FOR USE BY BANKS ONLY
May 1, 1995
DREYFUS FLORIDA INTERMEDIATE
MUNICIPAL BOND FUND
Supplement to Prospectus Dated May 1, 1995
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
740/s050195IST
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PROSPECTUS MAY 1, 1995
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.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1995, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 3
CONDENSED FINANCIAL INFORMATION................... 3
DESCRIPTION OF THE FUND........................... 4
MANAGEMENT OF THE FUND............................ 15
HOW TO BUY FUND SHARES............................ 16
SHAREHOLDER SERVICES.............................. 18
HOW TO REDEEM FUND SHARES......................... 20
SHAREHOLDER SERVICES PLAN......................... 23
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 23
PERFORMANCE INFORMATION........................... 25
GENERAL INFORMATION............................... 25
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C> <C> <C> <C>
Management Fees........................................................................... .60%
Other Expenses ........................................................................... .20%
Total Fund Operating Expenses............................................................. .80%
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: $8 $26 $44 $99
</TABLE>
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The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be greater
or less than those indicated. Moreover, while the example assumes a 5% annual
return, the Fund's actual performance will vary and may result in an actual
return greater or less than 5%.
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The purpose of the foregoing table is to assist you in
understanding the various costs and expenses borne by the Fund, and therefore
indirectly by investors, the payment of which will reduce investors' return
on an annual basis. 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 the Fund's
distributor; you may be charged a nominal fee if you effect transactions in Fu
nd 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 LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance 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 the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
_________________________
PER SHARE DATA: 1992(1) 1993 1994
_______ ______ _____
<S> <C> <C> <C>
Net asset value, beginning of year........................................ $12.50 $12.94 $13.85
------- ------ ------
INVESTMENT OPERATIONS:
Investment income_net ................................................... .69 .70 .66
Net realized and unrealized gain (loss) on investments.................... .44 .92 (1.33)
------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS.......................................... 1.13 1.62 (.67)
------- ------ ------
DISTRIBUTIONS:
Dividends from investment income-net...................................... (.69) (.70) (.65)
Dividends from net realized gain on investments........................... -- (.01) --
Dividends in excess of net realized gain on investments................... -- -- (.01)
------- ------ ------
TOTAL DISTRIBUTIONS....................................................... (.69) (.71) (.66)
------- ------ ------
Net asset value, end of year.............................................. $12.94 $13.85 $12.52
======= ====== =======
TOTAL INVESTMENT RETURN..................................................... 9.86%(2) 12.84% (4.92%)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .................................. -- .20% .48%
Ratio of net investment income to average net assets ..................... 5.78%(2) 5.20% 5.01%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation................................... 1.00%(2) .64% .32%
Portfolio Turnover Rate................................................... 13.01%(3) 13.48% 18.76%
Net Assets, end of year (000's omitted)................................... $332,582 $538,495 $409,361
- -------------------
(1) From January 21, 1992 (commencement of operations)to December 31, 1992.
(2) Annualized.
(3) Not annualized.
</TABLE>
Page 3
Further information about the Fund's performance is contained in
the Fund's annual report, which may be obtained without charge by writing to
the address or calling the number set forth on the cover page of this
Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE _ The Fund's goal is to provide you with as high a
level of current income exempt from Federal 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, debentures and other debt instruments.
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
Page 4
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 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 at varying rates of interest, pursuant
to direct arrangements between the Fund, as lender, and the borrower. These
obligations permit daily changes in the amount borrowed. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit
support arrangements will not adversely affect the tax exempt status of these
obligations. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such instruments
generally will be traded, and there generally is no established secondary
Page 5
market for these obligations, although they are redeemable at face value,
plus accrued interest. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Fund's right
to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Each obligation purchased by the Fund will meet the
quality criteria established for the purchase of Municipal Obligations. The
Dreyfus Corporation, on behalf of the Fund, will consider on an ongoing basis
the creditworthiness of the issuers of the floating and variable rate demand
obligations in the Fund's portfolio.
The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives the Fund
an undivided interest in the Municipal Obligation in the proportion that the
Fund's participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest. If the participation interest is unrated, it will be
backed by an irrevocable letter of 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 intere
sts, the Fund will have the right to demand payment, on not more than seven
days' notice, for all or any part of the Fund's participation interest in the
Municipal Obligation, plus accrued interest. As to these instruments, the
Fund intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity
to meet redemptions, or to maintain or improve the quality of its investment
portfolio.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each case,
payments on the two classes are based on payments received on the underlying
Municipal Obligations. One class has the characteristics of a typical auction
rate security, where at specified intervals its interest rate is adjusted,
and ownership changes, based on an auction mechanism. This class's interest
rate generally is expected to be below the coupon rate of the underlying
Municipal Obligations and generally is at a level comparable to that of a
Municipal Obligation of similar quality and having a maturity equal to the
period between interest rate adjustments. The second class bears interest at
a rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this case
inversely to changes in the rate of interest of the first class. If the
interest rate on the first class exceeds the coupon rate of the underlying
Municipal Obligations, its interest rate will exceed the rate paid on the
second class. In no event will the aggregate interest paid with respect to
the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should be
expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by the Fund should
increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund also
may purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a 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 settle-
Page 6
ment 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.
The Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, the
Fund obligates a broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by
commitment therefore is subject to the ability of the seller to make payment
on demand. The Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The Fund may pay for stand-by commitments if such action is
deemed necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. 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 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.
Page 7
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 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 Investments 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.
Options and futures transactions involve so-called "derivative securities."
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
Page 8
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. To the
extent the Fund engages in the use of futures and options on futures for
other than bona fide hedging purposes, the Fund may be subject to additional
risk.
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 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.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of 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 if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures
contracts based on indices, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the
Page 9
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
the market does not move 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.
Furthermore, if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.
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, 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 invest in interest rate futures contracts and
options on interest rate futures contracts as a substitute for a comparable
market position or 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.
Page 10
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.
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, 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. 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.
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 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.
Page 11
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
appropriate disclosure in its prospectus.
BORROWING MONEY _ As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940. However,
the Fund currently intends to borrow money only for temporary or emergency
(not leveraging) purposes, in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
CERTAIN FUNDAMENTAL POLICIES _ The Fund may (i) borrow money to the extent
permitted under the Investment Company Act of 1940, which currently limits
borrowing to no more than 331/3% of the value of the Fund's total assets; and
(ii) invest up to 25% of its total assets in the securities of issuers in any
industry, provided that there is no such limitation on investments in
Municipal Obligations and, for temporary defensive purposes, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies that cannot
be changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares. See
"Investment Objective and Management Policies_Investment Restrictions" in the
Fund's Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES _ The Fund may (i) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (ii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities (which securities could
include participation interests (including municipal lease/purchase
agreements) that are not subject to the demand feature described above, and
floating and variable rate demand obligations as to which the Fund cannot
exercise the related demand feature described above and as to which there is
no secondary market). See "Investment Objective and Management
Policies_Investment Restrictions" in the Fund's 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
Page 12
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, 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
Page 13
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 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,
Page 14
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.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of March 31, 1995, The Dreyfus Corporation managed or administered
approximately $72 billion in assets for 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 portfolio manager 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
portfolio managers are identified in the Fund's Statement of Additional
Information. The Dreyfus Corporation also provides research services for the
Fund as well as other funds advised by The Dreyfus Corporation through a
professional staff of portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$193 billion in assets as of December 31, 1994, including approximately $70
billion in mutual fund assets. As of December 31, 1994, various subsidiaries
of Mellon provided non-investment services, such as custodial or
administration services, for approximately $654 billion in assets, including
approximately $74 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily assume
certain expenses of the Fund, which would have the effect of lowering the
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,
Page 15
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume. For the fiscal year ended December 31, 1994, the Fund paid The
Dreyfus Corporation a monthly management fee at the effective annual rate of
.28 of 1% of the value of the Fund's average daily net assets pursuant to an
undertaking by The Dreyfus Corporation.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of FDI Distribution Services,
Inc., a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. 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
Page 16
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
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.
Page 17
SHAREHOLDER SERVICES
FUND EXCHANGES _ You may purchase, in exchange for shares of the Fund, shares
of certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "NO" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account, or by a separate signed Shareholder Services
Form, also available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund Shares_Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the fund
into which the exchange is made: Telephone Exchange Privilege, Check
Redemption Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital gain
distribution option (except for Dreyfus Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund 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 availability of Fund Exchanges 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
Page 18
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 Registration Mark _ Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-AUTOMATIC Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE _ Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund may
terminate your participation upon 30 days' notice to you.
DREYFUS DIVIDEND OPTIONS _ Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share price
s which do not include the sales load or which reflect a reduced sales load.
If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the purchased shares. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACH permits you to transfer electronically on the payment date
dividends or dividends and capital gain distributions, if any, from the Fund
to a designated bank account. Only an account maintained at a domestic
Page 19
financial institution which is an Automated Clearing House member may be so
designated. Banks may charge a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in or
cancellation of these privileges is effective three business days following
receipt. These privileges are available only for existing accounts and may
not be used to open new accounts. Minimum subsequent investments do not apply
for Dreyfus Dividend Sweep. The Fund may modify or terminate these privileges
at any time or charge a service fee. No such fee currently is contemplated.
DREYFUS PAYROLL SAVINGS PLAN _ Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the Automated Clearing House system at each
pay period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. Your
employer must complete the reverse side of the form and return it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may change the amount of purchase or cancel the authorization only by
written notification to your employer. It is the sole responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the Fund, the
Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The 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.
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. 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
Page 20
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, the Check Redemption Privilege, the Wire
Redemption Privilege, the Telephone Redemption Privilege or 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 Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you 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 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
Page 21
account. Redemption Checks may be made payable to the order of any person in
the amount of $500 or more. Potential fluctuations in the net asset value of
Fund shares should be considered in determining the amount of the check.
Redemption Checks should not be used to close your account. Redemption Checks
are free, but the Transfer Agent will impose a fee for stopping payment of a
Redemption Check upon your request or if the Transfer Agent cannot honor the
Redemption Check due to insufficient funds or other valid reason. You should
date your Redemption Checks with the current date when you write them. Please
do not postdate your Redemption Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the check, all
postdated Redemption Checks which are dated within six months of presentment
for payment, if they are otherwise in good order. Shares for which
certificates have been issued may not be redeemed by Redemption Check. This
Privilege may be modified or terminated at any time by the Fund or the
Transfer Agent upon notice to shareholders.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day)made out to the owners of record and mailed to your address.
Redemption proceeds of less than $1,000 will be paid automatically by check.
Holders of jointly registered Fund or bank accounts may have redemption
proceeds of not more than $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-800-221-4060 or, if you are
calling from overseas, call 1-401-455-3306. The Fund reserves the right to
refuse any redemption request, including requests made shortly after a change
of address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's Statement of Additional Information sets forth
instructions for transmitting redemption requests by wire. Shares for which
certificates have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE _ You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which certificates have been issued are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE _ You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a
Page 22
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, a wholly-owned subsidiary of
The Dreyfus 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.
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.
Page 23
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, 1994 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification is
in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income 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.
page 24
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
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable
page 25
for the obligations of the Fund. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Fund or a Trustee. The Trust Agreement
provides for indemnification from the Fund's property for all losses and
expenses of any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder'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; in New York City, call 1-718-895-1206; outside the U.S.
or Canada, call 516-794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 26
[This Page Intentionally Left Blank]
Page 27
DREYFUS
Florida Intermediate
Municipal Bond Fund
Prospectus
Registration Mark
Copy Rights 1995, Dreyfus Service Corporation
740p7050195
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Florida Intermediate Municipal Bond Fund (the "Fund"), dated May 1,
1995, as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City - Call 1-718-895-1206
Outside the U.S. or Canada - Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . B-10
Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . . B-16
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . B-17
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . . B-19
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . . . B-22
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . . . . B-23
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . B-24
Information About the Fund. . . . . . . . . . . . . . . . . . . . . . . . B-25
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . . . B-26
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-27
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . B-39
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . . B-53
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended
December 31, 1994, computed on a monthly basis, was as follows:
<TABLE>
<CAPTION>
Fitch Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation Percent
("Fitch") or ("Moody's") or ("S&P") of Value
- --------------- ----------------- ----------------- --------
<S> <C> <C> <C>
AAA Aaa AAA 62.4%
AA Aa AA 24.1
A A A 7.7
BBB Baa BBB 2.8
F-1, F-1+ MIG1, VMIG 1, P-1 SP-1+/SP-1, A-1 .5
Not Rated Not Rated Not Rated 2.5*
-----
100.0%
======
* Included in the Not Rated category are securities comprising 2.5% 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 (2.3%) and
Ba/BB (.2%).
</TABLE>
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 staff of the Securities and Exchange Commission currently considers
certain lease obligations to be illiquid. Determination as to the liquidity
of such securities is made in accordance with guidelines established by the
Fund's Board. Pursuant to such guidelines, the Board has directed the Manager
to monitor carefully the Fund's investment in such securities with particular
regard to (1) the frequency of trades and quotes for the lease obligation; (2)
the number of dealers willing to purchase or sell the lease obligation and the
number of other potential buyers; (3) the willingness of dealers to undertake
to make a market in the lease obligation; (4) the nature of the marketplace
trades, including the time needed to dispose of the lease obligation, the
method of soliciting offers and the mechanics of transfer; and (5) such other
factors concerning the trading market for the lease obligation as the Manager
may deem relevant. In addition, in evaluating the liquidity and credit
quality of a lease obligation that is unrated, the Fund's Board has directed
the Manager to consider (a) whether the lease can be cancelled; (b) what
assurance there is that the assets represented by the lease can be sold; (c)
the strength of the lessee's general credit (e.g., its debt, administrative,
economic, and financial characteristics); (d) the likelihood that the
municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an "event of nonappropriation"); (e) the
legal recourse in the event of failure to appropriate; and (f) such other
factors concerning credit quality as the Manager may deem relevant. The Fund
will not invest more than 15% of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 11" below.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for the Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the Fund,
but the Manager will consider such event in determining whether the Fund
should continue to hold the Municipal Obligations. To the extent that the
ratings given by Moody's, S&P or Fitch for Municipal Obligations may change
as a result of changes in such organizations or their rating systems, the Fund
will attempt to use comparable ratings as standards for its investments in
accordance with the investment policies contained in the Fund's Prospectus and
this Statement of Additional Information. The ratings of Moody's, S&P and
Fitch represent their opinions as to the quality of the Municipal Obligations
which they undertake to rate. It should be emphasized, however, that ratings
are relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of portfolio
investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as amended, for certain restricted securities held by the Fund, the
Fund intends to treat such securities as liquid securities in accordance with
procedures approved by the Fund's Board of 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 Manager to monitor carefully the Fund's investments in such securities
with particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a period
of time, qualified institutional buyers cease purchasing restricted securities
pursuant to Rule 144A, the Fund's investing in such securities may have the
effect of increasing the level of liquidity in the Fund's portfolio during
such period.
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.
Short-Selling. The Fund may engage in short-selling. Until the Fund
closes its short position or replaces the borrowed security, the Fund will:
(a) maintain 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.
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. 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 any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Lower rated zero coupon securities, in which the Fund may invest up to
5% of its 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 11 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 to the extent permitted under the Act
(which currently limits borrowings to no more than 33 1/3% of the value of the
Fund's total assets). For purposes of this investment restriction, the entry
into options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices shall not constitute
borrowing.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not prevent the Fund from
investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Fund from purchasing and selling options, forward
contracts, futures contracts, including those relating to indices, and options
on futures contract or indices.
4. Underwrite the securities of other issuers, except that the
Fund may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available, and except to the extent the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund may
lend its portfolio securities in an amount not to exceed 33 1/3% of the value
of its total assets. Any loans of portfolio securities will be made according
to guidelines established by the Securities and Exchange Commission and the
Fund's Board of 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 indices, and options on futures
contracts or indices.
8. Purchase securities other than Municipal Obligations and
Taxable Investments and those arising out of transactions in futures and
options or as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to
the extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to the extent necessary to secure permitted borrowings and to
the extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests (including municipal
lease/purchase agreements) that are not subject to the demand feature
described in the Fund's Prospectus, and floating and variable rate demand
obligations as to which the Fund cannot exercise the demand feature described
in the Fund's Prospectus on less than seven days' notice and as to which there
is no secondary market) if, in the aggregate, more than 15% of its net assets
would be so invested.
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 of the Fund
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board for various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager
and, until August 24, 1994, the Fund's distributor. From August 1994
to December 31, 1994, he was a director of Mellon Bank Corporation.
Mr. DiMartino is a director and former treasurer of The Muscular
Dystrophy Association; a trustee of Bucknell University; Chairman of
the Board of Directors of Noel Group, Inc.; and a director of
HealthPlan Corporation. Mr. DiMartino is also a Board member of 93
other funds in the Dreyfus Family of Funds. He is 51 years old and
his address is 200 Park Avenue, New York, New York 10166.
GORDON J. DAVIS, Trustee. Since October 1994, senior partner with the law
firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September 1994,
Mr. Davis was a senior partner with the law firm of Lord Day & Lord,
Barrett Smith. From 1978 to 1983 he was Commissioner of Parks and
Recreation for the City of New York. He is also a Director of
Consolidated Edison, a utility company, and Phoenix Home Life
Insurance Company and a member of various other corporate and not-for-
profit boards of directors and trustees. Mr. Davis also is a Board
member of 11 other funds in the Dreyfus Family of Funds. He is 53
years old and his address is 241 Central Park West, New York, New York
10024.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer of AT&T
Investment Management Corporation. He is also a trustee of Corporate
Property Investors, a real estate investment company. Mr. Feldman
also is a Board member of 27 other funds in the Dreyfus Family of
Funds. He is 53 years old and 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, Ms. Martin served as Secretary
of the United States Department of Labor. From 1981 to 1991, she was
United States Congresswoman for the State of Illinois. She also is a
director of Harcourt General Corporation, a publishing, insurance and
retailing company, Ameritech Corporation, a telecommunications and
information company, and Ryder Systems Incorporated, a transportation
company. Ms. Martin also is a Board member of 11 other funds in the
Dreyfus Family of Funds. She is 53 years old and her address is 3750
Lake Shore Drive, Chicago, Illinois 60613.
EUGENE McCARTHY, Trustee. Writer and columnist; former Senator from
Minnesota from 1958-1970. He is also a director of Harcourt Brace
Jovanovich, Inc., publishers. Mr. McCarthy also is a Board member of
11 other funds in the Dreyfus Family of Funds. He is 78 years old and
his address is P.O. Box 22, Woodville, Virginia 22749.
DANIEL ROSE, Trustee. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic-American Enterprise
Fund, which will make equity investments and loans, and provide
technical business assistance to new business concerns in the Baltic
states. He is also chairman of the Housing Committee of The Real
Estate Board of New York, Inc., and a trustee of Corporate Property
Investors, a real estate investment company. Mr. Rose also is a Board
member of 21 other funds in the Dreyfus Family Funds. He is 65 years
old and 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. Mr. Vanocur also is a
Board member of 21 other funds in the Dreyfus Family of Funds. He is
67 years old and his address is 2928 P Street, N.W., Washington, D.C.
20007.
ANNE WEXLER, Trustee. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also
a director of American Cyanamid Company, Alumax, The Continental
Corporation, Comcast Corporation, The New England Electric System,
NOVA and a member of the board of the Carter Center of Emory
University, the Council of Foreign Relations, the National Park
Foundation; Visiting Committee of the John F. Kennedy School of
Government at Harvard University and the Board of Visitors of the
University of Maryland School of Public Affairs. Ms. Wexler also is a
Board member of 16 other funds in the Dreyfus Family of Funds. She is
65 years old and her address is c/o The Wexler Group, 1317 F Street,
Suite 600, N.W., Washington, D.C. 20004.
REX WILDER, Trustee. Financial Consultant. Mr. Wilder also is a Board
member of 11 other funds in the Dreyfus Family of Funds. He is 74
years old and his address is 290 Riverside Drive, New York, New York
10025.
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. The Trustees will 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.
The Fund typically pays its Trustees an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. For the fiscal year
ended December 31, 1994, the aggregate amount of compensation paid to each
Trustee by the Fund and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member were as follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
- ------------------- ------------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Gordon J. Davis $3,500 none none $ 29,602
Joseph S. DiMartino** $4,375 none none $445,000
David P. Feldman $3,500 none none $ 85,631
Lynn Martin $3,250 none none $ 26,852
Eugene McCarthy $3,500 none none $ 29,403
Daniel Rose $3,500 none none $ 62,006
Sander Vanocur $3,500 none none $ 62,006
Anne Wexler $1,181 none none $ 26,329
Rex Wilder $3,500 none none $ 29,403
- -------------------------------
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $599 for all Trustees
as a group.
** Estimated amounts for the current fiscal year ending December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December
1991 to July 1994, she was President and Chief Compliance Officer of
Funds Distributor, Inc., a wholly-owned subsidiary of The Boston
Company, Inc. Prior to December 1991, she served as Vice President
and Controller, and later as Senior Vice President, of The Boston
Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray, and prior to August 1990, he was
employed as an Associate at Sidley & Austin. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by
the Manager. From 1984 to July 1994, he was Assistant Vice President
in the Mutual Fund Accounting Department of the Manager. He is 59
years old.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was a
Senior Legal Product Manager and, from January 1990 to January 1992, a
mutual fund accountant, for The Boston Company Advisors, Inc. He is
28 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor of an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on February 13, 1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board of 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 on August 3, 1994. 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 May 31, 1994. 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 following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Paul H. Snyder, Vice President and Chief Financial Officer;
Daniel C. Maclean, Vice President and General Counsel; Elie M. Genadry,
Vice President-Wholesale; Henry D. Gottmann, Vice President-Retail; William
F. Glavin, Jr. Vice President-Product Management; Jeffrey N. Nachman, Vice
President-Mutual Fund Administration; Diane M. Coffey, Vice President-
Corporate Communications; Andrew S. Wasser, Vice President-Information
Services; Barbara E. Casey, Vice President-Retirement Services; Katherine
C. Wickham, Vice President-Human Resources; Mark N. Jacobs, Vice President-
Fund Legal and Compliance, and Secretary; Maurice Bendrihem, Controller;
Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene, Julian M. Smerling and David B. Truman,
directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board of Trustees. The Manager is responsible for investment decisions,
and provides the Fund with portfolio managers who are authorized by the
Board of Trustees to execute purchases and sales of securities. The Fund's
portfolio managers are Richard J. Moynihan, Joseph P. Darcy, A. Paul
Disdier, Karen M. Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as for other funds advised by the Manager. All purchases and sales
are reported for the 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 maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services, the Fund 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. For the fiscal
year ended December 31, 1994, the management fee payable by the Fund
amounted to $2,789,984; however, pursuant to undertakings in effect, the
Manager reduced its fee by $1,510,325, resulting in a fee of $1,279,659 for
fiscal 1994.
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 Dreyfus Service Corporation 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 May 31, 1994.
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.
During the fiscal year ended December 31, 1994, the Fund was charged
an aggregate $419,379 pursuant to 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.
Service 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."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference will
be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions 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 "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified
if his account falls below the amount designated under this Privilege. In
this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement
plans are eligible for this Privilege. Exchanges of IRA shares may be made
between IRA accounts and from regular accounts to IRA accounts, but not
from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-654-6561. The Fund reserves the right to reject
any exchange request in whole or in part. Fund Exchanges or the Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on 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 portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department. The amount of transactions during the last
fiscal year in newly issued debt instruments in fixed price public
offerings directed to an underwriter or underwriters in consideration of,
among other things, research services provided was $1,994,612.
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, 1994
was 5.19%, which reflects the absorption of expenses pursuant to expense
limitations in effect. See "Management of the Fund" in the Prospectus.
Had expenses not been absorbed, the Fund's current yield for the same
period would have been 4.99%. 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, 1994 was
8.59%, 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 8.26%. 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 2.945 year
periods ended December 31, 1994 was -4.92% and 5.58%, respectively.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
The Fund's total return for the period January 21, 1992 (commencement
of operations) through December 31, 1994 was 17.33%. 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, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
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 LLP, 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, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--95.5% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
FLORIDA--88.8%
Alachua County Health Facilities Authority, Health Facilities Revenue,
Refunding
(Santa Fe Healthcare Facilities Project) 6.875%, 11/15/2002............. $ 4,155,000 $ 4,090,016
Bay County, RRR, Refunding:
6%, 7/1/2001 (Insured; MBIA)............................................ 1,250,000 1,280,350
6.10%, 7/1/2002 (Insured; MBIA)......................................... 2,095,000 2,153,283
6.20%, 7/1/2003 (Insured; MBIA)......................................... 1,250,000 1,281,500
Boca Raton, Water and Sewer Revenue, Refunding 5.60%, 10/1/2004............. 1,000,000 969,960
Boynton Beach, Public Service Tax Revenue, Refunding
5.20%, 11/1/2005 (Insured; AMBAC)....................................... 1,475,000 1,357,531
Brevard County, Refunding 5.45%, 3/1/2002 (Insured; MBIA)................... 1,250,000 1,226,663
Brevard County Health Facilities Authority, Revenue, Refunding
(Wuesthoff Memorial Hospital) 6.90%, 4/1/2002........................... 2,500,000 2,596,725
Broward County:
Airport Systems Revenue, Refunding 5%, 10/1/2005........................ 3,000,000 2,700,540
Gas Tax Revenue 6.50%, 9/1/2004......................................... 1,200,000 1,233,348
Broward County Health Facilities Authority, HR, Refunding
(Holy Cross Hospital, Inc.) 5.20%, 6/1/2003 (Insured; AMBAC)............ 2,295,000 2,169,096
Broward County School Board, COP:
6%, 7/1/2001 (Insured; AMBAC)........................................... 1,000,000 1,018,280
6.10%, 7/1/2002 (Insured; AMBAC)........................................ 2,000,000 2,043,380
Broward County School District, Refunding:
5.70%, 2/15/2001........................................................ 3,000,000 2,995,170
5.80%, 2/15/2002........................................................ 2,000,000 2,000,980
5.30%, 2/15/2004........................................................ 5,000,000 4,722,850
6%, 2/15/2004........................................................... 3,000,000 3,020,670
Canaveral Port Authority, Revenue, Refunding:
6.10%, 6/1/2001 (Insured; FGIC)......................................... 2,000,000 2,047,780
Port Improvement 5.40%, 6/1/2002 (Insured; FGIC)........................ 2,000,000 1,954,560
Celebration Community Development District, Special Assessment
5.60%, 5/1/2004 (Insured; MBIA)......................................... 5,000,000 4,858,150
Citrus County, Hospital Board Revenue, Refunding
(Citrus Memorial Hospital) 6%, 8/15/2002 (Insured; FSA)................. 1,000,000 1,015,790
Collier County, Capital Improvement Revenue, Refunding:
5.75%, 10/1/2006 (Insured; MBIA)........................................ 1,985,000 1,938,452
5.85%, 10/1/2007 (Insured; MBIA)........................................ 2,105,000 2,053,133
Collier County School Board, COP, Refunding 5.50%, 2/15/2003 (Insured; FSA). 3,000,000 2,913,780
Coral Springs, Water and Sewer Revenue, Refunding
5.50%, 9/1/2003 (Insured; FGIC)......................................... 1,425,000 1,391,327
Dade County:
Aviation Revenue:
6%, 10/1/2003 (Insured; MBIA)......................................... 2,000,000 1,995,740
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
FLORIDA (CONTINUED)
Dade County (continued):
Aviation Revenue (continued):
6.15%, 10/1/2004 (Insured; MBIA)...................................... $ 2,000,000 $ 2,005,580
6.75%, 10/1/2006...................................................... 2,750,000 2,838,660
Refunding 5.30%, 10/1/2002............................................ 4,000,000 3,856,800
Public Facilities Revenue, Refunding (Jackson Memorial Hospital)
5.20%, 6/1/2004 (Insured; MBIA)....................................... 2,750,000 2,591,380
School District, Refunding:
5.20%, 7/15/2004 (Insured; AMBAC)..................................... 6,000,000 5,646,600
5.20%, 7/15/2005 (Insured; AMBAC)..................................... 6,425,000 5,923,529
(Seaport) 5.90%, 10/1/2002 (Insured; AMBAC)............................. 2,470,000 2,506,531
Dade County Health Facilities Authority, HR, Refunding
(North Shore Medical Center Project):
5.80%, 8/15/2000 (Insured; AMBAC)..................................... 1,650,000 1,663,233
5.90%, 8/15/2001 (Insured; AMBAC)..................................... 1,725,000 1,745,562
6%, 8/15/2002 (Insured; AMBAC)........................................ 1,760,000 1,787,790
Deerfield Beach, Water and Sewer Improvement Revenue, Refunding
6.125%, 10/1/2003 (Insured; FGIC)....................................... 1,180,000 1,213,241
Dunedin, HR, Refunding (Mease Health Care) 5%, 11/15/2004 (Insured; MBIA)... 3,550,000 3,238,594
Duval County School District, Refunding 5.90%, 8/1/2002 (Insured; AMBAC).... 4,500,000 4,537,980
First Florida Governmental Financing Commission, Revenue:
6.30%, 7/1/2002 (Insured; MBIA)......................................... 1,000,000 1,039,300
Refunding 6%, 7/1/2003 (Insured; MBIA).................................. 3,000,000 3,057,930
Florida, Pollution Control 5.90%, 7/1/2002.................................. 2,500,000 2,536,250
Florida Board of Education, Capital Outlay:
4.23%, 6/1/2004 (a,b)................................................... 7,000,000 5,713,750
5.90%, 6/1/2005......................................................... 1,295,000 1,290,934
6.80%, 6/1/2006......................................................... 2,900,000 3,021,887
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 2,021,540
5.90%, 7/1/2002 (Insured; MBIA)....................................... 3,850,000 3,905,825
6.40%, 7/1/2003 (Insured; AMBAC)...................................... 3,450,000 3,601,490
6.10%, 7/1/2004 (Insured; MBIA)....................................... 2,420,000 2,469,804
(Refunding-Department of Natural Resources-Save Our Coast)
6.40%, 7/1/2005 (Insured; MBIA)....................................... 1,000,000 1,020,850
Florida Housing Finance Agency, Refunding
(Plantation Colony Apartments - B) 5.70%, 10/1/2004..................... 1,250,000 1,171,300
Florida Municipal Power Agency, Revenue:
(All-Requirements Power Supply Project):
5.75%, 10/1/2000 (Insured; AMBAC)..................................... 1,000,000 1,005,720
5.80%, 10/1/2001 (Insured; AMBAC)..................................... 1,000,000 1,005,430
5.90%, 10/1/2002 (Insured; AMBAC)..................................... 1,000,000 1,008,550
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
FLORIDA (CONTINUED)
Florida Municipal Power Agency, Revenue (continued):
(All-Requirements Power Supply Project) (continued):
6%, 10/1/2003 (Insured; AMBAC, Prerefunded 10/1/2002) (c)............. $ 1,000,000 $ 1,027,600
6.10%, 10/1/2004 (Insured; AMBAC, Prerefunded 10/1/2002) (c).......... 1,000,000 1,033,790
(Refunding-Saint Lucie Project) 5.40%, 10/1/2005 (Insured; FGIC)........ 8,565,000 8,057,695
Florida Sunshine Skyway, Revenue, Refunding:
6.10%, 7/1/2001......................................................... 1,650,000 1,675,591
6.20%, 7/1/2002......................................................... 1,315,000 1,338,631
Florida Turnpike Authority, Turnpike Revenue
5.90%, 7/1/2005 (Insured; FGIC)......................................... 2,700,000 2,679,156
Gainesville, Utilities Systems Revenue 6.20%, 10/1/2003..................... 1,650,000 1,692,339
Greater Orlando Aviation Authority, Orlando Airport Facilities Revenue:
6.25%, 10/1/2006 (Insured; FGIC)........................................ 1,600,000 1,611,408
Refunding 6.10%, 10/1/2002 (Insured; FGIC).............................. 2,000,000 2,056,920
Hernando County School District, Refunding:
6.10%, 8/1/2003 (Insured; MBIA)......................................... 2,000,000 2,052,220
5.40%, 9/1/2003 (Insured; MBIA)......................................... 1,290,000 1,248,720
5.50%, 9/1/2004 (Insured; MBIA)......................................... 1,580,000 1,529,266
Hillsborough County:
Capital Improvement Revenue (County Center Project):
6.125%, 7/1/2003...................................................... 1,150,000 1,157,176
6.50%, 7/1/2007....................................................... 1,000,000 1,015,560
(Refunding-Environmentally Sensitive Lands Acquisition and Protection):
5.875%, 7/1/2001...................................................... 1,295,000 1,289,134
6%, 7/1/2002.......................................................... 2,080,000 2,077,504
Hillsborough County Aviation Authority, Revenue, Refunding
(Tampa International Airport):
5.30%, 10/1/2001 (Insured; AMBAC)..................................... 2,000,000 1,929,440
5.45%, 10/1/2002 (Insured; AMBAC)..................................... 3,295,000 3,187,550
6.70%, 10/1/2004 (Insured; FGIC)...................................... 3,000,000 3,126,630
Hillsborough County Hospital Authority, HR, Refunding
(Tampa General Hospital Project) 6.125%, 10/1/2002 (Insured; FSA)....... 3,350,000 3,429,428
Hollywood, Water and Sewer Revenue 6%, 10/1/1999 (Insured; FGIC)............ 1,000,000 1,018,880
Indian Trace Community Development District, Water and Sewer Revenue 8%, 4/1/2001 2,755,000 2,778,610
Jacksonville:
Guaranteed Entitlement Revenue, Refunding 5.50%, 10/1/2002 (Insured; AMBAC) 1,400,000 1,377,348
HR (University Medical Center, Inc. Project) 5.90%, 2/1/2001............ 550,000 553,030
IDR, Refunding (TTX Company Project) 5.40%, 3/1/2001.................... 2,300,000 2,232,955
Jacksonville Beach, Utilities Revenue, Refunding 5.125%, 10/1/2004 (Insured; MBIA) 1,500,000 1,399,800
Jacksonville Electric Authority, Revenue:
Electric Systems, Refunding 5.40%, 10/1/2004............................ 2,250,000 2,144,790
(Saint John's River):
6.40%, 10/1/2000...................................................... 5,000,000 5,187,650
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
FLORIDA (CONTINUED)
Jacksonville Electric Authority, Revenue (continued):
(Saint John's River) (continued):
Refunding:
5%, 10/1/2004..................................................... $ 12,275,000 $ 11,241,445
5%, 10/1/2005..................................................... 1,425,000 1,284,823
Jacksonville Health Facilities Authority, HR:
(Memorial Medical Center Project) 6.20%, 5/1/2000 (Insured; MBIA)....... 1,000,000 1,027,250
Refunding (Daughters of Charity) 4.75%, 11/15/2003...................... 4,205,000 3,706,497
Kissimmee, Water and Sewer Revenue, Refunding:
5.40%, 10/1/2002 (Insured; AMBAC)....................................... 1,035,000 1,004,312
5.50%, 10/1/2003 (Insured; AMBAC)....................................... 1,000,000 969,530
Kissimmee Utility Authority, Electric System Improvement Revenue, Refunding
5%, 10/1/2003 (Insured; FGIC)........................................... 2,000,000 1,867,740
Lakeland, Electric and Water Revenue:
6.70%, 10/1/1999........................................................ 1,000,000 1,047,350
Refunding:
5.625%, 10/1/2005..................................................... 5,455,000 5,256,383
5.90%, 10/1/2007...................................................... 2,385,000 2,337,705
Lee County Hospital Board of Directors, HR, Refunding
(Lee Memorial Hospital Project) 5.80%, 4/1/2002 (Insured; MBIA)......... 2,730,000 2,748,973
Lee County School Board, COP 5.15%, 8/1/2006 (Insured; FSA)................. 2,750,000 2,490,400
Melbourne, Water and Sewer Revenue, Refunding 6%, 10/1/2001 (Insured; FGIC). 745,000 763,588
Miami, Refunding:
5.70%, 12/1/2004 (Insured; FGIC)........................................ 6,025,000 5,946,193
5.80%, 12/1/2005 (Insured; FGIC)........................................ 2,000,000 1,963,460
Miami Beach Health Facilities Authority, HR, Refunding
(Mount Sinai Medical Center Project):
5.60%, 11/15/2002..................................................... 1,100,000 1,090,947
5.70%, 11/15/2003..................................................... 1,500,000 1,490,610
Nassau County, PCR, Refunding (ITT Rayonier, Inc. Project):
5.70%, 6/1/2001......................................................... 2,080,000 2,002,499
5.90%, 7/1/2005......................................................... 1,075,000 1,007,243
North Broward Hospital District, HR, Refunding:
6.10%, 1/1/2002 (Insured; MBIA)......................................... 2,050,000 2,103,915
6.125%, 1/1/2003 (Insured; MBIA)........................................ 2,000,000 2,052,720
Ocean Highway and Port Authority, Revenue
6.25%, 12/1/2002 (LOC; ABN Amro Bank) (d)............................... 3,500,000 3,478,230
Orange County, Revenue:
Solid Waste Facility 6%, 10/1/2002 (Insured; FGIC)...................... 1,000,000 1,022,880
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
FLORIDA (CONTINUED)
Orange County, Revenue (continued):
Tourist Development Tax:
5.90%, 10/1/2000 (Insured; AMBAC)..................................... $ 1,900,000 $ 1,936,841
6.15%, 10/1/2002 (Insured; AMBAC)..................................... 2,455,000 2,532,480
Water and Wastewater, Refunding 5.80%, 10/1/2002 (Insured; AMBAC)....... 2,080,000 2,082,350
Orange County Health Facilities Authority, Revenue:
(Hospital-Adventist/Sunbelt Project) 6.875%, 11/15/2004 (Insured; AMBAC) 4,000,000 4,212,800
(Hospital-Orlando Regional Healthcare-A) 5.50%, 11/1/2003 (Insured; AMBAC) 2,000,000 1,938,660
Orlando, Capital Improvement Special Revenue 5.50%, 10/1/2003............... 2,000,000 1,932,460
Orlando & Orange County Expressway Authority, Florida Expressway Revenue,
Refunding 5.30%, 7/1/2005 (Insured; AMBAC).............................. 3,500,000 3,287,760
Orlando Utilities Commission, Water and Electric Revenue:
5%, 10/1/2004........................................................... 3,055,000 2,805,132
Refunding 5.60%, 10/1/2003.............................................. 10,000,000 9,856,400
Osceola County:
Gas Tax Improvement Revenue, Refunding
5.50%, 4/1/2003 (Insured; FGIC)....................................... 1,365,000 1,333,933
5.65%, 4/1/2004 (Insured; FGIC)....................................... 1,445,000 1,421,389
Transportation Revenue
(Osceola Parkway Project) 5.375%, 4/1/2002 (Insured; MBIA)............ 1,400,000 1,366,652
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 8%, 7/1/2004................... 4,284,000 4,189,666
Palm Beach County:
Criminal Justice Facilities Revenue, Refunding
5.10%, 6/1/2003 (Insured; FGIC)....................................... 5,000,000 4,721,450
Solid Waste IDR (Okeelanta Power LP Project) 6.375%, 2/15/2007.......... 2,700,000 2,527,767
Palm Beach County School District, Refunding:
5.50%, 8/1/2000 (Insured; AMBAC)........................................ 1,200,000 1,195,380
5.60%, 8/1/2001 (Insured; AMBAC)........................................ 1,000,000 997,760
6%, 8/1/2006 (Insured; AMBAC)........................................... 1,000,000 1,000,650
6%, 8/1/2007 (Insured; AMBAC)........................................... 3,000,000 2,976,300
Pasco County, Refunding:
Optional Gas Tax Revenue:
5.40%, 8/1/2001 (Insured; FGIC)....................................... 2,830,000 2,785,286
5.50%, 8/1/2002 (Insured; FGIC)....................................... 1,980,000 1,948,597
Water and Sewer Revenue:
5.50%, 10/1/2002 (Insured; FGIC)...................................... 2,500,000 2,459,550
5.40%, 10/1/2003 (Insured; FGIC)...................................... 1,500,000 1,441,215
Pinellas County:
Capital Improvement Revenue 5.50%, 10/1/1999............................ 4,000,000 4,004,560
RRR, Refunding 6.40%, 10/1/1998 (Insured; MBIA)......................... 4,465,000 4,623,552
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
FLORIDA (CONTINUED)
Polk County, Capital Improvement Revenue, Refunding 6%, 12/1/2002 (Insured;
MBIA).......................................................................... $ 1,900,000 $ 1,932,167
Punta Gorda, Utilities Revenue, Refunding 5.50%, 1/1/2002 (Insured; AMBAC).. 1,315,000 1,288,121
Reedy Creek Improvement District:
5.80%, 6/1/1999 (Insured; MBIA)......................................... 1,500,000 1,521,465
Utilities Revenue, 6.30%, 10/1/2003 (Insured; MBIA)..................... 1,000,000 1,035,160
Saint John's County Industrial Development Authority, HR (Flagler Hospital
Project)
5.80%, 8/1/2003......................................................... 1,000,000 956,950
Saint Lucie County School District, Refunding
5.90%, 7/1/2002 (Insured; AMBAC)........................................ 1,780,000 1,805,810
Saint Petersburg, Public Improvement Revenue,
Refunding 6%, 2/1/2002 (Insured; MBIA).................................. 1,500,000 1,531,965
Sarasota County, Refunding:
6.25%, 10/1/2004 (Insured; FGIC)........................................ 1,505,000 1,550,797
Utilities Systems Revenue:
5.50%, 10/1/2003 (Insured; FGIC)...................................... 2,130,000 2,079,285
5.60%, 10/1/2004 (Insured; FGIC)...................................... 2,345,000 2,293,152
Seminole County School District, Refunding 6%, 8/1/2003 (Insured; MBIA)..... 2,500,000 2,548,500
Sunrise:
Public Facilities Revenue:
6.50%, 10/1/2007 (Insured; MBIA)...................................... 1,000,000 1,027,100
Refunding 6%, 10/1/2001 (Insured; MBIA)............................... 1,000,000 1,024,950
Utility System Revenue, Refunding:
5.10%, 10/1/2004 (Insured; AMBAC)..................................... 1,335,000 1,242,458
5.20%, 10/1/2005 (Insured; AMBAC)..................................... 1,395,000 1,294,309
Tallahassee, Health Facilities Revenue, Refunding
(Tallahassee Memorial Regional Medical Center):
5.50%, Series A, 12/1/2002 (Insured; MBIA)............................ 1,010,000 987,164
5.50%, Series B, 12/1/2002 (Insured; MBIA)............................ 1,000,000 977,390
Tampa, Revenue:
(Alleghany Health Systems - Saint Mary's)
5.75%, 12/1/2007 (Insured; MBIA)...................................... 2,750,000 2,643,273
Solid Waste System, Refunding 5.25%, 10/1/2006 (Insured; FGIC).......... 3,000,000 2,761,950
Water and Sewer 6.30%, 10/1/2006........................................ 4,000,000 4,060,600
Volusia County, Sales Tax Improvement Revenue, Refunding
6.40%, 10/1/2007 (Insured; MBIA)........................................ 2,000,000 2,036,580
Volusia County Educational Facility Authority, Revenue
(Embry-Riddle Aeronautical University):
5.875%, 10/15/2002 (Insured; College Construction Loan Insurance Association) 1,145,000 1,153,049
6.10%, 10/15/2003 (Insured; College Construction Loan Insurance Association) 1,000,000 1,018,950
Volusia County School District, Refunding 6.375%, 8/1/2005 (Insured; FGIC).. 1,000,000 1,032,930
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
U.S. RELATED--6.7%
Puerto Rico Commonwealth, Refunding 5.20%, 7/1/2003......................... $ 5,000,000 $ 4,762,150
Puerto Rico Electric Power Authority, Electric Revenue, Refunding
5.50%, 7/1/2002 (Insured; FSA).......................................... 6,000,000 5,931,120
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding:
5.875%, 7/1/1999........................................................ 4,000,000 4,009,520
5.10%, 7/1/2003......................................................... 5,000,000 4,542,700
Puerto Rico Municipal Finance Agency 5.60%, 7/1/2002........................ 3,100,000 2,983,440
Puerto Rico Public Buildings Authority:
(Refunding-Public Education and Health Facilities) 6.50%, 7/1/2003...... 1,000,000 1,022,680
Revenue, Refunding 6.10%, 7/1/2000...................................... 2,500,000 2,516,275
Virgin Islands Water and Power Authority, Water Systems Revenue
7.20%, 1/1/2002......................................................... 1,000,000 1,001,620
--------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $394,204,114)................... $384,420,778
=============
SHORT-TERM MUNICIPAL INVESTMENTS--4.5%
FLORIDA:
Florida Municipal Power Agency, Revenue, CP (Pooled Loan Project)
5%, 1/4/1995 (LOC; Morgan Guaranty Trust Co.) (d)....................... $ 2,585,000 $ 2,585,000
Gainesville, Utility Revenue, CP (Pooled Loan Project)
5%, 1/3/1995 (LOC: Bank of America and Sun Bank) (d).................... 1,900,000 1,900,000
Hillsborough County Industrial Development Authority, PCR, VRDN
(Tampa Electric Co. Project) 5.65% (e).................................. 5,800,000 5,800,000
Martin County, SWDR, VRDN
(Florida Power and Light Co. Project) 5.30% (e)......................... 1,000,000 1,000,000
Pinellas County Health Facilities Authority, Revenue, Refunding, VRDN
(Pooled Hospital Loan Program) 6.05% (LOC; Chemical Bank) (d,e)......... 6,900,000 6,900,000
--------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $18,185,000)................... $ 18,185,000
=============
TOTAL INVESTMENTS--100.0%
(cost $412,389,114)..................................................... $402,605,778
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
CP Commercial Paper PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
FSA Financial Security Assurance SWDR Solid Waste Disposal Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 61.4%
AA Aa AA 22.4
A A A 7.3
BBB Baa BBB 1.8
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 4.5
Not Rated (g) Not Rated (g) Not Rated (g) 2.6
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994, this security amounted to $5,713,750 or 1.4% of net assets.
(c) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Secured by letters of credit.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Fund's Manager to be of comparable
quality to those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $412,389,114)_see statement..................................... $402,605,778
Interest receivable..................................................... 7,006,449
Receivable for shares of Beneficial Interest subscribed................. 159,000
Prepaid expenses........................................................ 30,870
-----------
409,802,097
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $139,070
Due to Custodian........................................................ 66,620
Accrued expenses and other liabilities.................................. 235,324 441,014
---------- ------------
NET ASSETS ................................................................ $409,361,083
=============
REPRESENTED BY:
Paid-in capital......................................................... $423,737,865
Accumulated undistributed investment income-net......................... 57,089
Accumulated net realized capital losses and distributions
in excess of net realized gain on investments_Note 1(c)............... (4,650,535)
Accumulated net unrealized (depreciation) on investments_Note 3......... (9,783,336)
-------------
NET ASSETS at value applicable to 32,694,615 shares outstanding
(unlimited number of $.001 par value shares of Beneficial Interest
authorized)............................................................. $409,361,083
=============
NET ASSET VALUE, offering and redemption price per share
($409,361,083 / 32,694,615 shares)...................................... $12.52
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 25,497,341
EXPENSES:
Management fee_Note 2(a).............................................. $ 2,789,984
Shareholder servicing costs_Note 2(b)................................. 738,849
Custodian fees........................................................ 47,459
Professional fees..................................................... 41,680
Trustees' fees and expenses_Note 2(c)................................. 21,980
Prospectus and shareholders' reports.................................. 18,913
Registration fees..................................................... 1,132
Miscellaneous......................................................... 66,452
--------------
3,726,449
Less_reduction in management fee due to
undertakings_Note 2(a)............................................ 1,510,325
--------------
TOTAL EXPENSES.................................................. 2,216,124
--------------
INVESTMENT INCOME--NET.......................................... 23,281,217
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments_Note 3............................... $ (4,647,281)
Net unrealized (depreciation) on investments............................ (44,215,781)
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (48,863,062)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(25,581,845)
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 22,063,446 $ 23,281,217
Net realized gain (loss) on investments................................. 618,669 (4,647,281)
Net unrealized appreciation (depreciation) on investments for the year.. 27,359,058 (44,215,781)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 50,041,173 (25,581,845)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net............................................. (22,063,446) (23,224,128)
From net realized gain on investments................................... (385,082) --
In excess of net realized gain on investments........................... -- (238,834)
-------------- --------------
TOTAL DIVIDENDS....................................................... (22,448,528) (23,462,962)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 359,269,086 219,567,040
Dividends reinvested.................................................... 16,093,950 16,231,257
Cost of shares redeemed................................................. (197,042,056) (315,887,827)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 178,320,980 (80,089,530)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 205,913,625 (129,134,337)
NET ASSETS:
Beginning of year....................................................... 332,581,795 538,495,420
-------------- --------------
End of year (including undistributed investment income-net;
$57,089 in 1994)...................................................... $538,495,420 $409,361,083
============= ============
SHARES SHARES
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 26,644,952 16,724,264
Shares issued for dividends reinvested.................................. 1,190,189 1,243,406
Shares redeemed......................................................... (14,661,633) (24,144,029)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 13,173,508 (6,176,359)
============= ============
See notes to financial statements.
</TABLE>
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated May 1, 1995.
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, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgement of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain
of its public bodies and municipalities may affect the ability of issuers
within the state to pay interest on, or repay principal of, municipal
obligations held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends 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, it is the policy of the Fund not to distribute such gain.
Dividends in excess of net realized gain on investments for financial
statement purposes result primarily from distributions of realized gain
necessary to satisfy tax requirements.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of approximately $2,168,000
available for Federal income tax purposes to be applied against future net
securities profit, if any, realized subsequent to December 31, 1994. The
carryover does not include net realized securities losses from November 1,
1994 through December 31, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the carryover expires in
fiscal 2002.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, 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, 1994 through May 1, 1994, to waive receipt of the
management fee payable to it by the Fund in excess of an annual rate of .20
of 1% of the Fund's average daily net assets, and thereafter had undertaken
through October 17, 1994, to reduce the management fee paid by the Fund, to
the extent that the Fund's aggregate expenses (excluding certain expenses as
described above) exceeded certain specified annual percentages of the Fund's
average daily net assets. The Manager has currently undertaken from October
18, 1994 through March 31, 1995, or until such time as the net assets of the
Fund exceed $500 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 an
annual rate of .40 of 1% of the average daily value of the Fund's net assets.
The reduction in management fee, pursuant to undertakings, amounted to
$1,510,325 for the year ended December 31, 1994.
(B) Pursuant to the Fund's Shareholder Service Plan, the Fund reimburses
Dreyfus Service Corporation 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, 1994, the Fund was charged an aggregate of $419,379 pursuant
to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $250 per meeting.
Prior to April 25, 1994, the annual fee was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $125,583,056 and $209,493,995, respectively, for the year ended
December 31, 1994, and consisted entirely of long-term and short-term
municipal investments.
At December 31, 1994, accumulated net unrealized depreciation on
investments was $9,783,336 consisting of $2,629,054 gross unrealized
appreciation and $12,412,390 gross unrealized depreciation.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS FLORIDA INTERMEDIATE MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, 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, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Florida Intermediate Municipal Bond Fund at December 31,
1994, and 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.
(Logo Signature)
New York, New York
February 3, 1995
