the institution with which it has engaged
in a portfolio loan transaction breaches its agreement with the Fund.
CERTAIN FUNDAMENTAL POLICIES - The Fund may (i) borrow money from
banks, but only for temporary or emergency (not leveraging) purposes, in
an amount up to 15% of the value of the Fund's total assets (including the
amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the Fund's total assets, the Fund will not
make any additional investments; and (ii) invest up to 25% of its total
assets in the securities of issuers in any industry, provided that there is
no such limitation on investments in Municipal Obligations and, for
temporary defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940)
of the Fund's outstanding voting shares. See "Investment Objective and
Management Policies - Investment Restrictions" in the Statement of
Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES - The Fund may (i)
pledge, hypothecate, mortgage or otherwise encumber its assets, but only
to secure borrowings for temporary or emergency purposes; and (ii) invest
up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described above and floating and variable rate demand
obligations as to which the Fund cannot exercise the related demand
feature described above and as to which there is no secondary market).
See "Investment Objective and Management Policies - Investment
Restrictions" in the Statement of Additional Information.
RISK FACTORS
INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS - You should consider
carefully the special risks inherent in the Fund's investment in New
Jersey Municipal Obligations. Although New Jersey enjoyed a period of
economic growth with unemployment levels below the national average
during the mid-1980s, its economy slowed down well before the onset of
the national recession in July 1990. Reflecting the economic downturn,
the State's unemployment rate rose from 3.6% in the first quarter of 1989
to 9.1% in April 1993. As a result of New Jersey's fiscal weakness, in July
1991, S&P lowered its rating of the State's general obligation debt
(7)
from AAA to AA+. You should obtain and review a copy of the Statement of
Additional Information which more fully sets forth these and other risk
factors.
LOWER RATED BONDS - You should carefully consider the relative risks of
investing in the higher yielding (and, therefore, higher risk) securities in
which the Fund may invest up to 20% of the value of its net assets. These
are bonds such as those rated Ba by Moody's or BB by S&P or Fitch or as
low as the lowest rating assigned by Moody's, S&P or Fitch. They generally
are not meant for short-term investing and may be subject to certain
risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by
Moody's are regarded as having extremely poor prospects of ever attaining
any real investment standing. Bonds rated D by S&P are in default and the
payment of interest and/or repayment of principal is in arrears. Bonds
rated DDD, DD or D by Fitch are in actual or imminent default, are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the issuer; DDD
represents the highest potential for recovery of such bonds; and D
represents the lowest potential for recovery. Such Municipal Obligations,
though high yielding, are characterized by great risk. See "Appendix B" in
the Statement of Additional Information for a general description of
Moody's, S&P and Fitch ratings of Municipal Obligations. The ratings of
Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, The Dreyfus Corporation also will
evaluate these securities and the ability of the issuers of such securities
to pay interest and principal. The Fund's ability to achieve its investment
objective may be more dependent on The Dreyfus Corporation's credit
analysis than might be the case for a fund that invested in higher rated
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining
whether to continue to hold the security.
The market price and yield of bonds rated Ba or lower by Moody's and BB or
lower by S&P and Fitch are more volatile than those of higher rated bonds.
Factors adversely affecting the market price and yield of these securities
will adversely affect the Fund's net asset value. In addition, the retail
secondary market for these bonds may be less liquid than that of higher
rated bonds; adverse market conditions could make it difficult at times
for the Fund to sell certain securities or could result in lower prices than
those used in calculating the Fund's net asset value.
The Fund may invest up to 5% of its total assets in zero coupon securities
and pay-in-kind bonds (bonds which pay interest through the issuance of
additional bonds) rated Ba or lower by Moody's and BB or lower by S&P and
Fitch. These securities may be subject to greater fluctuations in value due
to changes in interest rates than interest-bearing securities and thus may
be considered more speculative than comparably rated interest-bearing
securities. See "Other Investment Considerations" below, and "Investment
Objective and Management Policies - Risk Factors - Lower Rated Bonds"
and "Dividends, Distributions and Taxes" in the Statement of Additional
Information.
OTHER INVESTMENT CONSIDERATIONS - Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price fluctuations.
Certain securities that may be purchased by the Fund, such as those with
interest rates that fluctuate directly or indirectly based on multiples of
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a stated index, are designed to be highly sensitive to changes in interest
rates and can subject the holders thereof to extreme reductions of yield
and possibly loss of principal. The values of fixed-income securities also
may be affected by changes in the credit rating or financial condition of
the issuing entities. The Fund's net asset value generally will not be
stable and should fluctuate based upon changes in the value of the Fund's
portfolio securities. Securities in which the Fund will invest may earn a
higher level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and
less fluctuation in market value.
New issues of Municipal Obligations usually are offered on a when-issued
basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate
that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable, although any gain realized on
such sale would be taxable. The Fund will not accrue income in respect of
a when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made if more than 20% of the value of
the Fund's net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the securities
held in the Fund's portfolio are subject to changes in value (both generally
changing in the same way, i.e., appreciating when interest rates decline
and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased
on a when-issued basis may expose the Fund to risk because they may
experience such fluctuations prior to their actual delivery. Purchasing
Municipal Obligations on a when-issued basis can involve the additional
risk that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the when-issued commitments will be
established and maintained at the Fund's custodian bank. Purchasing
Municipal Obligations on a when-issued basis when the Fund is fully or
almost fully invested may result in greater potential fluctuation in the
value of the Fund's net assets and its net asset value per share.
Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for
the leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund
and thus reduce available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If
any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Fund so as to adversely affect
Fund shareholders, the Fund would reevaluate its investment objective and
policies and submit possible changes in the
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Fund's structure to
shareholders for their consideration. If legislation were enacted that
would treat a type of Municipal Obligation as taxable, the Fund would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act
of 1940. A "diversified" investment company is required by the
Investment Company Act of 1940 generally to invest, with respect to 75%
of its total assets, not more than 5% of such assets in the securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Code
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of the Fund's total assets be invested in
cash, U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of
any one issuer limited for the purposes of this calculation to an amount
not greater than 5% of the value of the Fund's total assets and (ii) not
more than 25% of the value of its total assets be invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). Since a relatively
high percentage of the Fund's assets may be invested in the obligations of
a limited number of issuers, the Fund's portfolio securities may be more
susceptible to any single economic, political or regulatory occurrence
than the portfolio securities of a diversified investment company.
Investment decisions for the Fund are made independently from those of
other investment companies advised by The Dreyfus Corporation. However,
if such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time
as the Fund, available investments or opportunities for sales will be
allocated equitably to each investment company. In some cases, this
procedure may adversely affect the size of the position obtained for or
disposed of by the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, was formed in 1947 and serves as the Fund's investment adviser.
As of February 1, 1994, The Dreyfus Corporation managed or administered
approximately $79 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall management
of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. The Fund's primary investment officer is
Samuel J. Weinstock. He has held that position since August 31, 1988 and
has been employed by The Dreyfus Corporation since 1987. The Fund's
other investment officers are identified under "Management of the Fund"
in the Fund's Statement of Additional Information. The Dreyfus
Corporation also provides research services for the Fund as well as for
other funds advised by The Dreyfus Corporation through a professional
staff of portfolio managers and security analysts.
For the fiscal year ended December 31, 1993, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily
assume certain expenses of the Fund, which would have the effect of
lowering the overall expense ratio of the Fund and increasing yield to
investors at the time such amounts are waived or assumed, as the case
may be. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume.
The Fund bears certain costs of distributing Fund shares in accordance
with a plan (the "Service Plan") adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940. See "Annual Fund Operating Expenses"
and "Service Plan."
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is
the Fund's Custodian.
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HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a wholly-owned
subsidiary of The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166. The shares it distributes are not deposits or
obligations of The Dreyfus Security Savings Bank, F.S.B. and therefore are
not insured by the Federal Deposit Insurance Corporation.
You can purchase Fund shares through Dreyfus Service Corporation or
certain financial institutions (which may include banks), securities
dealers ("Selected Dealers"), and other industry professionals
(collectively, "Service Agents") that have entered into service
agreements with Dreyfus Service Corporation. Stock certificates are
issued only upon your written request. No certificates are issued for
fractional shares. It is not recommended that the Fund be used as a vehicle
for Keogh, IRA or other qualified plans. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client of
a Service Agent which has made an aggregate minimum initial purchase
for its customers of $2,500. Subsequent investments must be at least
$100. The initial investment must be accompanied by the Fund's Account
Application. For full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries, directors of The
Dreyfus Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing, the minimum initial investment is
$1,000. For full-time or part-time employees of The Dreyfus Corporation
or any of its affiliates or subsidiaries who elect to have a portion of their
pay directly deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to vary further the initial
and subsequent investment minimum requirements at any time.
You may purchase Fund shares by check or wire, or through the Dreyfus
TeleTransfer Privilege described below. Checks should be made payable to
"The Dreyfus Family of Funds." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-
0105. Neither initial nor subsequent investments should be made by third
party check. Purchase orders may be delivered in person only to a Dreyfus
Financial Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the
nearest Dreyfus Financial Center, please call one of the telephone numbers
listed under "General Information."
Wire payments may be made if your bank account is in a commercial bank
that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA#8900052295/Dreyfus
New Jersey Municipal Bond Fund, Inc., for purchase of Fund shares in your
name. The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, please call 1-800-645-6561 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank.
All payments should be made in U.S. dollars and, to avoid fees and delays,
should be drawn only on U.S. banks. A charge will be imposed if any check
used for investment in your account does not clear. Other purchase
procedures may be in effect for clients of certain Service Agents. The
Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank
(11)
of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS "1111.
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in
this Prospectus, and, to the extent permitted by applicable regulatory
authorities, may charge their clients direct fees for Servicing (as defined
under "Service Plan"). These fees would be in addition to any amounts
which might be received under the Service Plan. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard.
Fund shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form is received by the Transfer
Agent. Net asset value per share is determined as of the close of trading
on the floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), on each day the New York Stock Exchange is open for business. Net
asset value per share is computed by dividing the value of the Fund's net
assets (i.e., the value of its assets less liabilities) by the total number of
shares outstanding. The Fund's investments are valued by an independent
pricing service approved by the Board of Directors and are valued at fair
value as determined by the pricing service. The pricing service's
procedures are reviewed under the general supervision of the Board of
Directors. For further information regarding the methods employed in
valuing Fund investments, see "Determination of Net Asset Value" in the
Fund's Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon opening
or reopening an account. See "Dividends, Distributions and Taxes" and the
Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject
you to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE - You may purchase Fund shares
(minimum $500, maximum $150,000 per day) by telephone if you have
checked the appropriate box and supplied the necessary information on the
Fund's Account Application or have filed a Shareholder Services Form with
the Transfer Agent. The proceeds will be transferred between the bank
account designated in one of these documents and your Fund account. Only
a bank account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may
modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TeleTransfer Privilege, you may request a
Dreyfus TeleTransfer purchase of Fund shares by telephoning 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306. Shares
issued in certificate form are not eligible for this Privilege.
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.
EXCHANGE PRIVILEGE - The Exchange Privilege enables you to purchase, in
exchange for shares of the Fund, shares of certain other funds managed or
administered by The Dreyfus Corporation, to the extent such shares are
offered for sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you desire to
use this Privilege, you should consult your Service Agent or Dreyfus
Service Corporation to determine if it is available and whether any
conditions are imposed on its use.
To use this Privilege, you or your Service Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing, by wire or by
telephone. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306. See "How
to Redeem Fund Shares - Procedures." 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 from
Dreyfus Service Corporation. 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
(12)
initial
investment required for the fund into which the exchange is being made.
Telephone exchanges may be made only if the appropriate "YES" box has
been checked on the Account Application, or a separate signed Shareholder
Services Form is on file with the Transfer Agent. 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 in which the exchange is made: Exchange Privilege, Check Redemption
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege,
Dreyfus TELETRANSFER Privilege and the dividend/capital gain
distribution option (except for the Dreyfus Dividend Sweep Privilege)
selected by the investor.
Shares will be exchanged at the next determined net asset value; however,
a sales load may be charged with respect to exchanges into funds sold
with a sales load. If you are exchanging into a fund which charges a sales
load, you may qualify for share prices which do not include the sales load
or which reflect a reduced sales load, if the shares of the fund from which
you are exchanging were: (a) purchased with a sales load, (b) acquired by a
previous exchange from shares purchased with a sales load, or (c) acquired
through reinvestment of dividends or distributions paid with respect to
the foregoing categories of shares. To qualify, at the time of your
exchange you must notify the Transfer Agent or your Service Agent must
notify Dreyfus Service Corporation. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Shareholder Services" in the Statement of Additional Information. No
fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60
days' written notice, to charge shareholders a nominal fee in accordance
with rules promulgated by the Securities and Exchange Commission. The
Fund reserves the right to reject any exchange request in whole or in part.
The Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE - Dreyfus Auto-Exchange Privilege
enables you to invest regularly (on a semi-monthly, monthly, quarterly or
annual basis), in exchange for shares of the Fund, in shares of other funds
in the Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth day of the month according to
the schedule you have selected. Shares will be exchanged at the then-
current net asset value; however, a sales load may be charged with
respect to exchanges into funds sold with a sales load. See "Shareholder
Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or canceled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege
at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The Fund may
charge a service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free
1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER - Dreyfus-AUTOMATIC Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account
designated by you. At your option, the bank account designated by you will
be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on
both days. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form from Dreyfus Service Corporation. You
(13)
may cancel your
participation in this Privilege or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671, and the notification will
be effective three business days following receipt. The Fund may modify
or terminate this Privilege at any time or charge a service fee. No such
fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE - Dreyfus Government
Direct Deposit Privilege enables you to purchase Fund shares (minimum of
$100 and maximum of $50,000 per transaction) by having Federal salary,
Social Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund account. You
may deposit as much of such payments as you elect. To enroll in Dreyfus
Government Direct Deposit, you must file with the Transfer Agent a
completed Direct Deposit Sign-Up Form for each type of payment that you
desire to include in this Privilege. The appropriate form may be obtained
from Dreyfus Service Corporation. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
DREYFUS DIVIDEND SWEEP PRIVILEGE - Dreyfus Dividend Sweep Privilege
enables you to invest automatically dividends or dividends and capital
gain distributions, if any, paid by the Fund in shares of another fund in the
Dreyfus Family of Funds of which you are a shareholder. Shares of the
other fund will be purchased at the then-current net asset value; however,
a sales load may be charged with respect to investments in shares of a
fund sold with a sales load. If you are investing in a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load. If you are investing in a fund
that charges a contingent deferred sales charge, the shares purchased will
be subject on redemption to the contingent deferred sales charge, if any,
applicable to the purchased shares. See "Shareholder Services" in the
Statement of Additional Information. For more information concerning
this Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to request a Dividend Options Form, please
call toll free 1-800-645-6561. You may cancel this Privilege by mailing
written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. To select a new fund after
cancellation, you must submit a new Dividend Options Form. Enrollment in
or cancellation of this Privilege is effective three business days
following receipt. This Privilege is available only for existing accounts
and may not be used to open new accounts. Minimum subsequent
investments do not apply. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
DREYFUS PAYROLL SAVINGS PLAN - Dreyfus Payroll Savings Plan permits
you to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon your employer's direct
deposit program, you may have part or all of your paycheck transferred to
your existing Dreyfus account electronically through the Automated
Clearing House system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an authorization form with your
employer's payroll department. Your employer must complete the reverse
side of the form and return it to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form from the Dreyfus Service Corporation. You may change
the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your
employer, not Dreyfus Service Corporation, The Dreyfus Corporation, the
Fund, the Transfer Agent or any other person, to arrange for transactions
under the Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee currently is
contemplated.
AUTOMATIC WITHDRAWAL PLAN - The Automatic Withdrawal Plan permits
you to request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if you have a $5,000 minimum
account. An application for the Automatic Withdrawal Plan can be obtained
from Dreyfus Service Corporation. There is a service charge of $.50 for
each withdrawal check. The Automatic Withdrawal Plan may be ended at
any time by you, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
(14)
HOW TO REDEEM FUND SHARES
GENERAL - You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
Dreyfus Service Corporation. Service Agents may charge a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request.
The value of the shares redeemed may be more or less than their original
cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and
Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY DREYFUS TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-
AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT
BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR
REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL
REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT
TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT
BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE
CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-
AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT
COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON
SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED
TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon not
less than 45 days' written notice if your account's net asset value is $500
or less and remains so during the notice period.
PROCEDURES - You may redeem shares by using the regular redemption
procedure through the Transfer Agent, using the Check Redemption
Privilege, through the Wire Redemption Privilege, through the Telephone
Redemption Privilege, through the Dreyfus TeleTransfer Privilege or, if
you are a client of a Selected Dealer, through the Selected Dealer. If you
have given your Service Agent authority to instruct the Transfer Agent to
redeem shares and to credit the proceeds of such redemptions to a
designated account at your Service Agent, you may redeem shares only in
this manner and in accordance with the regular redemption procedure
described below. If you wish to use the other redemption methods
described below, you must arrange with your Service Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities.
You may redeem or exchange Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select a
telephone redemption or exchange privilege, you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Service Agent,
and reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of
these other redemption procedures
(15)
may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
REGULAR REDEMPTION - Under the regular redemption procedure, you may
redeem shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests
may be delivered in person only to a Dreyfus Financial Center. THESE
REQUESTS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY
UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call one of the telephone numbers listed under "General
Information." Redemption requests must be signed by each shareholder,
including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program.
If you have any questions with respect to signature-guarantees, please
call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member bank
of the Federal Reserve System in accordance with a written signature-
guaranteed request.
CHECK REDEMPTION PRIVILEGE - You may request on the Account
Application, Shareholder Services Form or by later written request that
the Fund provide Redemption Checks drawn on the Fund's account.
Redemption Checks may be made payable to the order of any person in the
amount of $500 or more. Potential fluctuations in the net asset value of
Fund shares should be considered in determining the amount of the check.
Redemption Checks should not be used to close your account. Redemption
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current date
when you write them. Please do not postdate your Redemption Checks. If
you do, the Transfer Agent will honor, upon presentment, even if presented
before the date of the check, all postdated Redemption Checks which are
dated within six months of presentment for payment, if they are
otherwise in good order. Shares for which certificates have been issued
may not be redeemed by Redemption Check. This Privilege may be modified
or terminated at any time by the Fund or the Transfer Agent upon notice to
shareholders.
WIRE REDEMPTION PRIVILEGE - You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank
if your bank is not a member. To establish the Wire Redemption Privilege,
you must check the appropriate box and supply the necessary information
on the Fund's Account Application or file a Shareholder Services Form
with the Transfer Agent. You may direct that redemption proceeds be paid
by check (maximum $150,000 per day) made out to the owners of record
and mailed to your address. Redemption proceeds of less than $1,000 will
be paid automatically by check. Holders of jointly registered Fund or bank
accounts may have redemption proceeds of only up to $250,000 wired
within any 30-day period. You may telephone redemption requests by
calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-
455-3306. The Fund reserves the right to refuse any redemption request,
including requests made shortly after a change of address, and may limit
the amount involved or the number of such requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund. The
Fund's Statement of Additional Information sets forth instructions for
transmitting redemption requests by wire. Shares for which certificates
have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE __ You may redeem Fund shares
(maximum $150,000 per day) by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The redemption
proceeds will be paid by check and mailed to your address. You may
telephone redemption instructions by calling 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. The Fund reserves the
right to refuse any request made by telephone, including
(16)
requests made
shortly after a change of address, and may limit the amount involved or
the number of telephone redemption requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which the certificates have been issued are not eligible for
this Privilege.
DREYFUS TELETRANSFER PRIVILEGE - You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between your Fund account and the
bank account designated in one of these documents. Only such an account
maintained in a domestic financial institution which is an Automated
Clearing House member may be so designated. Redemption proceeds will be
on deposit in your account at an Automated Clearing House member bank
ordinarily two days after receipt of the redemption request or, at your
request, paid by check (maximum $150,000 per day) and mailed to your
address. Holders of jointly registered Fund or bank accounts may redeem
through the Dreyfus TELETRANSFER Privilege for transfer to their bank
account only up to $250,000 within any 30-day period. The Fund reserves
the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount involved
or the number of such requests. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders.
No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may request
a Dreyfus TELETRANSFER redemption of Fund shares by telephoning 1-800-
221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares issued in certificate form are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER - If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that it
is received by the Transfer Agent by the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m., New York time), the
redemption request will be effective on that day. If a redemption request
is received by the Transfer Agent after such close of trading, the
redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Fund Shares"
for a discussion of additional conditions or fees that may be imposed upon
redemption.
SERVICE PLAN
Under the Service Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays Dreyfus Service
Corporation for advertising, marketing and distributing the Fund's shares
and for servicing Fund shareholders at an annual rate of .25 of 1% of the
value of the Fund's average daily net assets. Under the Service Plan,
Dreyfus Service Corporation may make payments to Service Agents for
administration, for servicing Fund shareholders who are also their clients
and/or for distribution. Dreyfus Service Corporation determines the
amounts to be paid to Service Agents. Service Agents receive such fees in
respect of the average daily value of the Fund's shares owned by
shareholders for whom the Service Agent performs Servicing (as defined
below) or for whom the Service Agent is the dealer or holder of record.
The Service Plan also provides that The Dreyfus Corporation may pay
Service Agents for Servicing out of its management fee, its past profits
or any other source available to it. From time to time, Dreyfus Service
Corporation may defer or waive receipt of fees under the Service Plan
while retaining the ability to be paid by the Fund under the Service Plan
thereafter. The fees payable to Dreyfus Service Corporation under the
Service Plan for advertising, marketing and distributing the Fund's shares
and for payments to Service Agents are payable without regard to actual
expenses incurred.
The Fund also bears the costs of preparing and printing prospectuses and
statements of additional information used for regulatory purposes and for
distribution to existing shareholders. Under the Service Plan, the Fund
bears (a) the costs of preparing, printing and distributing prospectuses
and statements of additional information used for other purposes, and (b)
the costs associated with implementing and operating the Service Plan
(such as costs of printing and mailing service agreements), the aggregate
of such amounts not to exceed in any fiscal year of the Fund the greater of
$100,000 or .005 of 1% of the value of the Fund's average
(17)
daily net assets
for such fiscal year. Each item for which a payment may be made under the
Service Plan may constitute an expense of distributing Fund shares as the
Securities and Exchange Commission construes such term under Rule 12b-1.
Expenses under the Service Plan may be carried forward from one year to
another to the extent they remain unpaid. All or a part of any such amount
carried forward will be paid at such time, if ever, as the Board of
Directors determines to pay it. The Fund will not be charged for interest,
carrying or other finance charges on any unreimbursed distribution or
other expense incurred and not paid in a prior year.
Servicing may include, among other things, one or more of the following:
answering client inquiries regarding the Fund; assisting clients in
changing dividend options, account designations and addresses; performing
subaccounting; establishing and maintaining shareholder accounts and
records; processing purchase and redemption transactions; investing
client cash account balances automatically in Fund shares; providing
periodic statements showing a client's account balance and integrating
such statements with those of other transactions and balances in the
client's other accounts serviced by the Service Agent; arranging for bank
wires; and such other services as the Fund may request, to the extent the
Service Agent is permitted by applicable statute, rule or regulation.
The Glass-Steagall Act and other applicable laws prohibit Federally
chartered or supervised banks from engaging in certain aspects of the
business of issuing, underwriting, selling and/or distributing securities.
Accordingly, banks will be engaged to act as Service Agents only to
perform administrative and shareholder servicing functions. While the
matter is not free from doubt, the Fund's Board of Directors believes that
such laws should not preclude a bank from acting as a Service Agent.
However, judicial or administrative decisions or interpretations of such
laws, as well as changes in either Federal or state statutes or regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, could prevent a bank from continuing to perform all or a part of
its Servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain Fund shareholders and
alternative means for continuing the Servicing of such shareholders would
be sought. In such event, changes in the operation of the Fund might occur
and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being
provided by such bank. The Fund does not expect that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment income on
each day the New York Stock Exchange is open for business. Dividends
usually are paid on the last business day of each month, and are
automatically reinvested in additional Fund shares at net asset value or,
at your option, paid in cash. The Fund's earnings for Saturdays, Sundays
and holidays are declared as dividends on the next business day. If you
redeem all shares in your account at any time during the month, all
dividends to which you are entitled will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities
gains, if any, generally are declared and paid once a year, but the Fund may
make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent
with the provisions of the Investment Company Act of 1940. The Fund will
not make distributions from net realized securities gains unless capital
loss carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Management of the Fund believes that the Fund was a "qualified
investment fund" within the meaning of the New Jersey gross income tax
for calendar year 1993. The primary criteria for constituting a "qualified
investment fund" are that (1) the Fund is an investment company
registered with the Securities and Exchange Commission, which for the
calendar year in which the dividends and distributions (if any) are paid,
has no investments other than interest-bearing obligations, obligations
issued at a discount, and cash and cash items, including receivables, and
financial options, futures and forward contracts, or other similar
financial instruments relating to interest-bearing obligations, obligations
issued at a discount or bond indexes related
(18)
thereto and (ii) at the close of
each quarter of the taxable year, the Fund has not less than 80% of the
aggregate principal amount of all of its investments, excluding financial
options, futures and forward contracts, or other similar financial
instruments related to interest-bearing obligations, obligations issued at
a discount or bond indexes related thereto, cash and cash items, which
cash items shall include receivables, in New Jersey Municipal Obligations,
including obligations of Puerto Rico, the Virgin Islands and other
territories and possessions of the United States and certain other
specified securities. Additionally, a qualified investment fund must
comply with certain continuing reporting requirements.
If the Fund qualifies as a qualified investment fund and the Fund complies
with its reporting obligations, (a) dividends and distributions paid by the
Fund to a New Jersey resident individual shareholder will not be subject
to New Jersey gross income tax to the extent that the dividends and
distributions are attributable to income earned by the Fund as interest on
or gain from New Jersey Municipal Obligations, and (b) gain from the sale
of Fund shares by a New Jersey resident individual shareholder will not
subject to the New Jersey gross income tax. Shares of the Fund are not
subject to property taxation by New Jersey or its political subdivisions.
To the extent that you are subject to state and local taxes outside of New
Jersey, dividends and distributions earned by an investment in the Fund
and gain from the sale of shares in the Fund may represent taxable income.
Except for dividends from Taxable Investments, the Fund anticipates that
substantially all dividends from net investment income paid by the Fund
will not be subject to Federal income tax. Dividends derived from Taxable
Investments, together with distributions from any net realized short-
term securities gains and all or a portion of any gains realized from the
sale or other disposition of certain market discount bonds, paid by the
Fund are subject to Federal income tax as ordinary income, whether or not
reinvested in additional Fund shares. No dividend paid by the Fund will
qualify for the dividends received deduction allowable to certain U.S.
corporations. Distributions from net realized long-term securities gains
of the Fund generally are taxable as long-term capital gains for Federal
income tax purposes if you are a citizen or resident of the United States.
The Code provides that the net capital gain of an individual generally will
not be subject to Federal income tax at a rate in excess of 28%. Under the
Code, interest on indebtedness incurred or continued to purchase or carry
Fund shares which is deemed to relate to exempt-interest dividends is not
deductible.
Although all or a substantial portion of the dividends paid by the Fund may
be excluded by shareholders of the Fund from their gross income for
Federal income tax purposes, the Fund may purchase specified private
activity bonds, the interest from which may be (i) a preference item for
purposes of the alternative minimum tax, (ii) a component of the
"adjusted current earnings" preference item for purposes of the corporate
alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If the Fund
purchases such securities, the portion of the Fund's dividends related
thereto will not necessarily be tax exempt to an investor who is subject
to the alternative minimum tax and/or tax on Social Security benefits and
may cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions
from securities gains, if any, paid during the year. These statements set
forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. These dollar amounts will vary
depending on the size and length of time of your investment in the Fund. If
the Fund pays dividends derived from taxable income, it intends to
designate as taxable the same percentage of the day's dividends as the
actual taxable income earned on that day bears to total income earned on
that day. Thus, the percentage of the dividend designated as taxable, if
any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct, or
that
(19)
such shareholder has not received notice from the IRS of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines a shareholder's TIN is incorrect or if a shareholder
has failed to properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the fiscal
year ended December 31, 1993 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification
is in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income taxes to the extent its earnings
are distributed in accordance with applicable provisions of the Code. The
Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable investment income and capital
gains.
You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield refers to the Fund's annualized net investment income per
share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating
current yield, the amount of net investment income per share during that
30-day period, computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate over a
six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire one-year
period. Calculations of the Fund's current yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield which,
after being taxed at a stated rate, would be equivalent to a stated current
yield calculated as described above.
For purposes of advertising, calculations of average annual total return
and certain calculations of total return will take into account the
performance of Dreyfus New Jersey Tax Exempt Bond Fund, L.P., the assets
and liabilities of which were transferred to the Fund in exchange for
shares of the Fund on August 31, 1988. See "General Information."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased
with an initial payment of $1,000 and that the investment was redeemed
at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return
is expressed as a percentage rate which, if applied on a compounded
annual basis, would result in the redeemable value of the investment at
the end of the period. Advertisements of the Fund's performance will
include the Fund's average annual total return for one, five and ten year
periods, or for shorter time periods depending upon the length of time
during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the net
asset value per share at the beginning of the period. Advertisements may
include the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type
and quality of portfolio securities and is affected by operating expenses.
Performance information, such as
(20)
that described above, may not provide a
basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from CDA
Investment Technologies, Inc., Lipper Analytical Services, Inc., Moody's
Bond Survey Bond Index, Lehman Brothers Municipal Bond Index,
Morningstar, Inc. and other industry publications. The Fund's yield
generally should be higher than that of shorter-term funds (which
generally fluctuate less in price per share).
GENERAL INFORMATION
The Fund was incorporated under Maryland law on January 11, 1988, and
commenced operations on August 31, 1988. On September 14, 1990, the
Fund's name was changed from Dreyfus New Jersey Tax Exempt Bond Fund,
Inc. to Dreyfus New Jersey Municipal Bond Fund, Inc. The Fund is authorized
to issue 500 million shares of Common Stock, par value $.001 per share.
Each share has one vote.
On August 31, 1988, all of the assets and liabilities of Dreyfus New
Jersey Tax Exempt Bond Fund, L.P. (the "Partnership") were transferred to
the Fund in exchange for shares of Common Stock of the Fund pursuant to a
proposal approved at a Meeting of Partners of the Partnership held on
August 17, 1988.
Unless otherwise required by the Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each year
the election of Directors or the appointment of auditors. However,
pursuant to the Fund's By-Laws, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special
meeting of shareholders for the purpose of removing a Director from
office and the holders of at least 25% of such shares may require the Fund
to hold a special meeting of shareholders for any other purpose. Fund
shareholders may remove a Director by the affirmative vote of a majority
of the Fund's outstanding voting shares. In addition, the Board of Directors
will call a meeting of shareholders for the purpose of electing Directors
if, at any time, less than a majority of the Directors then holding office
have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by writing to
the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-
0144, or by calling toll free 1-800-645-6561. In New York City, call 1-
718-895-1206; on Long Island, call 794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
__________________________________________________________________________
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 11, 1994
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus New Jersey Municipal Bond Fund, Inc. (the "Fund"), dated April
11, 1994, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . B-9
Management Agreement . . . . . . . . . . . . . . . . . . . . B-13
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . B-14
Service Plan . . . . . . . . . . . . . . . . . . . . . . . . B-15
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . B-16
Shareholder Services . . . . . . . . . . . . . . . . . . . . B-18
Determination of Net Asset Value . . . . . . . . . . . . . . B-20
Portfolio Transactions . . . . . . . . . . . . . . . . . . . B-21
Dividends, Distributions and Taxes . . . . . . . . . . . . . B-21
Performance Information. . . . . . . . . . . . . . . . . . . B-22
Information About the Fund . . . . . . . . . . . . . . . . . B-23
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . B-24
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . B-27
Financial Statements . . . . . . . . . . . . . . . . . . . . B-36
Report of Independent Auditors . . . . . . . . . . . . . . . B-47
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended
December 31, 1993, computed on a monthly basis, was as follows:
Fitch Moody's Standard
Investors Investors & Poor's
Service, Inc. Service, Inc. Corporation Percentage
("Fitch") or ("Moody's") or ("S&P") of Value
AAA Aaa AAA 42.5%
AA Aa AA 10.2
A A A 23.2
BBB Baa BBB 13.8
BB Ba BB 1.7
F-1(1) MIG 1(1) SP-1(1) .2
F-1 P-1 A-1 .1
Not Rated Not Rated Not Rated 8.3(2)
100.0%
_______________________________
1 Includes tax exempt notes rated in one of the two highest rating
categories by Moody's, S&P or Fitch. These securities, together with
Municipal Obligations rated Baa or better by Moody's or BBB or better
by S&P or Fitch, are taken into account at the time of a purchase for
purposes of determining that the Fund's portfolio meets the 80%
minimum quality standard discussed in the Fund's Prospectus.
2 Included in the Not Rated category are securities comprising 8.3% of
the value of the Fund's assets which, while not rated, have been
determined by the Manager to be of comparable quality to securities
in the following rating categories: Aaa/AAA (1.1%), Aa/AA (.4%),
Baa/BBB (5.4%) and Ba/BB (1.4%).
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity, or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Service Plan, will have the effect
of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. The Fund will
seek to minimize these risks by not investing more than 15% of its total
assets in lease obligations that contain "non-appropriation" clauses, and
by investing only in those "non-appropriation" lease obligations where
(1) the nature of the leased equipment or property is such that its
ownership or use is essential to a governmental function of the
municipality, (2) the lease payments will commence amortization of
principal at an early date resulting in an average life of seven years or
less for the lease obligation, (3) appropriate covenants will be obtained
from the municipal obligor prohibiting the substitution or purchase of
similar equipment if lease payments are not appropriated, (4) the lease
obligor has maintained good market acceptability in the past, (5) the
investment is of a size that will be attractive to institutional
investors, and (6) the underlying leased equipment has elements of
portability and/or use that enhance its marketability in the event
foreclosure on the underlying equipment is ever required. The staff of
the Securities and Exchange Commission currently considers certain lease
obligations to be illiquid. Accordingly, not more than 15% of the value
of the Fund's net assets will be invested in lease obligations that are
illiquid and in other illiquid securities. See "Investment Restriction
No. 11" below.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee
payment arrangements, will not adversely affect the tax exempt status of
the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Fund. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will
be monitored to assure that it is valued at fair value.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent
that the ratings given by Moody's, S&P or Fitch for Municipal Obligations
may change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in
the Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these ratings may be
an initial criterion for selection of portfolio investments, the Manager
also will evaluate these securities.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral.
For purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by
banks whose securities meet the standards for investment by the Fund to be
the equivalent of cash. From time to time, the Fund may return to the
borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan. These conditions may be subject to future
modification.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks,
by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S. Government-
sponsored agencies or instrumentalities, no assurance can be given that it
will always do so, since it is not so obligated by law. The Fund will
invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by the
Fund will not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal Deposit
Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price,
usually not more than one week after its purchase. The Fund's custodian
will have custody of, and will hold in a segregated account, securities
acquired by the Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to
be loans by the Fund. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, the Fund will enter into repurchase
agreements only with domestic banks with total assets in excess of one
billion dollars or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type
in which the Fund may invest, and will require that additional securities
be deposited with it if the value of the securities purchased should
decrease below resale price. The Manager will monitor on an ongoing basis
the value of the collateral to assure that it always equals or exceeds the
repurchase price. Certain costs may be incurred by the Fund in connection
with the sale of the securities if the seller does not repurchase them in
accordance with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or limited. The
Fund will consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements.
Risk Factors
Investing in New Jersey Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
New Jersey Municipal Obligations. These risks result from the financial
condition of the State of New Jersey. Although New Jersey enjoyed a
period of economic growth with unemployment levels below the national
average during the mid-1980s, its economy slowed down well before the
onset of the national recession in July 1990. Reflecting the economic
downturn, the State's unemployment rate rose from 3.6% in the first
quarter of 1989 to 9.1% in April 1993. As a result of New Jersey's recent
fiscal weakness, in July 1991, S&P lowered its rating of the State's
general obligation debt from AAA to AA+. Investors should review Appendix
A which sets forth these and other risk factors.
Lower Rated Bonds. The Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See in the Prospectus
"Description of the Fund--Risk Factors--Lower Rated Bonds" for a
discussion of certain risks and "Appendix B" for a general description of
Moody's, S&P and Fitch ratings of Municipal Obligations. Although ratings
may be useful in evaluating the safety of interest and principal payments,
they do not evaluate the market value risk of these bonds. The Fund will
rely on the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in
the Fund's portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether the Fund should
continue to hold the bond.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These bonds are
considered by S&P, Moody's and Fitch, on balance, as predominantly
speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation and generally
will involve more credit risk than securities in the higher rating
categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues
when necessary to meet the Fund's liquidity needs or in response to a
specific economic event such as a deterioration in the creditworthiness of
the issuer. The lack of a liquid secondary market for certain securities
also may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's portfolio and calculating
its net asset value. Adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable, objective data may be available.
These bonds may be particularly susceptible to economic downturns.
It is likely that an economic recession could severely disrupt the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The
Fund has no arrangement with the Distributor or any other persons
concerning the acquisition of such securities, and the Manager will review
carefully the credit and other characteristics pertinent to such new
issues.
Lower rated zero coupon securities, in which the Fund may invest up
to 5% of its total assets, involve special considerations. The credit
risk factors pertaining to lower rated securities also apply to lower
rated zero coupon bonds. Such zero coupon bonds carry an additional risk
in that, unlike bonds which pay interest throughout the period to
maturity, the Fund will realize no cash until the cash payment date unless
a portion of such securities are sold and, if the issuer defaults, the
Fund may obtain no return at all on its investment. See "Dividends,
Distributions and Taxes."
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 7 below as fundamental policies. These
restrictions cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended
(the "Act")) of the Fund's outstanding voting shares. Investment
restrictions numbered 8 through 12 are not fundamental policies and may be
changed by vote or a majority of Directors at any time. The Fund may not:
1. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) based on 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
the Fund's total assets, the Fund will not make any additional
investments. For purposes of this investment restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes shall not constitute
borrowing.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not prevent the Fund
from investing in Municipal Obligations secured by real estate or
interests therein, or prevent the Fund from purchasing and selling
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Directors.
6. Issue any senior security (as such term is defined in
Section 18(f) of the Act), except to the extent that the activities
permitted in Investment Restrictions numbered 2, 3 and 10 may be deemed to
give rise to a senior security.
7. Sell securities short or purchase securities on margin, but the
Fund may make margin deposits in connection with transactions in options,
forward contracts, futures contracts, including those relating to indexes,
and options on futures contracts or indexes.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options
or as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to
the extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure borrowings for temporary or
emergency purposes and to the extent related to the deposit of assets in
escrow in connection with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures
contracts, including those related to indexes, and options on futures
contracts or indexes.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described in the Fund's Prospectus, and floating and
variable rate demand obligations as to which the Fund cannot exercise the
demand feature described in the Fund's Prospectus on less than seven days'
notice and as to which there is no secondary market) if, in the aggregate,
more than 15% of its net assets would be so invested.
12. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry." If a percentage restriction is adhered to at the time
of investment, a later increase or decrease in percentage resulting from a
change in values or assets will not constitute a violation of such
restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
GORDON J. DAVIS, Director. Since 1983, senior partner with the law firm
of Lord Day & Lord, Barrett Smith. Former Commissioner of Parks and
Recreation for the City of New York from 1978-1983. He is also a
Director of Consolidated Edison, a utility company, and Phoenix Home
Life Insurance Company and a member of various other corporate and
not-for-profit boards. His address is 241 Central Park West, New
York, New York 10024.
*DAVID P. FELDMAN, Director. Corporate Vice President-Investment
Management of AT&T. He is also a trustee of Corporate Property
Investors, a real estate investment company. His address is One Oak
Way, Berkeley Heights, New Jersey 07922.
LYNN MARTIN, Director. Holder of the Davee Chair at the J.L. Kellogg
Graduate School of Management, Northwestern University. During the
Spring Semester 1993, she was a Visiting Fellow at the Institute of
Policy, Kennedy School of Government, Harvard University. Ms. Martin
also is a consultant to the international accounting firm of Deloitte
& Touche, and chairwoman of its Council on the Advancement of Women.
From January 1991 through January 1993, Ms. Martin served as
Secretary of the United States Department of Labor. From 1981 to
1991, she was United States Congresswoman for the State of Illinois.
She also is a Director of Harcout General Corporation, a publishing,
insurance and retailing company, Ameritech Corporation Corporation, a
telecommunications and information company, and Ryder Systems
Incorporated, a transportation company. Her address is 3750 Lake
Shore Drive, Chicago, Illinois 60613.
*EUGENE McCARTHY, Director. Writer and columnist; former Senator from
Minnesota from 1958-1970. His address is P.O. Box 22, Woodville,
Virginia 22749.
DANIEL ROSE, Director. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. He is also chairman of the Housing Committee of
The Real Estate Board of New York, Inc., and a trustee of Corporate
Property Investors, a real estate investment company. His address is
c/o Rose Associates, Inc., 380 Madison Avenue, New York, New York
10017.
*HOWARD STEIN, Director. Chairman of the Board and Chief Executive
Officer of the Manager, Chairman of the Board of the Distributor and
an officer, director, trustee or general partner of other investment
companies advised or administered by the Manager. His address is 200
Park Avenue, New York, New York 10166.
SANDER VANOCUR, Director. Since January 1992, Mr. Vanocur has been the
President of Old Owl Communications, a full-service communications
firm, and since November 1989, he has served as a Director of the
Damon Runyon-Walter Winchell Cancer Research Fund. From June 1986 to
December 1991, he was a Senior Correspondent of ABC News and, from
October 1986 to December 1991, he was Anchor of the ABC News program
"Business World," a weekly business program on the ABC television
network. Mr. Vanocur joined ABC News in 1977. His address is 2928 P
Street, N.W., Washington, D.C. 20007.
REX WILDER, Director. Financial Consultant. His address is 290 Riverside
Drive, New York, New York 10025.
The "non-interested" Directors, Mr. Feldman and Senator McCarthy are
also Managing General Partners of Dreyfus Global Growth, L.P. (A Strategic
Fund) and Dreyfus Strategic Growth, L.P., trustees of Dreyfus Florida
Intermediate Municipal Bond Fund,
Dreyfus Florida Municipal Money Market Fund, Dreyfus New York Insured Tax
Exempt
Bond Fund, Dreyfus Investors GNMA Fund, Dreyfus 100% U.S. Treasury
Intermediate
Term Fund, Dreyfus 100% U.S. Treasury Long Term Fund, Dreyfus 100% U.S.
Treasury Money Market Fund and Dreyfus 100% U.S. Treasury Short Term Fund,
and directors of Premier Global Investing. Messrs. Feldman, Rose and
Vanocur are also trustees of Dreyfus BASIC U.S. Government Money Market
Fund, Dreyfus California Intermediate Municipal Bond Fund, Dreyfus
Connecticut Intermediate Municipal Bond Fund, Dreyfus Massachusetts
Intermediate Municipal Bond Fund, Dreyfus New Jersey Intermediate
Municipal Bond Fund, Dreyfus Strategic Income and Dreyfus Strategic
Investing, and directors of Dreyfus Strategic Governments Income, Inc. and
FN Network Tax Free Money Market Fund, Inc. Mr. Feldman is also a
director of Dreyfus Edison Electric Index Fund, Inc., Dreyfus Life and
Annuity Index Fund, Inc., Dreyfus-Wilshire Target Funds, Inc., Peoples
Index Fund, Inc. and Peoples S&P MidCap Index Fund, Inc.
For so long as the Fund's plan described in the section captioned
"Service Plan" remains in effect, the Directors of the Fund who are not
"interested persons" of the Fund, as defined in the Act, will be selected
and nominated by the Directors who are not "interested persons" of the
Fund.
The Fund does not pay any remuneration to its officers and Directors
other than fees and expenses to Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $25,963 for fiscal 1993 for all such Directors
as a group.
Officers of the Fund
RICHARD J. MOYNIHAN, President and Investment Officer. An employee of the
Manager and an officer, director or trustee of other investment
companies advised or administered by the Manager.
A. PAUL DISDIER, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. Since February
1988, an employee of the Manager and an officer of other investment
companies advised and administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised or
administrated by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
MARK N. JACOBS, Vice President. Secretary and Deputy General Counsel of
the Manager and an officer of other investment companies advised or
administered by the Manager.
JEFFREY N. NACHMAN, Vice President-Financial. Vice President--Mutual Fund
Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by the
Manager.
DANIEL C. MACLEAN, Secretary. Vice President and General Counsel of the
Manager, Secretary of the Distributor and an officer of other
investment companies advised or administered by the Manager.
GREGORY GRUBER, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the
Manager, the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's Common Stock outstanding on March 3, 1994.
The following persons are also officers and/or directors of the
Manager: Julian M. Smerling, Vice Chairman of the Board of Directors;
Joseph S. DiMartino, President, Chief Operating Officer and a director;
Alan M. Eisner, Vice President and Chief Financial Officer; David W.
Burke, Vice President and Chief Administrative Officer; Robert F. Dubuss,
Vice President; Elie M. Genadry, Vice President - Institutional Sales;
Peter A. Santoriello, Vice President; Robert H. Schmidt, Vice President;
Kirk V. Stumpp, Vice President - New Product Development; Philip L. Toia,
Vice President - Fixed-Income Research; Katherine C. Wickham, Assistant
Vice President; Maurice Bendrihem, Controller; and Mandell L. Berman,
Alvin E. Friedman, Lawrence M. Greene, Abigail Q. McCarthy and David B.
Truman, directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated January 21, 1988 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested
persons" (as defined in the Act) of the Fund or the Manager, by vote cast
in person at a meeting called for the purpose of voting on such approval.
The Agreement was approved by shareholders at a meeting held on August 17,
1988 and was last approved by the Board of Directors of the Fund,
including a majority of the Directors who are not "interested persons" of
any party to the Agreement, at a meeting held on November 9, 1993. The
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of the Fund's
outstanding voting shares, or, upon not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the Act).
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the
Fund's Board of Directors. The Manager is responsible for investment
decisions, and provides the Fund with Investment Officers who are
authorized by the Board of Directors to execute purchases and sales of
securities. The Fund's Investment Officers are A. Paul Disdier, Karen M.
Hand, Stephen C. Kris, Richard J. Moynihan, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the
Fund as well as for other funds advised by the Manager. All purchases and
sales are reported for the Directors' review at the meeting subsequent to
such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
maintaining corporate existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports and
corporate meetings and any extraordinary expenses. Pursuant to the Fund's
Service Plan, the Fund bears expenses for advertising, marketing and
distributing the Fund's shares and servicing shareholder accounts, and
also bears the cost of preparing and printing prospectuses and statements
of additional information and costs associated with implementing and
operating such plan. See "Service Plan."
The Manager pays the salaries of all officers and employees employed
by both it and the Fund, maintains office facilities, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services.
The Manager also may make such advertising and promotional expenditures,
using its own resources, as it from time to time deems appropriate.
As compensation for the Manager's services, the Fund has agreed to
pay the Manager a monthly management fee at the annual rate of .60 of 1%
of the value of the Fund's average daily net assets. The management fees
for the fiscal years ended December 31, 1991, 1992 and 1993 amounted to
$2,598,341, $3,432,689 and $4,137,876, respectively.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed 1-1/2% of the value of the Fund's average net assets
for the fiscal year, the Fund may deduct from the payment to be made to
the Manager under the Agreement, or the Manager will bear, such excess
expense. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the
other funds in the Dreyfus Family of Funds and for certain other
investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 A.M. and 4:00 P.M., New York time,
on any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to
use the Dreyfus TeleTransfer Privilege, the initial payment for purchase
of Fund shares must be drawn on, and redemption proceeds paid to, the same
bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of Fund
Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
SERVICE PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Service
Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the Act provides, among other things, that an investment
company may bear expenses of distributing its shares only pursuant to a
plan adopted in accordance with the Rule. Because some or all of the fees
paid for advertising or marketing the Fund's shares and the fees paid to
the Distributor and to certain financial institutions (which may include
banks), securities dealers and other financial industry professionals
(collectively, "Service Agents") could be deemed to be payment of
distribution expenses, the Fund's Board of Directors has adopted such a
plan (the "Plan"). The Fund's Board of Directors believes that there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders. In some states, banks or other financial institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Board of Directors for their review. In addition, the Plan provides that
it may not be amended to increase materially the costs which the Fund may
bear for distribution pursuant to the Plan without shareholder approval
and that other material amendments of the Plan must be approved by the
Board of Directors, and by the Directors who are not "interested persons"
(as defined in the Act) of the Fund or the Manager and have no direct or
indirect financial interest in the operation of the Plan or in the related
service agreements, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plan and the related service
agreements are subject to annual approval by such vote of the Directors
cast in person at a meeting called for the purpose of voting on the Plan.
The Plan was approved by shareholders at a meeting held on August 17, 1988
and was last approved by the Board of Directors at a meeting held on
November 9, 1993. The Plan may be terminated at any time by vote of the
holders of a majority of the Directors who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Plan or in any of the related service agreements or by vote of a majority
of the Fund's shares. Any service agreement may be terminated without
penalty, at any time, by such vote of the Directors or, upon not more than
60 days' written notice to the Service Agent, by vote of the holders of a
majority of the Fund's shares, or, upon 15 days' notice, by the
Distributor. Each service agreement will terminate automatically in the
event of its assignment (as defined in the Act).
During the fiscal year ended December 31, 1993, $1,734,949 was
chargeable to the Fund under the Plan, of which $1,724,115 was for
advertising, marketing and distributing the Fund's shares and for
servicing Fund shareholders and $10,834 for printing and distributing
prospectuses. Pursuant to undertakings in effect during this period, the
Manager waived $1,724,115 of such amount.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only
to the registered owner(s) of the account and only to the address of
record. The Account Application or later written request must be manually
signed by the registered owner(s). Checks may be made payable to the
order of any person in an amount of $500 or more. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the Fund to redeem a sufficient number of
full and fractional shares in the investor's account to cover the amount
of the Check. Dividends are earned until the Check clears. After
clearance, a copy of the Check will be returned to the investor.
Investors generally will be subject to the same rules and regulations that
apply to checking accounts, although election of this Privilege creates
only a shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or a representative of the investor's Service Agent acting on
the investor's behalf, and reasonably believed by the Transfer Agent to be
genuine. Ordinarily, the Fund will initiate payment for shares redeemed
pursuant to this Privilege on the next business day after receipt by the
Transfer Agent of a redemption request in proper form. Redemption
proceeds will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account
Application or Shareholder Services Form. Redemption proceeds, if wired,
must be in the amount of $1,000 or more and will be wired to the
investor's account at the bank of record designated in the investor's file
at the Transfer Agent, if the investor's bank is a member of the Federal
Reserve System, or to a correspondent bank if the investor's bank is not a
member. Fees ordinarily are imposed by such bank and usually borne by the
investor. Immediate notification by the correspondent bank to the
investor's bank is necessary to avoid a delay in crediting the funds to
the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
________________ ________________
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have also selected the Dreyfus TeleTransfer Privilege, any request
for a wire redemption will be effected as a Dreyfus TeleTransfer
transaction through the Automated Clearing House ("ACH") system unless
more prompt transmittal specifically is requested. Redemption proceeds
will be on deposit in the investor's account at an ACH member bank
ordinarily two business days after receipt of the redemption request. See
"Purchase of Fund Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Signature Program ("STAMP") and the Stock Exchanges
Medallion Program. Guarantees must be signed by an authorized signatory
of the guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians and may
accept other suitable verification arrangements from foreign investors,
such as consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on
the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors reserves the right to make payments in
whole or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In such event,
the securities would be valued in the same manner as the Fund's portfolio
is valued. If the recipient sold such securities, brokerage charges would
be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities
and Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Exchange Privilege. Shares of other funds purchased by exchange will
be purchased on the basis of relative net asset value per share as
follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To use this Privilege, an investor, or the investor's Service Agent
acting on his behalf, must give exchange instructions to the Transfer
Agent in writing, by wire or by telephone. Telephone exchanges may be
made only if the appropriate "YES" box has been checked on the Account
Application or a separate signed Shareholder Services Form is on file with
the Transfer Agent. By using this Privilege, the investor authorizes the
Transfer Agent to act on telephonic, telegraphic or written exchange
instructions from any person representing himself or herself to be the
investor or a representative of the investor's Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate
form are not eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange permits an
investor to purchase, in exchange for shares of the Fund, shares of
another fund in the Dreyfus Family of Funds. This Privilege is available
only for existing accounts. Shares will be exchanged on the basis of
relative net asset value as set forth under "Exchange Privilege" above.
Enrollment in or modification or cancellation of this Privilege is
effective three business days following notification by the investor. An
investor will be notified if his account falls below the amount designated
to be exchanged under this Privilege. In this case, an investor's account
will fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange transaction. Shares
held under IRA and other retirement plans are eligible for this Privilege.
Exchanges of IRA shares may be made between IRA accounts and from regular
accounts to IRA accounts, but not from IRA accounts to regular accounts.
With respect to all other retirement accounts, exchanges may be made only
among those accounts.
The Exchange Privilege and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the
fund being acquired may legally be sold. Shares may be exchanged only
between accounts having identical names and other identifying
designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege or Dreyfus Auto
Exchange Privilege may be modified or terminated at any time upon notice
to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep Privilege. Dreyfus Dividend Sweep Privilege
allows investors to invest on payment date their dividends or dividends
and capital gain distributions, if any, from the Fund in shares of another
fund in the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of other funds purchased pursuant to this Privilege
will be purchased on the basis of relative net asset value per share as
follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with
a sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
by an independent pricing service (the "Service") approved by the Board of
Directors. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side
of the market, these investments are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation
of the market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general
market conditions. The Service may employ electronic data processing
techniques and/or a matrix system to determine valuations. The Service's
procedures are reviewed by the Fund's officers under the general
supervision of the Board of Directors. Expenses and fees, including the
management fee (reduced by the expense limitation, if any) and fees
pursuant to the Service Plan, are accrued daily and are taken into account
for the purpose of determining the net asset value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which
it appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked
price. No brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's
Investment Officers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to
supplement its own research and analysis with the views and information of
other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six
months (or such shorter period as the Internal Revenue Service may
prescribe by regulation) and has received an exempt-interest dividend with
respect to such shares, any loss incurred on the sale of such shares will
be disallowed to the extent of the exempt-interest dividend received. In
addition, any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a distribution would be a return
on investment in an economic sense although taxable as stated in
"Dividends, Distributions and Taxes" in the Prospectus.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of any
gains realized from the sale or other disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of
the Code.
Investment by the Fund in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, the
Fund could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the Fund may have to dispose
of securities to generate cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The Fund's current yield for the 30-day period ended December 31,
1993 was 4.68%, which reflects the absorption of expenses pursuant to
expense limitations in effect. See "Management of the Fund" in the
Prospectus. Had expenses not been absorbed the Fund's current yield for
the same period would have been 4.43%. Current yield is computed pursuant
to a formula which operates as follows: The amount of the Fund's expenses
accrued for the 30-day period (net of reimbursements) is subtracted from
the amount of the dividends and interest earned (computed in accordance
with regulatory requirements) by the Fund during the period. That result
is then divided by the product of: (a) the average daily number of shares
outstanding during the period that were entitled to receive dividends, and
(b) the net asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be declared
as a dividend shortly thereafter. The quotient is then added to 1, and
that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
Based upon a combined 1994 Federal and State of New Jersey personal
income tax rate of 43.62%, the Fund's tax equivalent yield for the 30-day
period ended December 31, 1993 was 8.30%, which reflects the absorption of
expenses pursuant to expense limitations in effect. See "Management of
the Fund" in the Prospectus. Had expenses not been absorbed the Fund's
tax equivalent yield for the same period would have been 7.86%. Tax
equivalent yield is computed by dividing that portion of the current yield
(calculated as described above) which is tax exempt by 1 minus a stated
tax rate and adding the quotient to that portion, if any, of the yield of
the Fund that is not tax exempt.
The tax equivalent yield noted above represents the application of
the highest Federal and New Jersey State marginal personal income tax
rates presently in effect. For Federal income tax purposes, a 39.60% tax
rate has been used. For New Jersey income tax purposes, a 6.65% tax rate
has been used. The tax equivalent yield figure, however, does not include
the potential effect of any local (including, but not limited to, county,
district or city) taxes, including applicable surcharges. In addition,
there may be pending legislation which could affect such stated tax rates
or yields. Each investor should consult its tax adviser, and consider its
own factual circumstances and applicable tax laws, in order to ascertain
the relevant tax equivalent yield.
The Fund's average annual total return for the 1, 5 and 6.153 year
periods ended December 31, 1993 was 12.97%, 10.13% and 10.66%,
respectively. Average annual total return is calculated by determining
the ending redeemable value of an investment purchased with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and distributions), dividing by the amount of
the initial investment, taking the "n"th root of the quotient (where "n"
is the number of years in the period) and subtracting 1 from the result.
The Fund's total return for the period November 6, 1987 to December
31, 1993 was 86.54%. Total return is calculated by subtracting the amount
of the Fund's net asset
value per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and
dividing the result by the net asset value per share at the beginning of
the period.
From time to time, the Fund may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not representative of
the Fund's past or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, and actual or proposed tax legislation. From time to time,
advertising materials for the Fund may also refer to statistical or other
information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company
Institute, and to Morningstar ratings and related analyses supporting the
rating.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
nonassessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
portfolio securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of Common Stock being sold pursuant to the Fund's
Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the
Fund.
APPENDIX A
RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS.
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn
from official statements relating to securities offerings of the State of
New Jersey and various local agencies available as of the date of this
Statement of Additional Information. While the Fund has not independently
verified this information, it has no reason to believe that such
information is not correct in all material respects.
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's principal
manufacturing industries produce chemicals, pharmaceutical, electrical
equipment and instruments, machinery, printing and food products. Other
economic activities include services, wholesale and retail trade,
insurance, tourism, petroleum refining and truck farming.
While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. Initially, this
slowdown was an expected response to the State's tight labor market and
the decrease in the number of persons entering the labor force. Late in
the decade, a decline in construction demand and in the rate of growth in
consumer spending as well as continued softness in the State's
manufacturing sector set the stage for the current recession in New
Jersey. The State's average annual unemployment rate was below the
national average from 1981 through 1990. In 1988, unemployment dropped to
its lowest level since 1969, averaging 3.8% for the year. Unemployment,
however, began to rise during 1989 and 1990, averaging 5.0% of the labor
force in New Jersey and 5.5% nationally in 1990. By August 1992, the
State unemployment rate moved above the national average for the first
time in a decade, registering 9.4%. In April 1993, the State unemployment
rate was 9.1%. As a result of the State's fiscal weakness, S&P, in July
1991, lowered its rating of the State's general obligation debt from AAA
to AA+.
The fiscal 1992 budget gap of $1.5 billion was closed through a
combination of one-time and recurring actions. The State's General Fund
ended fiscal 1992 with an undesignated fund balance of $836 million.
The fiscal year 1993 Appropriations Act forecasts Sales and Use Tax
collections of $3.647 billion, a decrease from receipts of $4.038 billion
for fiscal year 1992, Gross Income Tax collections of $4.35 billion, an
increase from receipts of $4.102 billion for fiscal year 1992, and
Corporate Business Tax collections of $1.06 million, an increase from
receipts of $910.7 million for fiscal year 1992.
The State appropriated approximately $12.639 billion and $14.960
billion for fiscal 1991 and 1992, respectively. Estimated 1993 and 1994
State appropriations total $14.770 billion and $15.650 billion,
respectively. Of the $14.770 billion appropriated in fiscal year 1993
from the General Fund, the Property Tax Relief Fund, the Casino Control
Fund and the Casino Revenue Fund, $6.290 billion (42.6%) is appropriated
for State aid to local governments, $3.390 billion (22.9%) is appropriated
for grants-in-aid (payments to individuals or public or private agencies
for benefits to which a recipient is entitled by law or for the provision
of service on behalf of the State), $4.478 billion (30.4%) for direct
State services, $444.3 million (3.0%) for debt service on State general
obligation bonds and $167.5 million (1.1%) for capital construction.
As of December 31, 1992, the outstanding general obligation bonded
indebtedness for the State was approximately $3.6 billion. In fiscal year
1992, the State initiated a program under which it issued tax and revenue
anticipation notes to aid in providing effective cash flow management to
fund imbalances which occur in the collection and disbursement of the
General Fund and Property Tax Relief Fund revenues. On October 1, 1992,
the State issued $1.6 billion of tax and revenue anticipation notes.
Such tax and revenue anticipation notes do not constitute a general
obligation of the State or a debt or liability within the meaning of the
State Constitution. Such notes constitute special obligations of the
State payable solely from moneys on deposit in the General Fund and
Property Tax Relief Fund which are attributable to the State's fiscal year
1993 and legally available for such payment.
APPENDIX B
Description of S&P's, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
A
Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for
payment of debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management
performance appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions
are no more than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+)
designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days.
A
Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while other factors
of major importance in bond risk, long-term secular trends for example,
may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment
grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the profitability
of continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable business
and economic activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the lowest
potential for recovery on these bonds and D represents the lowest
potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
13-36 months or the DDD, DD, or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
MUNICIPAL BONDS--99.5% PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
NEW JERSEY--85.0%
Atlantic County Utilities Authority, Solid Waste System Revenue:
7%, 3/1/2008....................................................................... $ 4,250,000 $ 4,618,305
7.125%, 3/1/2016................................................................... 6,650,000 7,088,434
Bedminster Township Board of Education, COP 7.125%, 9/1/2010......................... 2,500,000 2,732,600
Bergen County Utilities Authority, Water Pollution Control System Revenue
5.50%, 12/15/2015 (Insured; FGIC).................................................. 5,000,000 5,101,350
Bordentown Sewer Authority, Revenue:
6%, 12/1/2020 (Insured; MBIA)...................................................... 2,800,000 3,099,684
6.80%, 12/1/2025 (Insured; MBIA)................................................... 3,000,000 3,386,970
City of Camden:
Zero Coupon, 2/15/2010 (Insured; FSA).............................................. 2,500,000 1,075,650
Zero Coupon, 2/15/2012 (Insured; FSA).............................................. 4,585,000 1,748,765
Camden County Municipal Utilities Authority, Sewer Revenue
8.25%, 12/1/2017 (Insured; FGIC)................................................... 8,480,000 9,892,259
Camden County Pollution Control Financing Authority, Solid Waste Disposal and Resource
Recovery System Revenue:
7.50%, 12/1/2009................................................................. 3,335,000 3,612,972
7.50%, 12/1/2010................................................................. 13,000,000 14,083,550
Cherry Hill Township, Refunding 6.30%, 6/1/2012...................................... 4,000,000 4,485,640
Delaware River and Bay Authority, Revenue
5%, 1/1/2017....................................................................... 5,000,000 4,912,750
East Orange:
Zero Coupon, 8/1/2009 (Insured; FSA)............................................... 1,000,000 445,930
Zero Coupon, 8/1/2010 (Insured; FSA)............................................... 4,240,000 1,780,842
Zero Coupon, 8/1/2011 (Insured; FSA)............................................... 2,500,000 989,700
Elk Township Board of Education, COP 7.375%, 12/1/2009 (Insured; MBIA)............... 2,000,000 2,300,360
Essex County Improvement Authority, Lease Revenue:
7%, 12/1/2020 (Insured; AMBAC)..................................................... 4,000,000 4,736,680
Refunding 5.50%, 12/1/2020 (Insured; AMBAC)........................................ 2,500,000 2,548,025
Evesham Township Board of Education, COP, Lease Purchase Agreement
6.875%, 9/1/2011 (Insured; FGIC)................................................... 3,250,000 3,705,163
Gloucester Township Municipal Utilities Authority, Revenue
5.65%, 3/1/2018 (Insured; AMBAC)................................................... 2,730,000 2,964,944
Hoboken, Union City and Weehawken Sewage Authority, Sewer Revenue
7.25%, 8/1/2019 (Insured; MBIA).................................................... 7,195,000 8,442,037
Howell Township, Refunding 6.80%, 1/1/2014 (Insured; FGIC)........................... 5,000,000 5,661,900
Hudson County Improvement Authority:
Facility Lease Revenue 8.739%, 12/1/2025 (Insured; FGIC) (a,b)..................... 13,835,000 15,529,788
Multi-Family Housing Revenue (Conduit Financing - Observer Park Project)
6.90%, 6/1/2022 (Insured; FNMA).................................................. 4,190,000 4,488,202
Jersey City:
Zero Coupon, 5/15/2008 (Insured; FSA).............................................. 3,500,000 1,699,530
Zero Coupon, 5/15/2010 (Insured; FSA).............................................. 4,745,000 2,047,467
6.60%, 5/15/2011 (Insured; FSA).................................................. 6,550,000 7,292,967
Keansburg Board of Education, COP 8%, 11/1/2014...................................... 7,750,000 9,407,570
Manchester Township Board of Education, COP 7.20%, 12/15/2009 (Insured; MBIA)........ 4,175,000 4,851,016
Mercer County Improvement Authority, Revenue, Refunding:
Insured Solid Waste (Resource Recovery Project) 6.70%, 4/1/2013 (Insured; FGIC).... 11,000,000 12,380,720
Solid Waste (Resource Recovery Project) 6.80%, 4/1/2005............................ 6,150,000 6,798,025
Middlesex County Utilities Authority, Sewer Revenue 6%, 8/15/2015 (Insured; AMBAC)... 1,500,000 1,562,986
Monmouth County Improvement Authority, Revenue (Asbury Park Project)
7.375%, 12/1/2009.................................................................. 3,000,000 3,363,960
Monroe Township Municipal Utilities Authority, Water and Sewer System Revenue
6.875%, 2/1/2017 (Insured; MBIA)................................................... 5,000,000 5,785,900
Borough of Moonachie Board of Education, COP
6.375%, 3/1/2014 (Lease Purchase Agreement; Lamington Funding Corp.)............... 3,775,000 3,951,179
Mount Holly Sewage Authority, Sewer Revenue, Refunding 6%, 12/1/2016 (Insured; MBIA). 1,500,000 1,574,355
New Brunswick Housing and Urban Development Authority, Lease Revenue
5.75%, 7/1/2024 (Insured; MBIA).................................................... 3,500,000 3,642,730
New Brunswick Parking Authority, Revenue, Refunding:
7.125%, 9/1/2015 (Insured; FGIC)................................................... 2,000,000 2,330,140
6.50%, 9/1/2019 (Insured; FGIC).................................................... 2,000,000 2,242,300
New Jersey Economic Development Authority, Revenue:
(Community Mental Health Loan Program) 8.50%, 7/1/2017............................. 7,705,000 8,414,939
District Heating and Cooling Revenue (Trigen - Trenton Project):
6.10%, 12/1/2004................................................................. 3,375,000 3,458,093
6.20%, 12/1/2007................................................................. 2,725,000 2,847,979
Economic Development:
(American Airlines Inc. Project) 7.10%, 11/1/2031................................ 2,855,000 3,125,511
First Mortgage (The Evergreens) 9.25%, 10/1/2022................................. 5,000,000 5,384,000
First Mortgage Gross (Mega Care Inc. Project) 8.625%, 8/1/2007................... 5,000,000 5,901,100
Gas Facilities (Elizabethtown Gas Co. Project) 6.75%, 10/1/2021.................. 1,350,000 1,460,282
Refunding:
(Manchester Manor Project) 6.70%, 8/1/2022 (Insured; GNMA)..................... 2,500,000 2,711,175
(Stolt Terminals Inc. Project) 10.50%, 1/15/2018............................... 9,440,000 .. 11,427,498
(Tevco Inc. Project) 8.125%, 10/1/2009 (LOC; Credit Lyonnais)(c)............... 2,500,000 2,809,275
Waste Paper Recycling (Marcal Paper Mills Inc. Project) 8.50%, 2/1/2010.......... 5,850,000 7,107,399
Water Facilities:
(American Water Co. Inc. Project) 6.50%, 4/1/2022 (Insured; FGIC).............. 34,800,000 38,602,596
(Elizabeth Water Project):
6.60%, 8/1/2021.............................................................. 6,010,000 6,514,179
6.70%, 8/1/2021.............................................................. 3,965,000 4,321,969
(Hackensack Water Project) 7%, 10/1/2017....................................... 1,500,000 1,639,335
New Jersey Educational Facilities Authority, Revenue:
(New Jersey Institute of Technology) 6.90%, 7/1/2009 (Insured; MBIA)............... 2,000,000 2,247,220
(Seton Hall University Project):
6.85%, 7/1/2019 (Insured; MBIA).................................................. 9,050,000 10,137,629
7%, 7/1/2021..................................................................... 3,500,000 3,876,740
(Trenton State College):
7.125%, 7/1/2009 (Insured; AMBAC)................................................ 4,000,000 4,660,880
Refunding 6%, 7/1/2019 (Insured; AMBAC).......................................... 7,000,000 7,554,470
(Union County College) 7.25%, 7/1/2009............................................. 2,100,000 2,390,493
New Jersey Health Care Facilities Financing Authority, Revenue:
(Allegany Health System - Our Lady of Lourdes Medical Center):
5.125%, 7/1/2013 (Insured; MBIA)................................................. 4,000,000 3,973,120
5.20%, 7/1/2018 (Insured; MBIA).................................................. 4,250,000 4,226,668
(Bridgeton and Millville Hospitals):
7.875%, 7/1/2010 (Insured; MBIA)................................................. 1,250,000 1,453,938
8%, Series C 7/1/2013 (Insured; MBIA)............................................ 1,735,000 2,027,642
8%, Series D 7/1/2013 (Insured; MBIA)............................................ 645,000 753,792
(Centrastate Medical Center) 6%, 7/1/2021 (Insured; AMBAC)......................... 7,000,000 7,357,420
(Chilton Memorial Hospital) 5%, 7/1/2013........................................... 2,375,000 2,247,605
(Community Medical Center) 6%, 7/1/2019 (Insured; MBIA)............................ 5,870,000 6,112,020
(Community Memorial Hospital Association) 8%, 7/1/2014 (Insured; MBIA)............. 2,500,000 2,858,525
(Deborah Heart and Lung Center Issue):
6.20%, 7/1/2013.................................................................. 1,250,000 1,299,975
6.30%, 7/1/2023.................................................................. 2,700,000 2,798,253
(Elmer Community Hospital) 7.90%, 2/1/2007 (Insured; FHA).......................... 3,100,000 3,485,795
Health System (Franciscan Sisters of the Poor - Health Systems, Inc., Saint Mary's
Hospital) 5.875%, 7/1/2012 (Insured; MBIA)....................................... 3,250,000 3,223,805
(Hunterdon Medical Center) 7%, 7/1/2020 (Insured; AMBAC)........................... 5,000,000 5,757,250
(Kennedy Memorial Hospital University Medical Center):
8.375%, 7/1/2010................................................................. 2,065,000 2,471,020
6%, 7/1/2020..................................................................... 4,115,000 4,204,584
(Kimball Medical Center) 8%, 7/1/2013.............................................. 13,000,000 14,644,370
(Medical Center of Ocean County) 6.75%, 7/1/2020 (Insured; FSA).................... 2,000,000 2,253,680
(Newcomb Medical Center) 7.875%, 7/1/2003.......................................... 2,795,000 3,159,077
(Overlook Hospital Association) 6%, 7/1/2000 (Insured; FGIC)....................... 250,000 268,573
(Palisades Medical Center):
7.50%, 7/1/2006.................................................................. 2,600,000 2,613,078
7.60%, 7/1/2021.................................................................. 2,400,000 2,410,296
(Princeton Medical Center) 7%, 7/1/2022 (Insured; AMBAC)........................... 3,375,000 3,886,144
(Refunding - Atlantic City Medical Center) 6.80%, 7/1/2011......................... 2,500,000 2,772,375
(Saint Barnabas' Medical Center) 6%, 7/1/2023 (Insured; MBIA)...................... 5,250,000 5,466,458
(Saint Peter's Medical Center) 6%, 7/1/2021 (Insured; MBIA)........................ 1,500,000 1,654,410
(Society of the Valley Hospital) 6%, 7/1/2014 (Insured; MBIA)...................... 2,500,000 2,614,025
(Zurbrugg Memorial Hospital) 8.50%, 7/1/2012....................................... 9,565,000 10,620,306
New Jersey Highway Authority, Senior Parkway Revenue, Refunding (Garden State Parkway)
5.75%, 1/1/2019.................................................................... 5,000,000 5,141,850
New Jersey Housing and Mortgage Finance Agency, Revenue:
Home Buyer:
7.65%, 10/1/2016 (Insured; MBIA)................................................. 1,085,000 1,131,818
7%, 4/1/2025 (Insured; MBIA)..................................................... 3,800,000 4,071,282
7.70%, 4/1/2025 (Insured; MBIA) (a,b)............................................ 9,200,000 9,522,000
5.50%, 10/1/2026 (Insured; MBIA)................................................. 2,500,000 2,469,800
7.70%, 10/1/2029 (Insured; MBIA)................................................. 7,570,000 8,341,383
Home Mortgage 8.10%, 10/1/2017 (Insured; MBIA)..................................... 2,955,000 3,148,493
Multi-Family Housing, Refunding (Presidential Plaza at Newport Project)
7%, 5/1/2030 (Insured; FHA)...................................................... 5,000,000 5,578,350
Rental Housing 6.75%, 11/1/2022.................................................... 9,310,000 10,084,313
New Jersey Housing Finance Agency, General Resolution (Section 8) 7.10%, 11/1/2012... 1,000,000 1,097,720
New Jersey Sports and Exposition Authority, State Contract 6%, 3/1/2021.............. 4,575,000 4,812,534
New Jersey Transit Corp., Lease Purchase Agreement, COP (Raymond Plaza East Inc.)
6.50%, 10/1/2016 (Insured; FSA).................................................... 4,445,000 5,079,968
New Jersey Wastewater Treatment Trust, Loan Revenue
7.375%, 5/15/2007 (Insured; MBIA).................................................. 2,000,000 2,282,720
North Jersey District Water Supply Commission:
(Wanaque North Project):
6%, 11/15/2019 (Insured; MBIA)................................................... 3,850,000 4,092,550
Refunding 6.25%, 11/15/2017 (Insured; MBIA)...................................... 1,000,000 1,092,640
(Wanaque South Project) 6%, 7/1/2019 (Insured; MBIA)............................... 2,000,000 2,270,740
Ocean County Pollution Control Financing Authority, PCR, Refunding
(Ciba Geigy Corp. Project) 6%, 5/1/2020............................................ 11,700,000 12,255,048
Passaic Board of Education, COP 7.875%, 4/1/2004 (LOC; Marine Midland Bank) (c)...... 4,000,000 4,756,320
Passaic County Utilities Authority, Solid Waste System Revenue 7%, 11/15/2007........ 5,000,000 5,451,300
Port Authority of New York and New Jersey:
(Delta Airlines Inc. Project) 6.95%, 6/1/2008...................................... 7,200,000 7,643,376
Revenue:
(Consolidated Board 67th Series) 6.875%, 1/1/2025................................ 3,950,000 4,473,138
(Consolidated Board 71st Series) 6.50%, 1/15/2026................................ 4,000,000 4,365,560
(Consolidated Board 73rd Series) 6.75%, 4/15/2026................................ 9,000,000 10,172,970
Special Obligation (Continental-Eastern LaGuardia Project) 9.125%, 12/1/2015..... 6,500,000 7,725,965
Rutgers State University 7%, 5/1/2019 ............................................... 4,525,000 5,206,329
Salem County Improvement Authority, Revenue (County Correctional Facility and Court
House) 7.125%, 5/1/2017 (Insured; AMBAC)........................................... 2,000,000 2,322,380
Salem County Industrial Pollution Control Financing Authority, Revenue
(Atlantic City Electric Project) 7.375%, 4/15/2014................................. 2,575,000 2,875,966
Salem County Pollution Control Financing Authority, Waste Disposal Revenue
(E.I. Dupont de Nemours and Co.-Chambers Works Project):
6.50%, 11/15/2021................................................................ 4,000,000 4,377,280
6.125%, 7/15/2022................................................................ 6,750,000 7,150,207
Sayreville Housing Development Corp., Mortgage Revenue, Refunding (Lakeview Section 8)
7.75%, 8/1/2024 (Insured; FHA)..................................................... 3,000,000 3,265,440
Southeast Morris County Municipal Utilities Authority, Water Revenue
6.50%, 1/1/2011 (Insured; FGIC).................................................... 1,475,000 1,630,745
Union City 6.70%, 9/1/2012 (Insured; MBIA)........................................... 4,850,000 5,557,227
Union County Utilities Authority, Solid Waste System Revenue 7.20%, 6/15/2014........ 9,500,000 10,611,405
University of Medicine and Dentistry 7.20%, 12/1/2019................................ 5,710,000 6,519,906
Wanaque Borough Sewer Authority, Sewer Revenue, Refunding
6%, 12/1/2017 (Insured; AMBAC)..................................................... 1,260,000 1,366,293
West New York Municipal Utilities Authority, Sewer Revenue, Refunding
7.30%, 12/15/2017 (Insured; FGIC).................................................. 6,250,000 7,497,313
U.S. RELATED--14.5%
Guam Power Authority, Revenue 6.30%, 10/1/2022....................................... 3,750,000 3,955,725
Commonwealth of Puerto Rico:
5.50%, 7/1/2013.................................................................... 12,000,000 12,100,920
7.30%, 7/1/2020.................................................................... 10,850,000 12,957,178
Public Improvement 6.80%, 7/1/2021................................................. 4,400,000 5,217,432
Puerto Rico Electric Power Authority, Power Revenue:
7%, 7/1/2021....................................................................... 10,900,000 12,412,484
Refunding 8%, 7/1/2008............................................................. 2,000,000 2,335,180
Puerto Rico Highway and Transportation Authority, Highway Revenue:
7.75%, 7/1/2016.................................................................... 3,460,000 4,219,954
6.625%, Series S, 7/1/2018......................................................... 9,400,000 11,020,936
6.625%, Series T, 7/1/2018........................................................ 2,550,000 2,816,348
Refunding 5%, 7/1/2022............................................................ 5,000,000 4,702,500
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank of Puerto Rico)(c) ............. 3,985,000 4,281,922
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Baxter Travenol Laboratories) 8%, 9/1/2012.......... 5,000,000 5,864,550
Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities:
6%, 7/1/2012.................................................................... 1,650,000 1,694,385
7%, 7/1/2019.................................................................... 2,000,000 2,283,720
Puerto Rico Urban Renewal and Housing Corp. 7.875%, 10/1/2004....................... 2,000,000 2,358,760
University of Puerto Rico, University Revenues, Refunding 6.50%, 6/1/2013........... 2,250,000 2,412,495
Virgin Islands, Matching Fund (Hugo Insurance Claims Fund Program)
7.75%, 10/1/2006.................................................................. 3,685,000 4,278,690
Virgin Islands Public Finance Authority, Revenue, Refunding
(Matching Fund Loan Notes) 7.25%, 10/1/2018....................................... 4,750,000 5,358,428
Virgin Islands Water and Power Authority, Electric System Revenue
7.40%, 7/1/2011................................................................... 4,000,000 4,636,400
------------
TOTAL MUNICIPAL BONDS
(cost $643,083,768)............................................................... $721,920,647
============
SHORT-TERM MUNICIPAL INVESTMENTS--.5%
New Jersey:
New Jersey Economic Development Authority, Revenue:
Economic Development, Refunding VRDN (Dow Chemical - Eldorado Terminal) 3.15% (d).. $ 2,600,000 $ 2,600,000
Pollution Control VRDN (Merck and Co.) 3.50% (d)................................... 800,000 800,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $3,400,000).................................................................. $ 3,400,000
============
TOTAL INVESTMENTS--100.0%
(cost $646,483,768)................................................................ $725,320,647
============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation GNMA Government National Mortgage Association
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) or MOODY'S or STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 46.1%
AA Aa AA 9.5
A A A 20.8
BBB Baa BBB 13.1
BB Ba BB 2.5
F1 MIG1 SP1 .1
F1 P1 A1 .4
Not Rated Not Rated Not Rated 7.5
------
100.0%
======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security--the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
December 31, 1993, these securities amounted to $25,051,788 or 3.5%
of net assets.
(c) Secured by letter of credit.
(d) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market
interest rates.
(e) Fitch currently provides creditworthiness information for a limited
amount of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1993
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $646,483,768)--see statement............................................ $725,320,647
Interest receivable............................................................. 13,957,008
Receivable for shares of Common Stock subscribed................................ 28,000
Prepaid expenses................................................................ 31,362
------------
739,337,017
LIABILITIES:
Due to The Dreyfus Corporation.................................................. $ 367,453
Payable for investment securities purchased..................................... 11,369,015
Payable for shares of Common Stock redeemed..................................... 2,834
Accrued expenses and other liabilities.......................................... 1,782,857 13,522,159
----------- ------------
NET ASSETS........................................................................ $725,814,858
============
REPRESENTED BY:
Paid-in capital................................................................. $646,322,096
Accumulated undistributed net realized gain on investments...................... 655,883
Accumulated net unrealized appreciation on investments-Note 3................... 78,836,879
------------
NET ASSETS at value applicable to 51,727,026 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)................. $725,814,858
============
NET ASSET VALUE, offering and redemption price per share
($725,814,858 divide 51,727,026 shares)......................................... $14.03
======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME:
INTEREST INCOME................................................................. $ 44,534,401
EXPENSES:
Management fee--Note 2(a)..................................................... $ 4,137,876
Shareholder servicing costs--Note 2(b)........................................ 2,144,307
Custodian fees................................................................ 75,664
Professional fees............................................................. 60,303
Prospectus and shareholders' reports--Note 2(b)............................... 28,078
Directors' fees and expenses--Note 2(c)....................................... 25,963
Registration fees............................................................. 17,951
Miscellaneous................................................................. 213,200
-----------
6,703,342
Less--reduction in shareholder servicing costs
due to undertaking-Note 2(b)................................................ 1,724,115
-----------
TOTAL EXPENSES............................................................ 4,979,227
------------
INVESTMENT INCOME--NET.................................................... 39,555,174
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3........................................ $ 1,854,233
Net unrealized appreciation on investments...................................... 41,608,187
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................... 43,462,420
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 83,017,594
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1992 1993
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income--net.......................................................... $ 34,677,755 $ 39,555,174
Net realized gain on investments................................................ 7,915,444 1,854,233
Net unrealized appreciation on investments for the year......................... 6,008,516 41,608,187
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 48,601,715 83,017,594
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.......................................................... (34,677,755) (39,555,174)
Net realized gain on investments................................................ (9,048,084) (1,117,588)
------------ ------------
TOTAL DIVIDENDS............................................................... (43,725,839) (40,672,762)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold................................................... 267,423,236 259,116,860
Dividends reinvested............................................................ 35,501,982 32,091,573
Cost of shares redeemed......................................................... (208,977,387) (222,267,812)
------------ ------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS........................ 93,947,831 68,940,621
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................ 98,823,707 111,285,453
NET ASSETS:
Beginning of year............................................................... 515,705,698 614,529,405
------------ ------------
End of year..................................................................... $614,529,405 $725,814,858
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold..................................................................... 20,366,852 18,866,106
Shares issued for dividends reinvested.......................................... 2,706,388 2,325,735
Shares redeemed................................................................. (15,903,493) (16,110,778)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING............................................ 7,169,747 5,081,063
============ ============
See notes to financial statements.
</TABLE>
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Prospectus dated April 11, 1994.
See notes to financial statements.
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a non-diversified open-end management investment company.
Dreyfus Service Corporation ("Distributor") acts as the distributor of
the Fund's shares, which are sold to the public without a sales load.
The Distributor is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments are valued each
business day by an independent pricing service ("Service") approved by
the Fund's Board of Directors. Investments for which quoted bid prices
in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers
in such securities) and asked prices (as calculated by the Service based
upon its evaluation of the market for such securities). Other
investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities
of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss
from securities transactions are recorded on the identified cost basis.
Interest income, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is earned from settlement date
and recognized on the accrual basis. Securities purchased or sold on a
when-issued or delayed-delivery basis may be settled a month or more
after the trade date.
The Fund follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect the
ability of issuers within the state to pay interest on, or repay
principal of, municipal obligations held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends from investment income-net on each business day. Such
dividends are paid monthly. Dividends from net realized capital gain are
normally declared and paid annually, but the Fund may make distributions
on a more frequent basis to comply with the distribution requirements of
the Internal Revenue Code. To the extent that net realized capital gain
can be offset by capital loss carryovers, if any, it is the policy of
the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax
exempt dividends, by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of income and net realized
capital gain sufficient to relieve it from all, or substantially all,
Federal income taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the
average daily value of the Fund's net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should
the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage and extraordinary expenses, exceed 1-1/2% of the
average value of the Fund's net assets for any full year. There was no
expense reimbursement for the year ended December 31, 1993.
(B) The Fund has adopted a Service Plan (the "Plan") pursuant to which
the Fund pays the Distributor, at an annual rate of .25 of 1% of the
value of the Fund's average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Fund's
shares and for servicing shareholder accounts. The Distributor may make
payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the
Fund's shares owned by clients of the Service Agent. The Plan also
separately provides for the Fund to bear the costs of preparing,
printing and distributing certain of the Fund's prospectuses and
statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of
$100,000 or .005 of 1% of the Fund's average daily net assets for any
full year. During the year ended December 31, 1993, $1,734,949 was
charged to the Fund pursuant to the Plan, of which $1,724,115 was waived
pursuant to an undertaking by the Manager.
(C) Certain officers and directors of the Fund are "affiliated
persons," as defined in the Act, of the Manager and/or the Distributor.
Each director who is not an "affiliated person" receives an annual fee
of $2,500 and an attendance fee of $250 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and
Plan of Merger providing for the merger of the Manager with a subsidiary
of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of the Manager and of
Mellon. The merger is expected to occur in mid-1994, but could occur
significantly later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with the Manager under the Investment Company Act
of 1940, and thus a termination of such Agreement, the Manager will seek
prior approval from the Fund's Board and shareholders.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $123,664,079 and
$62,574,448, respectively, for the year ended December 31, 1993, and
consisted entirely of municipal bonds and short-term municipal
investments.
At December 31, 1993, accumulated net unrealized appreciation on
investments was $78,836,879, consisting of $78,934,980 gross unrealized
appreciation and $98,101 gross unrealized depreciation.
At December 31, 1993, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities
of Dreyfus New Jersey Municipal Bond Fund, Inc., including the statement
of investments, as of December 31, 1993, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and financial
highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1993 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Dreyfus New Jersey Municipal Bond Fund, Inc. at
December 31, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the
indicated years, in conformity with generally accepted accounting
principles.
Ernst & Young
New York, New York
January 31, 1994
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby makes the
following designations regarding its fiscal year ended December 31,
1993:
--All the dividends paid from investment income-net are "exempt-
interest dividends" (not subject to regular Federal and, for
individuals who are New Jersey residents, New Jersey personal income
taxes).
--The $.0217 per share paid by the Fund on December 14, 1993
represents a long-term capital gain distribution.
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's capital gain distribution
paid for the 1993 calendar year on Form 1099-DIV which will be mailed by
January 31, 1994.
