April 11, 1994
DREYFUS FLORIDA INTERMEDIATE
MUNICIPAL BOND FUND
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.
740/stkr041194
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PROSPECTUS APRIL 11, 1994
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
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DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND (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 INCOME TAX AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL. THE DOLLAR-WEIGHTED
AVERAGE MATURITY OF THE FUND'S PORTFOLIO RANGES BETWEEN THREE
AND TEN YEARS.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY.
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.
-----------------
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.
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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
PAGE
ANNUAL FUND OPERATING EXPENSES............................ 2
CONDENSED FINANCIAL INFORMATION........................... 2
DESCRIPTION OF THE FUND................................... 3
MANAGEMENT OF THE FUND.................................... 13
HOW TO BUY FUND SHARES.................................... 14
SHAREHOLDER SERVICES...................................... 15
HOW TO REDEEM FUND SHARES................................. 18
SHAREHOLDER SERVICES PLAN................................. 20
DIVIDENDS, DISTRIBUTIONS AND TAXES........................ 20
PERFORMANCE INFORMATION................................... 22
GENERAL INFORMATION....................................... 22
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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%
Other Expenses............................................. .24%
Total Fund Operating Expenses.............................. .84%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $9 $27 $47 $104
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect.
You can purchase Fund shares without charge directly from Dreyfus
Service Corporation; you may be charged a nominal fee if you effect
transactions in Fund shares through a securities dealer, bank or other
financial institution. See "Management of the Fund" and "Shareholder
Services 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 for a share of
beneficial Interest 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: 1992(1) 1993
------ ------
<S> <C> <C>
Net asset value, beginning of year................................. $12.50 $12.94
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INVESTMENT OPERATIONS:
Investment income-net.............................................. .69 .70
Net realized and unrealized gain on investments.................... .44 .92
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TOTAL FROM INVESTMENT OPERATIONS............................... 1.13 1.62
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DISTRIBUTIONS:
Dividends from investment income-net............................... (.69) (.70)
Dividends from net realized gain on investments.................... -- (.01)
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TOTAL DISTRIBUTIONS............................................ (.69) (.71)
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Net asset value, end of year....................................... $12.94 $13.85
====== ======
TOTAL INVESTMENT RETURN 9.86%(2) 12.84%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................ -- .20%
Ratio of net investment income to average net assets............... 5.78%(2) 5.20%
Decrease reflected in above expense ratios due to undertaking
by The Dreyfus Corporation..................................... 1.00%(2) .64%
Portfolio Turnover Rate............................................ 13.01%(3) 13.48%
Net Assets, end of year (000's omitted)............................ $332,582 $538,495
</TABLE>
- -----------------------------
(1) From January 21, 1992 (commencement of operations) to December 31, 1992.
(2) Annualized.
(3) Not annualized.
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
(2)
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 income tax as is consistent
with the preservation of capital. To accomplish this goal, the Fund will
invest primarily in the debt securities of the State of Florida, its
political subdivisions, authorities and corporations, the interest from
which is, in the opinion of bond counsel to the issuer, exempt from Federal
income tax (collectively, "Florida Municipal Obligations"). To the extent
acceptable Florida Municipal Obligations are at any time unavailable for
investment by the Fund, the Fund will invest temporarily in other debt
securities the interest from which is, in the opinion of bond counsel to the
issuer, exempt from Federal income tax. The dollar-weighted average
maturity of the Fund's portfolio ranges between three and 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 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.
Under normal circumstances, at least 65% of the value of the Fund's net
assets will be invested in Florida Municipal Obligations. The Fund will
seek to invest in securities which are exempt from the Florida intangible
personal property tax. See "Risk Factors-Investing in Florida 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, but it currently is the intention of the Fund that
this portion of the Fund's portfolio be invested primarily in Municipal
Obligations rated no lower than Baa by Moody's or BBB by S&P or Fitch. The
Fund may invest in short-term Municipal Obligations which are rated in
the two highest rating categories by Moody's, S&P or Fitch. See "Appendix
B" in the Statement of Additional Information. Municipal Obligations rated
BBB by S&P or Fitch or Baa by Moody's are considered investment grade
obligations; those rated BBB by S&P or Fitch are regarded as having an
adequate capacity to pay principal and interest, while those rated Baa by
(3)
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics.
Investments rated Ba or lower by Moody's and BB or lower by S&P and
Fitch ordinarily provide higher yields but involve greater risk because of
their speculative characteristics. The Fund may invest in Municipal
Obligations rated C by Moody's or D by S&P or Fitch, which is such rating
organizations' lowest rating, and indicates that the Municipal Obligation
is in default and interest and/or repayment of principal is in arrears. See
"Risk Factors-Lower Rated Bonds" below for a further discussion of
certain risks. The Fund also may invest in securities which, while not
rated, are determined by The Dreyfus Corporation to be of comparable
quality to the rated securities in which the Fund may invest; for purposes
of the 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 also 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 it 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 bears to the total principal amount
of the Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated, it will
be backed by an irrevocable letter of
(4)
credit or guarantee of a bank that the
Board of Trustees 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 multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
The Fund may invest up to 15% of the value of its net assets in securities
as to which a liquid trading market does not exist, provided such
investments are consistent with the Fund's investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale and repurchase agreements providing for settlement in more than
seven days after notice. As to these securities, the Fund is subject to a
risk that should the Fund desire to sell them when a ready buyer is not
available at a price that the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected. 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 Trustees. 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 Trustees 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.
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
(5)
put options. The exercise of a stand-by
commitment therefore is subject to the ability of the seller to make
payment on demand. The Fund will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by
commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors. The Fund also may acquire
call options on specific Municipal Obligations. The Fund generally would
purchase these call options to protect the Fund from the issuer of the
related Municipal Obligation redeeming, or other holder of the call option
from calling away, the Municipal Obligation before maturity. The sale by
the Fund of a call option that it owns on a specific Municipal Obligation
could result in the receipt of taxable income by the Fund.
The Fund may purchase 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 the prevailing short-term tax exempt rates, that
has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial
institution receives periodic fees equal to the difference between the
Municipal Obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period,
that would cause the securities, coupled with the tender option, to trade
at par on the date of such determination. Thus, after payment of this fee,
the security holder effectively holds a demand obligation that bears
interest at the prevailing short-term tax exempt rate. The Dreyfus
Corporation, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligations, of
any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on
the underlying Municipal Obligations and for other reasons. The Fund will
not invest more than 15% of the value of its net assets in securities that
are illiquid, which would include tender option bonds as to which it cannot
exercise the tender feature on not more than seven days' notice if there is
no secondary market available for these obligations.
The Fund may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of
debt securities that have been stripped of their unmatured interest
coupons, the coupons themselves and receipts or certificates representing
interests in such stripped debt obligations and coupons. The market prices
of zero coupon securities generally are more volatile than the market
prices of 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. See "Risk Factors-Lower
Rated Bonds" and "Other Investment Considerations" below, and
"Investment Objective and Management Policies-Risk Factors- Lower
Rated Bonds" and "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within
the two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities; commercial paper rated
not lower than P-l by Moody's, A-1 by S&P or F-l 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
(6)
value of the Fund's net assets be invested in Taxable
Investments. When the Fund has adopted a temporary defensive position,
including when acceptable Florida Municipal Obligations are unavailable
for investment by the Fund, in excess of 35% of the Fund's net assets may
be invested in securities other than Florida Municipal Obligations. 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 Investment are more fully described in the
Statement of Additional Information, to which reference hereby is made.
INVESTMENT TECHNIQUES
The Fund may employ, among others, the investment techniques described
below. Use of these techniques may give rise to taxable income.
WHEN-ISSUED SECURITIES - New issues of Municipal Obligations usually
are offered on a when-issued basis, which means that delivery and
payment for such Municipal Obligations ordinarily take place within 45
days after the date of the commitment to purchase. The payment
obligation and the interest rate that will be received on the Municipal
Obligations are fixed at the time the Fund enters into the commitment.
The Fund will make commitments to purchase such Municipal Obligations
only with the intention of actually acquiring the securities, but the Fund
may sell these securities before the settlement date if it is deemed
advisable, although any gain realized on such sale would be taxable. The
Fund will not accrue income in respect of a when-issued security prior to
its stated delivery date. No additional when-issued commitments will be
made for the Fund 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 consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the when-issued commitments will be
established and maintained at the Fund's custodian bank. Purchasing
Municipal Obligations on a when-issued basis when the Fund is fully or
almost fully invested may result in greater potential fluctuation in the
value of the Fund's net assets and its net asset value per share.
FUTURES TRANSACTIONS - IN GENERAL -The Fund is not a commodity pool.
However, as a substitute for a comparable market position in the
underlying securities or for hedging purposes, the Fund may engage, to the
extent permitted by applicable regulations, in futures and options on
futures transactions as described below.
The Fund's commodities transactions must constitute bona fide hedging or
other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, the Fund may not
engage in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options, other than
for bona fide hedging transactions, would exceed 5% of the liquidation
value of the Fund's assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however,
that in the case of an option that is in-the-money at the time of purchase,
the in-the-money amount may be excluded in calculating the 5%. Pursuant
to regulations and/or published positions of the Securities and Exchange
Commission, the Fund may be required to segregate cash or high quality
money market instruments in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity.
Initially, when purchasing or selling futures contracts the Fund will be
required to deposit with its custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount.
This amount is subject to change by the exchange or board of trade on
which the contract is traded and members of such exchange or board of
trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract
(7)
which is returned to the Fund upon termination of
the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from
the broker will be made daily as the price of the index or securities
underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known
as "marking-to-market." At any time prior to the expiration of a futures
contract, the Fund may elect to close the position by taking an opposite
position at the then prevailing price, which will operate to terminate the
Fund's existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only if
there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond the limit or trading may
be suspended for specified periods during the trading day. Futures contract
prices could move to the limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to a substantial loss. If it is
not possible, or the Fund determines not, to close a futures position in
anticipation of adverse price movements, the Fund will be required to
make daily cash payments of variation margin. In such circumstances, an
increase in the value of the portion of the portfolio being hedged, if any,
may offset partially or completely losses on the futures contract.
However, no assurance can be given that the price of the securities being
hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
In addition, to the extent the Fund is engaging in a futures transaction
as a hedging device, due to the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is
possible that the hedge will not be fully effective in that, for example,
losses on the portfolio securities may be in excess of gains on the futures
contract or losses on the futures contract may be in excess of gains on the
portfolio securities that were the subject of the hedge. In futures
contracts based on indexes, the risk of imperfect correlation increases as
the composition of the Fund's portfolio varies from the composition of the
index. In an effort to compensate for the imperfect correlation of
movements in the price of the securities being hedged and movements in
the price of futures contracts, the Fund may buy or sell futures contracts
in a greater or lesser dollar amount than the dollar amount of the
securities being hedged if the historical volatility of the futures contract
has been less or greater than that of the securities. Such "over hedging"
or "under hedging" may adversely affect the Fund's net investment results
if market movements are not as anticipated when the hedge is established.
Successful use of futures by the Fund also is subject to The Dreyfus
Corporation's ability to predict correctly movements in the direction of
the market or interest rates. For example, if the Fund has hedged against
the possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund will
lose part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures positions.
In addition, in such situations, if the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. Such
sales of securities may, but will not necessarily, be at increased prices
which reflect the rising market. The Fund may have to sell securities at a
time when it may be disadvantageous to do so.
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer of the option is required upon exercise to assume an offsetting
futures position (a short position if the option is a call and a long position
if the option is a put). Upon exercise of the option, the assumption of
offsetting futures positions by the writer and holder of the option will be
accompanied by delivery of the accumulated cash balance in the writer's
futures margin account which represents the amount by which the market
price of the futures contract, at exercise, exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Call options sold by the Fund with respect to futures contracts will be
covered by, among other things,
(8)
entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of
which are expected to move relatively consistently with the instruments
underlying, the futures contract. Put options sold by the Fund with respect
to futures contracts will be covered when, among other things, cash or
liquid securities are placed in a segregated account to fulfill the
obligation undertaken.
The Fund may utilize municipal bond index futures to protect against
changes in the market value of the Municipal Obligations in its portfolio or
which it intends to acquire. Municipal bond index futures contracts are
based on an index of long-term Municipal Obligations. The index assigns
relative values to the Municipal Obligations included in an index, and
fluctuates with changes in the market value of such Municipal Obligations.
The contract is an agreement pursuant to which two parties agree to take
or make delivery of an amount of cash based upon the difference between
the value of the index at the close of the last trading day of the contract
and the price at which the index contract was originally written. The
acquisition or sale of a municipal bond index futures contract enables the
Fund to protect its assets from fluctuations in rates on tax exempt
securities without actually buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE
FUTURES CONTRACTS - The Fund may purchase and sell interest rate
futures contracts and options on interest rate futures contracts as a
substitute for a comparable market position and to hedge against adverse
movements in interest rates.
To the extent the Fund has invested in interest rate futures contracts or
options on interest rate futures contracts as a substitute for a
comparable market position, the Fund will be subject to the investment
risks of having purchased the securities underlying the contract.
The Fund may purchase call options on interest rate futures contracts to
hedge against a decline in interest rates and may purchase put options on
interest rate futures contracts to hedge its portfolio securities against
the risk of rising interest rates.
If the Fund has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities held in the Fund's
portfolio and rates decrease instead, the Fund will lose part or all of the
benefit of the increased value of the securities which it has hedged
because it will have offsetting losses in its futures positions. In addition,
in such situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements at a time when it
may be disadvantageous to do so. These sales of securities may, but will
not necessarily, be at increased prices which reflect the decline in
interest rates.
The Fund may sell call options on interest rate futures contracts to
partially hedge against declining prices of its portfolio securities. If the
futures price at expiration of the option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in the Fund's
portfolio holdings. The Fund may sell put options on interest rate futures
contracts to hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Fund will
retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which the Fund
intends to purchase. If a put or call option sold by the Fund is exercised,
the Fund will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the value of
its futures positions, the Fund's losses from existing options on futures
may to some extent be reduced or increased by changes in the value of its
portfolio securities.
The Fund also may sell options on interest rate futures contracts as part
of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or
that there will be a correlation between price movements in the options
on interest rate futures and price movements in the Fund's portfolio
securities which are the subject of the hedge. In addition, the Fund's
purchase of such options will be based upon predictions as to anticipated
interest rate trends, which could prove to be inaccurate.
SHORT-SELLING - The Fund may make short sales, which are transactions
in which the Fund sells a security it does not own in anticipation of a
decline in the market value of that security. To complete such a
transaction,
(9)
the Fund must borrow the security to make delivery to the
buyer. The Fund then is obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The price at
such time may be more or less than the price at which the security was
sold by the Fund. Until the security is replaced, the Fund is required to pay
to the lender amounts equal to any dividends or interest which accrue
during the period of the loan. To borrow the security, the Fund also may be
required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is
closed out.
Until the Fund replaces a borrowed security in connection with a short
sale, the Fund will: (a) maintain daily a segregated account, containing
cash or U.S. Government securities, at such a level that (i) the amount
deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii)
the amount deposited in the segregated account plus the amount deposited
with the broker as collateral will not be less than the market value of the
security at the time it was sold short; or (b) otherwise cover its short
position.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund will realize a
gain if the security declines in price between those dates. This result is
the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the
amount of any loss increased, by the amount of any premium or amounts in
lieu of dividends or interest the Fund may be required to pay in connection
with a short sale.
The Fund may purchase call options to provide a hedge against an increase
in the price of a security sold short by the Fund. When the Fund purchases
a call option it has to pay a premium to the person writing the option and
a commission to the broker selling the option. If the option is exercised by
the Fund, the premium and the commission paid may be more than the
amount of the brokerage commission charged if the security were to be
purchased directly.
The Fund anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any
specified portion of its assets, as a matter of practice, will be invested
in short sales. However, no securities will be sold short if, after effect is
given to any such short sale, the total market value of all securities sold
short would exceed 25% of the value of the Fund's net assets.
In addition to the short sales discussed above, the Fund may make short
sales "against the box," a transaction in which the Fund enters into a
short sale of a security which the Fund owns. The proceeds of the short
sale will be held by a broker until the settlement date at which time the
Fund delivers the security to close the short position. The Fund receives
the net proceeds from the short sale. The Fund at no time will have more
than 15% of the value of its net assets in deposits on short sales against
the box. It currently is anticipated that the Fund will make short sales
against the box for purposes of protecting the value of the Fund's net
assets.
LENDING PORTFOLIO SECURITIES - From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
transactions. Such loans may not exceed 331/3% of the 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.
FUTURE DEVELOPMENTS - The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other derivative investments which are not presently
contemplated for use by the Fund or which are not currently available but
which may be developed, to the extent such opportunities are both
consistent with the Fund's investment objective and legally permissible
for the Fund. Before entering into such transactions or making any such
investment, the Fund will provide appropri-
(10)
ate disclosure in its prospectus.
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 FLORIDA MUNICIPAL OBLIGATIONS - You should consider
carefully the special risks inherent in the Fund's investment in Florida
Municipal Obligations. The Florida Constitution and Statutes mandate that
the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each fiscal
year. Florida's Constitution permits issuance of Florida Municipal
Obligations pledging the full faith and credit of the State, with a vote of
the electors, to finance or refinance fixed capital outlay projects
authorized by the Legislature provided that the outstanding principal does
not exceed 50% of the total tax revenues of the State for the two
preceding years. Florida's Constitution also provides that the Legislature
shall appropriate monies sufficient to pay debt service on State bonds
pledging the full faith and credit of the State as the same becomes due.
All State tax revenues, other than trust funds dedicated by Florida's
Constitution for other purposes, would be available for such an
appropriation, if required. Revenue bonds may be issued by the State or its
agencies without a vote of Florida's electors only to finance or refinance
the cost of State fixed capital outlay projects which may be payable
solely from funds derived directly from sources other than State tax
revenues. Fiscal year 1993-94 total General Revenue and Working Capital
funds available totalled approximately $13.555 billion, an 8.2% increase
over 1992-93, which resulted in unencumbered reserves of approximately
$277.9 million at the end of fiscal 1993-94. General Revenue and Working
Capital funds available for fiscal 1994-95 are estimated to total $14.311
billion, a 5.6% increase over 1993-94. The massive effort to rebuild and
replace destroyed or damaged property in South Florida after Hurricane
Andrew is considered to be responsible for the positive revenue outlook.
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, high risk) debt securities
in which the Fund may invest up to 20% of the value of its net assets.
These are securities such as those rated Ba by Moody's or BB by S&P or
Fitch or as low as the lowest rating assigned by Moody's, S&P or Fitch.
They generally are not meant for short-term investing and may be subject
to certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. 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,
(11)
while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by
Moody's are regarded as having extremely poor prospects of ever attaining
any real investment standing. Bonds rated D by S&P are in default and the
payment of interest and/or repayment of principal is in arrears. Bonds
rated DDD, DD or D by Fitch are in actual or imminent default, are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the issuer; DDD
represents the highest potential for recovery of such bonds; and D
represents the lowest potential for recovery. Such bonds, though high
yielding, are characterized by great risk. See "Appendix B" in the
Statement of Additional Information for a general description of Moody's,
S&P and Fitch ratings of Municipal Obligations. The ratings of Moody's,
S&P and Fitch represent their opinions as to the quality of the Municipal
Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and, although ratings
may be useful in evaluating the safety of interest and principal payments,
they do not evaluate the market value risk of these bonds. Therefore,
although these ratings may be an initial criterion for selection of
portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. The Fund's ability to achieve its investment objective may
be more dependent on The Dreyfus Corporation's credit analysis than might
be the case for a fund that invested in higher rated securities. Once the
rating of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold
the security.
The market price and yield of bonds rated Ba or lower by Moody's and BB or
lower by S&P and Fitch are more volatile than those of higher rated bonds.
Factors adversely affecting the market price and yield of these securities
will adversely affect the Fund's net asset value. In addition, the retail
secondary market for these bonds may be less liquid than that of higher
rated bonds; adverse conditions could make it difficult at times for the
Fund to sell certain securities or could result in lower prices than those
used in calculating the Fund's net asset value.
The Fund may invest up to 5% of the value of its net assets in zero coupon
securities and pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds) rated Ba or lower by Moody's and BB or lower
by S&P and Fitch. These securities may be subject to greater fluctuations
in value due to changes in interest rates than interest-bearing securities
and thus may be considered more speculative than comparably rated
interest-bearing securities. See "Other Investment Considerations"
below, and "Investment Objective and Management Policies-Risk Factors-
Lower Rated Bonds" and "Dividends, Distributions and Taxes" in the
Statement of Additional Information.
OTHER INVESTMENT CONSIDERATIONS - Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price fluctuations.
Certain securities that may be purchased by the Fund, such as those with
interest rates that fluctuate directly or indirectly based on multiples of a
stated index, are designed to be highly sensitive to changes in interest
rates and can subject the holders thereof to extreme reductions of yield
and possibly loss of principal. The values of fixed-income securities also
may be affected by changes in the credit rating or financial condition of
the issuing entities. The Fund's net asset value generally will not be
stable and should fluctuate based upon changes in the value of the Fund's
portfolio securities. Securities in which the Fund invests may earn a
higher level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and
less fluctuation in market value.
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
(12)
the issuing municipality will discontinue appropriating funding for
the leased property.
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 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 the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If
any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Fund so as to adversely affect
Fund shareholders, the Fund would reevaluate its investment objective and
policies and submit possible changes in the Fund's structure to
shareholders for their consideration. If legislation were enacted that
would treat a type of Municipal Obligation as taxable, the Fund would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act
of 1940. A "diversified" investment company is required by the
Investment Company Act of 1940 generally to invest, with respect to 75%
of its total assets, not more than 5% of such assets in the securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Code,
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of the Fund's total assets be invested in
cash, U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of
any one issuer limited for the purpose 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 securities 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 January 31, 1994, The Dreyfus Corporation managed or administered
approximately $79 billion in assets for more than l.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 Trustees in
accordance with Massachusetts law. The Fund's primary investment
officer is Stephen C. Kris. He has held that position since the Fund's
inception and has been employed by The Dreyfus Corporation since 1988.
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 other
funds advised by The Dreyfus Corporation through a professional staff of
portfolio managers and security analysts.
Under the terms of the Management Agreement, the Fund has agreed to pay
The Dreyfus Corporation a
(13)
monthly fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily
assume certain expenses of the Fund, which would have the effect of
lowering the overall expense ratio of the Fund and increasing yield to
investors at the time such amounts are waived or assumed, as the case
may be. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume. For the fiscal year ended
December 31, 1993, no management fee was paid by the Fund pursuant to
an undertaking by The Dreyfus Corporation.
The Dreyfus Corporation may pay Dreyfus Service Corporation for
shareholder and distribution services from The Dreyfus Corporation's own
assets, including past profits but not including the management fee paid
by the Fund. Dreyfus Service Corporation may use part or all of such
payments to pay securities dealers or others in respect of these services.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence,
Rhode Island 02940-9671, is the Fund's Transfer and Dividend Disbursing
Agent (the "Transfer Agent"). The Bank of New York, 110 Washington
Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
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 without a sales charge if you purchase them
directly from Dreyfus Service Corporation; you may be charged a nominal
fee if you effect transactions in Fund shares through a securities dealer,
bank or other financial institution. Share certificates are issued only upon
your written request. No certificates are issued for fractional shares. It
is not recommended that the Fund be used as a vehicle for Keogh, IRA or
other qualified 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 securities dealer, bank or other financial institution 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 the telephone number 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 #8900202920/Dreyfus
Florida Intermediate Municipal Bond Fund, for purchase of Fund shares in
your name. The wire must include your Fund account
(14)
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.
The Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number preceded by the digits "1111."
Fund shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form is received by the Transfer
Agent. Net asset value per share is determined as of the close of trading
on the floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value per share, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the New York Stock Exchange. Net asset value per share is computed by
dividing the value of the Fund's net assets (i.e., the 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 Trustees and are valued at fair value as determined by the pricing
service. 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
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 Dreyfus Service Corporation to
determine if it is available and whether any conditions are imposed on its
use.
To use this Privilege, you 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 cur-
(15)
rent 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 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 into 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 that charges a sales
load, you may qualify for share prices which do not include the sales load
or which reflect a reduced sales load, if the shares of the fund from which
you are exchanging were: (a) purchased with a sales load, (b) acquired by a
previous exchange from shares purchased with a sales load, or (c) acquired
through reinvestment of dividends or distributions paid with respect to
the foregoing categories of shares. To qualify, at the time of your
exchange you must notify the Transfer Agent. 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 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 certain
other funds in the Dreyfus Family of Funds of which you are currently an
investor. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be
exchanged automatically on the first and/or fifteenth of the month
according to the schedule you have selected. Shares will be exchanged at
the then-current net asset value; however, a sales load may be charged
with respect to exchanges into funds sold with a sales load. See
"Shareholder Services" in the Statement of Additional Information. The
right to exercise this Privilege may be modified or cancelled by the Fund
or the Transfer Agent. You may modify or cancel your exercise of this
Privilege at any time by writing to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. The Fund may charge a
service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to obtain a Dreyfus Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER - Dreyfus-AUTOMATIC Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account
designated by you. At your option, the bank account designated by you will
be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on
both days. Only an account maintained at a domestic financial institution
which is an Automated Clearing House member may be so designated. To
(16)
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 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 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 Automated 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.
(17)
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. Securities dealers, banks and other financial
institutions 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 REDEMPTIONS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT
COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON
SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED
TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account at its option upon not
less than 30 days' written notice if your account's net asset value is $500
or less and remains so during the notice period.
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 or through the Dreyfus TeleTransfer Privilege. 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 and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of
these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used. During the delay, the Fund's net asset value may
fluctuate.
REGULAR REDEMPTION - Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption
requests may be delivered in person only to a Dreyfus Financial Center.
THESE REQUESTS WILL BE
(18)
FORWARDED TO THE FUND AND WILL BE
PROCESSED UPON RECEIPT THEREBY. For the location of the nearest Dreyfus
Financial Center, please call the telephone number 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 the telephone number 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 requests made
shortly after a change of address, and may limit the amount involved or
the number of telephone redemption requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which certificates have been issued are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE - You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account
(19)
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.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which the
Fund reimburses Dreyfus Service Corporation an amount not to exceed an
annual rate of .25 of 1% of the value of the average daily net assets of the
Fund's shares for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of
shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income on
each day the New York Stock Exchange is open for business. Fund shares
begin earning income dividends on the day following the date of purchase.
The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the next business day. 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. If you
redeem all shares in your account at any time during the month, all
dividends to which you are entitled will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities
gains, if any, generally are declared and paid once a year, but the Fund may
make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent
with the provisions of the Investment Company Act of 1940. The Fund will
not make distributions from net realized securities gains unless capital
loss carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Except for dividends from Taxable Investments, the Fund anticipates that
substantially all dividends paid by the Fund will not be subject to Federal
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. No dividend paid
by the Fund will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions from net realized long-term
securities gains of the Fund generally are taxable as long-term capital
gains for Federal income tax purposes if you are a citizen or resident of
the United States. Dividends and distributions from gain derived from
securities transactions and from the use of the investment techniques
described under "Description of the Fund-Investment Techniques" also
will be subject to Federal income tax. The Code provides that the net
capital gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%. Under the Code, interest on
indebtedness incurred or continued to purchase or carry Fund shares which
is deemed to relate to exempt-interest dividends is not deductible.
(20)
Dividends or distributions by the Fund to a Florida resident are not
taxable by Florida. However, Florida imposes an intangible personal property
tax on shares of the Fund owned by a Florida resident on January 1 of each
year unless such shares qualify for an exemption from the tax.
The Fund has received a Technical Assistance Advisement from the State
of Florida, Department of Revenue, to the effect that Fund shares owned by
a Florida resident will be exempt from the intangible personal property
tax so long as the Fund's portfolio includes only assets, such as notes,
bonds, and other obligations issued by the State of Florida or its
municipalities, counties, and other taxing districts, the United States
Government, and its agencies, Puerto Rico, Guam, and the U.S. Virgin
Islands, and other assets which are exempt from that tax ("exempt
investments").
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 dividends related thereto will
not necessarily be tax exempt to an investor who is subject to the
alternative minimum tax and/or tax on Social Security benefits and may
cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions
from securities gains, if any, paid during the year. These statements set
forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. These dollar amounts will vary
depending on the size and length of time of your investment in the Fund. If
the Fund pays dividends derived from taxable income, it intends to
designate as taxable the same percentage of the day's dividend as the
actual taxable income earned on that day bears to total income earned on
that day. Thus, the percentage of the dividend designated as taxable, if
any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct or
that such shareholder has not received notice from the IRS of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines a shareholder's TIN is incorrect or if a shareholder
has failed to properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the fiscal
year ended 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 tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund
is subject to a non-deductible 4% excise tax, measured with respect to
certain undistributed amounts of taxable investment income and capital
gain.
You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
(21)
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.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased
with an initial payment of $1,000 and that the investment was redeemed
at the end of a stated period of time, after giving effect to the
reinvestment of dividends and distributions during the period. The return
is expressed as a percentage rate which, if applied on a compounded
annual basis, would result in the redeemable value of the investment at
the end of the period. Advertisements of the Fund's performance will
include the Fund's average annual total return for one, five and ten year
periods, or for shorter periods depending upon the length of time during
which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the net
asset value per share at the beginning of the period. Advertisements may
include the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type
and quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment
companies using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from 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 should generally be higher than money
market funds (the Fund, however, does not seek to maintain a stable price
per share and may not be able to return an investor's principal), and its
price per share should fluctuate less than long term bond funds (which
generally have somewhat higher yields).
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement
and Declaration of Trust (the "Trust Agreement") dated September 12,
1990, and commenced operations on January 21, 1992. The Fund is
authorized to issue an unlimited number of shares of beneficial interest,
par value $.001 per share. Each share has one vote.
On May 11, 1993, the Fund's shareholders approved a proposal to change,
among other things, certain of the Fund's fundamental policies and
investment restrictions to (i) permit the Fund to engage in futures and
options transactions, (ii) permit the Fund to lend its portfolio securities
and (iii) increase the percentage of the Fund's assets which may be
invested in illiquid securities and make such policy non-fundamental.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of
(22)
the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed
by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations, a possibility which management
believes is remote. Upon payment of any liability incurred by the Fund, the
shareholder paying such liability will be entitled to reimbursement from
the general assets of the Fund. The Trustees intend to conduct the
operations of the Fund in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
discussed under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove
Trustees.
The Transfer Agent maintains a record of your ownership and sends you
confirmation and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free 1-800-645-6561.
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.
(23)
__________________________________________________________________________
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
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 Florida Intermediate Municipal Bond Fund (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 toll free 1-800-645-
6561.
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
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . . . . . B-14
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . 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-23
Information About the Fund . . . . . . . . . . . . . . . . . . . . . . . B-24
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . . . B-24
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-29
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . B-37
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . B-50
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 Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation Percent
("Fitch") or ("Moody's") or ("S&P") of Value
- --------------- ----------------- ----------------- --------
AAA Aaa AAA 61.0%
AA Aa AA 21.7%
A A A 9.2%
BBB Baa BBB 3.2%
F-1 MIG 1 SP-1+/SP-1 .8%
F-1 P-1 A-1 .2%
Not Rated Not Rated Not Rated 3.9%(*)
------
100.0%
======
__________________________________
1 Included in the Not Rated category are securities comprising 3.1% 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: Baa/BBB (2.9%) and Ba/BB (.2%).
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity, or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, 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 the value
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 and the creditworthiness of the
issuers of such securities.
Futures Contracts and Options on Futures Contracts. Upon exercise
of an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and accumulated balance in the
writer's futures margin account, which represents the amount by which the
market price of the futures contract exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option
on a futures contract is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the time
of sale, there are no daily cash payments to reflect changes in the value
of the underlying contract; however, the value of the option does change
daily and that change would be reflected in the net asset value of the
Fund.
Lending Portfolio Securities. To a limited extent, the Fund may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to a 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 from 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 at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price
usually not more than one week after its purchase. The Fund's custodian
or sub-custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and
Exchange Commission to be loans by the Fund. In an attempt to reduce the
risk of incurring a loss on a repurchase agreement, the Fund will enter
into repurchase agreements only with domestic banks with total assets in
excess of one billion dollars or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which the Fund may invest, and will require that
additional securities be deposited with it if the value of the securities
purchased should decrease below resale price. The Manager will monitor on
an ongoing basis the value of the collateral to assure that it always
equals or exceeds the repurchase price. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the seller does
not repurchase them in accordance with the repurchase agreement. In
addition, if bankruptcy proceedings are commenced with respect to the
seller of the securities, realization on the securities by the Fund may be
delayed or limited. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into repurchase
agreements.
Risk Factors
Investing in Florida Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
Florida Municipal Obligations. The Florida Constitution and Statutes
mandate that the State budget as a whole, and each separate fund within
the State budget, be kept in balance from currently available revenues
each State fiscal year. Florida's Constitution permits issuance of
Florida Municipal Obligations pledging the full faith and credit of the
State, with a vote of the electors, to finance or refinance State fixed
capital outlay projects authorized by the Legislature provided that the
outstanding principal does not exceed 50% of the total tax revenues of the
State for the two preceding years. Florida's Constitution also provides
that the Legislature shall appropriate monies sufficient to pay debt
service on State bonds pledging the full faith and credit of the State as
the same becomes due. All State tax revenues, other than trust funds
dedicated by Florida's Constitution for other purposes, would be available
for such an appropriation, if required. Revenue bonds may be issued by
the State or its agencies without a vote of Florida's electors only to
finance or refinance the cost of State fixed capital outlay projects which
may be payable solely from funds derived directly from sources other than
State tax revenues. Fiscal year 1993-94 total General Revenue and Working
Capital funds available totalled approximately $13.555 billion, an 8.2%
increase over 1992-93, which resulted in unencumbered reserves of
approximately $277.9 million at the end of fiscal 1993-94. General
Revenue and Working Capital funds available for fiscal 1994-95 are
estimated to total $14.311 billion, a 5.6% increase over 1993-94. The
massive effort to rebuild and replace destroyed or damaged property in
South Florida after Hurricane Andrew is considered to be responsible for
the positive revenue outlook. Investors should review Appendix A which
more fully sets forth these and other risk factors.
Lower Rated Bonds. The Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See 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. 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 disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The
Fund has no arrangement with 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 net 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 as fundamental policies. Fundamental
policies cannot be changed without approval by the holders of a majority
(as defined in the Investment Company Act of 1940, as amended (the "Act"))
of the Fund's outstanding voting shares. Investment restrictions numbered
8 through 12 are not fundamental policies and may be changed by a vote of
a majority of the Trustees at any time. The Fund may not:
1. Invest more than 25% of its assets in the securities of
issuers in any single industry; provided that there shall be no limitation
on the purchase of Municipal Obligations and, for defensive purposes,
securities issued by banks and 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 contract 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 Trustees.
6. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent that the activities permitted in
Investment Restriction Nos. 2, 3 and 10 may be deemed to give rise to a
senior security.
7. 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 relating 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.
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
Trustees 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 Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees and Officers of the Fund
GORDON J. DAVIS, Trustee. Since 1983, Mr. Davis has been a 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 various other
corporate and not-for-profit boards. His address is 241 Central Park
West, New York, New York 10024.
*DAVID P. FELDMAN, Trustee. 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, Trustee. 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, she served as Secretary for
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 Harcourt General Corporation, a publishing, insurance and
retailing company, Ameritech 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, Trustee. Writer and columnist; former Senator from
Minnesota from 1958-1970. His address is P.O. Box 22, Woodville,
Virginia 22749.
*RICHARD J. MOYNIHAN, President, Investment Officer and Trustee. An
employee of the Manager and an officer, director or trustee of other
investment companies advised or administered by the Manager. His
address is 200 Park Avenue, New York, New York 10166.
DANIEL ROSE, Trustee. 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.
SANDER VANOCUR, Trustee. 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, Trustee. Financial Consultant. His address is 290 Riverside
Drive, New York, New York 10025.
The "non-interested Trustees, 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
Municipal Money Market, 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 and Dreyfus New Jersey Municipal
Bond Fund, Inc. 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.
The Fund does not pay any remuneration to its officers and Trustees
other than fees and expenses to Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $13,932 for the fiscal year ended December 31,
1993 for all such Trustees as a group.
Ordinarily, meetings of shareholders for the purpose of electing
Trustees will not be held unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders,
at which time the Trustees then in office will call a shareholders'
meeting for the election of Trustees. Under the Act, shareholders of
record of not less than two-thirds of the outstanding shares of the Fund
may remove a Trustee through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. Under the Fund's
Agreement and Declaration of Trust, the Trustees are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
Officers of the Fund Not Listed Above
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. 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 and
administered 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.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of
the Manager and an officer of other investment companies advised or
administered by the Manager.
JEFFREY N. NACHMAN, Vice President and Treasurer. Vice President-Mutual
Fund Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
GREGORY S. GRUBER, Controller. Senior Accounting Manager of 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 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.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on March 3, 1994.
The following persons are also officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive Officer;
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; John J. Pyburn and Katherine C. Wickham,
Assistant Vice Presidents; 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 December 20, 1991 with the Fund, which
is subject to annual approval by (i) the Fund's Board of Trustees 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 Trustees 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 May 11, 1993.
The Agreement was last approved by the Fund's Board of Trustees, including
a majority of the Trustees 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
Trustees or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days' notice, by the Manager. The Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The 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 Trustees. The Manager is responsible for investment
decisions, and provides the Fund with Investment Officers who are
authorized by the Board of Trustees to execute purchases and sales of
securities. The Fund's Investment Officers are Richard J. Moynihan, A.
Paul Disdier, Karen M. Hand, Stephen C. Kris, L. Lawrence Troutman, Samuel
J. Weinstock, Monica S. Wieboldt and Jill C. Shaffro. 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 Trustees' 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: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Trustees who are not
officers, directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports and
meetings, costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to
existing shareholders, and any extraordinary expenses.
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.
The Manager, from time to time, from its own funds, other than the
management fee paid by the Fund, but including past profits, may make
payments for shareholder servicing and distribution services to the
Distributor. The Distributor in turn may pay part or all of such
compensation to securities dealers or other persons for their servicing or
distribution assistance.
As compensation for the Manager's services, the Fund pays 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. All fees and expenses are accrued
daily and deducted before declaration of dividends to investors. For the
period January 21, 1992 (commencement of operations) through December 31,
1992, and the fiscal year ended December 31, 1993, no management fees were
paid by the Fund pursuant to undertakings by the Manager.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan"),
pursuant to which the Fund reimburses the Distributor for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by
the Trustees who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plan is subject to annual
approval by such vote of the Trustees cast in person at a meeting called
for the purpose of voting on the Plan. The Plan was so approved on July
20, 1993. The Plan is terminable at any time by vote of a majority of the
Trustees who are not "interested persons" and who have no direct or
indirect financial interest in the operation of the Plan.
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.
Services Charges. There is no sales or service charge by the Fund or
the Distributor, although investment dealers, banks and other institutions
may make reasonable charges to investors for their services. The services
provided and the applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been given to
understand that these fees may be charged for customer services including,
but not limited to, same-day investment of client funds; same-day access
to client funds; advice to customers about the status of their accounts,
yield currently being paid or income earned to date; provision of periodic
account statements showing security and money market positions; other
services available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such fees will
be deducted monthly from the investor's account, which on smaller accounts
could constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the
best interest of investors. Investors should be aware that they may
purchase shares of the Fund directly from the Fund without imposition of
any maintenance or service charges, other than those already described
herein. In some states, banks or other financial institutions effecting
transactions in Fund shares may be required to register as dealers
pursuant to state law.
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.
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
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 and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer
Agent receives the redemption request in proper form. Redemption proceeds
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or
Shareholder Services Form. Redemption proceeds, if wired, must be in the
amount of $1,000 or more and will be wired to the investor's account at
the bank of record designated in the investor's file at the Transfer
Agent, if the investor's bank is a member of the Federal Reserve System,
or to a correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas 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 "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians and may accept other
suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to signature-
guarantees, please call the telephone number 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 Trustees reserves the right to make payments in whole
or 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 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, 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 described above under "Exchange Privilege."
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
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 the payment date their dividends or
dividends and capital gain distributions, if any, from the Fund in shares
of another fund in the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of other funds purchased pursuant to this Privilege
will be purchased on the basis of relative net asset value per share as
follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds
that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will
be deducted.
C. Dividends and distributions paid by a fund which charges a
sales load may be invested in shares of other funds sold with
a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered
Shares exceeds the maximum sales load charged by the fund
from which dividends or distributions are being swept,
without giving effect to any reduced loads, the difference
will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be
imposed upon redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
by an independent pricing service (the "Service") approved by the Board of
Trustees. 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 Trustees. Expenses and fees, including the
management fee (reduced by the expense limitation, if any), 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 shall
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 should be a return
on the 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. In addition, all or a portion of the gain realized from
engaging in "conversion transactions" may be treated as ordinary income
under Section 1258. "Conversion transactions" are defined to include
certain forward, futures, option and "straddle" transactions, transactions
marketed or sold to produce capital gains, or transactions described in
Treasury regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund
from certain financial futures and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of such futures and
options as well as from closing transactions. In addition, any such
futures or options remaining unexercised at the end of the fund's taxable
year will be treated as sold for their then fair market value, resulting
in additional gain or loss to the Fund characterized in the manner
described above.
Offsetting positions held by the Fund involving certain financial
futures contracts or options transactions may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, override or modify the provisions
of Section 1256. As such, all or a portion of any short or long-term
capital gain from certain "straddle" and/or conversion transactions may be
recharacterized to ordinary income.
If the fund were treated as entering into "straddles" by reason of
its engaging in financial futures contract or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options comprising a part of such "straddles" were governed by Section
1256 of the Code. The Fund may make one or more elections with respect to
"mixed straddles." If no election is made, to the extent the straddle
rules apply to positions established by the Fund, losses realized by the
Fund will be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion
transaction rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss and long-term capital gain may
be recharacterized as short-term capital gain or ordinary income.
Investment by the Fund in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, the
Fund could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The Fund's current yield for the 30-day period ended December 31,
1993 was 4.31%, 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 3.89%. 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 Federal personal income tax rate of 39.60%, the Fund's
tax equivalent yield for the 30-day period ended December 31, 1993 was
7.14%, 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 6.44%. 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 Fund's average annual total return for the 1 and 1.945 year
periods ended December 31, 1993 was 12.84% and 11.41%, 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"the 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 January 21, 1992 (commencement
of operations) through December 31, 1993 was 23.39%. The Fund's total
return figure referenced above reflects the absorption of certain
expenses. Had these expenses not been absorbed, total return would have
been lower. 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 indicative of the
Fund's past or future performance. Advertising materials for the Fund
also may refer to or discuss then-current or past economic conditions,
developments and/or events, including those relating to or arising from
actual or proposed tax legislation. From time to time, advertising
materials for the Fund may refer to statistical or other information
concerning trends relating to investment companies, as compiled by
industry associations such as the Investment Company Institute, and may
refer to Morningstar ratings and related analyses supporting such ratings.
From time to time, advertising materials for the Fund may
occasionally include information about other similar funds and may refer
to the Fund as the first Florida municipal bond fund available to
investors with no sales load. In addition, such materials may include a
discussion or a comparison of certain specific attributes of those funds,
including, but not limited to, required minimum and subsequent
investments, required minimum balances, sales loads, portfolio investments
and other investment services.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of beneficial interest being sold pursuant to the Fund's
Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS - INVESTING IN
FLORIDA MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information
available as of the date of this Statement of Additional Information.
While the Fund has not independently verified such information, it has no
reason to believe that such information is not correct in all material
respects.
General - The Florida Constitution and Statutes mandate that the
State budget as a whole, and each separate fund within the State budget,
be kept in balance from currently available revenues each fiscal year.
Florida's Constitution permits issuance of Florida Municipal Obligations
pledging the full faith and credit of the State, with a vote of the
electors, to finance or refinance fixed capital outlay projects authorized
by the Legislature provided that the outstanding principal does not exceed
50% of the total tax revenues of the State for the two preceding years.
Florida's Constitution also provides that the Legislature shall
appropriate monies sufficient to pay debt service on State bonds pledging
the full faith and credit of the State as the same becomes due.
Revenues and Expenditures. Financial operations of the State of
Florida covering all receipts and expenditures are maintained through the
use of three fund types - the General Revenue Fund, Trust Funds and the
Working Capital Fund. The General Revenue Fund receives the majority of
State tax revenues. The Trust Funds consist of monies received by the
State which under law or trust agreement are segregated for a purpose
authorized by law. Revenues in the General Revenue Fund which are in
excess of the amount needed to meet appropriations may be transferred to
the Working Capital Fund. The Florida Constitution and Statutes mandate
that the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each State
fiscal year.
For fiscal year 1993-94, General Revenue plus Working Capital funds
available totalled approximately $13.555 billion, an 8.2% increase over
1992-93, resulting in unencumbered reserves of approximately $277.9
million. This amount reflected a transfer of $190 million, out of an
estimated $220 million in non-recurring revenue due to Hurricane Andrew,
to a hurricane relief trust fund. For fiscal year 1994-95, General
Revenue plus Working Capital funds available are estimated to total
approximately $14.311 billion, a 5.6% increase over 1993-94. This amount
reflects a transfer of $159 million in non-recurring revenue due to
Hurricane Andrew, to a hurricane relief trust fund. Fiscal year 1992-93
General Revenue plus Working Capital funds available totalled $12.533
billion, and total effective appropriations were $11.987 billion,
resulting in unencumbered reserves of $543.5 million at the end of the
fiscal year. The massive effort to rebuild and replace destroyed or
damaged property in the wake of Hurricane Andrew is responsible for the
substantial positive revenue estimates shown. Most of the impact is in
the sales tax. Florida ended fiscal years 1990-91 and 1991-92 with
General Revenue plus Working Capital funds unencumbered reserves of
approximately $50 million and $184.6 million, respectively.
In fiscal year 1992-93, the State derived approximately 62% of its
total direct revenues to the General Revenue Fund, Trust Funds and Working
Capital Fund from State taxes. Federal grants and other special revenues
accounted for the remaining revenues. Major sources of tax revenues to
the General Revenue Fund are the sales and use tax, corporate income tax,
intangible personal property tax and beverage tax, which amounted to 68%,
7%, 4% and 4%, respectively, of total General Revenue Fund receipts.
State expenditures are categorized for budget and appropriation
purposes by type of fund and spending unit, which are further subdivided
by line item. In fiscal year 1992-93, expenditures from the General
Revenue Fund for education, health and welfare and public safety amounted
to approximately 49%, 30% and 11%, respectively, of total General Revenues
fund receipts.
Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax. The sales tax is 6% of the sales price
of tangible personal property sold at retail in the State. The use tax is
6% of the cost price of tangible personal property when the same is not
sold but is used, or stored for use, in the State. The use tax also
applies to the use in the State of tangible personal property purchased
outside Florida which would have been subject to the sales tax if
purchased from a Florida dealer. Less than 10% of the sales tax is
designated for local governments and is distributed to the respective
counties in which collected for use by such counties and municipalities
therein. In addition to this distribution, local governments may (by
referendum) assess a .5% or 1% discretionary sales surtax within their
county. Proceeds from this local option sales tax are earmarked for
funding local infrastructure programs and acquiring land for public
recreation or conservation or protection of natural resources. In
addition, non-consolidated counties with populations in excess of 800,000
may levy a local option sales tax to fund indigent health care. This tax
rate may not exceed .5% and the combined levy of the indigent health care
surtax and the infrastructure surtax described above may not exceed 1%.
Furthermore, charter counties which adopted a charter prior to June 1,
1976, and each county with a consolidated county/municipal government, may
(by referendum) assess up to a 1% discretionary sales surtax within their
county. Proceeds from this tax are earmarked for the development,
construction, maintenance and operation of a fixed guideway rapid transit
system or may be remitted to an expressway or transportation authority for
use on county roads and bridges, for a bus system, or to service bonds
financing roads and bridges. The two taxes, sales and use, stand as
complements to each other, and taken together provide a uniform tax upon
either the sale at retail or the use of all tangible personal property
irrespective of where it may have been purchased. This tax also includes
a levy on the following: (i) rentals of tangible personal property,
transient lodging and non-residential real property; (ii) admissions to
places of amusements, most sports and recreation events; (iii) utilities,
except those used in homes; and (iv) restaurant meals. Exemptions
include: groceries; medicines; hospital rooms and meals; fuels used to
produce electricity; purchases by religious, charitable and educational
nonprofit institutions; most professional, insurance and personal service
transactions; apartments used as permanent dwellings; the trade-in value
of motor vehicles; and residential utilities.
All receipts of the sales and use tax, with the exception of the tax
on gasoline and special fuels, are credited to either the General Revenue
Fund, the Solid Waste Management Trust Fund, or counties and cities. For
the State fiscal year which ended June 30, 1993, receipts from this source
were $9.426 billion, an increase of 12.5% from fiscal year 1991-92.
Motor Fuel Tax. The second largest source of State tax receipts is
the tax on motor fuels. Preliminary data show collections from this
source in the State fiscal year ended June 30, 1992, were $1.476 billion.
However, these revenues are almost entirely dedicated trust funds for
specific purposes and are not included in the State General Revenue Fund.
State and local taxes on motor fuels (gasoline and special fuel)
include several distinct fuel taxes: (i) the State sales tax on motor
fuels, levied at 6% of the average retail price per gallon of fuel, not to
fall below 6.9 cents per gallon; (ii) the State excise tax of four cents
per gallon of motor fuel, proceeds distributed to local governments;
(iii) the State Comprehensive Enhanced Transportation System (SCETS) tax,
which is levied at a rate in each county equal to two-thirds of the sum of
the county's local option motor fuel taxes; and (iv) local option motor
fuel taxes, which may range between one cent to seven cents per gallon.
Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an
excise tax on beer, wine, and liquor. This tax is one of the State's
major tax sources, with revenues totalling $442.2 million in State fiscal
year ended June 30, 1993. Alcoholic beverage receipts increased 1.6% from
the previous year's total. The revenues collected from this tax are
deposited into the State's General Revenue Fund.
The 1990 Legislature established a surcharge on alcoholic beverages.
This charge is levied on alcoholic beverages sold for consumption on
premises. The surcharge is at ten cents per ounce of liquor, ten cents
per four ounces of wine, four cents per twelve ounces of beer. Most of
these proceeds are deposited into the General Revenue Fund. In fiscal
1992-93, a total of $97.0 million was collected.
Corporate Income Tax. Pursuant to an amendment to the State
Constitution, the State Legislature adopted, effective January 1, 1972,
the "Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations and other artificial entities
for the privilege of conducting business, deriving income or existing
within the State. This tax does not apply to natural persons who engage
in a trade or business or profession under their own or any fictitious
name, whether individually as proprietorships or in partnerships with
others, estates of decedents or incompetents, or testamentary trusts.
The tax is imposed in an amount equal to 5.5% of the taxpayer's net
corporate income for the taxable year, less a $5,000 exemption, as defined
in such Code. Net income is defined by the Code as that share of a
taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales
(50%), property (25%) and payroll (25%). All business income is
apportioned and non-business income is allocated to a single jurisdiction,
usually the state of commercial domicile.
All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year ended June 30, 1993, receipts from this
source were $846.6 million, an increase of 5.6% from fiscal year 1991-92.
Documentary Stamp Tax. Deeds and other documents relating to realty
are taxed at 70 cents per $100 of consideration, while corporate shares,
bonds, certificates of indebtedness, promissory notes, wage assignments
and retail charge accounts are taxed at 35 cents per $100 of
consideration. Documentary stamp tax collections totalled $639 million
during fiscal year 1992-93, posting a 27% increase from the previous
fiscal year. The General Revenue Fund receives approximately 71% of
documentary stamp tax collections.
Gross Receipts Tax. Effective July 1, 1992, the tax rate was
increased from 2.25% to 2.5% of the gross receipts of electric, natural
gas and telecommunications services. All gross receipts utilities
collections are credited to the Public Education Capital Outlay and Debt
Service Trust Fund. In fiscal year 1992-93, gross receipts utilities tax
collections totalled $447.9 million, an increase of 14.4% over the
previous fiscal year.
Intangible Personal Property Tax. This tax is levied on two distinct
bases: i) stocks, bonds, including bonds secured by Florida realty,
notes, government leaseholds, interests in limited partnerships registered
with the SEC, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2
mills, ii) mortgages and other obligations secured by liens on Florida
realty, taxed with a non-recurring 2 mill tax.
Of the tax proceeds, 33.5% is distributed to the County Revenue
Sharing Trust Fund. The remainder is distributed to the General Revenue
Fund.
Fiscal year 1992-93 total intangible personal property tax
collections were $783.4 million, a 33% increase over the prior year.
Severance Taxes. The severance tax includes the taxation of oil, gas
and sulfur production and a tax on the severance of primarily phosphate
rock and other solid minerals. Total collections from severance taxes
totalled $64.5 million during fiscal year 1992-93, down 4% from the
previous fiscal year.
Lottery. The 1987 Legislature created the Department of the Lottery
to operate the State Lottery and setting forth the allocation of the
revenues. Of the revenues generated by the Lottery, 50% is to be returned
to the public as prizes; at least 38% is to be deposited in the
Educational Enhancement Trust Fund (for public education); and no more
than 12% can be spent on the administrative cost of operating the lottery.
Fiscal year 1992-93 produced ticket sales of $2.13 billion of which
education received approximately $810.4 million.
APPENDIX B
Description of Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's") and Fitch Investors Service, Inc.
("Fitch") ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
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 payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
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 sign (+)
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 this 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 sign
(+) 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 some
time in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
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 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 differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while other factors
of major importance in bond risk, long-term secular trends for example,
may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment
grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
Commercial Paper 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 will normally be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest
potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS-96.3% AMOUNT VALUE
FLORIDA-88.4% ------------ ------------
<S> <C> <C>
Alachua County Health Facilities Authority, Health Facilities Revenue, Refunding
(Santa Fe Healthcare Facilities Project) 6.875%, 11/15/2002...................... $ 4,540,000 $ 4,920,543
Bay County, RRR, Refunding:
6%, 7/1/2001 (Insured; MBIA)..................................................... 1,250,000 1,387,538
6.10%, 7/1/2002 (Insured; MBIA).................................................. 2,095,000 2,348,453
6.20%, 7/1/2003 (Insured; MBIA).................................................. 1,250,000 1,412,800
Boca Raton, Water and Sewer Revenue, Refunding 5.60%, 10/1/2004.......................... 2,000,000 2,144,160
Boynton Beach, Public Service Tax Revenue, Refunding 5.20%, 11/1/2005 (Insured; AMBAC)... 1,475,000 1,545,357
Brevard County, Refunding 5.45%, 3/1/2002 (Insured; MBIA)................................ 1,250,000 1,342,675
Brevard County Health Facilities Authority, Revenue:
(Hospital-Holmes Regional Medical Center Project) 5.10%, 10/1/2000............... 2,000,000 2,028,320
(Refunding-Wuesthoff Memorial Hospital) 6.90%, 4/1/2002.......................... 2,500,000 2,816,925
Broward County:
Gas Tax Revenue 6.50%, 9/1/2004.................................................. 1,200,000 1,339,428
Water and Sewer Utility Revenue, Refunding 5%, 10/1/2006 (Insured; AMBAC)........ 1,000,000 1,011,000
Broward County Health Facilities Authority, HR, Refunding
(Holy Cross Hospital Inc.) 5.20%, 6/1/2003 (Insured; AMBAC)...................... 2,295,000 2,422,487
Broward County School Board, COP:
6%, 7/1/2001 (Insured; AMBAC).................................................... 1,000,000 1,104,620
6.10%, 7/1/2002 (Insured; AMBAC)................................................. 2,000,000 2,229,920
Broward County School District, Refunding:
5.70%, 2/15/2001................................................................. 3,000,000 3,249,390
5.80%, 2/15/2002................................................................. 2,000,000 2,182,220
5.30%, 2/15/2004................................................................. 6,000,000 6,311,700
6%, 2/15/2004.................................................................... 3,000,000 3,301,710
Canaveral Port Authority, Revenue, Refunding:
6.10%, 6/1/2001 (Insured; FGIC).................................................. 2,000,000 2,233,160
Port Improvement 5.40%, 6/1/2002 (Insured; FGIC)................................. 2,000,000 2,145,140
Charlotte County, Utility Revenue:
6.75%, 10/1/2004 (Insured; FGIC)................................................. 2,390,000 2,815,324
Refunding 5.125%, 10/1/2004 (Insured; FGIC)...................................... 1,500,000 1,569,960
Citrus County, Hospital Board Revenue, Refunding
(Citrus Memorial Hospital) 6%, 8/15/2002 (Insured; FSA).......................... 1,000,000 1,109,170
Collier County School Board, COP, Refunding 5.50%, 2/15/2003 (Insured; FSA).............. 3,000,000 3,187,320
Coral Springs, Refunding:
5.20%, 10/1/2003................................................................. 1,190,000 1,242,634
Water and Sewer Revenue 5.50%, 9/1/2003 (Insured; FGIC).......................... 1,425,000 1,539,071
Dade County:
Aviation Revenue:
6%, 10/1/2003 (Insured; MBIA)............................................ 2,000,000 2,204,580
6.15%, 10/1/2004 (Insured; MBIA)......................................... 2,000,000 2,215,780
6.75%, 10/1/2006......................................................... 2,750,000 2,996,867
Refunding 5.30%, 10/1/2002............................................... 4,000,000 4,220,120
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Dade County (continued):
(Seaport) 5.90%, 10/1/2002 (Insured; AMBAC)...................................... $ 2,470,000 $ 2,732,783
School Board, COP
(G. Holmes Braddock Senior High School) 5.125%, 8/1/2003 (Insured; MBIA). 1,500,000 1,577,040
School District, Refunding:
5.20%, 7/15/2004 (Insured; AMBAC)........................................ 6,000,000 6,284,760
5.20%, 7/15/2005 (Insured; AMBAC)........................................ 6,425,000 6,684,506
Public Facilities Revenue, Refunding
(Jackson Memorial Hospital) 5.20%, 6/1/2004 (Insured; MBIA).............. 2,750,000 2,864,400
Water and Sewer Systems Revenue, Refunding
4.70%, 10/1/2004 (Insured; FGIC)......................................... 5,000,000 5,058,550
Dade County Health Facilities Authority, HR, Refunding:
(North Shore Medical Center Project):
5.80%, 8/15/2000 (Insured; AMBAC)........................................ 1,650,000 1,799,144
5.90%, 8/15/2001 (Insured; AMBAC)........................................ 1,725,000 1,897,948
6%, 8/15/2002 (Insured; AMBAC)........................................... 1,760,000 1,952,139
Deerfield Beach, Water and Sewer Revenue, Refunding and Improvement
6.125%, 10/1/2003 (Insured; FGIC)................................................ 1,180,000 1,329,895
Delray Beach, Water and Sewer Revenue, Refunding 5.10%, 10/1/2004 (Insured; AMBAC)....... 1,500,000 1,544,940
Dunedin, HR, Refunding (Mease Health Care) 5%, 11/15/2004 (Insured; MBIA)................ 3,550,000 3,679,398
Duval County School District:
7.10%, 8/1/1999.................................................................. 1,000,000 1,108,690
Refunding 5.90%, 8/1/2002 (Insured; AMBAC)....................................... 4,500,000 4,961,070
Escambia County, Sales Tax Revenue, Refunding 5.30%, 1/1/2004 (Insured; FGIC)............ 2,050,000 2,167,362
First Florida Governmental Financing Commission, Revenue:
6.30%, 7/1/2002 (Insured; MBIA).................................................. 1,000,000 1,135,030
Refunding 6%, 7/1/2003 (Insured; MBIA)........................................... 3,000,000 3,344,760
Florida, Pollution Control 5.90%, 7/1/2002............................................... 2,500,000 2,768,175
Florida Board of Education, Capital Outlay:
6.919%, 6/1/2004 (a,b)........................................................... 7,000,000 7,455,000
6.80%, 6/1/2006.................................................................. 2,900,000 3,218,449
Public Education:
5.30%, 6/1/2003.......................................................... 3,000,000 3,189,510
Refunding 5.70%, 6/1/2003................................................ 3,665,000 4,000,714
Florida Division of Bond Finance Department, General Services Revenues:
(Department of Natural Resources-Preservation 2000):
5.80%, 7/1/2001 (Insured; MBIA).......................................... 2,000,000 2,195,960
5.90%, 7/1/2002 (Insured; MBIA).......................................... 3,850,000 4,262,990
6.40%, 7/1/2003 (Insured; AMBAC)......................................... 3,450,000 3,912,783
6.10%, 7/1/2004 (Insured; MBIA).......................................... 2,420,000 2,684,917
(Refunding-Department of Natural Resources-Save Our Coast)
6.40%, 7/1/2005 (Insured; MBIA).......................................... 1,000,000 1,112,790
Florida Local Government Finance Authority, Revenue
7.75%, 3/1/2000 (LOC; Sumitomo Bank) (c)......................................... 2,000,000 2,081,020
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Florida Municipal Power Agency, Revenue:
(All-Requirements Power Supply Project):
5.75%, 10/1/2000 (Insured; AMBAC)........................................ $ 1,000,000 $ 1,093,890
5.80%, 10/1/2001 (Insured; AMBAC)........................................ 1,000,000 1,100,650
5.90%, 10/1/2002 (Insured; AMBAC)........................................ 1,000,000 1,109,790
6%, 10/1/2003 (Insured; AMBAC)........................................... 1,000,000 1,124,060
6.10%, 10/1/2004 (Insured; AMBAC)........................................ 1,000,000 1,131,250
(Refunding-Saint Lucie Project) 5.40%, 10/1/2005 (Insured; FGIC)................. 8,565,000 9,080,613
Florida Sunshine Skyway, Revenue, Refunding:
6.10%, 7/1/2001.................................................................. 1,650,000 1,813,169
6.20%, 7/1/2002.................................................................. 1,315,000 1,454,324
Gainesville, Utilities Systems Revenue 6.20%, 10/1/2003.................................. 1,650,000 1,855,408
Greater Orlando Aviation Authority, Orlando Airport Facilities Revenue:
6.25%, 10/1/2006 (Insured; FGIC)................................................. 1,600,000 1,762,144
Refunding:
6.10%, 10/1/2002 (Insured; FGIC)......................................... 2,000,000 2,247,640
5.75%, 10/1/2003 (Insured; AMBAC)........................................ 5,000,000 5,496,700
Hernando County School District, Refunding:
6.10%, 8/1/2003 (Insured; MBIA).................................................. 2,000,000 2,246,780
5.40%, 9/1/2003 (Insured; MBIA).................................................. 1,290,000 1,383,228
5.50%, 9/1/2004 (Insured; MBIA).................................................. 1,580,000 1,700,080
Hillsborough County:
Capital Improvement Revenue (County Center Project) 6.125%, 7/1/2003............. 1,150,000 1,266,070
(Refunding-Environmentally Sensitive Lands Acquisition and Protection):
5.875%, 7/1/2001......................................................... 1,295,000 1,398,108
6%, 7/1/2002............................................................. 2,080,000 2,264,704
Utility Revenue, Refunding Zero Coupon, 8/1/2006 (Insured; MBIA)................. 2,500,000 1,338,000
Hillsborough County Aviation Authority, Revenue, (Tampa International Airport):
4.90%, 10/1/2005 (Insured; FGIC)................................................. 1,635,000 1,645,023
Refunding:
5.30%, 10/1/2001 (Insured; AMBAC)........................................ 3,000,000 3,187,590
5.45%, 10/1/2002 (Insured; AMBAC)........................................ 3,295,000 3,528,945
5%, 10/1/2003 (Insured; FGIC)............................................ 2,345,000 2,425,316
6.70%, 10/1/2004 (Insured; FGIC)......................................... 3,000,000 3,356,970
Hillsborough County Hospital Authority, HR, Refunding
(Tampa General Hospital Project) 6.125%, 10/1/2002 (Insured; FSA)................ 3,350,000 3,744,998
Hollywood, Water and Sewer Revenue 6%, 10/1/1999 (Insured; FGIC)......................... 1,000,000 1,096,360
Homestead, Special Insurance Assessment Revenue
(Hurricane Andrew Covered Claim):
5.125%, 3/1/2002 (Insured; MBIA)......................................... 2,300,000 2,395,588
5.25%, 3/1/2003 (Insured; MBIA).......................................... 3,500,000 3,660,370
Indian Trace Community Development District, Water and Sewer Revenue 8%, 4/1/2001........ 3,035,000 3,253,732
Jacksonville:
HR (University Medical Center Inc. Project) 5.90%, 2/1/2001...................... 550,000 597,053
Excise Taxes Revenue, Refunding 4.90%, 10/1/2003 (Insured; FGIC)................. 2,500,000 2,588,000
Guaranteed Entitlement Revenue, Refunding 5.50%, 10/1/2002 (Insured; AMBAC)...... 1,400,000 1,514,968
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Jacksonville Beach, Utilities Revenue, Refunding 5.125%, 10/1/2004 (Insured; MBIA)....... $ 1,500,000 $ 1,569,960
Jacksonville Electric Authority, Revenue:
Electric Systems, Refunding 5.40%, 10/1/2004..................................... 2,250,000 2,384,528
(Saint John's River):
6.40%, 10/1/2000......................................................... 5,000,000 5,630,850
Refunding:
5%, 10/1/2004.................................................... 12,275,000 12,661,540
5%, 10/1/2005.................................................... 4,925,000 5,039,112
Jacksonville Health Facilities Authority, HR:
(Memorial Medical Center Project) 6.20%, 5/1/2000 (Insured; MBIA)................ 1,000,000 1,108,370
(Refunding-Daughters of Charity) 4.75%, 11/15/2003............................... 5,000,000 4,999,700
Kissimmee, Water and Sewer Revenue, Refunding:
5.40%, 10/1/2002 (Insured; AMBAC)................................................ 1,035,000 1,103,993
5.50%, 10/1/2003 (Insured; AMBAC)................................................ 1,000,000 1,070,800
Kissimmee Utility Authority, Electric System Revenue, Refunding and Improvement
5%, 10/1/2003 (Insured; FGIC).................................................... 2,000,000 2,084,500
Lake County Resource Recovery, IDR
(Refunding-NRG/Recovery Group) 5.40%, 10/1/2003.................................. 8,440,000 8,549,551
Lakeland, Electric and Water Revenue:
6.70%, 10/1/1999................................................................. 1,000,000 1,130,260
Refunding:
5.375%, 10/1/2002........................................................ 2,000,000 2,135,700
5.625%, 10/1/2005........................................................ 5,455,000 5,880,490
Lee County, Capital Improvement Revenue, Refunding 5.10%, 10/1/2003 (Insured; MBIA)...... 2,500,000 2,625,175
Lee County Hospital Board of Directors, HR, Refunding
(Lee Memorial Hospital Project) 5.80%, 4/1/2002 (Insured; MBIA).................. 2,730,000 2,996,776
Lee County School Board, COP 5.15%, 8/1/2006 (Insured; FSA).............................. 2,750,000 2,822,325
Marion County School District, Refunding 5.25%, 8/1/2002 (Insured; FSA).................. 1,500,000 1,594,665
Melbourne, Water and Sewer Revenue, Refunding 6%, 10/1/2001 (Insured; FGIC).............. 745,000 829,215
Miami, Refunding 5.70%, 12/1/2004 (Insured; FGIC)........................................ 6,025,000 6,588,458
Miami Beach Health Facilities Authority, HR, Refunding
(Mount Sinai Medical Center Project):
5.60%, 11/15/2002........................................................ 1,100,000 1,198,131
5.70%, 11/15/2003........................................................ 1,500,000 1,644,615
Nassau County, PCR, Refunding, (ITT Rayonier Inc. Project):
5.70%, 6/1/2001.................................................................. 2,080,000 2,215,429
5.90%, 7/1/2005.................................................................. 1,075,000 1,112,120
North Broward Hospital District, HR, Refunding:
6.10%, 1/1/2002 (Insured; MBIA).................................................. 2,050,000 2,285,770
6.125%, 1/1/2003 (Insured; MBIA)................................................. 2,000,000 2,238,340
Ocean Highway and Port Authority, Revenue
6.25%, 12/1/2002 (LOC; ABN Amro Bank)(c)......................................... 3,500,000 3,749,970
Orange County, Revenue:
Solid Waste Facility 6%, 10/1/2002 (Insured; FGIC)............................... 1,000,000 1,116,620
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Orange County, Revenue (continued):
Tourist Development Tax:
5.90%, 10/1/2000 (Insured; AMBAC)........................................ $ 1,900,000 $ 2,095,016
6.15%, 10/1/2002 (Insured; AMBAC)........................................ 2,455,000 2,767,816
Water and Wastewater, Refunding 5.80%, 10/1/2002 (Insured; AMBAC)................ 2,080,000 2,278,328
Orange County Health Facilities Authority, Revenue:
(Hospital-Adventist/Sunbelt Project) 6.875%, 11/15/2004 (Insured; AMBAC)......... 4,000,000 4,544,520
(Hospital-Orlando Regional Healthcare-A) 5.50%, 11/1/2003 (Insured; AMBAC)....... 2,000,000 2,145,840
Orlando, Capital Improvement Special Revenue 5.50%, 10/1/2003............................ 2,000,000 2,141,600
Orlando & Orange County Expressway Authority, Florida Expressway Revenue, Refunding
5%, 7/1/2003 (Insured; AMBAC).................................................... 5,000,000 5,207,150
Orlando Utilities Commission, Water and Electric Revenue:
5%, 10/1/2004.................................................................... 3,055,000 3,165,377
Refunding 5.60%, 10/1/2003....................................................... 10,000,000 10,876,100
Osceola County:
Gas Tax Revenue, Refunding and Improvement:
5.50%, 4/1/2003 (Insured; FGIC).......................................... 1,365,000 1,470,446
5.65%, 4/1/2004 (Insured; FGIC).......................................... 1,445,000 1,567,767
Transportation Revenue
(Osceola Parkway Project) 5.375%, 4/1/2002 (Insured; MBIA)............... 1,400,000 1,497,468
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 8%, 7/1/2004............................ 4,284,000 4,391,100
Palm Bay, Utility Revenue (Palm Bay Utility Corp. Project)
5.70%, 10/1/2003 (Insured; MBIA)................................................. 1,105,000 1,210,461
Palm Beach County:
Criminal Justice Facilities Revenue:
7.10%, 6/1/2004 (Insured; FGIC).......................................... 1,500,000 1,764,420
Refunding 5.10%, 6/1/2003 (Insured; FGIC)................................ 5,000,000 5,243,650
Solid Waste IDR, (Okeelanta Power LP Project) 6.375%, 2/15/2007.................. 2,700,000 2,713,932
Palm Beach County School District, Refunding:
5.50%, 8/1/2000 (Insured; AMBAC)................................................. 1,200,000 1,293,156
5.60%, 8/1/2001 (Insured; AMBAC)................................................. 1,000,000 1,086,690
6%, 8/1/2006 (Insured; AMBAC).................................................... 1,000,000 1,079,210
Palm Beach County Solid Waste Authority, Revenue, Refunding and Improvement
5.75%, 12/1/2003 (Insured; MBIA)................................................. 3,865,000 4,254,360
Pasco County, Refunding:
Optional Gas Tax Revenue:
5.40%, 8/1/2001 (Insured; FGIC).......................................... 2,830,000 3,038,967
5.50%, 8/1/2002 (Insured; FGIC).......................................... 1,980,000 2,140,083
Water and Sewer Revenue:
5.50%, 10/1/2002 (Insured; FGIC)......................................... 2,500,000 2,705,300
5.40%, 10/1/2003 (Insured; FGIC)......................................... 1,500,000 1,596,930
Pinellas County:
Capital Improvement Revenue 5.50%, 10/1/1999..................................... 7,610,000 8,130,144
Health Facilities Authority, HR (Morton Plant Health System Project)
5.10%, 11/15/2004 (Insured; MBIA)........................................ 1,600,000 1,656,656
RRR, Refunding 6.40%, 10/1/1998 (Insured; MBIA).................................. 4,465,000 4,966,866
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Polk County, Capital Improvement Revenue, Refunding 6%, 12/1/2002 (Insured; MBIA)........ $ 1,900,000 $ 2,110,273
Port Everglades Authority, Port Improvement Revenue, Refunding
Zero Coupon, 9/1/2001 (Insured; FGIC)............................................ 10,225,000 7,236,642
Punta Gorda, Utilities Revenue, Refunding 5.50%, 1/1/2002 (Insured; AMBAC)............... 1,315,000 1,406,156
Reedy Creek Improvement District 5.80%, 6/1/1999 (Insured; MBIA)......................... 1,500,000 1,627,965
Saint John's County Industrial Development Authority, HR (Flagler Hospital Project)
5.80%, 8/1/2003.................................................................. 1,000,000 1,047,080
Saint Lucie County School District, Refunding
5.90%, 7/1/2002 (Insured; AMBAC)................................................. 1,780,000 1,970,941
Saint Petersburg, Public Improvement Revenue, Refunding 6%, 2/1/2002 (Insured; MBIA)..... 1,500,000 1,663,845
Sarasota County, Refunding:
Revenue 4.95%, 10/1/2003 (Insured; MBIA)......................................... 1,400,000 1,454,768
6.25%, 10/1/2004 (Insured; FGIC)................................................. 1,505,000 1,683,734
Utilities System Revenue:
5.50%, 10/1/2003 (Insured; FGIC)......................................... 2,130,000 2,301,657
5.60%, 10/1/2004 (Insured; FGIC)......................................... 2,345,000 2,541,910
Sarasota County School Board Financing Corp., Lease Revenue
7.20%, 7/1/2002 (Insured; MBIA).................................................. 2,000,000 2,328,640
Seminole County School District, Refunding 6%, 8/1/2003 (Insured; MBIA).................. 2,500,000 2,789,175
South Broward Hospital District, HR, Refunding 5.05%, 5/1/2004 (Insured; AMBAC).......... 3,075,000 3,167,127
Sunrise:
Public Facilities Revenue:
6.50%, 10/1/2007 (Insured; MBIA)......................................... 1,000,000 1,124,980
Refunding 6%, 10/1/2001 (Insured; MBIA).................................. 1,000,000 1,113,040
Utility System Revenue, Refunding:
5.10%, 10/1/2004 (Insured; AMBAC)........................................ 1,335,000 1,394,474
5.20%, 10/1/2005 (Insured; AMBAC)........................................ 1,395,000 1,461,151
Tallahassee, Refunding:
Health Facilities Revenue:
(Tallahassee Memorial Regional Medical Center-A)
5.50%, 12/1/2002 (Insured; MBIA)................................. 1,000,000 1,075,780
(Tallahassee Memorial Regional Medical Center-B)
5.50%, 12/1/2002 (Insured; MBIA)................................. 1,010,000 1,086,538
Municipal Electric Revenue:
5.50%, 10/1/2001......................................................... 1,475,000 1,576,451
5.60%, 10/1/2002 (Insured; FGIC)......................................... 1,550,000 1,679,053
5.75%, 10/1/2003......................................................... 1,000,000 1,085,350
Tampa, Revenue:
(Allegany Health System-Saint Joseph) 4.75%, 12/1/2004 (Insured; MBIA)........... 3,460,000 3,483,286
Packaging Facilities, Refunding (Utilities Tax)
5.20%, 10/1/2003 (Insured; AMBAC)........................................ 2,005,000 2,119,485
Solid Waste System, Refunding:
5%, 10/1/2004 (Insured; FGIC)............................................ 3,650,000 3,781,875
5%, 10/1/2005 (Insured; FGIC)............................................ 1,245,000 1,282,873
Water and Sewer 7.86%, 10/1/2006 (a)............................................. 4,000,000 4,802,840
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
FLORIDA (CONTINUED)
Volusia County, Sales Tax Revenue, Refunding and Improvement
6.40%, 10/1/2007 (Insured; MBIA)................................................. $ 2,000,000 $ 2,214,700
Volusia County Educational Facility Authority, Revenue
(Embry-Riddle Aeronautical University):
5.875%, 10/15/2002 (Insured; College Construction Loan Insurance Association) 1,145,000 1,262,488
6.10%, 10/15/2003 (Insured; College Construction Loan Insurance Association) 1,000,000 1,118,560
Volusia County School District, Refunding 6.375%, 8/1/2005 (Insured; FGIC)............... 1,000,000 1,119,140
U.S. RELATED-7.9%
Commonwealth of Puerto Rico:
Public Improvement 6.60%, 7/1/2004............................................... 2,500,000 2,928,675
Refunding 5.20%, 7/1/2003........................................................ 5,000,000 5,159,750
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding:
5.875%, 7/1/1999................................................................. 4,000,000 4,291,400
5.10%, 7/1/2003.................................................................. 5,000,000 5,125,800
Puerto Rico Electric Power Authority, Electric Revenue, Refunding
5.50%, 7/1/2002 (Insured; FSA)................................................... 6,000,000 6,499,200
Puerto Rico Municipal Finance Agency 5.60%, 7/1/2002..................................... 3,100,000 3,294,711
Puerto Rico Public Buildings Authority:
(Refunding-Public Education and Health Facilities)
6.50%, 7/1/2003.......................................................... 1,000,000 1,152,740
Revenue:
6.50%, 7/1/2003.......................................................... 1,395,000 1,620,892
Refunding 6.10%, 7/1/2000................................................ 2,500,000 2,719,250
Virgin Islands Public Finance Authority, Revenue, Refunding:
6.25%, 10/1/1996................................................................. 3,400,000 3,624,910
6.50%, 10/1/1997................................................................. 2,955,000 3,227,510
6.60%, 10/1/1998................................................................. 1,430,000 1,560,402
Virgin Islands Water and Power Authority, Water Systems Revenue
7.20%, 1/1/2002.................................................................. 1,000,000 1,131,020
------------
TOTAL MUNICIPAL BONDS (cost $480,856,724)................................................ $515,289,169
============
SHORT-TERM MUNICIPAL INVESTMENTS-3.7%
FLORIDA:
Florida Housing Finance Agency, Multi-Family Housing Revenue, VRDN:
(Sun Pointe Cove Apartments) 3.25% (LOC; Citibank) (c,d)......................... $ 3,100,000 $ 3,100,000
(Montgomery Meadows) 3.25% (LOC; Citibank) (c,d)................................. 3,000,000 3,000,000
Jacksonville Health Facilities Authority, Health Facilities Revenue, VRDN
(HSI Support System) 4.30% (LOC; Sun Bank) (Insured; MBIA) (c,d)................. 3,000,000 3,000,000
Martin County, IDR, VRDN (Indiantown Cogeneration Project)
3.25% (LOC; Credit Suisse) (c,d)................................................. 1,000,000 1,000,000
Pinellas County Health Facilities Authority, Revenue, Refunding, VRDN
(Pooled Hospital Loan Program) 4% (LOC; Chemical Bank) (c,d)..................... 9,900,000 9,900,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $20,000,000)................................ $ 20,000,000
============
TOTAL INVESTMENTS-100.0%
(cost $500,856,724).............................................................. $535,289,169
============
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
SUMMARY OF ABBREVIATIONS
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resources Recovery Revenue
HR Hospital Revenue VRDN Variable Rate Demand Note
IDR Industrial Development Revenue
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 58.6%
AA Aa AA 22.7
A A A 7.9
BBB Baa BBB 3.2
F1 MIG1 SP1 2.6
F1 P1 A1 1.1
Not Rated Not Rated Not Rated 3.9
------
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, this security amounted to $7,455,000 or 1.4%
of net assets.
(c) Secured by letters of credit.
(d) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market
interest rates.
(e) Fitch currently provides creditworthiness information for a limited
amount of investments.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1993
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $500,856,724)-see statement........................................ $535,289,169
Cash............................................................................. 1,085,920
Interest receivable.............................................................. 8,283,358
Prepaid expenses................................................................. 49,623
Due from The Dreyfus Corporation................................................. 178,398
------------
544,886,468
LIABILITIES:
Payable for investment securities purchased...................................... $ 6,161,163
Payable for shares of Beneficial Interest redeemed............................... 28,132
Accrued expenses................................................................. 201,753 6,391,048
------------ ------------
NET ASSETS............................................................................... $538,495,420
============
REPRESENTED BY:
Paid-in capital.................................................................. $503,827,395
Accumulated undistributed net realized gain on investments....................... 235,580
Accumulated gross unrealized appreciation on investments......................... 34,432,445
------------
NET ASSETS at value applicable to 38,870,974 shares outstanding
(unlimited number of $.001 par value shares of Beneficial Interest
authorized)...................................................................... $538,495,420
============
NET ASSET VALUE, offering and redemption price per share
($538,495,420 / 38,870,974 shares)............................................... $13.85
======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME:
INTEREST INCOME.................................................................. $ 22,910,976
EXPENSES:
Management fee-Note 2(a)................................................. $ 2,546,400
Shareholder servicing costs-Note 2(b).................................... 735,380
Professional fees........................................................ 62,557
Prospectus and shareholders' reports..................................... 61,853
Registration fees........................................................ 56,794
Custodian fees........................................................... 45,986
Trustees' fees and expenses-Note 2(c).................................... 13,932
Miscellaneous............................................................ 51,426
-----------
3,574,328
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................ 2,726,798
-----------
TOTAL EXPENSES........................................... 847,530
------------
INVESTMENT INCOME-NET.................................... 22,063,446
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................................. $ 618,669
Net unrealized appreciation on investments....................................... 27,359,058
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.......... 27,977,727
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 50,041,173
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1992* 1993
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income-net............................................................ $ 8,265,533 $ 22,063,446
Net realized gain on investments................................................. 16,150 618,669
Net unrealized appreciation on investments for the year.......................... 7,073,387 27,359,058
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... 15,355,070 50,041,173
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net............................................................ (8,265,533) (22,063,446)
Net realized gain on investments................................................. (14,157) (385,082)
------------ ------------
TOTAL DIVIDENDS.......................................................... (8,279,690) (22,448,528)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.................................................... 368,886,012 359,269,086
Dividends reinvested............................................................. 5,936,181 16,093,950
Cost of shares redeemed.......................................................... (49,415,778) (197,042,056)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS............. 325,406,415 178,320,980
------------ ------------
TOTAL INCREASE IN NET ASSETS..................................... 332,481,795 205,913,625
NET ASSETS:
Beginning of year................................................................ 100,000 332,581,795
------------ ------------
End of year...................................................................... $332,581,795 $538,495,420
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................................................... 29,102,431 26,644,952
Shares issued for dividends reinvested........................................... 465,222 1,190,189
Shares redeemed.................................................................. (3,878,187) (14,661,633)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING....................................... 25,689,466 13,173,508
============ ============
- -----------------------
* From January 21, 1992 (commencement of operations) to December 31, 1992.
See notes to financial statements.
</TABLE>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Prospectus dated April 11, 1994.
See notes to financial statements.
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
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 exclusive
distributor of the Fund's shares, which are sold to the public without a
sales charge. 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
Board of Trustees. 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 daily from investment income-net. Such dividends are
paid monthly. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax
exempt dividends, by complying with the 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, brokerage,
interest on borrowings and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund for any full year.
However, the Manager had undertaken, from January 1, 1993 through
January 5, 1993, to reimburse all fees and expenses of the Fund and
thereafter, had undertaken through September 2, 1993 to waive receipt of
the management fee payable to it by the Fund. The Manager has currently
undertaken through February 28, 1994 or until such time as the net assets
of the Fund exceed $550 million, regardless of whether they remain at
that level, to waive receipt of the management fee payable to it by the
Fund in excess of
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
an annual rate of .20 of 1% of the Fund's average daily net assets. The
expense reimbursement, pursuant to the undertaking, amounted to
$2,726,798 for the year ended December 31, 1993.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund
reimburses the Distributor an amount not to exceed an annual rate of .25
of 1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the
year ended December 31, 1993, the Fund was charged an aggregate of
$456,111 pursuant to the Shareholder Services Plan.
(C) Certain officers and trustees of the Fund are "affiliated
persons," as defined in the Act, of the Manager and/or the Distributor.
Each trustee who is not an "affiliated person" receives an annual fee of
$1,000 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 $273,258,010 and
$89,384,754, respectively, for the year ended December 31, 1993, and
consisted entirely of municipal bonds and short-term municipal
investments.
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 FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and
liabilities of Dreyfus Florida Intermediate Municipal Bond Fund, 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 Florida Intermediate Municipal Bond Fund 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 Signature Logo)
New York, New York
February 3, 1994
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
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 income tax and, for
individuals who are Florida residents, not subject to taxation by Florida).
- - The $.0106 per share paid by the Fund on December 9, 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 taxable ordinary dividends and
capital gain distributions paid for the 1993 calendar year on Form 1099-
DIV which will be mailed by January 31, 1994.
