File Nos. 33-46586
811-6610
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 11 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11 [X]
(Check appropriate box or boxes.)
DREYFUS CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on August 2, 1999 pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
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on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
----
Dreyfus California Intermediate Municipal Bond Fund
Investing for income that is exempt from federal and California state income
taxes
PROSPECTUS August 2, 1999
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
THE FUND
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2 Goal/Approach
3 Main Risks
4 Past Performance
5 Expenses
6 Management
7 Financial Highlights
YOUR INVESTMENT
What every investor should know about the fund
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8 Account Policies
11 Distributions and Taxes
12 Services for Fund Investors
14 Instructions for Regular Accounts
FOR MORE INFORMATION
Information for managing your fund account
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Back Cover
Where to learn more about this and other Dreyfus funds
<PAGE>
The Fund
Dreyfus California Intermediate Municipal Bond Fund
-----------------------------
Ticker Symbol: DCIMX
GOAL/APPROACH
The fund seeks as high a level of income exempt from federal and California
state income taxes as is consistent with the preservation of capital. To pursue
its goal, the fund normally invests substantially all of its assets in municipal
bonds, the interest from which is exempt from federal and California state
personal income taxes. The fund's dollar-weighted average portfolio maturity
ranges between three and ten years. Although the fund currently intends to
invest only in investment grade securities at the time of their purchase, it has
the ability to invest up to 20% of net assets in bonds rated below BBB/Baa.
Municipal bonds are typically divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the
full faith and credit of the issuer and its taxing power
(pound) REVENUE BONDS, which are payable from the revenues
derived from a specific revenue source, such as
charges for water and sewer service or highway tolls
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
INFORMATION ON THE FUND' S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT (SEE BACK COVER).
Concepts to understand
AVERAGE MATURITY: an average of the stated maturities of the bonds held in the
fund, based on their dollar-weighted proportions in the fund.
INVESTMENT GRADE BONDS: independent rating organizations analyze and evaluate a
bond issuer's credit history and ability to repay debts. Based on their
assessment, they assign letter grades that reflect the issuer's
creditworthiness. AAA or Aaa represents the highest credit rating, AA/Aa the
second highest, and so on down to D, for defaulted debt. Bonds rated BBB or Baa
and above are considered investment grade.
<PAGE 2>
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the fund to invest for higher yields, the most immediate
effect is usually a drop in bond prices and, therefore, in the fund's share
price as well. As a result, the value of your investment in the fund could go up
and down, which means that you could lose money.
Other risk factors could have an effect on the fund's performance:
(pound) if an issuer fails to make timely interest or
principal payments, or there is a decline in the credit
quality of a bond, or perception of a decline, the
bond's value could fall, potentially lowering the fund's
share price
(pound) California' s economy and revenues underlying its
municipal bonds may decline
(pound) investing primarily in a single state may make the
fund's portfolio securities more sensitive to risks
specific to the state
Although the fund' s objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income tax.
Other potential risks
The fund may invest in certain derivatives. Derivatives range from the
conventional, such as futures and options, to the more exotic such as inverse
floaters. The value of derivatives can move in the same direction as interest
rates, or in the opposite direction. Derivatives can be illiquid and highly
sensitive to changes in their underlying security, interest rate or index and,
as a result, can be highly volatile. The fund may use derivatives to:
(pound) increase yield
(pound) hedge against a decline in principal value
(pound) invest with greater efficiency and lower cost than is possible through
direct investment
(pound) adjust the fund's duration
(pound) provide daily liquidity
The Fund
<PAGE 3>
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's performance from year to year. The second
table compares the fund's performance over time to that of the Lehman Brothers
10-Year Municipal Bond Index, an unmanaged total-return performance benchmark.
Both tables assume reinvestment of dividends. Of course, past performance is no
guarantee of future results.
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Year-by-year total return AS OF 12/31 EACH YEAR (%)
<TABLE>
14.44 13.42 3.66 7.63 5.79
-5.50
N/A N/A N/A N/A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
</TABLE>
BEST QUARTER: Q1 '95 +5.13%
WORST QUARTER: Q1 '94 -5.17%
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 3/31/99 WAS 0.67%.
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Average annual total return AS OF 12/31/98
<TABLE>
Since
inception
1 Year 5 Years (4/20/92)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND 5.79% 4.81% 6.80%
LEHMAN BROTHERS
10-YEAR MUNICIPAL
BOND INDEX 6.76% 6.35% 7.86%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/92
IS USED AS THE BEGINNING VALUE ON 4/20/92. UNLIKE THE FUND, THE LEHMAN INDEX
IS NOT COMPOSED OF BONDS OF A SINGLE STATE.
</TABLE>
What this fund is --
and isn't
This fund is a mutual fund:
a pooled investment that is professionally managed and gives you the
opportunity to participate in financial markets. It strives to reach its
stated goal, although as with all mutual funds, it cannot offer guaranteed
results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
<PAGE 4>
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Shareholder transaction fees are paid
from your account. Annual fund operating expenses are paid out of fund assets,
so their effect is included in the share price. The fund has no sales charge
(load) or Rule 12b-1 distribution fees.
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Fee table
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee
1.00%
CHARGED ONLY WHEN SELLING SHARES YOU
HAVE OWNED FOR LESS THAN 15 DAYS
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ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Shareholder Services fee 0.09%
Other expenses 0.13%
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TOTAL 0.82%
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Expense example
<TABLE>
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------
<S> <C> <C> <C>
$84 $262 $455 $1,014
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. During the
past fiscal year, Dreyfus waived a portion of its fee so that the effective
management fee paid by the fiscal was 0.58%, reducing total expenses to 0.80%.
This waiver is voluntary and may be terminated at any time.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse Dreyfus
Service Corporation for Shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
The Fund
<PAGE 5>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages more than $120
billion in over 160 mutual fund portfolios. During the fiscal year ended
March 31, 1999, the fund paid Dreyfus an annual management fee of 0.58% of the
fund's average net assets. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a
bank at its core. With more than $389 billion of assets under management, and
$1.9 trillion of assets under administration and custody, Mellon provides a
full range of banking, investment and trust products and services to
individuals, businesses and institutions. Mellon is headquartered in
Pittsburgh, Pennsylvania.
Monica Wiebolt has managed the fund since October 1996, and has been a portfolio
manager at Dreyfus since 1983.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy' s preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE 6>
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
" Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been independently audited by Ernst & Young
LLP, whose report, along with the fund's financial statements, is included in
the annual report.
<TABLE>
YEAR ENDED MARCH 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 13.82 13.27 13.27 13.02 13.08
Investment operations:
Investment income -- net .58 .59 .60 .62 .66
Net realized and unrealized gain
(loss) on investments .17 .55 -- .25 (.06)
Total from Investment operations .75 1.14 .60 .87 .60
Distributions:
Dividends from investment
income -- net (.58) (.59) (.60) (.62) (.66)
Net asset value, end of period 13.99 13.82 13.27 13.27 13.02
Total return (%) 5.55 8.77 4.60 6.75 4.76
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to
average net assets (%) .80 .79 .78 .65 .32
Ratio of net investment income to
average net assets (%) 4.19 4.35 4.48 4.66 5.13
Decrease reflected in above
expense ratios due to
undertakings by the Manager (%) .02 .01 .04 .14 .47
Portfolio turnover rate (%) 26.29 44.77 35.79 41.42 17.28
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 202,436 202,997 210,790 230,357 239,948
</TABLE>
The Fund
<PAGE 7>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in this fund. Your price for fund shares is
the fund's net asset value per share (NAV), which is generally calculated as of
the close of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern
time) every day the exchange is open.
YOUR ORDER WILL BE PRICED at the next NAV calculated after your order is
accepted by the fund's transfer agent or other authorized entity. Because the
fund seeks tax-exempt income, it is not recommended for purchase in IRAs or
other qualified retirement plans.
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Minimum investments
Initial Additional
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REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER
INVESTMENTS
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net assets by the number of existing
shares.
When calculating its NAV, the fund's investments are priced at fair value by an
independent pricing service approved by the fund's board. The pricing service's
procedures are reviewed under the general supervision of the board.
<PAGE 8>
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV calculated after your order is accepted by the fund's transfer agent or
other authorized entity. Any certificates representing fund shares being sold
must be returned with your redemption request. Your order will be processed
promptly, and you will generally receive the proceeds within a week.
BEFORE SELLING RECENTLY PURCHASED SHARES, please note that:
(pound) if the fund has not yet collected payment for the
shares you are selling, it may delay sending the
proceeds for up to eight business days or until it
has collected payment
(pound) if you are selling or exchanging shares you have owned
for less than 15 days, the fund may deduct a 1%
redemption fee (not charged on shares sold through
the Automatic Withdrawal Plan or Dreyfus Auto-Exchange
Privilege, or on shares acquired through dividend reinvestment
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Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
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CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Your Investment
<PAGE 9>
ACCOUNT POLICIES (CONTINUED)
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
(pound) refuse any purchase or exchange request that
could adversely affect the fund or its operations,
including those from any individual or group who, in the
fund' s view, is likely to engage in excessive trading
(usually defined as more than four exchanges out of the
fund within a calendar year)
(pound) refuse any purchase or exchange request in excess of
1% of the fund's total assets
(pound) change or discontinue its exchange privilege, or
temporarily suspend this privilege during unusual market
conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very large
redemptions, excessive trading or during unusual market
conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the fund
charges regular accounts with balances below $2,000 an annual fee of $12. The
fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; and accounts opened through a financial
institution.
If your account falls below $500, the fund may ask you to increase your balance.
If it is still below $500 after 30 days, the fund may close your account and
send you the proceeds.
<PAGE 10>
DISTRIBUTIONS AND TAXES
THE FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net capital gains it has realized once a year.
Your distributions will be reinvested in the fund unless you instruct the fund
otherwise. There are no fees or sales charges on reinvestments.
THE FUND ANTICIPATES THAT VIRTUALLY ALL OF ITS INCOME DIVIDENDS will be exempt
from federal and California state personal income taxes. However, any dividends
from taxable investments, and any capital gain distributions, are taxable as
ordinary income or as capital gains, whether or not you reinvested them. The tax
status of any distribution is the same regardless of how long you have been in
the fund and whether you reinvest your distributions or take them in cash. In
general, distributions are federally taxable as follows:
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Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
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INCOME GENERALLY GENERALLY
DIVIDENDS TAX EXEMPT TAX EXEMPT
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of your dividends and distributions will be detailed in your
annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Except in tax-advantaged accounts, any sale or exchange of fund shares,
including through the checkwriting privilege, may generate a tax liability.
The table at right also can provide a guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains" applies to
fund shares sold or exchanged up to 12 months after buying them. "Long-term
capital gains" applies to shares sold or exchanged after 12 months.
Your Investment
<PAGE 11>
SERVICES FOR FUND INVESTORS
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application or by
calling 1-800-645-6561.
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For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
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For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
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For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
Dreyfus Financial Centers
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
Our experienced financial consultants can help you make informed choices and
provide you with personalized attention in handling account transactions. The
Financial Centers also offer informative seminars and events. To find the
Financial Center nearest you, call 1-800-499-3327.
<PAGE 12>
Checkwriting privilege
YOU MAY WRITE REDEMPTION CHECKS against your account in amounts of $500 or more.
These checks are free; however, a fee may be charged if you request a stop
payment or if the transfer agent cannot honor a redemption check due to
insufficient funds or another valid reason. Please do not postdate your checks
or use them to close your account.
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another. You can
request your exchange in writing or by phone. Be sure to read the current
prospectus for any fund into which you are exchanging. Any new account
established through an exchange will have the same privileges as your original
account (as long as they are available) . There is currently no fee for
exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
24-hour automated account access
YOU CAN EASILY MANAGE YOUR DREYFUS accounts, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more -- when it's convenient for you.
Third-party investments
If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
financial advisers and financial supermarkets may charge transaction fees and
may set different minimum investments or limitations on buying or selling
shares. Consult a representative of your plan or financial institution if in
doubt.
Your Investment
<PAGE 13>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387,
Providence, RI 02940-9387
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* DDA# 8900204400
* the fund name
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
WITHOUT ANY INITIAL INVESTMENT Check the Dreyfus Step Program option on your
application. Return your application, then complete the additional materials
when they are sent to you.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* DDA# 8900204400
* the fund name
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
<PAGE 14>
TO SELL SHARES
Write a redemption check OR write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671,
Providence, RI 02940-9671
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
Your Investment
<PAGE 15>
NOTES
<PAGE 16>
<PAGE 17>
For More Information
Dreyfus California Intermediate Municipal Bond Fund
-----------------------------
SEC file number: 811-6610
More information on this fund is available free upon
request, including the following:
Annual/Semiannual Report
Describes the fund' s performance, lists portfolio
holdings and contains a letter from the fund's manager
discussing recent market conditions, economic trends and
fund strategies that significantly affected the fund's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A
current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999 Dreyfus Service Corporation 902P0899
<PAGE>
DREYFUS CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 2, 1999
This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with
the current Prospectus of Dreyfus California Intermediate
Municipal Bond Fund (the "Fund"), dated August 2, 1999, 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 one of the
following numbers:
Call Toll Free -- 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
The Fund's most recent Annual Report and Semi-Annual Report
to Shareholders are separate documents supplied with this
Statement of Additional Information, and the financial
statements, accompanying notes and report of independent auditors
appearing in the Annual Report are incorporated by reference into
this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund B-2
Management of the Fund B-16
Management Arrangements B-20
How to Buy Shares B-23
Shareholder Services Plan B-24
How to Redeem Shares B-25
Shareholder Services B-27
Determination of Net Asset Value B-30
Dividends, Distributions and Taxes B-31
Portfolio Transactions B-33
Performance Information B-34
Information About the Fund B-35
Counsel and Independent Auditors B-37
Appendix A B-38
Appendix B B-56
DESCRIPTION OF THE FUND
The Fund is a Massachusetts business trust that commenced
operations on April 20, 1992. The Fund is an open-end,
management investment company, known as a mutual fund.
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.
Certain Portfolio Securities
The following information supplements and should be read in
conjunction with the Fund's Prospectus.
Municipal Obligations. The Fund will invest primarily in
debt securities of the State of California, its political
subdivisions, authorities and corporations, and certain other
specified securities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal and State of
California personal income taxes (collectively, "California
Municipal Obligations"). To the extent acceptable California
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, but not State of
California, income tax. The Fund will invest at least 80% of the
value of its net assets (except when maintaining a temporary
defensive position) in Municipal Obligations. Municipal
Obligations are debt obligations issued by states, territories
and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities,
or multistate agencies or authorities, the interest from which,
in the opinion of bond counsel to the issuer, is 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.
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.
Certain Tax Exempt Obligations. The Fund may purchase
floating and variable rate demand notes and bonds, which are tax
exempt obligations ordinarily having stated maturities in excess
of one year, but which permit the holder to demand payment of
principal at any time, or at specified intervals. Variable rate
demand notes include master demand notes which are obligations
that permit the Fund to invest fluctuating amounts, 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. Because these obligations
are direct lending arrangements between the lender and borrower,
it is not contemplated that such instruments generally will be
traded, and there generally is no established secondary market
for these obligations, although they are redeemable at face
value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on
demand. Each obligation purchased by the Fund will meet the
quality criteria established for the purchase of Municipal
Obligations.
Tax Exempt Participation Interests. 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 Fund's Board has determined meets prescribed quality
standards for banks, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain
participation interests, the Fund will have the right to demand
payment, on not more than seven days' notice, for all or any part
of the Fund's participation interest in the Municipal Obligation,
plus accrued interest. As to these instruments, the Fund intends
to exercise its right to demand payment only upon a default under
the terms of the Municipal Obligation, as needed to provide
liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio.
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 canceled; (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.
Tender Option Bonds. The Fund may purchase tender option
bonds. A tender option bond is a Municipal Obligation (generally
held pursuant to a custodial arrangement) having a relatively
long maturity and bearing interest at a fixed rate substantially
higher than prevailing short-term tax exempt rates, that has been
coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which
such institution grants the security holders the option, at
periodic intervals, to tender their securities to the institution
and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic
fees equal to the difference between the Municipal Obligation's
fixed coupon rate and the rate, as determined by a remarketing or
similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to
trade at par on the date of such determination. Thus, after
payment of this fee, the security holder effectively holds a
demand obligation that bears interest at the prevailing short-
term tax exempt rate. The Manager, on behalf of the Fund, will
consider on an ongoing basis the creditworthiness of the issuer
of the underlying Municipal Obligations, of any custodian and of
the third party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or
interest on the underlying Municipal Obligations and for other
reasons.
The Fund will 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.
Custodial Receipts. 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. 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.
Stand-By Commitments. The Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held in its
portfolio. Under a stand-by commitment, the Fund obligates a
broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect,
stand-by commitments are comparable to put options. The exercise
of a stand-by commitment, therefore, is subject to the ability of
the seller to make payment on demand. The Fund will acquire
stand-by commitments solely to facilitate its portfolio liquidity
and does not intend to exercise its rights thereunder for trading
purposes. The Fund may pay for stand-by commitments if such
action is deemed necessary, thus increasing to a degree the cost
of the underlying Municipal Obligation and similarly decreasing
such security's yield to investors. 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.
Ratings of Municipal Obligations. The Fund will invest at
least 80% of the value of its net assets in Municipal Obligations
which, in the case of bonds, are rated no lower than Baa by
Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Ratings Group ("S&P") or Fitch IBCA, Inc. ("Fitch" and,
together with Moody's and S&P, the "Rating Agencies"). 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 the Rating Agencies, 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 also may
invest in securities which, while not rated, are determined by
the Manager to be of comparable quality to the rated securities
in which the Fund may invest; for purposes of the 80% requirement
described in this paragraph, such unrated securities will be
considered to have the rating so determined.
The average distribution of investments (at value) in
Municipal Obligations (including notes) by ratings for the fiscal
year ended March 31, 1999, computed on a monthly basis, was as
follows:
Percentage of
Fitch or Moody's or S&P Value
AAA Aaa AAA 58.6%
AA Aa AA 16.8%
A A A 12.3%
BBB Baa BBB 7.3%
F-1+/F-1 VMIG1/MIG1, P-1 SP-1+/SP-1, A-1 0.9%
Not Rated Not Rated Not Rated 4.1%*
100.0%
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
the Rating Agencies 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 Prospectus and this Statement of Additional
Information. The ratings of the Rating Agencies 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.
Taxable Investments. From time to time, on a temporary
basis other than for temporary defensive purposes (but not to
exceed 20% of the value of 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 the Rating Agencies;
obligations of the U.S. Government, its agencies or
instrumentalities; commercial paper rated not lower than P-1 by
Moody's, A-1 by S&P or F-1 by Fitch; certificates of deposit of
U.S. domestic banks, including foreign branches of domestic
banks, with assets of one billion dollars or more; time deposits;
bankers' acceptances and other short-term bank obligations; and
repurchase agreements in respect of any of the foregoing.
Dividends paid by 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 California Municipal
Obligations are unavailable for investment by the Fund, in excess
of 35% of the Fund's net assets may be invested in securities
that are not exempt from California personal income taxes. 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.
_______________________________
* Included in the Not Rated category are securities comprising
4.1% of the Fund's market value which, while not rated, have been
determined by the Manager to be of comparable quality to
securities in the following rating categories: BBB/Baa (2.7%) and BB/Baa (1.4).
Zero Coupon Securities. 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 securities that pay interest periodically and
are likely to respond to a greater degree to changes in interest
rates than non-zero coupon securities having similar maturities
and credit qualities.
Illiquid Securities. The Fund may invest up to 15% of the
value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are
consistent with the Fund's investment objective. These
securities may include securities that are not readily
marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, and repurchase agreements
providing for settlement in more than seven days after notice.
As to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available
at a price that the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.
Investment Techniques
The following information supplements and should be read in
conjunction with the Fund's Prospectus. The Fund's use of
certain of the investment techniques described below may give
rise to taxable income.
Borrowing Money. The Fund is permitted to borrow to the
extent permitted under the Investment Company Act of 1940, as
amended (the "1940 Act"), which permits an investment company to
borrow in an amount up to 33-1/3% of the value of its total
assets. 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 its 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.
Lending Portfolio Securities. The Fund may lend securities
from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain
transactions. The Fund continues to be entitled to payments in
amounts equal to the interest or other distributions payable on
the loaned securities which affords the Fund an opportunity to
earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not
exceed 33-1/3% of the value of the Fund's total assets, and the
Fund will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. Such loans
are terminable by the Fund at any time upon specified notice.
The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its
agreement with the Fund. In connection with its securities
lending transactions, the Fund may return to the borrower or a
third party which is unaffiliated with the Fund, and which is
acting as a "placing broker," a part of the interest earned from
the investment of collateral received for securities loaned.
Short-Selling. In these transactions, the Fund sells a
security it does not own in anticipation of a decline in the
market value of the security. To complete the transaction, the
Fund must borrow the security to make delivery to the buyer. The
Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at
which the security was sold by the Fund, which would result in a
loss or gain, respectively.
Securities will not be sold short if, after effect is given
to any such short sale, the total market value of all securities
sold short would exceed 25% of the value of the Fund's net
assets. The Fund may not sell short the securities of any single
issuer listed on a national securities exchange to the extent of
more than 5% of the value of the Fund's net assets. The Fund may
not make short sale which results in the Fund having sold short
in the aggregate more than 5% of the outstanding securities of
any class of an issuer.
The Fund also may make short sales "against the box," in
which the Fund enters into a short sale of a security it owns in
order to hedge an unrealized gain on the security. At no time
will more than 15% of the value of the Fund's net assets be in
deposits on short sales against the box.
Until the Fund closes its short position or replaces the
borrowed security, the Fund will: (a) maintain a segregated
account, containing permissible liquid assets, at such a level
that the amount deposited in the account plus the amount
deposited with the broker as collateral always equals the current
value of the security sold short; or (b) otherwise cover its
short position.
Derivatives. The Fund may invest in, or enter into,
derivatives, such as options and futures, for a variety of
reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to
increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and
degrees of risk, depending upon the characteristics of the
particular derivative and the portfolio as a whole. Derivatives
permit the Fund to increase or decrease the level of risk, or
change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease
the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities. However,
derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in
derivatives could have a large potential impact on the Fund's
performance.
If the Fund invests in derivatives at inopportune times or
judges market conditions incorrectly, such investments may lower
the Fund's return or result in a loss. The Fund also could
experience losses if its derivatives were poorly correlated with
its other investments, or if the Fund were unable to liquidate
its position because of an illiquid secondary market. The market
for many derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for derivatives.
Although the Fund will not be a commodity pool, certain
derivatives subject the Fund to the rules of the Commodity
Futures Trading Commission which limit the extent to which the
Fund can invest in such derivatives. The Fund may invest in
futures contracts and options with respect thereto for hedging
purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount
of initial margin deposits and premiums paid for unexpired
options with respect to such contracts, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the
Fund's assets, after taking into account unrealized profits and
unrealized losses on such contracts and options; provided,
however, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in
calculating the 5% limitation.
Derivatives may be purchased on established exchanges or
through privately negotiated transactions referred to as over-the-
counter derivatives. Exchange-traded derivatives generally are
guaranteed by the clearing agency which is the issuer or
counterparty to such derivatives. This guarantee usually is
supported by a daily payment system (i.e., variation margin
requirements) operated by the clearing agency in order to reduce
overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk
associated with derivatives purchased on an exchange. By
contrast, no clearing agency guarantees over-the-counter
derivatives. Therefore, each party to an over-the-counter
derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter derivatives in the same manner
as it would review the credit quality of a security to be
purchased by the Fund. Over-the-counter derivatives are less
liquid than exchange-traded derivatives since the other party to
the transaction may be the only investor with sufficient
understanding of the derivative to be interested in bidding for
it.
Futures Transactions--In General. The Fund may enter into
futures contracts in U.S. domestic markets, such as the Chicago
Board of Trade. Engaging in these transactions involves risk of
loss to the Fund which could adversely affect the value of the
Fund's net assets. Although the Fund intends to purchase or sell
futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will
exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified
periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of
futures positions and potentially subjecting the Fund to
substantial losses.
Successful use of futures by the Fund also is subject to the
Manager's ability to predict correctly movements in the direction
of the relevant market, and, to the extent the transaction is
entered into for hedging purposes, to ascertain the appropriate
correlation between the securities being hedged and the price
movements of the futures contract. For example, if the Fund uses
futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices
of such securities instead increase, the Fund will lose part or
all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures
positions. Furthermore, if in such circumstances the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the
Securities and Exchange Commission, the Fund may be required to
segregate permissible liquid assets to cover its obligations
relating to its transactions in derivatives. To maintain this
required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to
liquidate a derivative position at a reasonable price. In
addition, the segregation of such assets will have the effect of
limiting the Fund's ability otherwise to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell
interest rate futures contracts. An interest rate future
obligates the Fund to purchase or sell an amount of a specific
debt security at a future date at a specific price.
Options--In General. The Fund may invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put
options. The Fund may write (i.e., sell) covered call and put
option contracts to the extent of 20% of the value of its net
assets at the time such option contracts are written. A call
option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security or
securities at the exercise price at any time during the option
period, or at a specific date. Conversely, a put option gives
the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the
exercise price at any time during the option period, or at a
specific date.
A covered call option written by the Fund is a call option
with respect to which the Fund owns the underlying security or
otherwise covers the transaction by segregating cash or other
securities. A put option written by the Fund is covered when,
among other things, the Fund segregates cash or liquid securities
having a value equal to or greater than the exercise price of the
option to fulfill the obligation undertaken. The principal
reason for writing covered call and put options is to realize,
through the receipt of premiums, a greater return than would be
realized on the underlying securities alone. The Fund receives a
premium from writing covered call or put options which it retains
whether or not the option is exercised.
There is no assurance that sufficient trading interest to
create a liquid secondary market on a securities exchange will
exist for any particular option or at any particular time, and
for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of
reasons. In the past, for example, higher than anticipated
trading activity or order flow, or other unforeseen events, at
times have rendered certain of the clearing facilities inadequate
and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or
trading halts or suspensions in one or more options. There can
be no assurance that similar events, or events that may otherwise
interfere with the timely execution of customers' orders, will
not recur. In such event, it might not be possible to effect
closing transactions in particular options. If, as a covered
call option writer, the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it
delivers the underlying security upon exercise or it otherwise
covers its position.
Successful use by the Fund of options will be subject to the
Manager's ability to predict correctly movements in interest
rates. To the extent the Manager's predictions are incorrect,
the Fund may incur losses.
Future Developments. The Fund may take advantage of
opportunities in the area of options and any other derivatives
which are not presently contemplated for use by the Fund or which
are not currently available but which may be developed, to the
extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund.
Before entering into such transactions or making any such
investment the Fund will provide appropriate disclosure in its
Prospectus or Statement of Additional Information.
Forward Commitments. The Fund may purchase or sell
Municipal Obligations and other securities on a forward
commitment, when-issued or delayed delivery basis, which means
that delivery and payment take place a number of days after the
date of the commitment to purchase. The payment obligation and
the interest rate receivable on a forward commitment or when-
issued security are fixed when the Fund enters into the
commitment, but the Fund does not make payment until it receives
delivery from the counterparty. The Fund will commit to purchase
such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. The Fund will
segregate permissible liquid assets at least equal at all times
to the amount of the Fund's purchase commitments.
Municipal Obligations and other securities purchased on a
forward commitment or when-issued basis are subject to changes in
value (generally changing in the same way, i.e. appreciating when
interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the
issuer and changes, real or anticipated, in the level of interest
rates. Securities purchased on a forward commitment or when-
issued basis may expose the Fund to risks because they may
experience such fluctuations prior to their actual delivery.
Purchasing securities on a forward commitment or when-issued
basis can involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher
than that obtained in the transaction itself. Purchasing
securities on a forward commitment or when-issued basis when the
Fund is fully or almost fully invested may result in greater
potential fluctuation in the value of the Fund's net assets and
its net asset value per share.
Investment Considerations and Risks
Investing in Municipal Obligations. 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.
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 Manager
will consider, on an ongoing basis, a number of factors including
the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Internal Revenue Code of 1986, as
amended (the "Code"), relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these
provisions could be to increase the cost of the Municipal
Obligations available for purchase by the Fund and thus reduce
available yield. Shareholders should consult their tax advisers
concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax
exemption for interest on Municipal Obligations may be introduced
in the future. If any such proposal were enacted that would
reduce the availability of Municipal Obligations for investment
by the Fund so as to adversely affect Fund shareholders, the Fund
would reevaluate its investment objective and policies and submit
possible changes in the 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.
Investing in California Municipal Obligations. You should
consider carefully the special risks inherent in the Fund's
investment in California Municipal Obligations. These risks
result from certain amendments to the California Constitution and
other statues that limit the taxing and spending authority of
California governmental entities, as well as from the general
financial condition of the State of California. A severe
recession from 1990 through fiscal 1994 reduced revenues and
increased expenditures for social welfare programs, resulting in
a period of budget imbalance. During this period, expenditures
exceeded revenues in four out of six years, and the State
accumulated and sustained a budget deficit in its budget reserve,
the Special Fund for Economic Uncertainties, approaching $2.8
billion at its peak at June 30, 1993. By the 1993-94 fiscal
year, the accumulated budget deficit was so large that it was
impractical to budget to retire it in one year, so a two-year
program was implemented, using the issuance of revenue
anticipation warrants to carry a portion of the deficit over the
end of the fiscal year. When the economy failed to recover
sufficiently, a second two-year plan was implemented in 1994-95,
again using cross-fiscal year revenue anticipation warrants to
partly finance the deficit into the 1995-96 fiscal year. As a
consequence of the accumulated budget deficits, the State's cash
resources available to pay its ongoing obligations were
significantly reduced causing the State to rely increasingly on
external debt markets to meet its cash needs. The last and
largest of these borrowings was $4.0 billion of revenue
anticipation warrants which were issued in July 1994 and matured
on April 25, 1996. Future budget problems or a deterioration in
California's general financial condition may have the effect of
impairing the ability of the issuers of California Municipal
Obligations to pay interest on, or repay the principal of, such
California Municipal Obligations. You should review "Appendix A"
which sets forth additional information relating to investing in
California Municipal Obligations.
Lower Rated Bonds. The Fund may invest up to 20% of the
value of its net assets in higher yielding (and, therefore,
higher risk) debt securities such as those rated below investment
grade by the Rating Agencies (commonly known as junk bonds).
They may be subject to certain risks with respect to the issuing
entity and to greater market fluctuations than certain lower
yielding, higher rated Municipal Obligations. See "Appendix B"
for a general description of the Rating Agencies' 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.
You should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are
higher rated securities and will fluctuate over time. These
bonds generally are considered by the Rating Agencies to be, on
balance, predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation and generally will involve more credit risk than
securities in the higher rating categories.
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 any economic recession would
disrupt severely the market for such securities and may have an
adverse impact on the value of such securities, and could
adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon which would 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 person concerning
the acquisition of such securities, and the Manager will review
carefully the credit and other characteristics pertinent to such
new issues.
The credit risk factors pertaining to lower rated securities
also apply to lower rated zero coupon bonds and pay-in-kind
bonds, in which the Fund may invest up to 5% of its total assets.
Zero coupon bonds and pay-in-kind bonds carry an additional risk
in that, unlike bonds which pay interest throughout the period to
maturity, the Fund will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the
issuer defaults, the Fund may obtain no return at all on its
investment. See "Dividends, Distributions and Taxes."
Simultaneous Investments. Investment decisions for the Fund
are made independently from those of other investment companies
advised by the Manager. If, however, such other investment
companies desire to invest in, or dispose of, the same securities
as the Fund, available investments or opportunities for sales
will be allocated equitably to each investment company. In some
cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
Investment Restrictions
The Fund's investment objective is a fundamental policy,
which cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares. In addition, the Fund has adopted investment
restrictions numbered 1 through 6 as fundamental policies.
Investment restrictions numbered 7 through 12 are not fundamental
policies and may be changed by vote of a majority of the Fund's
Board members at any time. The Fund may not:
1. Borrow money, except to the extent permitted under
the 1940 Act (which currently limits borrowings to no more than
33-1/3% of the Fund's total assets). For purposes of this
investment restriction, the entry into options, forward
contracts, including those relating to indices, and options on
futures contracts or indices shall not constitute borrowing.
2. Purchase or sell real estate, real estate
investment trust securities, 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 futures contracts, including those relating to indices,
and options on futures contracts or indices.
3. 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.
4. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements;
however, the Fund may lend its portfolio securities in an amount
not to exceed 33-1/3% of the value of its total assets. Any
loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's Board.
5. Invest more than 25% of its total assets in the
securities of issuers in any single industry; provided that there
shall be no such limitation on the purchase of Municipal
Obligations and, for temporary defensive purposes, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
6. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), except to the extent that the
activities permitted in Investment Restriction Nos. 1, 2, 8 and
10 may be deemed to give rise to a senior security.
7. 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.
8. Purchase securities on margin, but the Fund may
make margin deposits in connection with transactions in futures,
including those relating to indices, and options on futures or
indices.
9. Invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
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
arrangements with respect to futures contracts, including those
related to indices, and options on futures contracts or indices
and collateral arrangements with respect to initial or variation
margin for 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 or the Statement of Additional
Information, and floating and variable rate demand obligations as
to which the Fund cannot exercise the demand feature described in
the Fund's Prospectus or the Statement of Additional Information
on less than seven days' notice and as to which there is no
secondary market), if, in the aggregate, more than 15% of its net
assets would be so invested.
12. Invest in companies for the purpose of exercising
control.
For purposes of Investment Restriction No. 5, 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.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and
supervision of the Fund. The Board approves all significant
agreements between the Fund and those companies that furnish
services to the Fund. These companies are as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian
Board members and officers of the Fund, together with
information as to their principal business occupations during at
least the last five years, are shown below.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995,
Chairman of the Board of various funds in the Dreyfus Family
of Funds. He also is a director of The Noel Group, Inc., a
venture capital company (for which, from February 1995 until
November 1997, he was Chairman of the Board), The Muscular
Dystrophy Association, HealthPlan Services Corporation, a
provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle
Industries, Inc. (formerly, Belding Heminway, Inc.), a
button packager and distributor, Career Blazers, Inc.
(formerly, Staffing Resources, Inc.), a temporary placement
agency, and Century Business Services, Inc., a provider of
various outsourcing functions for small and medium sized
companies. For more than five years prior to January 1995,
he was President, a director and, until August 1994, Chief
Operating Officer of the Manager and Executive Vice
President and a director of Dreyfus Service Corporation, a
wholly-owned subsidiary of the Manager and, until August 24,
1994, the Fund's distributor. From August 1994 until
December 31, 1994, he was a director of Mellon Bank
Corporation. He is 55 years old and his address is 200 Park
Avenue, New York, New York 10166.
DAVID W. BURKE, Board Member. Retired. From August 1995 to
November 1998, he was Chairman of the Broadcasting Board of
Governors, an independent board within the United States
Information Agency, since August 1995. From August 1994 to
December 31, 1994, Mr. Burke was a Consultant to the Manager
and, from October 1990 to August 1994, he was Vice President
and Chief Administrative Officer of the Manager. From 1977
to October 1990, Mr. Burke was involved in the management of
national television news, as Vice President and Executive
Vice President of ABC News, and subsequently as President of
CBS News. He is 63 years old and his address is 197 Eighth Street,
Charleston, Massachusetts 02642.
DIANE DUNST, Board Member. Since January 1992, President of
Diane Dunst Promotion, Inc., a full service promotion
agency. From January 1989 to January 1992, Director of
Promotion Services, Lear's Magazine. From 1985 to January
1989, she was Sales Promotion Manager of ELLE Magazine. She
is 59 years old and her address is 1172 Park Avenue, New
York, New York 10128.
ROSALIND GERSTEN JACOBS, Board Member. Merchandise and Marketing Consultant.
From 1997 to 1998, Director of Merchandise and Marketing for Corporate
Property Investors, a real estate investment company. From 1974 to 1976,
she was owner and manager of a merchandise and marketing consulting firm.
Prior to 1974, she was a Vice President of Macy's, New York. She is 73
years old and her address is c/o Corporate Property Investors, 305 East
47th Street, New York, New York 10017.
JAY I. MELTZER, Board Member. Physician engaged in private practice
specializing in internal medicine. He is a Clinical Professor of Medicine
at Columbia University, College of Physicians and Surgeons, an Adjunct
Clinical Professor at Cornell Medical College, a Consultant in Medince at
Memorial Sloan-Kettering Hospital. He teaches in the Section on Society
and Medicine and supervises a group of medical ethics Fellows. He also
writes a monthly commentary on medical affairs for the Medical Herald. He
is 70 years old and his address is 903 Park Avenue, New York, New York
10021.
DANIEL ROSE, Board Member. Vice Chairman 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 makes equity investments and loans and provides 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. He is 69 years old and his address is c/o Rose Associates, Inc., 200
Madison Avenue, New York, New York 10016.
WARREN B. RUDMAN, Board Member. Since January 1993, Partner in
the law firm Paul, Weiss, Rifkind, Wharton & Garrison and
since May 1995, a director of Collins & Aikman Corporation.
Also, since January 1993, Mr. Rudman has served as a
director of Chubb Corporation and of the Raytheon Company,
and as a member of the President's Foreign Intelligence
Advisory Board (Vice Chairman, through February, 1998 and,
currently, Chairman). From January 1981 to January 1993,
Mr. Rudman served as a United States Senator from the State
of New Hampshire. From January 1993 to December 1994, Mr.
Rudman served as Chairman of the Federal Reserve Bank of
Boston. Since 1988, Mr. Rudman has served as a trustee of
Boston College and since 1986 as a member of the Senior
Advisory Board of the Institute of Politics of the Kennedy
School of Government at Harvard University. He is 69 years
old and his address is c/o Paul, Weiss, Rifkind, Wharton &
Garrison, 1615 L Street, N.W., Suite 1300, Washington D.C.
20036.
SANDER VANOCUR, Board Member. Since January 1992, President of
Old Owl Communications, a full-service communications firm.
From May 1995 to June 1996, he was a Professional in
Residence at the Freedom Forum in Arlington, VA; from
January 1994 to May 1995, he served as Visiting Professional
Scholar at the Freedom Forum Amendment Center at Vanderbilt
University; and from November 1989 to November 1995, he was
a director of the Damon Runyon-Walter Winchell Cancer
Research Fund. From June 1977 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. He is 71 years old and his address is
2626 Sycamore Canyon, Santa Barbara, California 93108.
For so long as the Fund's plan described in the section
captioned "Shareholder Services Plan" remains in effect, the
Board members of the Fund who are not "interested persons" of the
Fund, as defined in the 1940 Act, will be selected and nominated
by the Board members who are not "interested persons" of the
Fund.
The Fund typically pays its Board members an annual retainer
and a per meeting fee and reimburses them for their expenses.
The Chairman of the Board receives an additional 25% of such
compensation. Emeritus Board members are entitled to receive an
annual retainer and a per meeting fee of one-half the amount paid
to them as Board members. The aggregate amount of compensation
paid to each Board member by the Fund for the fiscal year ended
March 31, 1999, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of
which is set forth in parenthesis next to each Board member's
total compensation)* for the year ended December 31, 1998, were
as follows:
Total Compensation From
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund** Board Member
Joseph S. DiMartino $ 5,625 $ 619,660 (187)
David W. Burke $ 4,500 $ 233,500 (62)
Diane Dunst $ 4,500 $ 37,750 (16)
Rosalind Gersten Jacobs $ 4,000 $ 84,000 (44)
Jay I. Meltzer $ 4,000 $ 34,000 (16)
Daniel Rose $ 4,500 $ 76,250 (30)
Warren B. Rudman $ 4,000 $ 82,000 (25)
Sander Vanocur $ 4,500 $ 76,250 (30)
_____________________
* Represents the number of separate portfolios comprising the
investment companies in the Fund Complex, including the
Fund, for which the Board member serves.
** Amount does not include reimbursed expenses for attending
Board meetings, which amounted to $1,100 for all Board
members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief
Executive Officer, Chief Compliance Officer and a director
of the Distributor and Funds Distributor, Inc., the ultimate
parent of which is Boston Institutional Group, Inc., and an
officer of other investment companies advised or
administered by the Manager. She is 41 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice
President and General Counsel of Funds Distributor, Inc.,
and an officer of other investment companies advised or
administered by the Manager. From August 1996 to March
1998, she was Vice President and Assistant General Counsel
for Loomis, Sayles & Company, L.P. From January 1986 to
July 1996, she was an associate with the law firm of Ropes &
Gray. She is 39 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and
Assistant Treasurer. Vice President and Client Development
Manager of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager.
From April 1997 to March 1998, she was employed as a
Relationship Manager with Citibank, N.A. From August 1995
to April 1997, she was an Assistant Vice President with
Hudson Valley Bank, and from September 1990 to August 1995,
she was Second Vice President with Chase Manhattan Bank.
She is 30 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice
President of the Distributor and Funds Distributor, Inc.,
and an officer of other investment companies advised or
administered by the Manager. She is 34 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive
Vice President and Client Service Director of Funds
Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From June
1995 to March 1998, he was Senior Vice President and Senior
Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for
First Data Corporation. He is 44 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer.
Senior Vice President, Treasurer, Chief Financial Officer
and a director of the Distributor and Funds Distributor,
Inc., and an officer of other investment companies advised
or administered by the Manager. From July 1988 to August
1994, he was employed by The Boston Company, Inc. where he
held various management positions in the Corporate Finance
and Treasury areas. He is 37 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary.
Assistant Vice President of Funds Distributor, Inc., and an
officer of other investment companies advised or
administered by the Manager. From April 1993 to January
1995, he was a Senior Fund Accountant for Investors Bank &
Trust Company. He is 30 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary.
Vice President and Senior Associate General Counsel of Funds
Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From
April 1994 to July 1996, he was Assistant Counsel at Forum
Financial Group. He is 34 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary.
Manager of Treasury Services Administration of Funds
Distributor, Inc., and an officer of other investment
companies advised or administered by the Manager. From July
1994 to November 1995, she was a Fund Accountant for
Investors Bank & Trust Company. She is 26 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant
Vice President of Funds Distributor, Inc., and an officer of
other investment companies advised or administered by the
Manager. From March 1990 to May 1996, she was employed by
U.S. Trust Company of New York where she held various sales
and marketing positions. She is 37 years old.
The address of each officer of the Fund is 200 Park Avenue,
New York, New York 10166.
The Fund's Board members and officers, as a group, owned
less than 1% of the Fund's shares outstanding on _________, 1999.
As of _______, 1999, the following shareholders were known
by the Fund to own 5% or more of the outstanding voting
securities of the Fund:
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned
subsidiary of Mellon Bank Corporation ("Mellon"). 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.
The Manager provides management services pursuant to the
Management Agreement (the "Agreement") dated August 24, 1994 with
the Fund, which is subject to annual approval by (i) the Fund's
Board or (ii) vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of the Fund, provided that in
either event the continuance also is approved by a majority of
the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval.
The Agreement was approved by shareholders of the Fund on August
3, 1994, and was last approved by the Fund's Board, including a
majority of the Board members who are not "interested persons" of
any party to the Agreement, at a meeting held on May 5, 1999.
The Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a
majority of the Fund's shares, or, upon not less than 90 days' notice,
by the Manager. The Agreement will terminate automatically in the event
of its assignment (as defined in the
1940 Act).
The following persons are officers and/or directors of the
Manager: Christopher M. Condron, Chairman of the Board and Chief
Executive Officer; Stephen E. Canter, President, Chief Operating
Officer, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman and a director; J. David Officer, Vice
Chairman and a director; Thomas F. Eggers, Vice Chairman--
Institutional and a director; Ronald P. O'Hanley III, Vice
Chairman; William T. Sandalls, Jr., Executive Vice President;
Mark N. Jacobs, Vice President, General Counsel and Secretary;
Diane P. Durnin, Vice President--Product Development; Patrice M.
Kozlowski, Vice President--Corporate Communications; Mary Beth
Leibig, Vice President--Human Resources; Andrew S. Wasser, Vice
President--Information Systems; Theodore A. Schachar, Vice
President; Wendy Strutt, Vice President; Richard Terres, Vice
President; William H. Maresca, Controller; James Bitetto,
Assistant Secretary; Steven F. Newman, Assistant Secretary; and
Mandell L. Berman, Burton C. Borgelt, Steven G. Elliot, Martin C.
McGuinn, Richard W. Sabo and Richard F. Syron, 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. The Manager is responsible for
investment decisions, and provides the Fund with portfolio
managers who are authorized by the Fund's Board to execute
purchases and sales of securities. The Fund's portfolio managers
are Richard J. Moynihan, Joseph A. Darcy, A. Paul Disdier,
Douglas Gaylor, Karen M. Hand, Stephen C. Kris, Jill C. Shaffro,
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 and for other funds advised by the Manager.
All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by the
Manager. The expenses borne by the Fund include: taxes,
interest, interest on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services,
costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses.
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 may
pay the Distributor for shareholder services from the Manager's
own assets, including past profits but not including the
management fee paid by the Fund. The Distributor may use part or
all of such payments to pay securities dealers, banks or other
financial institutions in respect of these services. The Manager
also may make such advertising and promotional expenditures,
using its own resources, as it from time to time deems
appropriate.
As compensation for the Manager's services, the Fund has
agreed to pay the Manager a monthly management fee at the annual
rate of .60% of the value of the Fund's average daily net assets.
All fees and expenses are accrued daily and deducted before the
declaration of dividends to shareholders. For the fiscal years
ended March 31, 1997, 1998 and 1999, the management fees payable
by the Fund amounted to $1,331,246, $1,230,454 and $1,211,464,
respectively, which amounts were reduced by $80,535, $23,713 and
$31,832, respectively, pursuant to undertakings by the Manager
then in effect, resulting in net fees paid to the Manager of
$1,250,711 in fiscal 1997, $1,206,741 in fiscal 1998 and
$1,179,632 in fiscal 1999.
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. 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.
Distributor. The Distributor, located at 60 State Street,
Boston, Massachusetts 02109, serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable
annually.
Transfer and Dividend Disbursing Agent and Custodian.
Dreyfus Transfer, Inc. (the "Transfer Agent"), a wholly-owned
subsidiary of the Manager, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing
agent. Under a transfer agency agreement with the Fund, the
Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment
of dividends and distributions payable by the Fund. For these
services, the Transfer Agent receives a monthly fee computed on
the basis of the number of shareholder accounts it maintains for
the Fund during the month, and is reimbursed for certain out-of-
pocket expenses.
The Bank of New York (the "Custodian"), 90 Washington
Street, New York, New York 10286, is the Fund's custodian. The
Custodian has no part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the
Fund. Under a custody agreement with the Fund, the Custodian
holds the Fund's securities and keeps all necessary accounts and
records. For its custody services, the Custodian receives a
monthly fee based on the market value of the Fund's assets held
in custody and receives certain securities transactions charges.
HOW TO BUY SHARES
General. Fund shares are sold without a sales charge. You
may be charged a fee if you effect transactions in Fund shares
through a securities dealer, bank or other financial institution.
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 maintains an omnibus account in the Fund and
has made an aggregate minimum initial purchase for its customers
of $2,500. Subsequent investments must be at least $100. The
initial investment must be accompanied by the Account
Application. For full-time or part-time employees of the Manager
or any of its affiliates or subsidiaries, directors of the
Manager, Board members of a fund advised by the Manager,
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 Manager or
any of its affiliates or subsidiaries who elect to have a portion
of their pay directly deposited into their Fund accounts, the
minimum initial investment is $50. The Fund reserves the right
to vary the initial and subsequent investment minimum
requirements at any time.
Fund shares also are offered without regard to the minimum
initial investment requirements through Dreyfus-Automatic Asset
Builderr, Dreyfus Government Direct Deposit Privilege or Dreyfus
Payroll Savings Plan pursuant to the Dreyfus Step Program
described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you
with a convenient way to invest for long-term financial goals.
You should be aware, however, that periodic investment plans do
not guarantee a profit and will not protect an investor against
loss in a declining market.
Shares are sold on a continuous basis at the net asset value
per share next determined after an order in proper form is
received by the Transfer Agent or other entity authorized to
receive orders on behalf of the Fund. Net asset value per share
is determined as of the close of trading on the floor of the New
York Stock Exchange (currently 4:00 p.m., New York time) on each
day the New York Stock Exchange is open for business. For
purposes of computing 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
Fund's Board and are valued at fair value as determined by the
pricing service. The pricing service's procedures are reviewed
under the general supervision of the Fund's Board. For further
information regarding the methods employed in valuing the Fund's
investments, see "Determination of Net Asset Value."
Dreyfus TeleTransfer Privilege. You may purchase shares by
telephone if you have checked the appropriate box and supplied
the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is
an Automated Clearing House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any
time. Purchase orders received by 4:00 p.m., New York time, on
any business day that the Transfer Agent and the New York Stock
Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00
p.m., New York time, on any business day the Transfer Agent and
the New York Stock Exchange are open for business, or orders made
on Saturday, Sunday or any Federal holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited
to the shareholder's Fund account on the second bank business day
following such purchase order. To qualify to use the Dreyfus
TeleTransfer Privilege, the initial payment for purchase of Fund
shares must be drawn on, and redemption proceeds paid to, the
same bank and account as are designated in 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 "How to Redeem Shares--Dreyfus TeleTransfer
Privilege."
Reopening an Account. You 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.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan (the
"Plan") pursuant to which the Fund reimburses Dreyfus Service
Corporation an amount not to exceed an annual rate of .25% of the
value of the Fund's average daily net assets 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 Fund's Board for its review. In addition, the
Plan provides that material amendments of the Plan must be
approved by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or
indirect financial interest in the operation of the 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 Board members cast in person at a meeting called for
the purpose of voting on the Plan. The Plan is terminable at any
time by vote of a majority of the Board members who are not
"interested persons" and have no direct or indirect financial
interest in the operation of the Plan.
For the fiscal year ended March 31, 1999, $187,936 was
chargeable to the Fund under the Plan.
HOW TO REDEEM SHARES
Redemption Fee. The Fund will deduct a redemption fee equal
to 1% of the net asset value of Fund shares redeemed (including
redemptions through the use of the Fund Exchanges service) less
than 15 days following the issuance of such shares. The
redemption fee will be deducted from the redemption proceeds and
retained by the Fund. For the fiscal year ended March 31, 1999,
the Fund retained $204 in redemption fees.
No redemption fee will be charged on the redemption or
exchange of shares (1) through the Fund's Check Redemption
Privilege, Automatic Withdrawal Plan or Dreyfus Auto-Exchange
Privilege, (2) through accounts that are reflected on the records
of the Transfer Agent as omnibus accounts approved by Dreyfus
Service Corporation, (3) through accounts established by
securities dealers, banks or other financial institutions
approved by Dreyfus Service Corporation that utilize the National
Securities Clearing Corporation's networking system, or (4)
acquired through the reinvestment of dividends or distributions.
The redemption fee may be waived, modified or terminated at any
time.
Check Redemption Privilege. The Fund provides Redemption
Checks ("Checks") automatically upon opening an account, unless
you specifically refuse the Check Redemption Privilege by
checking the applicable "No" box on the Account Application. The
Check Redemption Privilege may be established for an existing
account by a separate signed Shareholder Services Form. Checks
will be sent only to the registered owner(s) of the account and
only to the address of record. The Account Application or
Shareholder Services Form 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 your agent, will cause the Fund to redeem a sufficient number
of shares in your 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 you. You generally will be
subject to the same rules and regulations that apply to checking
accounts, although the election of this Privilege creates only a
shareholder-transfer agent relationship with the Transfer Agent.
You should date your Checks with the current date when you
write them. Please do not postdate your Checks. If you do, the
Transfer Agent will honor, upon presentment, even if presented
before the date of the Check, all postdated Checks which are
dated within six months of presentment for payment, if they are
otherwise in good order.
Checks are free, but the Transfer Agent will impose a fee
for stopping payment of a Check upon your request or if the
Transfer Agent cannot honor a Check due to insufficient funds or
other valid reason. If the amount of the Check is greater than
the value of the shares in your account, the Check will be
returned marked insufficient funds. Checks should not be used to
close an account.
This Privilege will be terminated immediately, without
notice, with respect to any account which is, or becomes, subject
to backup withholding on redemptions. Any Redemption Check
written on an account which has become subject to backup
withholding on redemptions will not be honored by the Transfer
Agent.
Wire Redemption Privilege. By using this Privilege, you
authorize the Transfer Agent to act on wire, telephone or letter
redemption instructions from any person representing himself or
herself to be you and reasonably believed by the Transfer Agent
to be genuine. Ordinarily, the Fund will initiate payment for
shares redeemed pursuant to this Privilege on the next business
day after receipt by the Transfer Agent of a redemption request
in proper form. Redemption proceeds ($1,000 minimum) will be
transferred by Federal Reserve wire only to the commercial bank
account specified by you on the Account Application or
Shareholder Services Form, or to a correspondent bank if your
bank is not a member of the Federal Reserve System. Fees
ordinarily are imposed by such bank and borne by the investor.
Immediate notification by the correspondent bank to your bank is
necessary to avoid a delay in crediting the funds to your bank
account.
If you have access to telegraphic equipment, you 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
If you do not have direct access to telegraphic equipment,
you may have the wire transmitted by contacting a TRT Cables
operator at 1-800-654-7171, toll free. You 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. You may request by
telephone that redemption proceeds be transferred between your
Fund account and your bank account. Only a bank account
maintained in a domestic financial institution which is an ACH
member may be designated. 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. You should be aware that if
you have selected the Dreyfus TeleTransfer Privilege, any request
for a wire redemption will be effected as a Dreyfus TeleTransfer
transaction through the ACH system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on
deposit in the your account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "How
to Buy Shares--Dreyfus TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates represent
ing Fund shares to be redeemed must be submitted with the redemp
tion request. Written redemption requests must be signed by each
shareholder, including each holder of a joint account, and each
signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed.
The Transfer Agent has adopted standards and procedures pursuant
to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well
as from participants in the New York Stock Exchange Medallion
Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the
guarantor, and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional
documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular
verification. For more information with respect to signature-
guarantees, please call one of the telephone numbers listed on
the cover.
Redemption Commitment. The Fund has committed itself to pay
in cash all redemption requests by any shareholder of record,
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 and
is a fundamental policy of the Fund which may not be changed
without shareholder approval. In the case of requests for
redemption in excess of such amount, the Fund's Board reserves
the right to make payments in whole or in part in securities or
other assets of the Fund in case of an emergency or any time a
cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Fund's
portfolio is valued. If the recipient sells such securities,
brokerage charges might 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
Fund Exchanges. You may purchase, in exchange for shares of
the Fund, shares of certain other funds managed or administered
by the Manager, to the extent such shares are offered for sale in
your state of residence. The Fund will deduct a redemption fee
equal to 1% of the net asset value of Fund shares exchanged where
the exchange is made less than 15 days after the issuance of such
shares. 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, you must
notify the Transfer Agent of your prior ownership of fund shares
and your account number.
To request an exchange, you 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 you check the applicable "No"
box on the Account Application, indicating that you specifically
refuse this Privilege. By using the Telephone Exchange
Privilege, you authorize the Transfer Agent to act on telephonic
instructions (including over The Dreyfus Touch automated
telephone system) from any person representing himself or herself
to be you 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. No fees currently are charged
shareholders directly in connection with exchanges, although the
Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal administrative fee in
accordance with rules promulgated by the Securities and Exchange
Commission.
To establish a personal retirement plan by exchange, shares
of the fund being exchanged must have a value of at least the
minimum initial investment required for the fund into which the
exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange
Privilege permits you to purchase, in exchange for shares of the
Fund, shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. 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. You will be notified if your
account falls below the amount designated to be exchanged under
this Privilege. In this case, your 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 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.
Shareholder Services Forms and prospectuses of the other
funds may be obtained by calling 1-800-645-6561. The Fund
reserves the right to reject any exchange request in whole or in
part. Shares may be exchanged only between accounts having
identical names and other identifying designations. The Fund
Exchanges service or the Dreyfus Auto-Exchange Privilege may be
modified or terminated at any time upon notice to shareholders.
Dreyfus-Automatic Asset Builderr. 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.
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 U.S. Government automatically
deposited into your Fund account. You may deposit as much of
such payments as you elect.
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 ACH 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.
It is the sole responsibility of your employer, not the
Distributor, the Manager, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus
Payroll Savings Plan.
Dreyfus Step Program. The Dreyfus Step Program enables you
to purchase Fund shares without regard to the Fund's minimum
initial investment requirements through Dreyfus-Automatic Asset
Builderr, Dreyfus Government Direct Deposit Privilege or Dreyfus
Payroll Savings Plan. To establish a Dreyfus Step Program
account, you must supply the necessary information on the Account
Application and file the required authorization form(s) with the
Transfer Agent. For more information concerning this Program, or
to request the necessary authorization form(s), please call toll
free 1-800-645-6561. You may terminate your participation in
this Program at any time by discontinuing your participation in
Dreyfus-Automatic Asset Builder, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan, as the case
may be, as provided under the terms of such Privilege(s). The
Fund may modify or terminate this Program at any time.
Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you
to invest automatically your 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 you are 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 that charges a sales load may be invested in
shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), but 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.
Dreyfus Dividend ACH permits you to transfer electronically
dividends or dividends and capital gain distributions, if any,
from the Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an ACH
member may be so designated. Banks may charge a fee for this
service.
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. Withdrawal payments are the
proceeds from sales of Fund shares, not the yield on the shares.
If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be
depleted. Automatic Withdrawal may be terminated 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.
DETERMINATION OF NET ASSET VALUE
Valuation of Portfolio Securities. The Fund's investments
are valued each business day by an independent pricing service
(the "Service") approved by the Fund's Board. 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 Fund's Board.
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, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that the Fund has qualified for the
fiscal year ended March 31, 1999 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.
If the Fund did not qualify as a regulated investment company, it
would be treated for tax purposes as an ordinary corporation
subject to Federal income tax.
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.
If you are an omnibus accountholder and indicate in a partial
redemption request that a portion of any accrued dividends to
which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along
with the proceeds of the redemption.
If you elect to receive dividends and distributions in cash,
and your dividend or distribution check is returned to the Fund
as undeliverable or remains uncashed for six months, the Fund
reserves the right to reinvest such dividend or distribution and
all future dividends and distributions payable to you in
additional Fund shares at net asset value. No interest will
accrue on amounts represented by uncashed distribution or
redemption checks.
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 under "Dividends, Distributions
and Taxes" in the Prospectus. In addition, 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.
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However,
all or a portion of any gain 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 of the Code. "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 Sections 1256 and 988 of the Code. As such, all or
a portion of any short or long-term capital gain from certain
"straddle" and/or conversion transactions may be recharacterized
as ordinary income.
If the Fund were treated as entering into "straddles" by
reason of its engaging in financial futures contracts 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."
Depending on which election is made, if any, the results to the
Fund may differ. If no election is made, to the extent the
straddle and conversion transaction rules apply to positions
established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting
position. Moreover, as a result of the straddle and the
conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and
long-term capital gains on straddle positions may be
recharacterized as short-term capital gains or ordinary income.
If, at the close of each quarter of its taxable year, at
least 50% of the value of the Fund's total assets consists of
obligations which, when held by an individual, the interest
therefrom is exempt from California personal income tax, and if
the Fund qualifies as a management company under the California
Revenue and Taxation Code, then the Fund will be qualified to pay
dividends to its shareholders that are exempt from California
personal income tax (but not from California franchise tax).
However, the total amount of California exempt-interest dividends
paid by the Fund to a non-corporate shareholder with respect to
any taxable year cannot exceed such shareholder's pro-rata share
of interest received by the Fund during such year that is exempt
from California taxation less any expenses and expenditures
deemed to have been paid from such interest.
For shareholders subject to the California personal income
tax, exempt-interest dividends derived from California Municipal
Obligations will not be subject to the California personal income
tax. Distributions from net realized short-term capital gains to
California resident shareholders will be subject to the
California personal income tax as ordinary income. Distributions
from net realized long-term capital gains may constitute long-
term capital gains for individual California resident
shareholders. Unlike under Federal tax law, the Fund's
shareholders will not be subject to California personal income
tax, or receive a credit for California taxes paid by the Fund on
undistributed capital gains. In addition, California tax law
does not consider any portion of the exempt-interest dividends
paid, an item of tax preference for the purposes of computing the
California alternative minimum tax.
The Taxpayer Relief Act of 1997 included constructive sale
provisions that generally apply if the Fund either (1) holds an
appreciated financial position with respect to stock, certain
debt obligations, or partnership interests ("appreciated
financial position") and then enters into a short sale, futures,
forward, or offsetting notional principal contract (collectively,
a "Contract") respecting the same or substantially identical
property or (2) holds an appreciated financial position that is a
Contract and then acquires property that is the same as, or
substantially identical to, the underlying property. In each
instance, with certain exceptions, the Fund generally will be
taxed as if the appreciated financial position were sold at its
fair market value on the date the Fund enters into the financial
position or acquires the property, respectively. Transactions
that are identified as hedging or straddle transactions under
other provisions of the Code can be subject to the constructive
sale provisions.
Investment by the Fund in securities issued 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.
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
and may be selected based upon their sales of shares of the Fund
or other funds advised by the Manager or its affiliates.
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.
PERFORMANCE INFORMATION
The Fund's current yield for the 30-day period ended March
31, 1999 was 3.57%, without waivers or expense reimbursement.
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 distributions, and (b) the net asset
value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be
declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1
is subtracted. The current yield is then arrived at by
multiplying the result by 2.
Based upon a combined 1999 Federal and California income tax
rate of 45.22%, the Fund's tax equivalent yield for the 30-day
period ended March 31, 1999 was 6.52%. Tax equivalent yield is
computed by dividing that portion of the current yield (calculated
as described above) which is tax exempt by 1 minus a stated tax rate
and adding the quotient to that portion, if any, of the yield of the
Fund that is not tax exempt.
The tax equivalent yield quoted above represents the
application of the highest Federal and State of California
marginal personal income tax rates presently in effect. For
Federal personal income tax purposes, a 39.6% tax rate has been
used. For California personal income tax purposes, an 11% tax
rate has been used. The tax equivalent figure, however, does not
include the potential effect of any local (including, but not
limited to, county, district or city) taxes, including applicable
surcharges. In addition, there may be pending legislation which
could affect such stated tax rates or yield. Each investor
should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the
relevant tax equivalent yield.
For the one-and five-year periods ended March 31, 1999, and
for the period April 20, 1992 (commencement of operations)
through March 31, 1999, the Fund's average annual total returns
were 5.55%, 6.07%, and 6.65%, respectively. Absent any expense
absorption and/or fee waiver then in effect, the Fund's total
return would have been lower. 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.
For the period April 20, 1992 (commencement of operations)
through March 31, 1999, the Fund's total return was 56.41%.
Absent any expense absorption and/or fee waiver then in effect,
the Fund's 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 periods), 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.
Comparative performance information may be used from time to
time in advertising or marketing the Fund's shares, including
data from CDA Investment Technologies, Inc., Lipper Analytical
Services, Inc., Moody's Bond Survey Bond Index, Lehman Brothers
Municipal Bond Index, Morningstar, Inc. and other industry
publications. From time to time, advertising materials for the
Fund may refer to or discuss then-current or past economic
conditions, developments and/or events, actual or proposed tax
legislation, or to statistical or other information concerning
trends relating to investment companies, as compiled by industry
associations such as the Investment Company Institute. From time
to time, advertising materials for the Fund also may refer to
Morningstar ratings and related analyses supporting such ratings.
INFORMATION ABOUT THE FUND
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.
Unless otherwise required by the 1940 Act, ordinarily it
will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider
each year the election of Board members or the appointment of
auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a
special meeting of shareholders for purposes of removing a Board
member from office. Fund shareholders may remove a Board member
by the affirmative vote of two-thirds of the Fund's outstanding
voting shares. In addition, the Board will call a meeting of
shareholders for the purpose of electing Board members if, at any
time, less than a majority of the Board members then holding
office have been elected by shareholders.
The Fund is intended to be a long-term investment vehicle
and is not designed to provide investors with a means of
speculating on short-term market movements. A pattern of
frequent purchases and exchanges can be disruptive to efficient
portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the
Fund's management determines that an investor is following a
market-timing strategy or is otherwise engaging in excessive
trading, the Fund, with or without prior notice, may temporarily
or permanently terminate the availability of Fund Exchanges, or
reject in whole or part any purchase or exchange request, with
respect to such investor's account. Such investors also may be
barred from purchasing other funds in the Dreyfus Family of
Funds. Generally, an investor who makes more than four exchanges
out of the Fund during any calendar year or who makes exchanges
that appear to coincide with a market-timing strategy may be
deemed to be engaged in excessive trading. Accounts under common
ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. In
addition, the Fund may refuse or restrict purchase or exchange
requests by any person or group if, in the judgment of the Fund's
management, the Fund would be unable to invest the money
effectively in accordance with its investment objective and
policies or could otherwise be adversely affected or if the Fund
receives or anticipates receiving simultaneous orders that may
significantly affect the Fund (e.g., amounts equal to 1% or more
of the Fund's total assets). If an exchange request is refused,
the Fund will take no other action with respect to the shares
until it receives further instructions from the investor. The
Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive
trading or if the amount of the redemption request otherwise
would be disruptive to efficient portfolio management or would
adversely affect the Fund. The Fund's policy on excessive
trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the
Dreyfus Auto-Exchange Privilege, to any automatic investment or
withdrawal privilege described herein, or to participants in
employer-sponsored retirement plans.
During times of drastic economic or market conditions, the
Fund may suspend Fund Exchanges temporarily without notice and
treat exchange requests based on their separate components --
redemption orders with a simultaneous request to purchase the
other fund's shares. In such a case, the redemption request
would be processed at the Fund's next determined net asset value
but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the
proceeds of the redemption, which may result in the purchase
being delayed.
The Fund is organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts. Under
Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Fund. However, the Fund's Agreement and Declaration of Trust
("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 Board Member. The
Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held
personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of a
shareholder liability is limited to circumstances in which the
Fund itself would be unable to meet its obligations, a
possibility which management believes is remote. Upon payment of
any liability incurred by the Fund, the shareholder paying such
liability will be entitled to reimbursement from the general
assets of the Fund. The Fund intends to conduct its operations
in a way so as to avoid, as far as possible, ultimate liability
of the shareholders for liabilities of the Fund.
To offset the relatively higher costs of servicing smaller
accounts, the Fund will charge regular accounts with balances
below $2,000 an annual fee of $12. The valuation of accounts and
the deductions are expected to take place during the last four
months of each year. The fee will be waived for any investor
whose aggregate Dreyfus mutual fund investments total at least
$25,000, and will not apply to IRA accounts or to accounts
participating in automatic investment programs or opened through
a securities dealer, bank or other financial institution, or to
other fiduciary accounts.
The Fund sends annual and semi-annual financial statements
to all its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York,
New York 10038-4982, as counsel for the Fund, has rendered its
opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares being sold
pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, independent auditors, has been selected as independent
auditors of the Fund.
APPENDIX A
INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
RISK FACTORS--INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
The following information is a summary of special factors
affecting investments in California Municipal Securities and is
drawn from the Official Statement issued by the State for its
public bond issue on December 9, 1998. The sources of payment
for such obligations and the marketability thereof may be
affected by financial or other difficulties experienced by the
State of California and certain of its municipalities and public
authorities. It does not purport to be a complete description
and is based on information from official statements relating to
securities offerings of California issuers.
State Finances
The Budget Process
The State's fiscal year begins on July 1 and ends on June
30. The State operates on a budget basis, using a modified
accrual system of accounting, with revenues credited in the
period in which they are measurable and available and
expenditures debited in the period in which the corresponding
liabilities are incurred.
The annual budget is proposed by the Governor by January 10
of each year for the next fiscal year (the "Governor's Budget").
Under State law, the annual proposed Governor's Budget cannot
provide for projected expenditures in excess of projected
revenues and balances available from prior fiscal years.
Following the submission of the Governor's Budget, the
Legislature takes up the proposal.
Under the State Constitution, money may be drawn from the
Treasury only through an appropriation made by law. The primary
source of the annual expenditure authorizations is the Budget Act
as approved by the Legislature and signed by the Governor. The
Budget Act must be approved by a two-thirds majority vote of each
House of the Legislature. The Governor may reduce or eliminate
specific line items in the Budget Act or any other appropriations
bill without vetoing the entire bill. Such individual line-item
vetoes are subject to override by a two-thirds majority vote of
each House of the Legislature.
Appropriations also may be included in legislation other
than the Budget Act (except for K-14 education) must be approved
by a two-thirds majority vote in each House of the Legislature
and be signed by the Governor. Bills containing K-14 education
appropriations only require a simple majority vote. Continuing
appropriations, available without regard to fiscal year, may also
be provided by statute or the State Constitution.
Funds necessary to meet an appropriation need not be in the
State Treasury at the time such appropriation is enacted;
revenues may be appropriated in anticipation of their receipt.
The General Fund
The moneys of the State are segregated into the General Fund
and over 900 Special Funds, including Bond, Trust and Pension
Funds. The General Fund consists of revenues received by the
State Treasury and not required by law to be credited to any
other fund, as well as earnings from the investment of State
moneys not allocable to another fund. The General Fund is the
principal operating fund for the majority of governmental
activities and is the depository of most of the major revenue
sources of the State. The General Fund may be expended as a
consequence of appropriation measures enacted by the Legislature
and approved by the Governor, as well as appropriations pursuant
to various constitutional authorizations and initiative statutes.
The Special Fund for Economic Uncertainties
The Special Fund for Economic Uncertainties ("SFEU") is
funded with General Fund revenues and was established to protect
the State from unforeseen revenue reductions and/or unanticipated
expenditure increases. Amounts in the SFEU may be transferred by
the State Controller as necessary to meet cash needs of the
General Fund. The State Controller is required to return moneys
so transferred without payment of interest as soon as there are
sufficient moneys in the General Fund.
The legislation creating the SFEU contains a continuous
appropriation from the General Fund authorizing the State
Controller to transfer to the SFEU, as of the end of each fiscal
year, the lesser of (i) the unencumbered balance in the General
Fund and (ii) the difference between the State's "appropriations
subject to limitation" for the fiscal year then ended and its
"appropriations limit" as defined in Section 8 of Article XIII B
of the State Constitution and established in the Budget Act for
that fiscal year, as jointly estimated by the State's Legislative
Analyst's Office and the Department of Finance. In certain
circumstances, moneys in the SFEU may be used in connection with
disaster relief.
For budgeting and accounting purposes, any appropriation
made from the SFEU is deemed an appropriation from the General
Fund. For year-end reporting purposes, the State Controller is
required to add the balance in the SFEU to the balance in the
General Fund so as to show the total moneys then available for
General Fund purposes.
The SFEU projection reflects the enactment of the Budget Act
on August 21, 1998. This figure contains the latest revenue
projections and expenditure amounts appropriated in the Budget
Act and trailer bills at that point in time. As in any year, the
Budget Act and related trailer bills are not the only pieces of
legislation which appropriate funds. Other factors including re-
estimates of revenues and expenditures, existing statutory
requirements, and additional legislation introduced and passed by
the Legislature may impact the reserve amount.
In the Budget Act for Fiscal Year 1998-99, signed on August
21, 1998, the Department of Finance projects the SFEU will have a
balance of about $1.255 billion at June 30, 1999.
Prior Fiscal Years' Financial Results
Fiscal Years Prior to 1995-96
Pressures on the State's budget in the late 1980's and early
1990's were caused by a combination of external economic
conditions (including a recession which began in 1990) and growth
of the largest General Fund Programs - K-14 education, health,
welfare and corrections - at rates faster than the revenue base.
During this period, expenditures exceeded revenues in four out of
six years up to 1992-93, and the State accumulated and sustained
a budget deficit approaching $2.8 billion at its peak at June 30,
1993. Between the 1991-92 and 1994-95 Fiscal Years, each budget
required multibillion dollar actions to bring projected revenues
and expenditures into balance, including significant cuts in
health and welfare program expenditures; transfers of program
responsibilities and funding from the State to local governments,
transfer of about $3.6 billion in annual local property tax
revenues from other local governments to local school districts,
thereby reducing State funding for schools under Proposition 98;
and revenue increases (particularly in the 1991-92 Fiscal Year
Budget), most of which were for a short duration.
Despite these budget actions, the effects of the recession
led to large, unanticipated budget deficits. By the 1993-94
Fiscal Year, the accumulated deficit was so large that it was
impractical to budget to retire it in one year, so a two-year
program was implemented, using the issuance of revenue
anticipation warrants to carry a portion of the deficit over the
end of the fiscal year. When the economy failed to recover
sufficiently in 1993-94, a second two-year plan was implemented
in 1994-95, again using cross-fiscal year revenue anticipation
warrants to partly finance the deficit into the 1995-96 fiscal
year.
Another consequence of the accumulated budget deficits,
together with other factors such as disbursement of funds to
local school districts "borrowed" from future fiscal years and
hence not shown in the annual budget, was to significantly reduce
the State's cash resources available to pay its ongoing
obligations. When the Legislature and the Governor failed to
adopt a budget for the 1992-93 Fiscal Year by July 1, 1992, which
would have allowed the State to carry out its normal annual cash
flow borrowing to replenish its cash reserves, the State
Controller issued registered warrants to pay a variety of
obligations representing prior years' or continuing
appropriations, and mandates from court orders. Available funds
were used to make constitutionally-mandated payments, such as
debt service on bonds and warrants. Between July 1 and September
4, 1992, when the budget was adopted, the State Controller issued
a total of approximately $3.8 billion of registered warrants.
For several fiscal years during the recession, the State was
forced to rely on external debt markets to meet its cash needs,
as a succession of notes and revenue anticipation warrants were
issued in the period from June 1992 to July 1994, often needed to
pay previously maturing notes or warrants. These borrowings were
used also in part to spread out the repayment of the accumulated
budget deficit over the end of a fiscal year, as noted earlier.
The last and largest of these borrowings was $4.0 billion of
revenue anticipation warrants which were issued in July, 1994 and
matured on April 25, 1996.
1995-96 and 1996-97 Fiscal Years
The State's financial condition improved markedly during the
1995-96, 1996-97 and 1997-98 fiscal years, with a combination of
better than expected revenues, slowdown in growth of social
welfare programs, and continued spending restraint based on the
actions taken in earlier years. The State's cash position also
improved, and no external deficit borrowing has occurred over the
end of these three fiscal years.
The economy grew strongly during these fiscal years, and as
a result, the General Fund took in substantially greater tax
revenues (around $2.2 billion in 1995-96, $1.6 billion in 1996-97
and $2.2 billion in 1997-98) than were initially planned when the
budgets were enacted. These additional funds were largely
directed to school spending as mandated by Proposition 98, and to
make up shortfalls from reduced federal health and welfare aid in
1995-96 and 1996-97. The accumulated budget deficit from the
recession years was finally eliminated. The Department of
Finance estimates that the State's budget reserve (the SFEU)
totaled $639.8 million as of June 30, 1997 and $1.782 billion at
June 30, 1998.
The following were major features of the 1997-98 Budget Act:
1. For the second year in a row, the Budget contained a
large increase in funding for K-14 education under
Proposition 98, reflecting strong revenues which
exceeded initial budgeted amounts. Part of the nearly
$1.75 billion in increased spending was allocated to
prior fiscal years. Funds were provided to fully pay
for the cost-of-living-increase component of
Proposition 98, and to extend the class size reduction
and reduction and reading initiatives.
2. The Budget Act reflected the $1.228 billion pension
case judgment payment, and brought funding of the
State's pension contribution back to the quarterly
basis which existed prior to the deferral actions which
were invalidated by the courts.
3. Funding from the General Fund for the University of
California and California State University was
increased by about 6 percent ($121 million and $107
million, respectively), and there was no increase in
student fees.
4. Because of the effect of the pension payment, most
other State programs were continued at 1996-97 levels,
adjusted for caseload changes.
5. Health and welfare costs were contained, continuing
generally the grant levels from prior years, as part of
the initial implementation of the new CalWORKs program.
6. Unlike prior years, this Budget Act did not depend on
uncertain federal budget actions. About $300 million
in federal funds, already included in the federal FY
1997 and 1998 budgets, was included in the Budget Act,
to offset incarceration costs for illegal aliens.
7. The Budget Act contained no tax increases, and no tax
reductions. The Renters Tax Credit was suspended for
another year, saving approximately $500 million.
The Department of Finance released updated estimates for the
1997-98 Fiscal Year on January 9, 1998 as part of the Governor's
1998-99 Fiscal Year Budget Proposal. Total revenues and
transfers are projected at $52.9 billion, up approximately $360
million from the Budget Act projection. Expenditures for the
fiscal year are expected to rise approximately $200 million above
the original Budget Act, to $53.0 billion. The balance in the
budget reserve, the SFEU, is projected to be $329 million at June
30, 1998, compared to $461 million at June 30, 1997.
Current State Budget
1998-99 Fiscal Year Budget
When the Governor released his proposed 1998-99 Fiscal Year
Budget on January 9, 1998, he projected General Fund revenues for
the 1998-99 Fiscal Year of $55.4 billion, and proposed
expenditures in the same amount. By the time the Governor
released the May Revision to the 1998-99 Budget ("May Revision")
on May 14, 1998, the Administration projected that revenues for
the 1997-98 and 1998-99 Fiscal Years combined would be more than
$4.2 billion higher than was projected in January. The Governor
proposed that most of this increased revenue be dedicated to fund
a 75% cut in the Vehicle License Fee ("VLF").
The Legislature passed the 1998-99 Budget Bill on August 11,
1998, and the Governor signed it on August 21, 1998. Some 33
companion bills necessary to implement the budget were also
signed. In signing the Budget Bill, the Governor used his
line-item veto power to reduce expenditures by $1.360 billion
from the General Fund, and $160 million from Special Funds. Of
this total, the Governor indicated that about $250 million of
vetoed funds were "set aside" to fund programs for education.
Vetoed items included education funds, salary increases and many
individual resources and capital projects.
The 1998-99 Budget Act is based on projected General Fund
revenues and transfers of $57.0 billion (after giving effect to
various tax reductions enacted in 1997 and 1998), a 4.2% increase
from the revised 1997-98 figures. Special Fund revenues were
estimated at $14.3 billion. The revenue projections were based
on the May Revision. Economic problems overseas since that time
may affect the May Revision projections. See "Economic
Assumptions" below.
After giving effect to the Governor's vetoes, the Budget Act
provides authority for expenditures of $57.3 billion from the
General Fund (a 7.3% increase from 1997-98), $14.7 billion from
Special Funds, and $3.4 billion from bond funds. The Budget Act
projects a balance in the SFEU at June 30, 1999 (but without
including the "set aside" veto amount) of $1.255 billion, a
little more than 2% of General Fund revenues. The Budget Act
assumes the State will carry out its normal intra-year cash flow
borrowing in the amount of $1.7 billion of revenue anticipation
notes, which were issued on October 1, 1998.
The most significant feature of the 1998-99 budget was
agreement on a total of $1.4 billion of tax cuts. The central
element is a bill which provides for a phased-in reduction of the
VLF. Since the VLF is currently transferred to cities and
counties, the bill provides for the General Fund to replace the
lost revenues. Starting on January 1, 1999, the VLF will be
reduced by 25%, at a cost to the General Fund of approximately
$500 million in the 1998-99 Fiscal Year and about $1 billion
annually thereafter.
In addition to the cut in VLF, the 1998-99 budget includes
both temporary and permanent increase in the personal income tax
dependent credit ($612 million General Fund cost in 1998-99, but
less in future years), a nonrefundable renters tax credit ($133
million), and various targeted business tax credits ($106
million).
Other significant elements of the 1998-99 Budget Act are as
follows:
1. Proposition 98 funding for K-12 schools is increased by
$1.7 billion in General Fund moneys over revised 1997-98 levels,
about $300 million higher than the minimum Proposition 98
guaranty. An additional $600 million was appropriated to "settle
up" prior years' Proposition 98 entitlements, and was primarily
devoted to one-time uses such as block grants, deferred
maintenance, and computer and laboratory equipment. Of the
1998-99 funds, major new programs include money for instructional
and library materials, deferred maintenance, support for
increasing the school year to 180 days and reduction of class
sizes in Grade 9. The Governor held $250 million of education
funds which were vetoed as set-aside for enactment of additional
reforms. Overall, per-pupil spending for K-12 schools under
Proposition 98 is increased to $5,695, more than one-third higher
than the level in the last recession year of 1993-94. The Budget
also includes $250 million as repayment of prior years' loans to
schools, as part of the settlement of the CTA v. Gould lawsuit.
2. Funding for higher education increased substantially
above the level called for in the Governor's four-year compact.
General Fund support was increased by $340 million (15.6%) for
the University of California and $267 million (14.1%) for the
California State University system. In addition, Community
Colleges received a $300 million (6.6%) increase under
Proposition 98.
3. The Budget includes increased funding for health,
welfare and social services programs. A 4.9% grant increase was
included in the basic welfare grants, the first increase in those
grants in 9 years. Future increases will depend on sufficient
General Fund revenue to trigger the phased cuts in VLF described
above.
4. Funding for the judiciary and criminal justice programs
increased by about 11% over 1997-98, primarily to reflect
increased State support for local trial courts and rising prison
population.
5. Various other highlights of the Budget included new
funding for resources projects, dedication of $376 million of
General Fund moneys for capital outlay projects, funding of a 3%
State employee salary increase, funding of 2,000 new Department
of Transportation positions to accelerate transportation
construction projects, and funding of the Infrastructure and
Economic Development Bank ($50 million).
6. The State of California received approximately $167
million of federal reimbursements to offset costs related to the
incarceration of undocumented alien felons for federal fiscal
year 1997. The State anticipates receiving approximately $195
million in federal reimbursements for federal fiscal year 1998.
After the Budget Act was signed, and prior to the close of
the Legislative session on August 31, 1998, the Legislature
passed a variety of fiscal bills. The Governor had until
September 30, 1998 to sign or veto these bills. The bills with
the most significant fiscal impact which the Governor signed
include $235 million for certain water system improvements in
Southern California, $243 million for the State's share of the
purchase of environmentally sensitive forest lands, $178 million
for state prisons, $160 million for housing assistance ($40
million of which was included in the 1998-99 Budget Act and an
additional $120 million reflected in Proposition IA), and $125
million for juvenile facilities. The Governor also signed bills
totaling $223 million for education programs which were part of
the Governor's $250 million veto "set aside," and $32 million for
local governments fiscal relief. In addition, he signed a bill
reducing by $577 million the State's obligation to contribute to
the State Teachers' Retirement System in the 1998-99 Fiscal Year.
Based solely on the legislation enacted, on a net basis, the
reserve for June 30, 1999, was reduced by $256 million. On the
other hand, 1997-98 revenues have been increased by $160 million.
The revised June 30, 1999, reserve is projected to be $1,159
million or $96 million below the level projected at the Budget
Act. The reserve projected in the Budget Act was $1,255 million.
It is important to emphasize that the new reserve level is based
on 1998-99 revenue and expenditure assumptions as of the Budget
Act except to augment for legislation signed after the budget
enactment. These assumptions will not be updated until the
1999-00 Governor's Budget is released on January 10, 1999. In
November, 1998, the Legislative Analyst's Office released a
report predicting that General Fund revenues for 1998-99 would be
somewhat lower, and expenditures somewhat higher, than the Budget
Act forecasts, but the net variance would be within the projected
$1.2 billion year-end reserve amount.
Local Governments
The primary units of local government in California are the
counties, ranging in population from 1,200 in Alpine County to
almost 9,600,000 in Los Angeles County. Counties are responsible
for the provision of many basic services, including indigent
health care, welfare, jails and public safety in unincorporated
areas. There are also about 480 incorporated cities, and
thousands of other special districts formed for education,
utility and other services. The fiscal condition of local
governments has been constrained since the enactment of
"Proposition 13" in 1978, which reduced and limited the future
growth of property taxes, and limited the ability of local
governments to impose "special taxes" (those devoted to a
specific purpose) without two-thirds voter approval. Counties,
in particular, have had fewer options to raise revenues than many
other local government entities, and have been required to
maintain many services.
Historically, funding for the State's trial court system was
divided between the State and the counties. However, Chapter 850,
Statutes of 1997, implemented a restructuring of the State's
trial court funding system. Funding for the courts, with the
exception of costs for facilities, local judicial benefits, and
revenue collection, was consolidated at the State level. The
county contribution for both their general fund and fine and
penalty amounts is capped at the 1994-95 level and becomes part
of the Trial Court Trust Fund, which supports all trial court
operations. The State assumed responsibility for future growth in
trial court funding. The consolidation of funding is intended to
streamline the operation of the courts, provide a dedicated
revenue source, and relieve fiscal pressure on the counties.
Beginning in 1998-99, the county general fund contribution for
court operations is reduced by $300 million, including $10.7
million to buy out the contribution of the 20 smallest counties,
and cities will retain $62 million in fine and penalty revenue
previously remitted to the state; the General Fund backfilled the
$362 million revenue loss to the Trial Court Trust Fund. In
addition to this general fund backfill, a $50 million
augmentation is included in the 1998 Budget Act for the trial
courts to fund workload increases and high priority issues such
as court security. In 1999-2000, the county general fund
contribution will be further reduced by an additional $92 million
to buy out the next 17 smallest counties and reduce by 10 percent
of the general fund contribution of the remaining 21 counties.
The entire statewide welfare system has been changed in
response to the change in federal welfare law enacted in 1996
(see "Welfare Reform" above). Under the CalWORKs program,
counties are given flexibility to develop their own plans,
consistent with state law, to implement the program and to
administer many of its elements, and their costs for
administrative and supportive services are capped at the 1996-97
levels. Counties are also given financial incentives if, at the
individual county level or statewide, the CalWORKs program
produces savings associated with specified standards. Counties
will still be required to provide "general assistance" aid to
certain persons who cannot obtain welfare from other programs.
In the aftermath of Proposition 13, the State provided aid
from the General Fund to make up some of the loss of property tax
moneys, including taking over the principal responsibility for
funding K-12 schools and community colleges. During the
recession, the Legislature eliminated most of the remaining
components of post-Proposition 13 aid to local government
entities other than K-14 education districts, although it has
also provided additional funding sources (such as sales taxes)
and reduced certain mandates for local services. Since then the
State has also provided additional funding to counties and cities
through such programs as health and welfare realignment, welfare
reform, trial court restructuring, the COPs program supporting
local public safety departments, and various other measures.
In 1996, voters approved Proposition 218, entitled the
"Right to Vote on Taxes Act," which incorporates new Articles
XIIIC and XIIID into the California Constitution. These new
provisions place limitations on the ability of local government
agencies to impose or raise various taxes, fees, charges and
assessments without voter approval. Certain "general taxes"
imposed after January 1, 1995 must be approved by voters in order
to remain in effect. In addition, Article XIIIC clarifies the
right of local voters to reduce taxes, fees, assessments or
charges through local initiatives. There are a number of
ambiguities concerning the Proposition and its impact on local
governments and their bonded debt which will require
interpretation by the courts or the Legislature. Proposition 218
does not affect the State or its ability to levy or collect
taxes.
On December 23, 1997, a consortium of California counties
filed a test claim with the Commission on State Mandates (the
"Commission") asking the Commission to determine whether the
property tax shift from counties to the Educational Revenue
Augmentation Fund, which is a funding source for schools, is a
reimbursable state mandated cost. On August 11, 1998, the State
Department of Justice, on behalf of the State Department of
Finance, filed a rebuttal in opposition to the counties' claim.
The issue is currently scheduled to be heard by the Commission on
October 22, 1998. The fiscal impact to the State General fund if
the Commission determines that the property tax shifts created a
reimbursable state mandate could total approximately $8 billion
for the 1996-97 ($2.5 billion), 1997-98 ($2.6 billion) and
1998-99 ($2.7 billion) property tax shifts. Ongoing costs to the
State General Fund would be approximately $2.7 billion annually.
Any Commission decision adverse to the State can be appealed to
the courts.
State Appropriations Limit
The State is subject to an annual appropriations limit
imposed by Article XIII B of the State Constitution (the
"Appropriations Limit"). The Appropriations Limit does not
restrict appropriations to pay debt service on the Bonds or other
voter-authorized bonds.
Article XIII B prohibits the State from spending
"appropriations subject to limitation" in excess of the
Appropriations Limit. "Appropriations subject to limitation,"
with respect to the State, are authorizations to spend "proceeds
of taxes," which consist of tax revenues, and certain other
funds, including proceeds from regulatory licenses, user charges
or other fees to the extent that such proceeds exceed "the cost
reasonably borne by that entity in providing the regulation,
product or service," but "proceeds of taxes" exclude most state
subventions to local governments, tax refunds and some benefit
payments such as unemployment insurance. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such
as reasonable user charges or fees and certain other non-tax
funds.
Not included in the Appropriations Limit are appropriations
for the debt service costs of bonds existing or authorized by
January 1, 1979, or subsequently authorized by the voters,
appropriations required to comply with mandates of courts or the
federal government, appropriations for qualified capital outlay
projects, appropriations of revenues derived from any increase in
gasoline taxes and motor vehicle weight fees above January 1,
1990 levels, and appropriation of certain special taxes imposed
by initiative (e.g., cigarette and tobacco taxes). The
Appropriations Limit may also be exceeded in cases of emergency.
The State's Appropriations Limit in each year is based on
the limit for the prior year, adjusted annually for changes in
State per capita personal income and changes in population, and
adjusted, when applicable, for any transfer of financial
responsibility of providing services to or from another unit of
government. The measurement of change in population is a blended
average of statewide overall population growth, and change in
attendance at local school and community college ("K-14")
districts. The Appropriations Limit is tested over consecutive
two-year periods. Any excess of the aggregate "proceeds of
taxes" received over such two-year transfers to K-14 districts
and refunds to taxpayers.
The Legislature has enacted legislation to implement Article
XIII B which defines certain terms used in Article XIII B and
sets forth the methods for determining the Appropriations Limit.
California Government Code Section 7912 requires an estimate of
the Appropriations Limit to be included in the Governor's Budget,
and thereafter to be subject to the budget process and
established in the Budget Act.
In the Budget Act for Fiscal Year 1998-99 enacted August 21,
1998, the Department of Finance projects the State's
Appropriations Subject to Limitations will be $6.3 billion under
the State's Appropriations Limit in Fiscal Year 1998-99.
Proposition 98
On November 8, 1988, voters of the State approved
Proposition 98, a combined initiative constitutional amendment
and statute called the "Classroom Instructional Improvement and
Accountability Act." Proposition 98 changed State funding of
public education below the university level and the operation of
the State Appropriations Limit, primarily by guaranteeing K-14
schools a minimum share of General Fund revenues. Under
Proposition 98 (as modified by Proposition 111, which was enacted
on June 5, 1990), K-14 schools are guaranteed the greater of (a)
in general, a fixed percent of General Fund revenues ("Test 1"),
(b) the amount appropriated to K-14 schools in the prior year,
adjusted for changes in the cost of living (measured as in
Article XIII B by reference to State per capita personal income)
and enrollment ("Test 2"), or (c) a third test, which would
replace Test 2 in any year when the percentage growth in per
capita General Fund revenues from the prior year plus one half of
one percent is less than the percentage growth in State per
capita personal income ("Test 3"). Under Test 3, schools would
receive the amount appropriated in the prior year adjusted for
changes in enrollment and per capita General Fund revenues, plus
an additional small adjustment factor. If Test 3 is used in any
year, the difference between Test 3 and Test 2 would become a
"credit" to schools which would be the basis of payments in
future years when per capita General Fund revenue growth exceeds
per capita personal income growth. Legislation adopted prior to
the end of the 1988-89 Fiscal Year, implementing Proposition 98,
determined the K-14 schools' funding guarantee under Test 1 to be
40.3 percent of the General Fund tax revenues, based on 1986-87
appropriations. However, that percent has been adjusted to
approximately 35 percent to account for a subsequent redirection
of local property taxes, since such redirection directly affects
the share of General Fund revenues to schools.
Proposition 98 permits the Legislature by two-thirds vote of
both houses, with the Governor's concurrence, to suspend the K-14
schools' minimum funding formula for a one-year period.
Proposition 98 also contains provisions transferring certain
State tax revenues in excess of the Article XIII B limit to K-14
schools.
During the recent recession, General Fund revenues for
several years were less than originally projected, so that the
original Proposition 98 appropriations turned out to be higher
than the minimum percentage provided in the law. The Legislature
responded to these developments by designating the "extra"
Proposition 98 payments in one year as a "loan" from future
years' Proposition 98 entitlements, and also intended that the
"extra" payments would not be included in the Proposition 98
"base" for calculating future years' entitlements. By
implementing these actions, per-pupil funding from Proposition 98
sources stayed almost constant at approximately $4,200 from
Fiscal Year 1991-92 to Fiscal Year 1993-94.
In 1992, a lawsuit was filed, called California Teachers'
Association v. Gould, which challenged the validity of these off-
budget loans. The settlement of this case, finalized in July,
1996, provides, among other things, that both the State and K-14
schools share in the repayment of prior years' emergency loans to
schools. Of the total $1.76 billion in loans, the State will
repay $935 million by forgiveness of the amount owed, while
schools will repay $825 million. The State share of the
repayment will be reflected as an appropriation above the current
Proposition 98 base calculation. The schools' share of the
repayment will count as appropriations that count toward
satisfying the Proposition 98 guarantee, or from "below" the
current base. Repayments are spread over the eight-year period
of 1994-95 through 2001-02 to mitigate any adverse fiscal impact.
Substantially increased General Fund revenues, above initial
budget projections, in the fiscal years 1994-95 and thereafter
have resulted or will result in retroactive increases in
Proposition 98 appropriations from subsequent fiscal years'
budgets. Because of the State's increasing revenues, per-pupil
funding at the K-12 level has increased by about 36% from the
level in place from 1991-92 through 1993-94, and is estimated at
about $5,695 per ADA in 1998-99. A significant amount of the
"extra" Proposition 98 monies in the last few years have been
allocated to special programs, most particularly an initiative to
allow each classroom from grades K-3 to have no more than 20
pupils by the end of the 1997-98 school year. There are also new
initiatives increasing instructional time, for purchasing new
instructional and library materials, and expanding teacher
preparation and support.
ECONOMY AND POPULATION
Introduction
California's economy, the largest among the 50 states and
one of the largest in the world, has major components in high
technology, trade, entertainment, agriculture, manufacturing,
tourism, construction and services. Since 1994, California's
economy has been performing strongly after suffering a deep
recession between 1990-94.
Population and Labor Force
The State's July 1, 1997 population of over 32.9 million
represented over 12 percent of the total United States
population.
California's population is concentrated in metropolitan
areas. As of the April 1, 1990 census, 96 percent resided in the
23 Metropolitan Statistical Areas in the State. As of July 1,
1997, the 5-county Los Angeles area accounted for 49 percent of
the State's population, with 16.0 million residents, and the 10-
county San Francisco Bay Area represented 21 percent, with a
population of 6.9 million.
The following table shows California's population data for
1992 through 1997.
Population 1992-97
% %
Increase Increase California
California Over United Over as % of
Year Population(a) Preceding States Preceding United
Year Population(a) Year States
1992 31,188,000 2.0 255,011,000 1.2 12.2
1993 31,517,000 1.1 257,795,000 1.1 12.2
1994 31,790,000 0.9 260,372,000 1.0 12.2
1995 32,063,000 0.9 262,890,000 1.0 12.2
1996 32,383,000 1.0 265,284,000 0.9 12.2
1997 32,957,000 1.8 267,575,000 0.9 12.3
________________________
(a)Population as of July 1.
SOURCE: U.S. Department of Commerce, Bureau of the Census; State of
California, Department of Finance.
The following table presents civilian labor force data for the resident
population, age 16 and over, for the years 1992 to 1997.
Labor Force
1992-97
Labor Force Trends (Thousands) Unemployment Rate(%)
Year Labor Employment California United States
Force
1992 15,404 13,973 9.3 7.5
1993 15,359 13,918 9.4 6.9
1994 15,450 14,122 8.6 6.1
1995 15,412 14,203 7.8 5.6
1996 15,568 14,444 7.2 5.4
1997 15,971 14,965 6.3 4.9
____________________
SOURCE: State of California, Employment Development Department.
Employment, Income, Construction and Retail Sales
The following table shows California's nonagricultural
employment distribution and growth for 1990 and 1997.
Payroll Employment By Major Sector
1990 and 1997
Employment % Distribution
(Thousands) of Employment
Industry Sector 1990 1997 1990 1997
Mining 39 29 0.3 0.2
Construction 605 554 4.8 4.2
Manufacturing
Nondurable goods 721 728 5.7 5.5
High Technology 686 517 5.4 3.9
Other Durable goods 690 669 5.4 5.1
Transportation and 624 663 4.9 5.1
Utilities
Wholesale and Retail 3,002 3,057 23.7 23.2
Trade
Finance, Insurance
and Real Estate 825 756 6.5 5.7
Services 3,395 4,051 26.8 30.8
Government
Federal 362 285 2.9 2.2
State and Local 1,713 1,858 13.5 14.1
TOTAL
AGRICULTURAL 12,662 13,167 100 100
___________________
SOURCE: State of California, Employment Development Department
and State of California, Department of Finance.
The following tables show California's total and per capita
income patterns for selected years.
Total Personal Income 1992-97
California
Year Millions %Change California % of
U.S.
1992 684,674 4.8(*) 13.1
1993 698,130 2.0 12.8
1994(a) 718,321 2.9 12.5
1995 754,269 5.0 12.4
1996 798,020 5.8 12.5
1997 846,017 6.0 12.5
_____________________
(*)Change from prior year.
(a)Reflects Northridge earthquake, which caused an estimated $15
billion drop in personal income.
Note: Omits income for government employees overseas.
SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis.
Per Capita Personal Income 1992-97
California
Year California % United % Change % of U.S.
Change States
1992 22,163 3.2(*) 20,546 4.7(*) 107.9
1993 22,388 1.0 21,220 3.3 105.5
1994(a) 23,899 2.3 22,056 3.9 103.8
1995 23,901 4.4 23,063 4.6 103.6
1996 25,050 4.8 24,169 4.8 103.6
1997 26,218 4.7 25,298 4.7 103.6
________________________
(*)Change from prior year.
(a)Reflects Northridge earthquake, which caused an estimated $15
billion drop in personal income.
SOURCE: U.S. Department of Commerce, Bureau of Economic
Analysis.
LITIGATION
In the case of Board of Administration, California Public
Employees' Retirement System, et al. v. Pete Wilson, Governor, et
al., plaintiffs challenged the constitutionality of legislation
which deferred payment of the State's employer contribution to
the Public Employees' Retirement System beginning in Fiscal Year
1992-93. On January 11, 1995, the Sacramento County Superior
Court entered a judgment finding that the legislation
unconstitutionally impaired the vested contract rights of PERS
members. The judgment provides for issuance of a writ of mandate
directing State defendants to disregard the provisions of the
legislation, to implement the statute governing employer
contributions that existed before the changes in the legislation
found to be unconstitutional, and to transfer to PERS the
contributions that were unpaid to date. On February 19, 1997, the
State Court of Appeal affirmed the decision of the Superior
Court, and the Supreme Court subsequently refused to hear the
case, making the Court of Appeals' ruling final.
On July 30, 1997, the Controller transferred $1.228 billion
from the General Fund to PERS in repayment of the principal
amount determined to have been improperly deferred. Subsequent
State payments to PERS will be made on a quarterly basis. On July
7, 1998, pursuant to Chapter 94, Statutes of 1998, the State paid
PERS $332.7 million for the accrued interest on the judgment and
interest on the unpaid accrued interest amount. See "CURRENT
STATE BUDGET - 1998-99 Fiscal Year Budget" above.
On June 24, 1998, plaintiffs in Howard Jarvis Taxpayers
Association et al. v. Kathleen Connell filed a complaint for
certain declaratory and injunctive relief challenging the
authority of the State Controller to make payments from the State
Treasury in the absence of a state budget. On July 21, 1998, the
trial court issued a preliminary injunction prohibiting the State
Controller from paying moneys from the State Treasury for fiscal
year 1998-99, with certain limited exceptions, in the absence of
a state budget. The preliminary injunction, among other things,
prohibited the State Controller from making any payments pursuant
to any continuing appropriation.
On July 22 and 27, 1998, various employee unions which had
intervened in the case appealed the trial court's preliminary
injunction and asked the Court of Appeal to stay the preliminary
injunction. On July 28, 1998, the Court of Appeal granted the
unions' requests and stayed the preliminary injunction pending
the Court of Appeal's decision on the merits of the appeal. On
August 5, 1998, the Court of Appeal denied the plaintiffs'
request to reconsider the stay. Also on July 22, 1998, the State
Controller asked the California Supreme Court to immediately stay
the trial court's preliminary injunction and to overrule the
order granting the preliminary injunction on the merits. On July
29, 1998, the Supreme Court transferred the State Controller's
request to the Court of Appeal. The matters are now pending
before the Court of Appeal.
In Jordan v. Department of Motor Vehicles, plaintiff
challenged the validity and constitutionality of the State's smog
impact fee and requested a refund of the fee. In October 1997,
the trial court ruled in favor of plaintiff and, in addition,
ordered the State to provide refunds to all persons who paid the
smog impact fee from three years before the filing of the lawsuit
in 1995 to the present. Plaintiff asserts that the total amount
required to be refunded will exceed $350 million. The State has
appealed.
A judgment was entered for plaintiffs in California
Ambulance Association v. Shalala et al., described at page 63 of
Exhibit I to this Appendix. The Ninth Circuit Court of Appeals,
however, reversed the trial court's decision. Plaintiffs filed a
petition for certiorari at the United States Supreme Court, which
the State opposed. The petition is currently pending at the
Supreme Court.
A judgment was entered for plaintiff in August 1998 in the
case of Ceridian Corporation v. Franchise Tax Board, described at
pages 63-64 of Exhibit 1. The State will appeal.
In Hathaway, et al. v. Wilson, et al., described at page 65
of Exhibit 1, the plaintiffs and the State reached a settlement
which resolved all the issues presented in the case. Pursuant to
the settlement, judgment was entered in August 1998, requiring
the State to return $19,427,000 from the General Fund to one
special fund.
In Thomas Hayes v. Commission on State Mandates, described
at page 64 of Exhibit 1, the Commission on State Mandates is now
expected to issue a final consolidated decision in late 1998.
In February 1998, the Court of Appeal in California State
Employees Association v. Wilson, described at page 64 of Exhibit
1, modified, then affirmed, a judgment in favor of the plaintiffs
invalidating the transfer of $12,290,000 from the State Highway
Account to the General Fund.
In July 1998, the parties in Beno v. Sullivan and Welch v.
Anderson, described at page 65 of Exhibit 1, entered into a
settlement agreement in which the State agreed to pay $42 million
in return for plaintiffs' agreement to dismiss both actions.
Information Technology
The State's reliance on information technology in every
aspect of its operations has made Year 2000-related ("Y2K")
information technology ("IT") issues a high priority for the
State. The Department of Information Technology ("DOIT"), an
independent office reporting directly to the Governor, is
responsible for ensuring the State's information technology
processes are fully functional before the year 2000. The DOIT has
created a Year 2000 Task Force and a California 2000 Office to
establish statewide policy requirements; to gather, coordinate,
and share information; and to monitor statewide progress. In
December 1996, the DOIT began requiring departments to report on
Y2K activities and currently requires departmental monthly
reporting of Y2K status. The DOIT has emphasized to departments
that efforts should be focused on applications that support
mission-critical business practices.
The risks posed by Y2K information technology related issues
are not confined to computer systems, but also include problems
presented by embedded microchips (products or systems that
contain microchips to perform functions such as traffic control,
instruments used in hospitals or medical laboratories, and
California Aqueduct monitoring). To address these problems, the
Governor issued Executive Order W-163-97, broadening the
responsibilities of the DOIT to resolve these issues as well as
legal questions associated with Y2K issues. The executive order
also required that mission critical systems be remediated by
December 31, 1998, that purchases of new systems, hardware,
software and equipment be Year 2000 compliant and further limited
new computer projects to those required by law until a
department's Y2K problems are resolved. The DOIT has also more
recently required departments to address interfacing of State IT
systems with external IT systems, and to report on contingency
planning status for problems which might occur if IT systems are
not fully remediated by the end of 1999.
In its quarterly report for the period ending June 30, 1998
(the "July Quarterly Report"), the DOIT reported that departments
under its supervision had identified 642 mission critical IT
systems out of a total of 2,432 systems. Of the mission-critical
systems, 87 were reported as already Y2K compliant. Of the
remaining 555 mission critical systems requiring remediation, 128
were reported as completed. While the DOIT does not oversee
certain independent State entities, such as the judiciary, the
Legislature, the University of California and California State
University System, it believes these other agencies are well
under way with their own Y2K remediation plans.
In its quarterly report for the period ending September 30,
1998 (the "October Quarterly Report"), the DOIT updated its
survey of State departments, and reported that the number of
mission-critical systems needing remediation was reduced to 532,
and 220 of them had been remediated. However, the DOIT reported
that fewer projects were completed by September 30, 1998 than had
been planned by departments, and more projects were falling into
fourth quarter 1998 and first quarter 1999. Thus, some
mission-critical systems (less than 10%) would not meet the
Governor's Executive Order target to be remediated by December
31, 1998.
In late August, 1998, the State Auditor ("BSA") released a
report on "Year 2000 Computer Problems." The BSA surveyed 39
State departments and compared their status to the March 31, 1998
DOIT quarterly report. (The work for BSA's report was done
before the DOIT July Quarterly Report was ready.) The BSA Report
concluded that some agencies had fallen behind schedule by as
much as 1-3 months compared to their March expectations. The BSA
Report also noted concern that departments were not making
adequate plans to test remediated systems, were not focusing
sufficiently on problems associated with data interface with
other governmental and private bodies, and were not far enough
along in developing "business continuation plans" to ensure
continued operations after January 1, 2000 in the event of IT
problems. The DOIT responded in some detail to the BSA report,
generally agreeing with its identification of issue areas, and
stating that it was following up on all areas with the
departments.
In the July Quarterly Report, the DOIT estimates total Y2K
costs identified by the departments under its supervision at
about $239 million, of which more than $100 million was projected
to be expended in fiscal years 1998-99 and 1999-2000. The
October Quarterly Report indicated the total costs were now
estimated to be at least $290 million, and the estimate would
likely increase in the future. These costs are part of much
larger overall IT costs incurred annually by State departments
and do not include costs for remediation for embedded technology,
desktop systems and additional costs resulting from discoveries
in the testing process. For fiscal year 1998-99, the Legislature
created a $20 million fund for unanticipated Y2K costs, which can
be increased if necessary.
Although the DOIT reports that State departments are making
substantial progress overall toward the goal of Y2K compliance,
the task is very large and will likely encounter unexpected
difficulties. The State cannot predict whether all mission
critical systems will be ready and tested by late 1999 or what
impact failure of any particular IT system(s) or of outside
interfaces with State IT systems might have. The State
Treasurer's Office and the State Controller's Office report that
they are both on schedule to complete their Y2K remediation
projects by December 31, 1998, allowing full testing during 1999.
These systems include debt service payments on State debt and the
State fiscal and accounting system.
APPENDIX B
Description of certain S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obli
gation.
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 in
terest and repayment of principal in accordance with the terms of
the obligation; (2) nature of 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. The AA rating may be modified by the addition of
a plus or minus sign to show relative standing within the
category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are
given a plus (+) designation.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to
issues that 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.
Paper rated A-1 indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign designation.
Moody's
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. Generally, Moody's provides either a
generic rating or a rating with a numerical modifier of 1 for
bonds in the generic rating category Aa. Moody's also provides
numerical modifiers of 2 and 3 in this category for bond issues
in the health care, higher education and other not-for-profit
sectors; the modifier 1 indicates that the issue ranks in the
higher end of that generic rating category; the modifier 2
indicates that the issue is in the mid-range of that generic
category; and the modifier 3 indicates that the issue is in the
low end of that generic 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 Rating
The rating Prime-1 (P-1) is the highest commercial paper
rating assigned by Moody's. Issuers of P-1 paper must have a
superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return on
funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a wide
range of financial markets and assured sources of alternate
liquidity.
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 issuer, 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 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.
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
satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-1+ and F-1 categories.
DREYFUS CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits.
_______ ________
(1) Registrant's Amended and Restated Declaration of Trust is
incorporated by reference to Exhibit (1) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on April 4, 1992, and Exhibit (1)(b) of Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A, filed on June
30, 1994.
(2) Registrant's By-Laws, as amended, are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A, filed on June 30, 1994.
(4) Management Agreement is incorporated by reference to Exhibit (5) of
Post-Effective Amendment No. 5 to the Registration Statement on
Form N-1A, filed on July 18, 1995.
(5)(a) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed on July 18, 1995.
(7)(a) Amended and Restated Custody Agreement is incorporated by reference
to Exhibit 8(a) of Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on June 30, 1994.
(9) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on June 30, 1994.
(10) Consent of Independent Auditors.
(15) Financial Data Schedule.
Other Exhibits
______________
(a) Powers of Attorney are incorporated by reference to Other
Exhibits (a) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A, file July 29, 1998.
(b) Certificate of Secretary is incorporated by reference to
Other Exhibits (b) of Post-Effective Amendment No. 10 to
the Registration Statement on Form N-1A, file July 29,
1998.
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
Reference is made to Article EIGHTH of the Registrant's Amended
and Restated Agreement and Declaration of Trust incorporated by
reference to Exhibit 1 to Pre-Effective Amendment No. 1 to the
Fund's Registration Statement filed under the Securities Act of
1933 on April 14, 1992. The application of these provisions is
limited by Article 10 of the Registrant's By-Laws, incorporated by
reference to Exhibit 2 of Pre-Effective Amendment No. 1 to the
Registration Statement, and by the following undertaking set forth
in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange
Commission such indemnification is against public
policy as expressed in such Act as is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person
of the registration in the successful defense of any
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the registrant
will, unless in the opinion of its counsel the
matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in such Act and
will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus,
serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-
investment adviser or administrator. Dreyfus Management, Inc.,
another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
<TABLE>
<CAPTION>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Franklin Portfolio Associates, LLC* Director 1/97 - Present
Chairman of the Board and
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 -Present
Mellon Capital Management Director 5/95 -Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 -1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Christopher M. Condron The Boston Company, Inc.* Vice Chairman 1/94 - Present
Chairman and Chief Director 5/93 - Present
Executive Officer
(Continued) Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 -Present
Company*
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
Mandell L. Berman Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
Burton C. Borgelt DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Bank Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
Stephen E. Canter Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, LLC* Director 2/99 - Present
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Stephen E. Canter Founders Asset Management, LLC Member, Board of 12/97 - Present
President, Chief Operating 2930 East Third Ave. Managers
Officer, Chief Investment Denver, CO 80206 Acting Chief Executive 7/98 - 12/98
Officer, and Director Officer
(Continued)
The Dreyfus Trust Company+++ Director 6/ 95 - Present
Thomas F. Eggers Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
and Director
Founders Asset Management, LLC Member, Board of 2/99 - Present
2930 East Third Avenue Managers
Denver, CO 80206
Steven G. Elliott Mellon Bank Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+ Chairman 7/89 - 11/97
President 4/88 - 11/97
Chief Executive Officer 4/88 - 11/97
Mellon International Investment Director 9/89 - 8/97
Corporation+
Steven G. Elliott Mellon Financial Services Treasurer 12/87 - Present
Director (Continued) Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
Lawrence S. Kash Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - Present
401 North Maple Ave. Chief Executive Officer 11/97 - Present
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.++ + Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - Present
Organization, Inc.++ President 1/97 - Present
Seven Six Seven Agency, Inc. ++ Director 1/97 - Present
Dreyfus Insurance Agency of Chairman 5/97 - Present
Massachusetts, Inc.++++ President 5/97 - Present
Director 5/97 - Present
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
Founders Asset Management, LLC Member, Board of 12/97 - Present
2930 East Third Avenue Managers
Denver, CO. 80206
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Lawrence S. Kash Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Vice Chairman Chairman 9/93 - 1/98
And Director (Continued) President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Martin G. McGuinn Mellon Bank Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
Mellon Financial Vice President 9/86 - 10/97
Corporation (MD)
Rockville, Maryland
J. David Officer Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman Director 3/99 - Present
And Director
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - Present
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - Present
Services, Inc.* Director 8/96 - Present
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
J. David Officer Mellon Trust of New York Director 6/96 - Present
Vice Chairman and 1301 Avenue of the Americas
Director (Continued) New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
Richard W. Sabo Founders Asset Management LLC President 12/98 - Present
Director 2930 East Third Avenue Chief Executive Officer 12/98 - Present
Denver, CO. 80206
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
Richard F. Syron American Stock Exchange Chairman 4/94 - Present
Director 86 Trinity Place Chief Executive Officer 4/94 - Present
New York, NY 10006
Ronald P. O'Hanley Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
TBCAM Holdings, Inc.* Chairman 6/98 - Present
Director 10/97 - Present
The Boston Company Asset Chairman 6/98 - Present
Management, LLC* Director 1/98 - 6/98
The Boston Company Asset Director 2/97 - 12/97
Management, Inc. *
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 5/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon Equity Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon-France Corporation+ Director 3/97 - Present
Ronald P. O'Hanley Laurel Capital Advisors+ Trustee 3/97 - Present
Vice Chairman (Continued)
Mark N. Jacobs Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - Present
Organization, Inc.++
William H. Maresca The Dreyfus Trust Company+++ Director 3/97 - Present
Controller
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 -Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Assistant Treasurer 3/93 - Present
Organization, Inc.++
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
William T. Sandalls, Jr. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97-12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
William T. Sandalls, Jr. Dreyfus-Lincoln, Inc. Director 12/96 - Present
Executive Vice President 4500 New Linden Hill Road President 1/97 - Present
(Continued) Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
Dreyfus Partnership President 1/97 - 6/97
Management, Inc.++ Director 1/96 - 6/97
Dreyfus Service Organization, Director 1/96 - 6/97
Inc.++ Executive Vice President 1/96 - 6/97
Treasurer 10/96- Present
Dreyfus Insurance Agency of Director 5/97 - Present
Massachusetts, Inc.++++ Treasurer 5/97- Present
Executive Vice President 5/97 - Present
Diane P. Durnin Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Schachar Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
Dreyfus Investment Advisors, Inc.++ Vice President - Tax 10/96 - Present
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Inc.++ Vice President - Tax 10/96 - Present
Wendy Strutt None
Vice President
Richard Terres None
Vice President
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice-President -
Information Systems
James Bitetto The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
Steven F. Newman Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
_______________________________
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Debt and Equity Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus U.S. Treasury Intermediate Term Fund
60) Dreyfus U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Municipal Bond Fund
71) Dreyfus Premier New York Municipal Bond Fund
72) Dreyfus Premier State Municipal Bond Fund
73) Dreyfus Premier Value Fund
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund, Inc.
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) Founders Funds, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Funds, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President and
Assistant Treasurer
Jean M. O'Leary+ Assistant Vice President, None Assistant
Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Stephanie D. Pierce++ Vice President Vice President,
Assistant Secretary
and Assistant
Treasurer
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 28. Location of Accounts and Records
_______ ________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
_______ ___________________
Not Applicable
Item 30. Undertakings
_______ ____________
None
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York on the
26th day of May, 1999.
DREYFUS CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
___________________________________
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President and Treasurer 05/26/99
__________________________ (Principal Executive Financial
Marie E. Connolly and Accounting Officer)
/s/David W. Burke* Trustee 05/26/99
_____________________________
David W. Burke
/s/Joseph S. DiMartino* Trustee 05/26/99
______________________________
Joseph S. DiMartino
/s/Diane Dunst* Trustee 05/26/99
_____________________________
Diane Dunst
/s/Rosalind Gersten Jacobs* Trustee 05/26/99
_____________________________
Rosalind Gersten Jacobs
/s/Jay I. Meltzer* Trustee 05/26/99
_____________________________
Jay I. Meltzer
/s/Daniel Rose* Trustee 05/26/99
_____________________________
Daniel Rose
/s/Warren B. Rudman* Trustee 05/26/99
_____________________________
Warren B. Rudman
/s/Sander Vanocur* Trustee 05/26/99
_____________________________
Sander Vanocur
/s/ Elba Vasquez
*BY: ________________________
Elba Vasquez,
Attorney-in-Fact
INDEX OF EXHIBITS
ITEM 23:
(10) Consent of Independent Auditors
(14) Financial Data Schedules
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our
report dated April 29, 1999, which is incorporated by reference, in this
Registration Statement (Form N-1A No. 33-46586) of Dreyfus California
Intermediate Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
May 25, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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