_______________________________________________________________________________
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 1, 1995
(AS REVISED AUGUST 22, 1995)
______________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Connecticut Intermediate Municipal Bond Fund (the "Fund"),
dated August 1, 1995 as it may be revised from time to time. To obtain a
copy of the Fund's Prospectus, please write to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or call toll free
1-800-645-6561; in New York City, call 1-718-895-1206; outside the U.S.
and Canada, call 516-794-5452.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . B-10
Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . B-14
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . . . . B-16
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . B-17
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . B-18
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . B-20
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . B-23
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . B-23
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . B-24
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . B-25
Information About the Fund . . . . . . . . . . . . . . . . . . . . . . B-27
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . . B-27
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . B-40
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . B-51
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended March
31, 1995, computed on a monthly basis, was as follows:
<TABLE>
<CAPTION>
Fitch Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation Percent
("Fitch") or ("Moody's") or ("S&P") of Value
--------------- ----------------- ----------------- ---------
<S> <C> <C> <C>
AAA Aaa AAA 31.7%
AA Aa AA 32.2%
A A A 20.0%
BBB Baa BBB 10.3%
F-1+/F-1 VMIG1/MIG 1, P-1 SP-1+/SP-1, A-1 .6%
Not Rated Not Rated Not Rated 5.2%*
100.0%
------
</TABLE>
________________________
* Included in the Not Rated category are securities comprising 5.2% 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: Baa/BBB (4.9%) and Ba/BB (.3%).
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity, or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. The staff of
the Securities and Exchange Commission currently considers certain lease
obligations to be illiquid. Determination as to the liquidity of such
securities is made in accordance with guidelines established by the Fund's
Board. Pursuant to such guidelines, the Board has directed the Manager to
monitor carefully the Fund's investment in such securities with particular
regard to (1) the frequency of trades and quotes for the lease
obligation; (2) the number of dealers willing to purchase or sell the
lease obligation and the number of the 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 mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may
deem relevant. In addition, in evaluating the liquidity and credit
quality of a lease obligation that is unrated, the Fund's Board has
directed the Manager to consider (a) whether the lease can be cancelled;
(b) what assurance there is that the assets represented by the lease can
be sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics ); (d) the
likelihood that the municipality will discontinue appropriating funding
for the leased property because the property is no longer deemed essential
to the operations of the municipality (e.g., the potential for an "event
of nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. The Fund will not invest more than 15% of the
value of its net assets in lease obligations that are illiquid and in
other illiquid securities. See "Investment Restriction No. 11" below.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee
payment arrangements, will not adversely affect the tax exempt status of
the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Fund. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will
be monitored to assure that it is valued at fair value.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent
that the ratings given by Moody's, S&P or Fitch for Municipal Obligations
may change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in
the Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these ratings may be
an initial criterion for selection of portfolio investments, the Manager
also will evaluate these securities and the creditworthiness of the
issuers of such securities.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted securities held by the
Fund, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Fund's Board
of Trustees has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level
of illiquidity in the Fund's portfolio during such period.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in
the writer's futures margin account, which represents the amount by which
the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on
the futures contract. The potential loss related to the purchase of an
option on a futures contract is limited to the premium paid for the option
(plus transaction costs). Because the value of the option is fixed at the
time of sale, there are no daily cash payments to reflect changes in the
value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of
the Fund.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral.
For purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by
banks whose securities meet the standards for investment by the Fund to be
the equivalent of cash. From time to time, the Fund may return to the
borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan. These conditions may be subject to future
modification.
Until the Fund replaces a borrowed security in connection with a
short sale, the Fund will: (a) maintain daily a segregated account,
containing cash or U.S. Government securities, at such a level that (i)
the amount deposited in the account plus the amount deposited with the
broker as collateral will equal the current value of the security sold
short and (ii) the amount deposited in the segregated account plus the
amount deposited with the broker as collateral will not be less than the
market value of the security at the time it was sold short; or (b)
otherwise cover its short position.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home
Loan Banks, by the right of the issuer to borrow from the U.S. Treasury;
others, such as those issued by the Federal National Mortgage Association,
by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S. Government-
sponsored agencies or instrumentalities, no assurance can be given that it
will always do so, since it is not so obligated by law. The Fund will
invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price
usually not more than one week after its purchase. The Fund's custodian
or sub-custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and
Exchange Commission to be loans by the Fund. In an attempt to reduce the
risk of incurring a loss on a repurchase agreement, the Fund will enter
into repurchase agreements only with domestic banks with total assets in
excess of one billion dollars or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which the Fund may invest, and will require that
additional securities be deposited with it if the value of the securities
purchased should decrease below resale price. The Manager will monitor on
an ongoing basis the value of the collateral to assure that it always
equals or exceeds the repurchase price. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the seller does
not repurchase them in accordance with the repurchase agreement. In
addition, if bankruptcy proceedings are commenced with respect to the
seller of the securities, realization on the securities by the Fund may be
delayed or limited. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into repurchase
agreements.
Risk Factors
------------
Investing in Connecticut Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
Connecticut Municipal Obligations. Connecticut's economy relies in part
on activities that may be adversely affected by cyclical change. Although
the State recorded General Fund surpluses in the fiscal years 1985 through
1987 and 1992 and 1993, Connecticut reported deficits from General Fund
operations for the fiscal years 1988 through 1991. Together with the
deficit carried forward from the State's 1990 fiscal year, the total
General Fund deficit for the 1991 fiscal year was $965.7 million. The
total deficit was funded by the issuance of General Obligation Economic
Recovery Notes. The State Comptroller's annual report for the fiscal year
ended June 30, 1994 reflected a General Fund operating surplus of $19.7
million. The Comptroller, however, estimated the cumulative projected
deficit under GAAP for the fiscal year ended June 30, 1994 to be
approximately $465.8 million. As a result of recurring budgetary
problems, S&P downgraded the State's general obligation bonds from AA+ to
AA in April 1990 and to AA- in September 1991. Fitch downgraded the
State's general obligation bonds from AA+ to AA in March 1995. Moody's
currently rates Connecticut's bonds Aa. Investors should review Appendix
A which more fully sets forth these and other risk factors.
Lower Rated Bonds. The Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See "Description of
the Fund--Risk Factors--Lower Rated Bonds" in the Prospectus for a
discussion of certain risks and "Appendix B" for a general description of
Moody's, S&P and Fitch ratings of Municipal Obligations. Although ratings
may be useful in evaluating the safety of interest and principal payments,
they do not evaluate the market value risk of these bonds. The Fund will
rely on the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in
the Fund's portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether the Fund should
continue to hold the bond.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds are considered by S&P, Moody's and Fitch,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in
the higher rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues
when necessary to meet the Fund's liquidity needs or in response to a
specific economic event such as a deterioration in the creditworthiness of
the issuer. The lack of a liquid secondary market for certain securities
also may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing the Fund's portfolio and calculating
its net asset value. Adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The
Fund has no arrangement with any persons concerning the acquisition of
such securities, and the Manager will review carefully the credit and
other characteristics pertinent to such new issues.
Lower rated zero coupon securities, in which the Fund may invest up
to 5% of its net assets, involve special considerations. The credit risk
factors pertaining to lower rated securities also apply to lower rated
zero coupon bonds. Such zero coupon bonds carry an additional risk in
that, unlike bonds which pay interest throughout the period to maturity,
the Fund will realize no cash until the cash payment date unless a portion
of such securities are sold and, if the issuer defaults, the Fund may
obtain no return at all on its investment. See "Dividends, Distributions
and Taxes."
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 6 below as fundamental policies. These
restrictions cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended
(the "Act")) of the Fund's outstanding voting shares. Investment
restrictions numbered 7 through 12 are not fundamental policies and may be
changed by vote of a majority of the Trustees at any time. The Fund may
not:
1. Borrow money, except to the extent permitted under the 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, futures 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 of Trustees.
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 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, and floating and
variable rate demand obligations as to which the Fund cannot exercise the
demand feature described in the Fund's Prospectus on less than seven days'
notice and as to which there is no secondary market) if, in the aggregate,
more than 15% of its net assets would be so invested.
12. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 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.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees of the Fund
--------------------
*DAVID W. BURKE, Trustee. Since August 1994, Consultant to the Manager.
From October 1990 to August 1994, 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 at ABC News, and
subsequently as President of CBS News. He is 59 years old and his
address is 200 Park Avenue, New York, New York 10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is Chairman of the Board of Noel Group, Inc., a venture capital
company; a trustee of Bucknell University; and a director of the
Muscular Dystrophy Association, HealthPlan Services Corporation,
Belding Heminway, Inc., a manufacturer and marketer of industrial
threads, specialty yarns, home furnishings and fabrics, Curtis
Industries, Inc., a national distributor of security products,
chemicals and automotive and other hardware, Simmons Outdoor
Corporation and Staffing Resources, Inc. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
DIANE DUNST, Trustee. 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 55 years old and her address is 120 E. 87th Street,
New York, New York 10128.
ROSALIND GERSTEN JACOBS, Trustee. 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 70 years old and her address is c/o
Corporate Property Investors, 305 East 47th Street, New York, New
York 10017.
JAY I. MELTZER, Trustee. Physician engaged in private practice
specializing in internal medicine. He is also a member of the
Advisory Board of the Section of Society and Medicine, College of
Physicians and Surgeons, Columbia University and a Clinical Professor
of Medicine, Department of Medicine, Columbia University College of
Physicians and Surgeons. He is 66 years old and his address is 903
Park Avenue, New York, New York 10021.
DANIEL ROSE, Trustee. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. He is also Chairman of the Housing Committee of The
Real Estate Board of New York, Inc., and a Trustee of Corporate
Property Investors, a real estate investment company. He is 65 years
old and his address is c/o Rose Associates, Inc., 380 Madison Avenue,
New York, New York 10017.
WARREN B. RUDMAN, Trustee. Since January 1993, Partner in the law firm of
Paul, Weiss, Rifkind, Wharton & Garrison. From January 1981 to
January 1993, Mr. Rudman served as a United States Senator from the
State of New Hampshire. Since May 1995, Mr. Rudman has served as a
director of Collins & Aikman Corporation. Since January 1993, Mr.
Rudman has also served as a director of Chubb Corporation and
Raytheon Company. Since 1988, Mr. Rudman has also 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 also serves as Vice Chairman of
the President's Foreign Intelligence Advisory Board. From January
1993 to December 31, 1994, Mr. Rudman served as Vice Chairman of the
Federal Reserved Bank of Boston. He is 65 years old and his address
is c/o Paul, Weiss, Rifkind, Wharton & Garrison, 1615 L Street, N.W.,
Washington, D.C. 20036.
SANDER VANOCUR, Trustee. Since January 1992, President of Old Owl
Communications, a full-service communications firm. Since November
1989, Mr. Vanocur has served as a Director of the Damon Runyon-Walter
Winchell Cancer Research Fund. Since January 1994, Mr. Vanocur has
served as a Visiting Professional Scholar at the Freedom Forum First
Amendment Center at Vanderbilt University. From June 1986 to
December 1991, he was a Senior Correspondent of ABC News and, from
October 1986 to December 31, 1991, he was Anchor of the ABC News
program "Business World," a weekly business program on the ABC
television network. He is 67 years old and his address is 2928 P
Street, N.W., Washington, D.C. 20007.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Trustees of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Trustees who are not "interested persons"
of the Fund.
Ordinarily, meetings of shareholders for the purpose of electing
Trustees will not be held unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders,
at which time the Trustees then in office will call a shareholders'
meeting for the election of Trustees. Under the Act, shareholders of
record of not less than two-thirds of the outstanding shares of the Fund
may remove a Trustee through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. The Trustees are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any such Trustee when requested in writing to
do so by the shareholders of record of not less than 10% of the Fund's
outstanding shares.
<TABLE>
<CAPTION>
The Fund typically pays its Trustees an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. The aggregate
amount of fees and expenses paid to Board members by the Fund for the
fiscal year ended March 31, 1995, 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 parentheses next to each Board members total
compensation) for the year ended December 31, 1994, were as follows:
(5) Total
(3) Pension or Compensation From
(2) Aggregate Retirement Benefits (4) Estimated Annual Fund and Fund
(1) Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
----------------- ----------------- ------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
David W. Burke $1,900 none none $ 27,898 (50)
Joseph S. DiMartino 3,839** none none 445,000*** (93)
Diane Dunst 3,071 none none 32,602 (9)
Rosalind Gersten Jacobs 2,481 none none 57,638 (20)
Jay I. Meltzer 3,071 none none 32,102 (9)
Daniel Rose 3,071 none none 62,006 (22)
Warren B. Rudman 3,071 none none 29,602 (17)
Sander Vanocur 3,071 none none 62,006 (22)
_____________________
* Amount does not include reimbursed expenses for attending Board
meetings which amounted to $186 for all Trustees as a group.
** Estimated amount for the fiscal year ending March 31, 1996.
*** Estimated amount for the year ending December 31 1995.
</TABLE>
Officers of the Fund
--------------------
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray, and prior to August 1990,
he was employed as an Associate at Sidley & Austin. He is 30 years
old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was Manager of the High Performance Fabric Division
of Springs Industries Inc. He is 33 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System. He is 30 years old.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 59 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Board members and officers of the Fund, as a group, owned less than
1% of the Fund's shares of beneficial interest outstanding on July 14,
1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Trustees or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Trustees who are not "interested persons"
(as defined in the Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Agreement was approved by shareholders on August 3, 1994, and was last
approved by the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund or
the Manager, at a meeting held on May 23, 1995. The Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board of
Trustees or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days' notice, by the Manager. The Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; Robert E.
Riley, President, Chief Operating Officer and a director; W. Keith Smith,
Vice Chairman of the Board; Lawrence S. Kash, Vice Chairman--Distribution
and a director; Philip L. Toia, Vice Chairman--Operations and
Administration; Stephen E. Canter--Vice Chairman, Chief Investment Officer
and a director; Paul H. Synder, Vice President--Chief Financial Officer;
Daniel C. Maclean III, Vice President and General Counsel; Diane M.
Coffey, Vice President--Corporate Communications; Jeffrey N. Nachman, Vice
President--Mutual Fund Administration; Mark N. Jacobs, Vice President--
Legal and Secretary; Henry D. Gottmann, Vice President--Retail Sales and
Service; Katherine C. Wickham, Vice President--Human Resources; Elie M.
Genadry, Vice President--Institutional Sales; Barbara Casey, Vice
President--Dreyfus Retirement Services; William F. Glavin, Vice President-
-Corporate Development; Andrew S. Wasser, Vice President--Information
Services; Maurice Bendrihem, Controller; Elvira Oslapas, Assistant
Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman,
Lawrence M. Greene, Julian M. Smerling and David B. Truman, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the
Fund's Board of Trustees. The Manager is responsible for investment
decisions, and provides the Fund with portfolio managers who are
authorized by the Board of Trustees to execute purchases and sales of
securities. The Fund's portfolio managers are Richard J. Moynihan, Joseph
A. Darcy, A. Paul Disdier, Karen M. Hand, Stephen C. Kris, Jill C.
Shaffro, L. Lawrence Troutman, Samuel J. Weinstock and Monica S. Wieboldt.
The Manager also maintains a research department with a professional staff
of portfolio managers and securities analysts who provide research
services for the Fund as well as for other funds advised by the Manager.
All purchases and sales are reported for the Trustees' review at the
meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
interest on securities sold short, brokerage fees and commissions, if any,
fees of Trustees who are not officers, directors, employees or holders of
5% or more of the outstanding voting securities of the Manager, Securities
and Exchange Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services, the Fund has agreed to
pay the Manager a monthly management fee at the annual rate of .60 of 1%
of the value of the Fund's average daily net assets. All fees and
expenses are accrued daily and deducted before the declaration of
dividends to shareholders. For the period May 27, 1992 (commencement of
operations) through March 31, 1993, and for the fiscal year ended March
31, 1994, no management fee was paid by the Fund pursuant to undertakings
by the Manager. For the fiscal year ended March 31, 1995, the management
fee payable by the Fund amounted to $820,427, which amount was reduced by
$685,192 pursuant to undertakings then in effect, resulting in a net fee
paid to the Manager of $135,235 for fiscal 1995.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholders Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan")
pursuant to which the Fund reimburses the Dreyfus Service Corporation for
certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder
accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Board members for their 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 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, 1995, $83,628 was chargeable to
the Fund under the Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Service Charges. There is no sales or service charge by the Fund or
the Distributor, although investment dealers, banks and other institutions
may make reasonable charges to investors for their services. The services
provided and the applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been given to
understand that these fees may be charged for customer services including,
but not limited to, same-day investment of client funds; same-day access
to client funds; advice to customers about the status of their accounts,
yield currently being paid or income earned to date; provision of periodic
account statements showing security and money market positions; other
services available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such fees will
be deducted monthly from the investor's account, which on smaller accounts
could constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the
best interest of investors. Investors should be aware that they may
purchase shares of the Fund directly from the Fund without imposition of
any maintenance or service charges, other than those already described
herein. In some states, banks or other financial institutions effecting
transactions in Fund shares may be required to register as dealers
pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time,
on any business day that The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open. Such purchases will be credited to the
shareholder's Fund account on the next bank business day. To qualify to
use the Dreyfus TeleTransfer Privilege, the initial payment for purchase
of Fund shares must be drawn on, and redemption proceeds paid to, the same
bank and account as are designated 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 "Redemption of Fund
Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old
Account Application is still applicable.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only
to the registered owner(s) of the account and only to the address of
record. The Account Application or later written request must be manually
signed by the registered owner(s). Checks may be made payable to the
order of any person in an amount of $500 or more. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the Fund to redeem a sufficient number of
shares in the investor's account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of
the Check will be returned to the investor. Investors generally will be
subject to the same rules and regulations that apply to checking accounts,
although election of this Privilege creates only a shareholder-transfer
agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer
Agent receives the redemption request in proper form. Redemption proceeds
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or
Shareholder Services Form. Redemption proceeds, if wired, must be in the
amount of $1,000 or more and will be wired to the investor's account at
the bank of record designated in the investor's file at the Transfer
Agent, if the investor's bank is a member of the Federal Reserve System,
or to a correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-
654-7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This must be signed by each shareholder, with each signature guaranteed as
described below under "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to signature-
guarantees, please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Trustees reserves the right to make payments in whole
or in part in securities or other assets in case of an emergency or any
time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities
and Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load,
and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without
a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales
load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were
acquired), without giving effect to any reduced loads, the
difference will be deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, an investor must give exchange instructions
to the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "NO" box on the
Account Application, indicating that the investor specifically refuses
this Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares issued in certificate form are not
eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund,
shares of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are
made in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between
IRA accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchange service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. There is a service charge of $.50 for each
withdrawal check. Automatic Withdrawal may be terminated at any time by
the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds
that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds
sold with a sales load, and the applicable sales load will be
deducted.
C. Dividends and distributions paid by a fund which charges a
sales load may be invested in shares of other funds sold with
a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered
Shares exceeds the maximum sales load charged by the fund
from which dividends or distributions are being swept,
without giving effect to any reduced loads, the difference
will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be
imposed upon redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
by an independent pricing service (the "Service") approved by the Board of
Trustees. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side
of the market, these investments are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation
of the market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general
market conditions. The Service may employ electronic data processing
techniques and/or a matrix system to determine valuations. The Service's
procedures are reviewed by the Fund's officers under the general
supervision of the Board of Trustees. Expenses and fees, including the
management fee (reduced by the expense limitation, if any), are accrued
daily and are taken into account for the purpose of determining the net
asset value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which
it appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked
price. No brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to
that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager to supplement its own
research and analysis with the views and information of other securities
firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six
months (or such shorter period as the Internal Revenue Service may
prescribe by regulation) and has received an exempt-interest dividend with
respect to such shares, any loss incurred on the sale of such shares shall
be disallowed to the extent of the exempt-interest dividend received. In
addition, any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a distribution should be a return
on the investment in an economic sense although taxable as stated in
"Dividends, Distributions and Taxes" in the Prospectus.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of any
gains realized from the sale or other disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of
the Code. In addition, all or a portion of the gain realized from
engaging in "conversion transactions" may be treated as ordinary income
under Section 1258 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, overrides or modifies the
provisions of Section 1256 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 to 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." If no election is made, to the extent the
straddle rules apply to positions established by the Fund, losses realized
by the Fund will be deferred to the extent of unrealized gain in any
offsetting positions. Moreover, as a result of the straddle and
conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain may be recharacterized as short-term capital gain or ordinary
income.
Investment by the Fund in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, the
Fund could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
For the 30-day period ended March 31, 1995, the Fund's yield was
4.91%. The Fund's yield reflects a waiver of a portion of the management
fee, without which the Fund's yield for the 30-day period ended March 31,
1995 would have been 4.56%. Current yield is computed pursuant to a
formula which operates as follows: The amount of the Fund's expenses
accrued for the 30-day period (net of reimbursements) is subtracted from
the amount of the dividends and interest earned (computed in accordance
with regulatory requirements) by the Fund during the period. That result
is then divided by the product of: (a) the average daily number of shares
outstanding during the period that were entitled to receive dividends, and
(b) the net asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be declared
as a dividend shortly thereafter. The quotient is then added to 1, and
that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
Based upon a combined 1995 Federal and Connecticut income tax rate of
42.32%, the Fund's tax equivalent yield for the 30-day period ended March
31, 1995 was 8.51%. Absent the expense absorption and/or fee waiver then
in effect, the Fund's tax equivalent yield for such period would have been
7.91%. 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 Connecticut marginal personal income tax
rates presently in effect. For Federal personal income tax purposes, a
39.6% tax rate has been used. For Connecticut personal income tax
purposes, a 4.5% 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-year period ended March 31, 1995 and for the period May
27, 1992 (commencement of operations) through March 31, 1995, the Fund's
average annual total return was 5.60% and 6.28%, respectively. Average
annual total return is calculated by determining the ending redeemable
value of an investment purchased with a hypothetical $1,000 payment made
at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking
the "n" th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.
For the period May 27, 1992 (commencement of operations) through
March 31, 1995, the Fund's total return was 18.33%. 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.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, and actual or proposed tax legislation, and may refer 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, the Fund may advertise that it is
(or was) the first no-load Connecticut intermediate term tax-free mutual
fund available to investors and, for so long as such statement remains
true, that it is the only no-load Connecticut intermediate-term tax-free
fund available to investors. From time to time, advertising materials for
the Fund also may refer to or discuss current ratings provided by
Morningstar, Inc., an independent company which provides general
information about investment companies to the public including ratings
based on a one-to-five star rating system. 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
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of beneficial interest being sold pursuant to the Fund's
Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS -- INVESTING IN CONNECTICUT MUNICIPAL OBLIGATIONS
--------------------------------------------------------------
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn
from official statements relating to securities offerings of the State
available as of the date of this Statement of Additional Information.
While the Fund has not independently verified such information, it has no
reason to believe that such information is not correct in all material
respects.
Connecticut's economy is diverse, with manufacturing, services and
trade accounting for approximately 70% of total non-agricultural
employment. The State's manufacturing industry is diversified, but from
1970 to 1993 manufacturing employment declined 33.5%, while non-
manufacturing employment increased 63.3%, particularly in the service,
trade and finance categories, resulting in an increase of 27.6% in total
growth in non-agricultural sectors. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms.
From 1984 to 1993, Connecticut ranked from sixth to twelfth among all
states in total defense contract awards, receiving 2.5% of all such
contracts in 1993. In recent years the Federal government has reduced the
amount of defense-related spending and the largest defense-related
employers in the State have announced substantial labor force reductions.
The future effect of those and other industrial labor force reductions on
the Connecticut economy cannot be predicted at this time.
Connecticut has a high level of personal income. According to Bureau
of Economic Analysis figures, personal income of State residents for
calendar year 1992 was $89.0 billion, a 5.2% increase over the previous
year. Total personal income in the State increased 29.6% from 1987 to
1992 and 11.1% from 1989 to 1992, compared with national increases of
35.4% and 17.5%, respectively. According to U.S. Department of Commerce
projections, the State is expected to continue to rank among the highest
in state per capital income. As of January 1994, the estimated rate of
unemployment (on a seasonably adjusted basis) in the State was 6.2%.
While the State's General Fund ended fiscal 1984-85, 1985-86 and
1986-87 with operating surpluses of approximately $365.5 million, $250.1
million and $365.2 million, respectively, the State recorded operating
deficits of $115.6 million, $28 million, $259.5 million and $808.5 million
for fiscal 1987-88, 1988-89, 1989-90 and 1990-91, respectively. Together
with the deficit carried forward from fiscal 1989-90, the total deficit
for the fiscal year 1990-91 was $965.7 million. The total deficit amount
was funded by the issuance of General Obligation Economic Recovery Notes
in late 1991. As of March 1, 1995, $455,610,000 of such Notes remained
outstanding. The Comptroller's annual report for the fiscal year ended
June 30, 1992 reflected a General Fund operating surplus of $110.2
million, which surplus was used to retire $110.1 million of the States
Economic Recovery Notes. The Comptroller's annual report for the fiscal
year ended June 30, 1993 reflected a General Fund operating surplus of
$113.5 million. The Comptroller's annual report for the fiscal year ended
June 30, 1994 reflected a General Fund operating surplus of $19.7 million.
The unappropriated surplus in the General Fund is deemed to be
appropriated for debt service for the fiscal year ending June 30, 1995.
Since 1988, the Comptroller's annual report has reported results on
the basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. The
Comptroller's monthly report for the period ended January 31, 1995
estimated that on a GAAP basis the cumulative deficit is $511 million for
fiscal 1994-95. The modified cash basis of accounting used for statutory
financial reporting and the modified accrual basis used for GAAP financial
reporting are different and, as a result, often produce varying financial
results, primarily because of differences in the recognition of revenues
and expenditures.
The State finances its operations primarily through the General Fund.
All tax and most non-tax revenues of the State, except for motor fuels
taxes and other transportation related taxes, fees and revenues, are paid
into, and substantially all expenditures pursuant to legislative
appropriations are made out of, the General Fund. The State derives over
70% of its revenues from taxes. Miscellaneous fees, receipts, transfers
and Federal grants account for most of the other State revenue. The Sales
and Use Taxes, the corporation business tax and the recently enacted broad
based personal income tax are the major revenue raising taxes. For fiscal
1994-95, the adopted budget anticipates General Fund expenditures of
$8.116 billion and General Fund revenues of 8.117 billion.
On November 3, 1992, Connecticut voters approved a constitutional
amendment which requires a balanced budget for each year and imposes a cap
on the growth of expenditures. The General Assembly is required by the
constitutional amendment to adopt by three-fifths vote certain spending
cap definitions. The statutory spending cap limits the growth of
expenditures to either (1) the rolling five-year average annual growth in
personal income, or (2) the increase in the consumer price index for urban
consumers during the preceding twelve-month period, whichever is greater.
Expenditures for the payment of bonds, notes and other evidences of
indebtedness are excluded from the constitutional and statutory
definitions of general budget expenditures. To preclude shifting
expenditures out of the General Fund to other funds, the spending cap
applies to all appropriated funds combined. For fiscal 1994-95, permitted
growth in capped expenditures is 4.49%. The adoption Budget for fiscal
1994-95 is approximately $24 million below the spending cap.
The State has no constitutional or other organic limit on its power
to issue obligations or incur indebtedness other than that it may only
borrow for public purposes. There are no reported court decisions
relating to State bonded indebtedness other than two cases validating the
legislative determination of the public purpose for improving employment
opportunities and related activities. The State Constitution has never
contained provisions requiring submission of the questions of incurring
indebtedness to a public referendum. Therefore, the authorization and
issuance of State debt, including the purpose, amount and nature thereof,
the method and manner of the incurrence of such debt, the maturity and
terms of repayment thereof, and other related matters are statutory.
The State has established a program of temporary note issuances to
cover periodic cash flow requirements. The maximum volume of cash flow
borrowing is determined based upon the State's actual cash needs on a
daily basis. The State, as of April 17, 1990, commenced a program
permitting the issuance of up to $539 million of General Obligation
Temporary Notes (the "April 1990 Program"). Under the April 1990 Program,
the State may issue notes during a five-year period concluding in April of
1995. Additionally, a separate $200 million temporary note program
commenced as of April 30, 1991 and concluded on October 31, 1991. There
are currently no notes outstanding under either program.
The General Assembly has empowered, pursuant to bond acts in effect,
the State Bond Commission to authorize general obligation bonds in the
amount of $10,194,811,925. As of March 1, 1995, the State Bond Commission
has authorized $8,673,257,266 in such bonds and the balance of
$1,521,554,659 was available for authorization. From such total
authorizations of $8,673,257,266, bonds in the aggregate of
$7,334,468,663.09 have been issued and the balance of $1,338,788,602.91
remained authorized but unissued as of March 1, 1995.
General obligation bonds issued by Connecticut municipalities are
payable primarily from ad valorem taxes on property subject to taxation by
the municipality. Certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits in recent years. The most notable of these is the City of
Bridgeport.
S&P, Moody's and Fitch rate Connecticut's municipal bonds AA-, Aa and
AA, respectively.
APPENDIX B
Description of Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's") and Fitch Investors Service, Inc.
("Fitch") ratings:
S&P
Municipal Bond Ratings
----------------------
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
A
Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for
payment of debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management
performance appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions
are no more than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus sign (+)
designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
Commercial Paper Ratings
------------------------
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days.
A
Issues assigned this rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's
Municipal Bond Ratings
----------------------
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment some
time in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.
Municipal Note Ratings
----------------------
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while other factors
of major importance in bond risk, long-term secular trends for example,
may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment
grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
Commercial Paper Ratings
------------------------
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and will normally be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Fitch
Municipal Bond Ratings
----------------------
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest
potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months or the DDD, DD or D categories.
Short-Term Ratings
------------------
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS MARCH 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.6% AMOUNT VALUE
------- -------
<S> <C> <C>
CONNECTICUT-80.9%
Cheshire:
4.75%, 8/15/2003........................................................ $ 530,000 $ 513,247
4.90%, 8/15/2004........................................................ 530,000 516,755
5%, 8/15/2005........................................................... 530,000 518,229
5.10%, 8/15/2006........................................................ 530,000 519,225
Columbia:
5.20%, 6/15/2002........................................................ 265,000 268,312
5.30%, 6/15/2003........................................................ 265,000 269,028
5.40%, 6/15/2004........................................................ 265,000 269,786
State of Connecticut:
5.80%, 11/15/2001....................................................... 1,000,000 1,044,560
6.10%, 3/15/2002........................................................ 3,500,000 3,706,885
5.80%, 11/15/2002....................................................... 1,500,000 1,567,440
5.70%, 8/15/2007........................................................ 1,500,000 1,525,005
COP (Middletown Courthouse Facilities Project):
5.90%, 12/15/2001 (Insured; MBIA)..................................... 250,000 261,648
6%, 12/15/2002 (Insured; MBIA)........................................ 750,000 790,058
Clean Water Fund Revenue:
5.40%, 4/1/2003....................................................... 1,000,000 1,011,640
5.50%, 4/1/2004....................................................... 1,245,000 1,261,745
5.40%, 6/1/2007....................................................... 1,805,000 1,777,979
Special Tax Obligation Revenue (Transit Infrastructure):
6.10%, 10/1/2001...................................................... 2,000,000 2,106,080
5.60%, 9/1/2002....................................................... 3,000,000 3,069,210
7.60%, 9/1/2007 (Prerefunded 9/1/1997) (a)............................ 1,000,000 1,083,340
Refunding 5.70%, 2/15/2001............................................ 500,000 514,255
Connecticut Airport, Revenue Refunding (Bradley International Airport):
7.10%, 10/1/1995 (Insured; FGIC)........................................ 1,040,000 1,053,780
7.20%, 10/1/1997 (Insured; FGIC)........................................ 1,000,000 1,057,350
Connecticut Development Authority,
Economic Development Projects Revenue Refunding 5.60%, 11/15/2004....... 1,000,000 1,011,510
Connecticut Health & Educational Facilities Authority, Revenue:
(New Britain Memorial Hospital) 7.50%, 7/1/2006......................... 1,000,000 1,030,040
(Quinnipiac College) 5.625%, 7/1/2003................................... 2,300,000 2,175,570
(Sacred Heart University) 5.35%, 7/1/2004............................... 1,000,000 974,310
(The Griffin Hospital):
5.30%, 7/1/2000....................................................... 500,000 475,065
5.50%, 7/1/2001....................................................... 500,000 470,615
5.60%, 7/1/2002....................................................... 500,000 467,645
5.70%, 7/1/2003....................................................... 500,000 465,130
(University of Hartford):
6.20%, 7/1/2001....................................................... 750,000 742,815
6.25%, 7/1/2002....................................................... 700,000 690,165
(William W. Backus Hospital):
5.40%, 7/1/2000....................................................... 285,000 280,759
5.80%, 7/1/2004....................................................... 250,000 244,297
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
CONNECTICUT (CONTINUED)
Connecticut Higher Education Supplemental Loan Authority, Revenue
(Family Education Loan Program):
5.70%, 11/15/2004..................................................... $1,515,000 $ 1,511,546
5.80%, 11/15/2005..................................................... 2,080,000 2,119,478
5.90%, 11/15/2006..................................................... 2,180,000 2,230,467
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
6.90%, 11/15/1998....................................................... 2,500,000 2,589,275
5.95%, 11/15/2002....................................................... 2,000,000 2,077,960
6.05%, 11/15/2002....................................................... 350,000 364,255
5.90%, 5/15/2006........................................................ 1,000,000 1,027,840
5.60%, 11/15/2006....................................................... 1,100,000 1,095,270
Connecticut Regional School District Number 5:
5.25%, 1/15/2004 (Insured; MBIA)........................................ 400,000 400,804
5.40%, 1/15/2005 (Insured; MBIA)........................................ 400,000 401,472
5.50%, 1/15/2006 (Insured; MBIA)........................................ 400,000 403,728
Connecticut Resources Recovery Authority,
Mid-Connecticut Systems Refunding:
5.60%, 11/15/1999..................................................... 2,500,000 2,537,375
5.75%, 11/15/2000..................................................... 2,000,000 2,044,100
Danbury:
5.10%, 8/15/2003........................................................ 815,000 813,297
5.25%, 8/15/2004........................................................ 815,000 817,934
Derby:
5.40%, 5/15/2004 (Insured; AMBAC)....................................... 420,000 424,187
5.50%, 5/15/2005 (Insured; AMBAC)....................................... 620,000 627,155
Eastern Connecticut Resource Recovery Authority, Solid Waste Revenue
(Wheelabrator Lisbon Project):
5.15%, 1/1/2005....................................................... 1,990,000 1,763,697
5.25%, 1/1/2006....................................................... 2,145,000 1,925,845
East Hampton:
5.25%, 7/15/2004 (Insured; FGIC)........................................ 300,000 299,538
5.40%, 7/15/2005 (Insured; FGIC)........................................ 305,000 306,168
5.50%, 7/15/2006 (Insured; FGIC)........................................ 305,000 305,735
East Lyme:
5.20%, 8/1/2003......................................................... 425,000 425,536
5.60%, 8/1/2009......................................................... 415,000 412,136
Groton Town:
5%, 8/15/2005........................................................... 490,000 474,933
5%, 8/15/2006........................................................... 490,000 470,253
Guilford:
5.25%, 1/15/2004........................................................ 300,000 297,684
5.40%, 1/15/2005........................................................ 325,000 323,261
5.50%, 1/15/2006........................................................ 325,000 324,444
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
CONNECTICUT (CONTINUED)
Guilford (continued):
Refunding:
5.40%, 10/15/2001..................................................... $ 1,215,000 $ 1,236,372
5.50%, 10/15/2002..................................................... 1,000,000 1,020,360
Hamden:
5.25%, 10/1/2001........................................................ 445,000 449,877
5.30%, 10/1/2002........................................................ 440,000 444,334
5.40%, 10/1/2003........................................................ 425,000 430,198
Meriden 5.50%, 11/15/2001 (Insured; MBIA)................................... 1,300,000 1,356,264
Montville 6%, 6/15/2000..................................................... 575,000 600,748
New Britain:
5.375%, 3/1/2003 (Insured; MBIA)........................................ 750,000 759,847
5.50%, 3/1/2004 (Insured; MBIA)......................................... 1,000,000 1,016,850
New Fairfield 4.80%, 3/15/2003 (Insured; MBIA).............................. 550,000 535,799
New Haven:
6.50%, 12/1/2002........................................................ 1,410,000 1,425,256
6.75%, 12/1/2005........................................................ 845,000 918,490
New London:
5.10%, 10/1/2002 (Insured; MBIA)........................................ 300,000 299,997
5.20%, 10/1/2003 (Insured; MBIA)........................................ 575,000 575,391
New Milford:
5.20%, 8/1/2003......................................................... 550,000 549,588
5.40%, 8/1/2006......................................................... 380,000 381,246
5.50%, 8/1/2007......................................................... 425,000 426,475
Norwalk Maritime Center Authority, Revenue Refunding (Maritime Center
Project):
5.40%, 2/1/2002......................................................... 635,000 646,557
5.50%, 2/1/2003......................................................... 670,000 684,037
Norwich 5.75%, 9/15/2005.................................................... 875,000 904,846
South Central Connecticut Regional Water Authority, Water Systems Revenue:
5.10%, 8/1/2000 (Insured; FGIC)......................................... 3,000,000 3,013,680
5.50%, 8/1/2003 (Insured; FGIC)......................................... 2,000,000 2,031,880
5.50%, 8/1/2004 (Insured; FGIC)......................................... 540,000 545,843
Southington:
5.40%, 9/15/2005 (Insured; MBIA)........................................ 455,000 456,788
5.50%, 9/15/2006 (Insured; MBIA)........................................ 455,000 457,675
5.60%, 9/15/2007 (Insured; MBIA)........................................ 455,000 458,813
Stamford:
6.625%, 3/15/2004....................................................... 2,750,000 3,058,853
7.75%, 1/15/2005........................................................ 1,650,000 1,975,017
Stratford:
4.60%, 11/1/2004 (Insured; FGIC)........................................ 3,500,000 3,230,745
5.625%, 11/1/2007 (Insured; FGIC)....................................... 4,365,000 4,372,770
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
CONNECTICUT (CONTINUED)
Vernon:
5.30%, 9/15/2004 (Insured; MBIA)........................................ $360,000 $ 363,722
5.40%, 9/15/2005 (Insured; MBIA)........................................ 360,000 364,579
5.50%, 9/15/2006 (Insured; MBIA)........................................ 360,000 365,710
Wallingford:
5.20%, 6/15/2001........................................................ 400,000 406,324
5.30%, 6/15/2002........................................................ 400,000 407,396
5.40%, 6/15/2003........................................................ 400,000 408,736
Refunding 5.30%, 6/1/2004............................................... 500,000 505,020
Waterbury:
4.90%, 4/15/2002 (Insured: FGIC)........................................ 1,650,000 1,629,689
5%, 4/15/2003 (Insured: FGIC)........................................... 2,060,000 2,039,812
West Haven:
6%, 8/15/2000........................................................... 350,000 348,282
6%, 9/1/2009............................................................ 480,000 485,155
Westport:
5.10%, 6/15/2003........................................................ 500,000 500,290
5.20%, 6/15/2004........................................................ 500,000 501,045
U.S. RELATED-18.7%
Guam Government 4.70%, 11/15/2002........................................... 2,365,000 2,191,243
Commonwealth of Puerto Rico:
5.25%, 7/1/2001......................................................... 1,000,000 988,500
5.30%, 7/1/2004 (Insured; MBIA)......................................... 1,000,000 1,005,720
Commonwealth of Puerto Rico Highway and Transportation Authority,
Highway Revenue Refunding:
5.875%, 7/1/1999. ................................................... 1,500,000 1,540,770
5.30%, 7/1/2004. ..................................................... 10,200,000 9,803,118
Puerto Rico Municipal Finance Agency 5.60%, 7/1/2002........................ 1,800,000 1,802,304
Virgin Islands, Subordinate Tax (Insurance Claims Fund Program-
General Obligation Matching Fund) 5.65%, 10/1/2003...................... 3,700,000 3,670,474
Virgin Islands Public Finance Authority,
Revenue Refunding Matching Fund Loan Notes:
6.90%, 10/1/2001...................................................... 2,000,000 2,089,160
7%, 10/1/2002......................................................... 750,000 786,923
Virgin Islands Water and Power Authority, Water Systems Revenue
7.20%, 1/1/2002......................................................... 400,000 413,504
-------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $130,294,519)..................................................... $129,430,923
============
SHORT-TERM MUNICIPAL INVESTMENT-.4%
CONNECTICUT;
State of Connecticut, Special Tax Obligation Revenue, VRDN (Transit
Infrastructure)
4.35%, (LOC; Industrial Bank of Japan) (b,c) (cost $500,000)............ $500,000 $500,000
========
TOTAL INVESTMENTS-100.0%
(cost $130.794,518)..................................................... $129,930,923
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company VRDN Variable rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
----- ----- -------------- ----------------
<S> <C> <C> <C>
AAA Aaa AAA 30.5%
AA Aa AA 33.2
A A A 20.6
BBB Baa BBB 9.9
F1 MIG1 SP1 .4
Not Rated(e) Not Rated(e) Not Rated(e) 5.4
-----
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunded date.
(b) Securities payable on demand. The interest rate, which is subject to
change, is based upon prime rates or an index of market interest rates.
(c) Secured by letters of credit.
(d) Fitch currently provides creditwothiness information for a limited
number of investments.
(e) Securities which while not rated by Fitch, Moody's or Standard and
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(f) At March 31, 1995, the Fund had $47,401,799 (36.0%) of net assets
invested in securities whose payment of principal and interest is
dependent upon revenues generated from city municipal projects.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $130,794,518)-see statement..................................... $129,930,923
Interest receivable..................................................... 2,157,442
Receivable for shares of Beneficial Interest subscribed................. 5,500
Prepaid expenses........................................................ 14,095
-----------
132,107,960
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 27,714
Due to Custodian........................................................ 273,461
Payable for shares of Beneficial Interest redeemed...................... 75,188
Accrued expenses........................................................ 50,843 427,206
------- --------
NET ASSETS ................................................................ $131,680,754
============
REPRESENTED BY:
Paid-in capital......................................................... $134,869,351
Accumulated net realized capital losses and distributions
in excess of net realized gain on investments-Note 1(c)............... (2,325,002)
Accumulated net unrealized (depreciation) on investments-Note 3......... (863,595)
--------
NET ASSETS at value applicable to 10,106,016 shares outstanding
(unlimited number of $.001 par value shares of Beneficial Interest authorized) $131,680,754
============
NET ASSET VALUE, offering and redemption price per share
($131,680,754 / 10,106,016 shares)...................................... $13.03
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $7,410,693
EXPENSES:
Management fee-Note 2(a).............................................. $ 820,427
Shareholder servicing costs-Note 2(b)................................. 202,494
Auditing fees......................................................... 36,053
Trustees' fees and expenses-Note 2(c)................................. 24,266
Custodian fees........................................................ 14,517
Legal fees............................................................ 11,455
Prospectus and shareholders' reports.................................. 8,864
Registration fees..................................................... 1,855
Miscellaneous......................................................... 31,802
--------
1,151,733
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 685,192
--------
TOTAL EXPENSES.................................................. 466,541
--------
INVESTMENT INCOME-NET.......................................... 6,944,152
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(2,222,394)
Net unrealized appreciation on investments.............................. 1,805,156
---------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (417,238)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,526,914
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MARCH 31,
------------------
1994 1995
------- -------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 6,005,276 $ 6,944,152
Net realized gain (loss) on investments................................. 40,949 (2,222,394)
Net unrealized appreciation (depreciation) on investments for the year.. (4,214,020) 1,805,156
--------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 1,832,205 6,526,914
--------- ---------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net............................................. (6,005,276) (6,944,152)
In excess of net realized gain on investments........................... (56,513) (8,171)
-------- --------
TOTAL DIVIDENDS....................................................... (6,061,789) (6,952,323)
-------- --------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 122,670,991 85,801,823
Dividends reinvested.................................................... 6,048,338 5,437,554
Cost of shares redeemed................................................. (59,282,445) (99,937,660)
--------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 69,436,884 (8,698,283)
--------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 65,207,300 (9,123,692)
NET ASSETS:
Beginning of year....................................................... 75,597,146 140,804,446
--------- -----------
End of year............................................................. $140,804,446 $131,680,754
=========== ============
SHARES SHARES
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 9,054,074 6,728,262
Shares issued for dividends reinvested.................................. 448,656 424,237
Shares redeemed......................................................... (4,387,812) (7,897,962)
--------- ---------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 5,114,918 (745,463)
========= ========
See notes to financial statements.
</TABLE>
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to Page ___ of the Fund's Propsectus dated
August 1, 1995 (As Revised August 22, 1995).
See notes to financial statements.
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Funds Service, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
Dividends in excess of net realized gain on investments for financial
statement purposes result primarily from distributions of realized gain
necessary to satisfy tax requirements.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $611,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to March 31, 1995.
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The carryover does not include net realized securities losses from November
1, 1994 through March 31, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. However, the Manager had
undertaken from April 1, 1994 through June 30, 1994, to waive receipt of the
management fee payable to it by the Fund, and thereafter, had undertaken
through April 13, 1995, to reduce the management fee paid by the Fund, to the
extent that the Fund's aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Fund's average
daily net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $685,192 for the year ended March 31, 1995.
The Manager has currently undertaken from April 14, 1995 through June 30,
1995 or until such time as the net assets of the Fund exceed $175 million,
regardless of whether they remain at that level, to waive receipt of the
management fee payable to it by the Fund in excess of an annual rate of .35
of 1% of the average daily value of the Funds' net assets.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the year ended
March 31, 1995, the Fund was charged an aggregate of $83,628 pursuant to the
Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $1,500 and an attendance fee of $500 per meeting.
Prior to August 10, 1994, the annual fee was $1,000 and attendance fee was
$250. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $76,142,926 and $86,556,770, respectively, for the year ended
March 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At March 31, 1995, accumulated net unrealized depreciation on investments
was $863,595, consisting of $1,271,952 gross unrealized appreciation and
$2,135,547 gross unrealized depreciation.
At March 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS CONNECTICUT INTERMEDIATE MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus Connecticut Intermediate Municipal Bond Fund, including the statement
of investments, as of March 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of March 31, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Connecticut Intermediate Municipal Bond Fund at March 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst and Young Signature Logo)
New York, New York
May 1, 1995
