File No. 33-61738
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
PREMIER INSURED MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on December 2, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal
year ended July 31, 1996 was filed on September 26, 1996.
PREMIER INSURED MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 5
4 General Description of Registrant 38
5 Management of the Fund 19
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 38
7 Purchase of Securities Being Offered 21
8 Redemption or Repurchase 28
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-35
13 Investment Objectives and Policies B-2
14 Management of the Fund B-11
15 Control Persons and Principal B-11
Holders of Securities
16 Investment Advisory and Other B-16
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PREMIER INSURED MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-29
18 Capital Stock and Other Securities B-29
19 Purchase, Redemption and Pricing B-19, B-22
of Securities Being Offered B-27
20 Tax Status *
21 Underwriters B-19
22 Calculations of Performance Data B-30
23 Financial Statements B-76
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-10
30 Location of Accounts and Records C-13
31 Management Services C-13
32 Undertakings C-13
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PREMIER INSURED MUNICIPAL BOND FUND
PROSPECTUS DECEMBER 2, 1996
Premier Insured Municipal Bond Fund (the "Fund") is an open-end,
management investment company, known as a mutual fund. The Fund's investment
objective is to maximize current income exempt from Federal and, where
applicable, from State personal income taxes to the extent consistent with the
preservation of capital.
The Fund permits you to invest in any of six separate non-diversified
portfolios (each, a "Series"): the National Series, the California Series,
the Connecticut Series, the Florida Series, the New Jersey Series and the New
York Series. Each Series invests primarily in a portfolio of Municipal
Obligations (as defined below) that are insured as to the timely payment of
principal and interest by recognized insurers of Municipal Obligations. Each
Series other than the National Series will invest primarily in Municipal
Obligations issued by issuers in the State after which it is named. It is
anticipated that substantially all dividends paid by each Series will be
exempt from Federal income tax and also, where applicable, will be exempt
from the personal income tax of the State after which the Series is named.
By this Prospectus, each Series is offering three Classes of shares
- -- Class A, Class B and Class C -- which are described herein. See
"Alternative Purchase Methods."
The Fund provides free redemption checks with respect to Class A
shares, which you can use in amounts of $500 or more for cash or to pay
bills. You can purchase or redeem all Classes of shares by telephone using
the TELETRANSFER Privilege.
The Dreyfus Corporation professionally manages the Fund's portfolio.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated December 2, 1996,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Securities and
Exchange Commission maintains a Web site (http://www.sec.gov) that contains
the Statement of Additional Information, material incorporated by reference, a
nd other information regarding the Fund. For a free copy of the Statement of
Additional Information, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611. When telephoning, ask
for Operator 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Fee Table.................................. 3
Condensed Financial Information............ 6
Alternative Purchase Methods............... 11
Description of the Fund.................... 12
Management of the Fund..................... 19
How to Buy Shares.......................... 21
Shareholder Services....................... 24
How to Redeem Shares....................... 28
Distribution Plan and Shareholder Services Plan 32
Dividends, Distributions and Taxes......... 33
Performance Information.................... 37
General Information........................ 38
Appendix................................... 40
Page 2
<TABLE>
<CAPTION>
FEE TABLE
CALIFORNIA CONNECTICUT
SERIES SERIES
---------------------------------- --------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge
Imposed on Redemption (as a percentage
of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees....... .55% .55% .55% .55% .55% .55%
12b-1 Fees............ None .50% .75% None .50% .75%
Other Expenses........ .89% .92% 1.95% .61% .61% .68%
Total Series Operating Expenses 1.44% 1.97% 3.25% 1.16% 1.66% 1.98%
Example
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) except where noted, redemption
at the end of each time period:
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- ---------- ---------
1 Year................. $ 59 $60/$20** $43/$33** $ 56 $57/$17** $30/$20**
3 Years................ $ 89 $92/$62** $100 $ 80 $82/$52** $ 62
5 YEARS................ $120 $126/$106** $170 $106 $110/$90** $107
10 YEARS............... $210 $203*** $355 $180 $171*** $231
* A contingent deferred sales charge of 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more.
** Assuming no redemption of shares.
*** Ten-year figure assumes conversion of Class B shares to Class A
shares at the end of the sixth year following the date of purchase.
</TABLE>
Page 3
<TABLE>
<CAPTION>
FLORIDA NATIONAL
SERIES SERIES
---------------------------------- --------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge
Imposed on Redemption(as a percentage of
the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees....... .55% .55% .55% .55% .55% .55%
12b-1 Fees............ None .50% .75% None .50% .75%
Other Expenses........ .63% .62% .56% .75% .76% 1.20%
Total Series Operating Expenses 1.18% 1.67% 1.86% 1.30% 1.81% 2.50%
Example
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) except where noted, redemption
at the end of each time period:
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
1 Year................. $ 56 $57/$17** $29/$19** $58 $58/$18** $35/$21**
3 Years................ $ 81 $83/$53** $58 $84 $87/$57** $78
5 YEARS................ $107 $111/$91** $101 $113 $118/$98** $133
10 YEARS............... $182 $173*** $218 $195 $187*** $284
* A contingent deferred sales charge of 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more.
** Assuming no redemption of shares.
*** Ten-year figure assumes conversion of Class B shares to Class A
shares at the end of the sixth year following the date of purchase.
</TABLE>
Page 4
<TABLE>
NEW JERSEY NEW YORK
SERIES SERIES
---------------------------------- --------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge
Imposed on Redemption
..(as a percentage of the
..amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees....... .55% .55% .55% .55% .55% .55%
12b-1 Fees............ None .50% .75% None .50% .75%
Other Expenses........ .67% .66% .67% .69% .69% 1.03%
Total Series Operating Expenses 1.22% 1.71% 1.97% 1.24% 1.74% 2.33%
Example
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except
where noted, redemption at the end of each time period:
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
1 Year................. $ 57 $57/$17** $30/$20** $ 57 $58/$18** $34/$24**
3 Years................ $ 82 $84/$54** $62 $ 83 $85/$55** $73
5 YEARS................ $109 $113/$93** $106 $110 $114/$94** $125
10 YEARS............... $186 $177*** $230 $188 $180*** $267
* A contingent deferred sales charge of 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more.
** Assuming no redemption of shares.
*** Ten-year figure assumes conversion of Class B shares to Class A
shares at the end of the sixth year following the date of purchase.
</TABLE>
- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, EACH SERIES' ACTUAL PERFORMANCE WILL VARY AND MAY
RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Long-term
investors in Class B or Class C shares could pay more in 12b-1 fees than
the economic equivalent of paying a front-end sales charge. The
information in the foregoing table does not reflect any fee waivers or
expense reimbursement arrangements that may be in effect. Certain Service
Agents (as defined below) may charge their clients direct fees for
effecting transactions in Fund shares; such fees are not reflected in the
foregoing table. See "Management of the Fund," "How to Buy Shares," "How
to Redeem Shares" and "Distribution Plan and Shareholder Services Plan."
Page 5
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data for each Series for
each year indicated. This information has been derived from the Series'
financial statements.
<TABLE>
<CAPTION>
CALIFORNIA SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ------------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.50 $11.56 $11.56 $12.50 $11.57 $11.57 $12.24
------- ------- ------- ------- ------- ------- ------
INVESTMENT OPERATIONS:
Investment income_net. .62 .64 .50 .56 .58 .44 .26
Net realized and unrealized gain (loss)
on investments........ (.94) ._- .39 (.93) ._- .40 (.27)
------- ------- ------- ------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS (.32) .64 .89 (.37) .58 .84 (.01)
------- ------- ------- ------- ------- ------- ------
DISTRIBUTIONS:
Dividends from investment
income--net........... (.62) (.64) (.50) (.56) (.58) (.44) (.26)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $11.56 $11.56 $11.95 $11.57 $11.57 $11.97 $11.97
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (3) (2.79%)(4) 5.80% 7.77% (3.20%)(4) 5.27% 7.30% (.11%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .08% 1.18% .50%(4) .57% 1.70% 2.04%(4)
Ratio of net investment income to
average net assets.... 5.30%(4) 5.56% 4.20% 4.78%(4) 5.10% 3.66% 3.19%(4)
Decrease reflected in
above ratios due to
undertakings by The Dreyfus
Corporation (limited to the expense
limitation provision of the
Management Agreement)..... 2.50%(4) 1.49% .26% 2.50%(4) 1.55% .27% 1.21%(4)
Portfolio Turnover Rate ._- 3.86% 58.47% ._- 3.86% 58.47% 58.47%
Net Assets, end of year (000's omitted) $1,473 $3,525 $3,156 $2,658 $3,793 $4,135 $1
(1).From August 19, 1993 (commencement of operations) to July 31, 1994.
(2).From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3).Exclusive of sales load.
(4) Annualized.
Page 6
CONNECTICUT SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ------------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
Net asset value, beginning of year $12.50 $12.76 $12.95 $12.50 $12.76 $12.96 $13.43
------- ------- ------- ------- ------- ------- ------
INVESTMENT OPERATIONS:
Investment income--net .19 .72 .61 .17 .65 .55 .33
Net realized and unrealized gain
(loss) on investments .26 .19 .03 .26 .20 .02 (.45)
------- ------- ------- ------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS .45 .91 .64 .43 .85 .57 (.12)
------- ------- ------- ------- ------- ------- ------
DISTRIBUTIONS:
Dividends from investment income_net (.19) (.72) (.61) (.17) (.65) (.55) (.33)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.76 $12.95 $12.98 $12.76 $12.96 $12.98 $12.98
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 3.61%(4) 7.43% 5.01% 3.49%(4) 6.95% 4.40% (1.32%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .07% 1.03% .50%(5) .58% 1.54% 1.98%(5)
Ratio of net investment income to
average net assets.... 5.17%(5) 5.66% 4.66% 4.77%(5) 5.11% 4.15% 3.94%(5)
Decrease reflected in
above ratios due to
undertakings by The Dreyfus
Corporation (limited to the expense
limitation provision of the
Management Agreement)..... 2.50%(5) 1.10% .13% 2.50%(5) 1.09% .12% ._-
Portfolio Turnover Rate ._- 5.33% 30.21% ._- 5.33% 30.21% 30.21%
Net Assets, end of year
(000's omitted) $8,438 $12,451 $11,117 $6,916 $16,612 $17,333 $173
(1).From May 5, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3) Exclusive of sales load.
(4).Not annualized.
(5).Annualized.
FLORIDA SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ------------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
Net asset value, beginning of year $12.50 $12.79 $13.07 $12.50 $12.78 $13.08 $13.76
------- ------- ------- ------- ------- ------- ------
Investment Operations:
Investment income_net. .19 .73 .63 .17 .67 .56 .34
Net realized and unrealized gain
(loss) on investments. .29 .28 .21 .28 .30 .20 (.48)
------- ------- ------- ------- ------- ------- ------
Total from Investment Operations .48 1.01 .84 .45 .97 .76 (.14)
------- ------- ------- ------- ------- ------- ------
Distributions:
Dividends from investment income_net (.19) (.73) .63 (.17) (.67) (.56) (.34)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.79 $13.07 $13.28 $12.78 $13.08 $13.28 $13.28
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 3.83%(4) 8.24% 6.48% 3.62%(4) 7.86% 5.89% (1.51%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .09% 1.04% .50%(5) .59% 1.52% 1.86%(5)
Ratio of net investment
income to average net assets....... 5.11%(5) 5.72% 4.70% 4.62%(5) 5.20% 4.23% 3.78%(5)
Decrease reflected in
above ratios due to
undertakings by
The Dreyfus Corporation 2.06%(5) 1.02% .14% 2.02%(5) 1.00% .15% _-
Portfolio Turnover Rate .-- .78% 12.70% ._- .78% 12.70% 12.70%
Net Assets, end of year
(000's omitted) $10,405 $19,541 $16,515 $12,320 $21,275 $18,210 $1
(1).From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3) Exclusive of sales load.
(4).Not annualized.
(5).Annualized.
Page 7
NATIONAL SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ------------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
Net asset value, beginning of year $12.50 $12.94 $13.01 $12.50 $12.95 $13.01 $13.53
------- ------- ------- ------- ------- ------- ------
INVESTMENT OPERATIONS:
Investment income_net. .18 .77 .63 .16 .71 .57 .34
Net realized and unrealized gain
(loss) on investments. .44 .07 .08 .45 .06 .09 (.43)
------- ------- ------- ------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS .62 .84 .71 .61 .77 .66 (.09)
------- ------- ------- ------- ------- ------- ------
DISTRIBUTIONS:
Dividends from investment income--net (.18) (.77) (.63) (.16) (.71) (.57) (.34)
Dividends from net realized gain
on investments........ ._- ._- (.03) ._- ._- (.03) (.03)
------- ------- ------- ------- ------- ------- ------
TOTAL DISTRIBUTIONS... (.18) (.77) (.66) (.16) (.71) (.60) (.37)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.94 $13.01 $13.06 $12.95 $13.01 $13.07 $13.07
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 4.99%(4) 6.86% 5.56% 4.94%(4) 6.24% 5.09% (.94%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .08% 1.17% .50%(5) .59% 1.68% 2.08%(5)
Ratio of net investment income to average
net assets ........... 5.44%(5) 6.02% 4.80% 4.90%(5) 5.51% 4.28% 3.84%(5)
Decrease reflected in
above ratios due to
undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management Agreement) 2.50%(5) 1.25% .13% 2.50%(5) 1.27% 13% 1.17%(5)
Portfolio Turnover Rate ._- 9.17% 29.73% .-_ 9.17% 29.73% 29.73%
Net Assets, end of year (000's omitted) $2,525 $8,272 $8,409 $3,343 $9,739 $10,860 $1
(1).From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3).Exclusive of sales load.
(4).Not annualized.
(5).Annualized.
Page 8
NEW JERSEY SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ------------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
Net asset value, beginning of year $12.50 $12.58 $12.71 $12.50 $12.58 $12.71 $13.21
------- ------- ------- ------- ------- ------- ------
INVESTMENT OPERATIONS:
Investment income_net. .18 .71 .59 .16 .65 .52 .32
Net realized and unrealized gain
(loss) on investments. .08 .13 .08 .08 .13 .08 (.43)
------- ------- ------- ------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS .26 .84 .67 .24 .78 .60 (.11)
------- ------- ------- ------- ------- ------- ------
DISTRIBUTIONS:
Dividends from investment income--net (.18) (.71) (.59) (.16) (.65) (.52) (.32)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.58 $12.71 $12.79 $12.58 $12.71 $12.79 $12.78
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 2.07%(4) 7.01% 5.31% 1.94%(4) 6.48% 4.79% (1.21%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .10% 1.14% .50%(5) .61% 1.63% 1.95%(5)
Ratio of net investment income to
average net assets.... 5.25%(5) 5.60% 4.55% 4.69%(5) 5.00% 4.04% 3.68%(5)
Decrease reflected in above ratios due to
undertakings by The Dreyfus Corporation
(limited to the expense limitation provision of
the Management Agreement). 2.50%(5) 1.35% .08% 2.50%(5) 1.29% .08% .02%(5)
Portfolio Turnover Rate ._- 43.48% 28.14% ._- 43.48% 28.14% 28.14%
Net Assets, end of year (000's omitted) $2,318 $4,981 $5,212 $2,373 $6,852 $8,910 $6
(1).From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3).Exclusive of sales load.
(4).Not annualized.
(5) Annualized.
Page 9
NEW YORK SERIES
----------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ------------------------------- ----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------- ------- ------- ------- ------- ------- -------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- -------------
Net asset value, beginning of year $12.50 $12.79 $12.75 $12.50 $12.80 $12.77 $13.39
------- ------- ------- ------- ------- ------- ------
Investment Operations:
Investment income_net. .18 .71 .59 .16 .64 .53 .33
Net realized and unrealized gain (loss)
on investments...... . .29 (.04) .16 .30 (.03) .15 (.46)
------- ------- ------- ------- ------- ------- ------
Total from Investment Operations .47 .67 .75 .46 .61 .68 (.13)
------- ------- ------- ------- ------- ------- ------
Distributions:
Dividends from investment income_net (.18) (.71) (.59) (.16) (.64) (.53) (.33)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.79 $12.75 $12.91 $12.80 $12.77 $12.92 $12.93
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 3.76%(4) 5.53% 5.97% 3.72%(4) 5.08% 5.35% (1.51%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ._- .09% 1.17% .50%(5) .60% 1.68% 1.99%(5)
Ratio of net investment income to
average net assets.... 5.28%(5) 5.64% 4.56% 4.87%(5) 5.02% 4.03% 2.99%(5)
Decrease reflected in above ratios due to
undertakings by The Dreyfus Corporation
(limited to the expense limitation provision of
the Management Agreement). 2.50%(5) 1.45% .07% 2.50%(5) 1.39% .06% .34%(5)
Portfolio Turnover Rate ._- 2.76% 26.18% ._- 2.76% 26.18% 26.18%
Net Assets, end of year (000's omitted) $2,054 $4,791 $4,768 $2,199 $6,611 $10,197 $103
(1) From May 6, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3) Exclusive of sales load.
(4) Not annualized.
(5) Annualized.
</TABLE>
Further information about each Series' performance is
contained in its annual report which may be obtained without charge by
writing to the address or calling the number set forth on the cover page
of this Prospectus.
Page 10
ALTERNATIVE PURCHASE METHODS
The Fund offers you three methods of purchasing each Series'
shares; you may choose the Class of shares that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your shares and any other relevant circumstances. Each Series' share
represents an identical pro rata interest in that Series' investment
portfolio.
As to each Series, Class A shares are sold at net asset value
per share plus a maximum initial sales charge of 4.50% of the public
offering price imposed at the time of purchase. The initial sales charge
may be reduced or waived for certain purchases. See "How to Buy
Shares--Class A Shares." These shares are subject to an annual service
fee at the rate of .25 of 1% of the value of the average daily net assets
of Class A. See "Distribution Plan and Shareholder Services
Plan_Shareholder Services Plan."
As to each Series, Class B shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Series.
Class B shares are subject to a maximum 4% contingent deferred sales
charge ("CDSC"), which is assessed if you redeem Class B shares within
six years of purchase. See "How to Buy Shares_Class B Shares" and "How to
Redeem Shares_Contingent Deferred Sales Charge_Class B Shares." These
shares also are subject to an annual service fee at the rate of .25 of 1%
of the value of the average daily net assets of Class B. In addition,
Class B shares are subject to an annual distribution fee at the rate of
.50 of 1% of the value of the average daily net assets of Class B. See
"Distribution Plan and Shareholder Services Plan." The distribution fee
paid by Class B will cause such Class to have a higher expense ratio and
to pay lower dividends than Class A. Approximately six years after the
date of purchase, Class B shares of a Series automatically will convert
to Class A shares of such Series, based on the relative net asset values
for shares of each such Class, and will no longer be subject to the
distribution fee. Class B shares that have been acquired through the
reinvestment of dividends and distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the
total Class B shares not acquired through the reinvestment of dividends
and distributions.
As to each Series, Class C shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Series.
Class C shares are subject to a 1% CDSC, which is assessed only if you
redeem Class C shares within one year of purchase. See "How to Buy Shares
-- Class C Shares" and "How to Redeem Shares -- Contingent Deferred Sales
Charge -- Class C Shares." These shares also are subject to an annual
service fee at the rate of .25 of 1%, and an annual distribution fee at
the rate of .75 of 1%, of the value of the average daily net assets of
Class C. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class C will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A.
The decision as to which Class of shares is more beneficial
to you depends on the amount and intended length of time of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee and CDSC on
Class B or Class C shares would be less than the initial sales charge on
Class A shares purchased at the same time, and to what extent, if any,
such differential would be offset by the return of Class A. Additionally,
investors qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
fees on Class B or Class C shares may exceed the initial sales charge on
Class A shares during the life of the investment. Finally, you should
consider the effect of the CDSC period and any conversion rights of the
Classes in the context of your own investment time frame. For example,
while Class C shares
Page 11
have a shorter CDSC period than Class B shares, Class C shares do not have
a conversion feature and, therefore, are subject to an ongoing
distribution fee. Thus, Class B shares may be more attractive than Class C
shares to investors with long-term investment outlooks. Generally, Class A
shares may be more appropriate for investors who invest $1,000,000 or more
in Fund shares, and for investors who invest between $100,000 and $999,999
in Fund shares with long term investment outlooks. Class A shares will not
be appropriate for investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to maximize current income
exempt from Federal income tax and, where applicable, from State personal
income taxes for residents of the States of California, Connecticut,
Florida, New Jersey and New York, to the extent consistent with the
preservation of capital. To accomplish its investment objective, each
Series invests primarily in debt securities issued by States, territories
and possessions of the United States and the District of Columbia and
their political subdivisions, authorities and corporations, the interest
from which is, in the opinion of bond counsel to the issuer, exempt from
Federal income taxes ("Municipal Obligations") that are insured as to the
timely payment of principal and interest by recognized insurers of
Municipal Obligations. In addition, the California Series, the
Connecticut Series, the Florida Series, the New Jersey Series and the New
York Series (collectively, the "State Series") invest primarily in such
Municipal Obligations of the State after which the relevant Series is
named the interest from which is, in the opinion of bond counsel to the
issuer, exempt from Federal and, if applicable, such State's personal
income taxes (collectively, "State Municipal Obligations" or when the
context so requires, "California Municipal Obligations," "Connecticut
Municipal Obligations," "Florida Municipal Obligations," etc.). To the
extent acceptable insured State Municipal Obligations at any time are
unavailable for investment, a State Series will invest temporarily in
State Municipal Obligations that are not subject to insurance, insured
Municipal Obligations and/or other debt securities the interest from
which is, in the opinion of bond counsel to the issuer, exempt from
Federal, but not State, income tax. With respect to the National Series,
to the extent acceptable insured Municipal Obligations at any time are
unavailable for investment, such Series will invest temporarily in
Municipal Obligations that are not subject to insurance and/or other debt
securities the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income tax. When used herein, the term
"State" refers to the State after which a Series is named. Each Series'
investment objective cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of such Series' outstanding voting shares. There can be
no assurance that the Series' investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Municipal Obligations generally include debt obligations
issued to obtain funds for various public purposes as well as certain
industrial development bonds issued by or on behalf of public
authorities. Municipal Obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by
the issuer's pledge of its faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable from the revenue
derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific revenue
source, but not from the general taxing power. Tax exempt industrial
development bonds, in most cases, are revenue bonds that do not carry the
pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes
are short-term
Page 12
instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of
taxes or receipt of other revenues. Municipal Obligations include
municipal lease/purchase agreements which are similar to
installment purchase contracts for property or equipment issued by
municipalities. Municipal Obligations bear fixed, floating or variable
rates of interest which are determined in some instances by formulas
under which the Municipal Obligation's interest rate will change directly
or inversely to changes in interest rates or an index, or multiples
thereof, in many cases subject to a maximum and minimum. Certain
Municipal Obligations are subject to redemption at a date earlier than
their stated maturity pursuant to call options, which may be separated
from the related Municipal Obligation and purchased and sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at
least 80% of the value of each Series' net assets (except when
maintaining a temporary defensive position) in Municipal Obligations.
Generally, at least 65% of the value of each Series' net assets (except
when maintaining a temporary defensive position) will be invested in
bonds, debentures and other debt instruments that are insured Municipal
Obligations which, with respect to the State Series, are issued by
issuers in the State after which such Series is named. See "Insurance
Feature" and "Investment Considerations and Risks_Investing in State
Municipal Obligations" below, and "Dividends, Distributions and Taxes."
Municipal Obligations purchased by each Series will be rated
no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
by Standard & Poor's Ratings Group, a division of The McGraw Hill
Companies, Inc. ("S&P") or Fitch Investors Service, L.P. ("Fitch").
Municipal Obligations rated Baa by Moody's or BBB by S&P or Fitch are
considered investment grade obligations; those rated Baa by Moody's are
considered medium grade obligations which lack outstanding investment
characteristics and have speculative characteristics, while those rated
BBB by S&P or Fitch are regarded as having an adequate capacity to pay
principal and interest. Each Series also may invest in securities which,
while not rated, are determined by The Dreyfus Corporation to be of
comparable quality to the rated securities in which the Series may
invest. Each Series also may invest in Taxable Investments of the quality
described under "Appendix -- Certain Portfolio Securities -- Taxable
Investments." Under normal market conditions, the weighted average
maturity of each Series' portfolio is expected to exceed ten years.
From time to time, a Series may invest more than 25% of the
value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), issued after August 7, 1986, while
exempt from Federal income tax, is a preference item for the purpose of
the alternative minimum tax. Where a regulated investment company
receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a
preference item to shareholders. Each Series may invest without
limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Investment Considerations and Risks" below.
Each Series' annual portfolio turnover rate is not expected
to exceed 100%. Each Series may engage in various investment techniques,
such as options and futures transactions, lending portfolio securities
and short-selling. Use of certain of these techniques may give rise to
taxable income. For a discussion of the investment techniques and their
related risks, see "Investment Considerations and Risks," "Appendix --
Investment Techniques" and
Page 13
"Dividends, Distributions and Taxes" below and "Investment Objective and
Management Policies _ Management Policies" in the Statement of Additional
Information.
INSURANCE FEATURE
At the time they are purchased by a Series, the Municipal
Obligations held in such Series' portfolio that are subject to insurance
will be insured as to timely payment of principal and interest under an
insurance policy (i) purchased by the Series or by a previous owner of
the Municipal Obligation ("Mutual Fund Insurance") or (ii) obtained by
the issuer or underwriter of the Municipal Obligation ("New Issue
Insurance"). The insurance of principal refers to the face or par value
of the Municipal Obligation and is not affected by nor does it insure the
price paid therefor by the Series or the market value thereof. The value
of each Series' shares is not insured.
New Issue Insurance is obtained by the issuer of the
Municipal Obligations and all premiums respecting such securities are
paid in advance by such issuer. Such policies are non-cancelable and
continue in force so long as the Municipal Obligations are outstanding
and the insurer remains in business.
Certain types of Mutual Fund Insurance obtained by the Fund
are effective only so long as the Fund is in existence, the insurer
remains in business and the Municipal Obligations described in the policy
continue to be held by the Series. The Fund, on behalf of the Series,
will pay the premiums with respect to such insurance. Depending upon the
terms of the policy, in the event of a sale of any Municipal Obligation
so insured by a Series, the Mutual Fund Insurance may terminate as to
such Municipal Obligation on the date of sale and in such event the
insurer may be liable only for those payments of principal and interest
which then are due and owing. Other types of Mutual Fund Insurance may
not have this termination feature. Each Series may purchase Municipal
Obligations with this type of insurance from parties other than the
issuer and the insurance would continue for the Series' benefit.
Typically, the insurer may not withdraw coverage on insured
securities held by a Series, nor may the insurer cancel the policy for
any reason except failure to pay premiums when due. The insurer may
reserve the right at any time upon 90 days' written notice to the Fund to
refuse to insure any additional Municipal Obligations purchased by a
Series after the effective date of such notice. The Fund's Board has
reserved the right to terminate the Mutual Fund Insurance policy for any
Series if it determines that the benefits to such Series of having its
portfolio insured are not justified by the expense involved. See
"Investment Considerations and Risks -- Investing in Insured Municipal
Obligations" below.
Mutual Fund Insurance and New Issue Insurance may be obtained
from Financial Guaranty Insurance Company ("Financial Guaranty"),MBIA
Insurance Corporation ("MBIA"), AMBAC Indemnity Corporation ("AMBAC
Indemnity") and Financial Security Assurance, Inc. ("FSA"), although the
Fund may purchase insurance from, or each Series may purchase Municipal
Obligations insured by, other insurers.
The following information regarding these insurers has been
derived from information furnished by the insurers. The Fund has not
independently verified any of the information, but the Fund is not aware
of facts which would render such information inaccurate.
Financial Guaranty is a New York stock insurance company
regulated by the New York State Department of Insurance and authorized to
provide insurance in 50 states and the District of Columbia. Financial
Guaranty is a subsidiary of FGIC Corporation, a Delaware holding company,
which is a subsidiary of General Electric Capital Corporation. Financial
Guaranty, in addition to providing insurance for the payment of interest
on and principal of Municipal Obligations held in unit investment trust
and mutual fund portfolios, provides New Issue Insurance and insurance
for secondary market issues of Municipal Obligations and for portions
Page 14
of new and secondary market issues of Municipal Obligations. As of December
31, 1995, Financial Guaranty reported total capital and surplus of
approximately $1 billion and admitted assets of approximately $2.3
billion. The claims-paying ability of Financial Guaranty is rated "AAA"
by S&P and Fitch and "Aaa" by Moody's.
MBIA, formerly known as Municipal Bond Investors Assurance
Corporation, is the principal operating subsidiary of MBIA Inc., a New
York Stock Exchange listed company.MBIA Inc. is not obligated to pay the
debts of or claims against MBIA. MBIA is domiciled in the State of New
York and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. As of December 31, 1995, MBIA had admitted assets of
$3.8 billion, total liabilities of $2.5 billion, and total capital and
surplus of $1.3 billion, determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. The claims-paying ability of MBIA is rated "AAA" by S&P and
Fitch and "Aaa" by Moody's.
AMBAC Indemnity is a Wisconsin-domiciled stock insurance
company, regulated by the Office of the Commissioner of Insurance of the
State of Wisconsin and licensed to do business in 50 states, the District
of Columbia, the Commonwealth of Puerto Rico and the territory of Guam.
AMBAC Indemnity is a wholly-owned subsidiary of AMBAC Inc., a publicly
held company. AMBAC Indemnity had admitted assets of approximately $2.4
billion and statutory capital of approximately $1.4 billion as of
December 31, 1995. Statutory capital consists of AMBAC Indemnity's
statutory contingency reserve and policyholders' surplus. The
claims-paying ability of AMBAC Indemnity is rated "AAA" by S&P and Fitch
and "Aaa" by Moody's.
FSA, which acquired Capital Guaranty Insurance Company in
December 1995, is a wholly-owned subsidiary of Financial Security
Assurance Holdings, Ltd., a New York Stock Exchange listed company. FSA
is authorized to provide insurance in 50 states, the District of Columbia
and three U.S. territories. As of December 31 1995, FSA's statutory
capital was approximately $650 million (unaudited) and total assets were
approximately $1.5 billion (unaudited). The claims-paying ability of FSA
is rated "AAA" by S&P and "Aaa" by Moody's.
Additional information concerning the insurance feature
appears in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments
which promise a stable stream of income, the prices of such securities
are inversely affected by changes in interest rates and, therefore, are
subject to the risk of market price fluctuations. Certain securities that
may be purchased by the Series, such as those with interest rates that
fluctuate directly or indirectly based on multiples of a stated index,
are designed to be highly sensitive to changes in interest rates and can
subject the holders thereof to extreme reductions of yield and possibly
loss of principal. The values of fixed-income securities also may be
affected by changes in the credit rating or financial condition of the
issuing entities. Certain securities purchased by the Series, such as
those rated Baa by Moody's and BBB by S&P and Fitch, may be subject to
such risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining
whether to continue to hold the security. Each Series' net asset value
generally will not be stable and should fluctuate based upon changes in
the value of such Series' portfolio securities. See "Appendix _ Certain
Portfolio Securities _ Ratings" below and "Appendix B" in the Statement
of Additional Information.
INVESTING IN STATE MUNICIPAL OBLIGATIONS (STATE SERIES ONLY) -- You
should consider carefully the special risks inherent in each State
Series' investment in its respective State's Municipal Obligations.
Certain of the States have experienced financial difficulties, the
recurrence of
Page 15
which could result in defaults or declines in the market values of
various Municipal Obligations in which such Series invests. If
there should be a default or other financial crises relating to a State
or an agency or municipality thereof, the market value and marketability
of outstanding State Municipal Obligations in a State Series' portfolio
and interest income to such Series could be adversely affected. You
should obtain and review a copy of the Statement of Additional
Information which more fully sets forth these and other risk factors.
CALIFORNIA SERIES. The special risks inherent in an
investment in California Municipal Obligations result from certain
amendments to the California Constitution and other statutes that limit
the taxing and spending authority of California governmental entities, as
well as from the general financial condition of the State of California.
From mid-1990 to late 1993, the State suffered a recession with the worst
economic, fiscal and budget conditions since the 1930s. As a result, the
State experienced recurring budget deficits for four of its five fiscal
years ended June 30, 1992. The State had operating surpluses of
approximately $109 million in 1992-93 and $917 million in 1993-94.
However, at June 30, 1994, according to California's Department of
Finance, the State's Special Fund for Economic Uncertainties had an
accumulated deficit, on a budget basis, of approximately $1.8 billion. A
further consequence of the large budget imbalances has been that the
State depleted its available cash resources and has had to use a series
of external borrowings to meet its cash needs. To meet its cash flow
needs in the 1994-95 fiscal year, the State issued, in July and August
1994, $4.0 billion in revenue anticipation warrants and $3.0 billion of
revenue anticipation notes. The 1994-95 Budget Act contained a plan to
retire a projected $1.025 billion deficit in the 1995-96 fiscal year. As
a result of the deterioration in the State's budget and cash situation,
between October 1991 and July 1994, the rating on the State's general
obligation bonds was reduced by S&P from AAA to A, by Moody's from Aaa to
A1 and by Fitch from AAA to A. These and other factors may have the
effect of impairing the ability of the issuers of California Municipal
Obligations to pay interest on, or repay principal of, such California
Municipal Obligations.
CONNECTICUT SERIES. Connecticut's economy relies in part on
activities that may be adversely affected by cyclical change, and recent
declines in defense spending have had a significant impact on
unemployment levels. Although the State recorded General Fund surpluses
in the fiscal years 1985 through 1987, and 1992 through 1995, Connecticut
reported deficits from its 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. Moreover, as of
June 30, 1995, the General Fund had a cumulative deficit under GAAP of
$576.9 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.
FLORIDA SERIES. The Florida Constitution and Statutes mandate
that the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each fiscal
year. Florida's Constitution permits issuance of Florida Municipal
Obligations pledging the full faith and credit of the State, with a vote
of the electors, to finance or refinance fixed capital outlay projects
authorized by the Legislature, provided that the outstanding principal
does not exceed 50% of the total tax revenues of the State for the two
preceding years. Florida's Constitution also provides that the
Legislature shall appropriate monies sufficient to pay debt service on
State bonds pledging the full faith and credit of the State as the same
becomes due. All State tax revenues, other than trust funds dedicated by
Florida's Constitution for other purposes, would be available for such an
appropriation, if required. Revenue bonds may be issued by the State or
its agencies without a vote of Florida's electors only to finance or
refinance the cost of State fixed capital outlay projects which may be
payable solely from funds derived directly from sources other than State
tax revenues. Fiscal year 1995-96 total General
Page 16
Revenue, Working Capital and Budget Stabilization funds available are
estimated to be $15.149 billion, which would result in unencumbered
reserves of approximately $325.1 million at the end of fiscal 1995-96.
The General Revenue, Working Capital and Budget Stabilization funds ended
the 1994-95 fiscal year with unencumbered reserves of $290.3 million.
NEW JERSEY SERIES. Although New Jersey enjoyed a period of
economic growth with unemployment levels below the national average
during the mid-1980's, its economy slowed down well before the onset of
the national recession in July 1990. Reflecting the economic downturn,
New Jersey's unemployment rate rose from a low of 3.6% in the first
quarter of 1989 to a recessionary peak of 9.3% during 1992. As a result
of New Jersey's fiscal weakness, in July 1991, S&P lowered its rating of
the State's general obligation debt from AAA to AA+.
NEW YORK SERIES. The special risks inherent in investing in
New York Municipal Obligations result from the financial condition of New
York State, and certain of its public bodies and municipalities,
including New York City. Beginning in early 1975, New York State, New York
City and other State entities faced serious financial difficulties which
jeopardized the credit standing and impaired the borrowing abilities of
such entities and contributed to high interest rates on, and lower market
prices for, debt obligations issued by them. A recurrence of such
financial difficulties or a failure of certain financial recovery
programs could result in defaults or declines in the market values of
various New York Municipal Obligations in which the New York Series may
invest. If there should be a default or other financial crisis relating
to New York State, New York City, a State or City agency, or a State
municipality, the market value and marketability of outstanding New York
Municipal Obligations in the New York Series' portfolio and the interest
income to such Series could be adversely affected. Moreover, the national
recession and the significant slowdown in the New York regional economy
in the early 1990's added substantial uncertainty to estimates of the
State's tax revenues, which, in part, caused New York State to incur
cash-basis operating deficits in the General Fund and issue deficit notes
during the fiscal periods 1989 through 1992. The State's financial
operations have improved, however, during recent fiscal years. For its
fiscal periods 1993 through 1995, the State recorded balanced budgets on
a cash basis, with substantial fund balances in the General Fund in
fiscal 1992-93 and 1993-94 and smaller fund balances in fiscal 1994-95
and 1995 -96. There can be no assurance that New York will not face
substantial potential budget gaps in future years. In January 1992,
Moody's lowered from A to Baa1 the ratings on certain
appropriation-backed debt of New York State and its agencies. The State's
general obligation, State-guaranteed and New York State Local Government
Assistance Corporation bonds continued to be rated A by Moody's. In
January 1992, S&P lowered from A to A- its ratings of New York State
general obligation bonds and stated that it continues to assess the
ratings outlook as negative. The ratings of various agency debt, State
moral obligations, contractual obligations, lease purchase obligations
and State guarantees also were lowered. In February 1991, Moody's lowered
its rating on New York City's general obligation bonds from A to Baa1 and
in July 1995, S&P lowered its ratings on such bonds from A- to BBB+. The
rating changes reflected the rating agencies' concerns about the
financial condition of New York State and City, the heavy debt load of
the State and City, and economic uncertainties in the region.
INVESTING IN INSURED MUNICIPAL OBLIGATIONS -- The insurance feature
is intended to reduce financial risk, but the cost thereof and the
restrictions on investments imposed by the guidelines in the insurance
policy will result in a reduction in the yield on the Municipal
Obligations purchased by a Series.
Because coverage under certain Mutual Fund Insurance policies
may terminate upon sale of a security from a Series' portfolio, insurance
with this termination feature should not be viewed as assisting the
marketability of securities in the Series' portfolio, whether or not the
securities are in default or subject to a serious risk of default. The
Dreyfus Corporation
Page 17
intends to retain any Municipal Obligations subject to such insurance
which are in default or, in the view of The Dreyfus Corporation,
in significant risk of default and to recommend to the Fund's Board
that the Fund place a value on the insurance which will be equal to
the difference between the market value of the defaulted security and
the market value of similar securities of minimum investment grade
(i.e., rated Baa by Moody's or BBB by S&P or Fitch) which are not
in default. To the extent a Series holds defaulted securities subject to
Mutual Fund Insurance with this termination feature, it may be limited in
its ability in certain circumstances to purchase other Municipal
Obligations. While a defaulted Municipal Obligation is held in a Series'
portfolio, such Series continues to pay the insurance premium thereon but
also is entitled to collect interest payments from the insurer and retains
the right to collect the full amount of principal from the insurer when
the security comes due.
INVESTING IN MUNICIPAL OBLIGATIONS -- Each Series may invest more
than 25% of the value of its total assets in Municipal Obligations which
are related in such a way that an economic, business or political
development or change affecting one such security also would affect the
other securities; for example, securities the interest upon which is paid
from revenues of similar types of projects or, with respect to the
National Series, securities whose issuers are located in the same state.
As a result, each Series may be subject to greater risk as compared to a
fund that does not follow this practice.
Certain municipal lease/purchase obligations in which the
Series may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by
the leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus
Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions
could be to increase the cost of the Municipal Obligations available for
purchase by the Fund and thus reduce the available yield. Shareholders
should consult their tax advisers concerning the effect of these
provisions on an investment in the Fund. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations
may be introduced in the future. If any such proposal were enacted that
would reduce the availability of Municipal Obligations for investment by
the Fund so as to adversely affect Fund shareholders, the Fund would
reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to shareholders for their consideration.
If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth
herein.
ZERO COUPON SECURITIES -- Federal income tax law requires the holder
of a zero coupon security or of certain pay-in- kind bonds to accrue
income with respect to these securities prior to the receipt of cash
payments. To maintain its qualification as a regulated investment company
and avoid liability for Federal income taxes, a Series may be required to
distribute such income accrued with respect to these securities and may
have to dispose of portfolio securities under disadvantageous
circumstances in order to generate cash to satisfy these distribution
requirements.
USE OF DERIVATIVES -- Each Series may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Series may use include
options and
Page 18
futures. While Derivatives can be used effectively in furtherance of
the Series' investment objective, under certain market conditions,
they can increase the volatility of the Series' net asset
value, can decrease the liquidity of the Series' investments and make
more difficult the accurate pricing of the Series' portfolio. See
"Appendix-- Investment Techniques -- Use of Derivatives"below, and
"Investment Objective and Management Policies -- Management Policies --
Derivatives" in the Statement of Additional Information.
NON-DIVERSIFIED STATUS -- The classification of each Series as a
"non-diversified" investment company means that the proportion of such
Series' assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total
assets, to invest not more than 5% of such assets in the securities of a
single issuer. Since a relatively high percentage of each Series' assets
may be invested in the securities of a limited number of issuers, the
Series' portfolio may be more sensitive to changes in the market value of
a single issuer. However, to meet Federal tax requirements, at the close
of each quarter no Series may have more than 25% of its total assets
invested in any one issuer and, with respect to 50% of total assets, more
than 5% of its total assets invested in any one issuer. These limitations
do not apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are
made independently from those of other investment companies advised by
The Dreyfus Corporation. If, however, such other investment companies
desire to invest in, or dispose of, the same securities as the Fund,
available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by
the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves as the
Fund's investment adviser. The Dreyfus Corporation is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation ("Mellon"). As of September 30, 1996, The Dreyfus
Corporation managed or administered approximately $81 billion in assets
for more than 1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the authority of the Fund's Board in accordance with
Massachusetts law. The primary portfolio manager for each of the
California Series, the Connecticut Series and the Florida Series is
Stephen C. Kris. He has held that position with respect to the California
Series since August 1993, and with respect to the Connecticut Series and
the Florida Series since October 1996, and has been an employee of The
Dreyfus Corporation since 1988. The primary portfolio manager for the
National Series is Joseph P. Darcy. He has held that position since
October 1996, and has been an employee of The Dreyfus Corporation since
May 1994. For more than five years prior to joining The Dreyfus
Corporation, Mr. Darcy was a Vice President and Portfolio Manager for
Merrill Lynch Asset Management. The primary portfolio manager for the New
Jersey Series is Samuel J. Weinstock. He has held that position since
October 1996, and has been an employee of The Dreyfus Corporation since
March 1987. The primary portfolio manager for the New York Series is
Richard J. Moynihan. He has held that position since October 1996, and
has been an employee of The Dreyfus Corporation since 1973. The Fund's
other portfolio managers are identified in the Statement of Additional
Information. The Dreyfus Corporation also provides research services for
the Fund and for other funds advised by The Dreyfus Corporation through a
professional staff of portfolio managers and securities analysts.
Page 19
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A.,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries,
including The Dreyfus Corporation, Mellon managed more than $226 billion
in assets as of September 30, 1996, including approximately $85 billion
in proprietary mutual fund assets. As of September 30, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $905 billion in
assets including approximately $60 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. From
time to time, The Dreyfus Corporation may waive receipt of its fees
and/or voluntarily assume certain expenses of a Series, which would have
the effect of lowering the expense ratio of that Series and increasing
yield to investors. The Fund will not pay The Dreyfus Corporation at a
later time for any amounts it may waive, nor will the Fund reimburse The
Dreyfus Corporation for any amounts it may assume.
For the fiscal year ended July 31, 1996, the Fund paid The
Dreyfus Corporation a monthly management fee pursuant to undertakings in
effect at the effective annual rate set forth below as a percentage of
the relevant Series' average daily net assets:
EFFECTIVE ANNUAL RATE
NAME OF SERIES OF MANAGEMENT FEE PAID
California .28 of 1%
Connecticut .43 of 1%
Florida .41 of 1%
National .42 of 1%
New Jersey .47 of 1%
New York .49 of 1%
In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus
Corporation may consider, among other things, the receipt of research
services and/or the sale of shares of the Fund or other funds
managed, advised or administered by The Dreyfus Corporation as factors in
the selection of broker-dealers to execute portfolio transactions for the
Fund. See "Portfolio Transactions" in the Statement of Additional
Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service
Agents in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at 60 State Street, Boston,
Massachusetts 02109. The Distributor's ultimate parent is Boston
Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York,
90 Washington Street, New York, New York 10286, is the Fund's Custodian.
Page 20
HOW TO BUY SHARES
GENERAL -- Fund shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals (collectively,
"Service Agents"), except that full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor. Subsequent purchases may be sent
directly to the Transfer Agent or your Service Agent.
When purchasing Series' shares, you must specify which Class
is being purchased. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified retirement plans. The Fund reserves the right to reject any
purchase order.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Shareholder Services Plan. You should consult your
Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Account Application.
You may purchase Series' shares by check or wire, or through
the TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds," and should specify the Series in which
you are investing. Payments which are mailed should be sent to Premier
Insured Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island
02940-6587. If you are opening a new account, please enclose your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed. Neither initial nor
subsequent investments should be made by third party check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Series DDA # as shown below, for purchase of
Fund shares in your name:
DDA# 8900088311/Premier Insured Municipal Bond Fund/National Series
DDA# 8900118172/Premier Insured Municipal Bond Fund/California Series
DDA# 8900088346/Premier Insured Municipal Bond Fund/Connecticut Series
DDA# 8900088362/Premier Insured Municipal Bond Fund/Florida Series
DDA# 8900088389/Premier Insured Municipal Bond Fund/New Jersey Series
DDA# 8900088400/Premier Insured Municipal Bond Fund/New York Series
The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable, and must indicate
the Class of shares being purchased. If your initial purchase of Fund
shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund
account number on the Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. A
Page 21
charge will be imposed if any check used for investment in your account
does not clear. The Fund makes available to certain large institutions
the ability to issue purchase instructions through compatible computer
facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark and the Government Direct Deposit
Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be
aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House member. You
must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and your Fund account number PRECEDED BY
THE DIGITS "1111."
Each Series' shares are sold on a continuous basis. Net asset
value per share is determined as of the close of trading on the floor of
the New York Stock Exchange (currently 4:00 p.m. New York time), on each
day the New York Stock Exchange is open for business. For purposes of
determining net asset value, options and futures contracts will be valued
15 minutes after the close of trading on the floor of the New York Stock
Exchange. Net asset value per share of each Class is computed by dividing
the value of the net assets of each Series represented by such Class
(i.e., the value of its assets less liabilities) by the total number of
Series' shares of such Class outstanding. Each Series' investments are
valued each business day by an independent pricing service approved by
the Fund's Board and are valued at fair value as determined by the
pricing service. The pricing service's procedures are reviewed under the
general supervision of the Fund's Board. For further information
regarding the methods employed in valuing the Series' investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
If an order is received in proper form by the Transfer Agent
or other agent by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time) on any business day, Fund
shares will be purchased at the public offering price determined as of
the close of trading on the floor of the New York Stock Exchange on that
day. Otherwise, Fund shares will be purchased at the public offering
price determined as of the close of trading on the floor of the New York
Stock Exchange on the next business day, except where shares are
purchased through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next determined public
offering price. It is the dealer's responsibility to transmit orders so
that they will be received by the Distributor or its designee before the
close of its business day. For certain institutions that have entered
into agreements with the Distributor, payment for the purchase of Fund
shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is
not received within three business days after the order is placed, the
order may be cancelled and the institution could be held liable for
resulting fees and/or losses.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Account Application for fur-
Page 22
ther information concerning this requirement. Failure to furnish a
certified TIN to the Fund could subject you to a $50 penalty imposed by
the Internal Revenue Service (the "IRS").
CLASS A SHARES--The public offering price for Class A shares
of each Series is the net asset value per share of that Class plus a
sales load as shown below:
<TABLE>
<CAPTION>
TOTAL SALES LOAD
-----------------------------------------
AS A % OF AS A % OF DEALERS' REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
--------------------------- ---------------- ----------------- -------------------------
<S> <C> <C> <C>
Less than $50,000... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more.. -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year of
purchase. The terms contained in the section of the Prospectus entitled
"How to Redeem Shares -- Contingent Deferred Sales Charge" (other than
the amount of the CDSC and its time periods) are applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions that have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at net asset value. In addition, Class A
shares are offered at net asset value to full-time or part-time employees
of The Dreyfus Corporation or any of its affiliates or subsidiaries,
directors of The Dreyfus Corporation, Board members of a fund advised by
The Dreyfus Corporation, including members of the Fund's Board, or the
spouse or minor child of any of the foregoing.
Class A shares also may be purchased at net asset value
through certain broker-dealers and other financial institutions which
have entered into an agreement with the Distributor, which includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer or other financial institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by
The Dreyfus Corporation or its affiliates. The purchase of Class A shares
of the Fund must be made within 60 days of such redemption and the
shareholder must have either (i) paid an initial sales charge or a
contingent deferred sales charge or (ii)been obligated to pay at any time
during the holding period, but did not actually pay on redemption, a
deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumen-
Page 23
tality thereof, (iii) a charitable organization (as defined in
Section 501(c)(3) of the Code investing $50,000 or more in Fund shares,
and (iv) a charitable remainder trust (as defined in Section 501(c)(3) of
the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its own
expense, may provide additional promotional incentives to dealers that
sell shares of funds advised by The Dreyfus Corporation which are sold
with a sales load, such as Class A shares. In some instances, those
incentives may be offered only to certain dealers who have sold or may
sell significant amounts of shares.
CLASS B SHARES -- The public offering price for Class B
shares of each Series is the net asset value per share of that Class. No
initial sales charge is imposed at the time of purchase. A CDSC is
imposed, however, on certain redemptions of Class B shares as described
under "How to Redeem Shares." The Distributor compensates certain Service
Agents for selling Class B and Class C shares at the time of purchase
from the Distributor's own assets. The proceeds of the CDSC and the
distribution fee, in part, are used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C
shares of each Series is the net asset value per share of that Class. No
initial sales charge is imposed at the time of purchase. A CDSC is
imposed, however, on redemptions of Class C shares made within the first
year of purchase. See "Class B Shares" above and "How to Redeem Shares."
RIGHT OF ACCUMULATION--CLASS A SHARES -- Reduced sales loads apply to
any purchase of Class A shares, shares of other funds in the Premier
Family of Funds, shares of certain other funds advised by The Dreyfus
Corporation which are sold with a sales load and shares acquired by a
previous exchange of such shares (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined in the Statement
of Additional Information, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased
and still hold Class A shares of the Fund, or of any other Eligible Fund
or combination thereof, with an aggregate current market value of $40,000
and subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Service Agent must notify the Distributor if orders are made
by wire, or the Transfer Agent if orders are made by mail. The reduced
sales load is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE -- You may purchase shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those in this Prospectus. You should consult your Service Agent in
this regard.
Page 24
FUND EXCHANGES
You may purchase, in exchange for shares of a Class of a
Series, shares of the same Class of one of the other Series or of certain
other funds managed or administered by The Dreyfus Corporation, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to
you. You also may exchange your Fund shares that are subject to a CDSC
for shares of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares
so purchased will be held in a special account created solely for this
purpose ("Exchange Account"). Exchanges of shares from an Exchange
Account only can be made into certain other funds managed or administered
by The Dreyfus Corporation. No CDSC is charged when an investor exchanges
into an Exchange Account; however, the applicable CDSC will be imposed
when shares are redeemed from an Exchange Account or other applicable
Fund account. Upon redemption, the applicable CDSC will be calculated
without regard to the time such shares were held in an Exchange Account.
See "How to Redeem Shares." Redemption proceeds for Exchange Account
shares are paid by Federal wire or check only. Exchange Account shares
also are eligible for Dividend Sweep and the Automatic Withdrawal Plan.
To use this service, you should consult your Service Agent or call
1-800-645-6561 to determine if it is available and whether any
conditions are imposed on its use.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of personal retirement plans, the shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, by a separate signed
Shareholder Services Form, available by calling 1-800-645-6561, or by
oral request from any of the authorized signatories on the account, by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions (including over The
Dreyfus TouchRegistration Mark Automated Telephone System) by calling
1-800-645-6561. If you are calling from overseas, call 516-794-5452. See
"How to Redeem Shares_Procedures." Upon an exchange into a new account,
the following shareholder services and privileges, as applicable and
where available, will be automatically carried over to the fund into
which the exchange is made: Telephone Exchange Privilege, Check
Redemption Privilege, TELETRANSFER Privilege and the dividend/capital
gain distribution option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged, as the case may be. If you
are exchanging Class A shares into a fund that charges a sales load, you
may qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from
shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your
Page 25
Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee
in accordance with rules promulgated by the Securities and Exchange
Commission. The Fund reserves the right to reject any exchange request in
whole or in part. The availability of Fund Exchanges may be modified or
terminated at any time upon notice to shareholders. See "Dividends,
Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of a Series, in shares of the same Class of one of the other Series or of
other funds in the Premier Family of Funds or certain other funds in the
Dreyfus Family of Funds of which you are a shareholder. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges of Class A
shares into funds sold with a sales load. No CDSC will be imposed on
Class B or Class C shares at the time of an exchange; however, Class B or
Class C shares acquired through an exchange will be subject on redemption
to the higher CDSC applicable to the exchanged or acquired shares. The
CDSC applicable on redemption of the acquired Class B or Class C shares
will be calculated from the date of the initial purchase of the Class B
or Class C shares exchanged, as the case may be. See "Shareholder
Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or canceled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege
at any time by mailing written notification to Premier Insured Municipal
Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The Fund
may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. For more information concerning this Privilege
and the funds in the Premier Family of Funds or Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561. See "Dividends,
Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on
either the first or fifteenth day, or twice a month, on both days. Only
an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization
form with the Transfer Agent. You may obtain the necessary authorization
form by calling 1-800-645-6561. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing written
notification to Premier Insured Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposit-
Page 26
ed into your Fund account. You may deposit as much of such payments as you
elect. To enroll in Government Direct Deposit, you must file with the
Transfer Agent a completed Direct Deposit Sign-Up Form for each type of
payment that you desire to include in the Privilege. The appropriate form
may be obtained from your Service Agent or by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Further, the Fund
may terminate your participation upon 30 days' notice to you.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same Class of another fund in the Premier Family of Funds
or the Dreyfus Family of Funds of which you are a shareholder. Shares of
the other fund will be purchased at the then-current net asset value;
however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund that charges a CDSC, the shares purchased will be
subject on redemption to the CDSC, if any, applicable to the purchased
shares. See "Shareholder Services" in the Statement of Additional
Information. Dividend ACH permits you to transfer electronically
dividends or dividends and capital gain distributions, if any, from the
Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an Automated Clearing House
member may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier Insured Municipal Bond Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. To select a new fund after cancellation, you must
submit a new Dividend Options Form. Enrollment in or cancellation of
these privileges is effective three business days following receipt.
These privileges are available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply
for Dividend Sweep. The Fund may modify or terminate these privileges at
any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have
been issued may not be redeemed through the Automatic Withdrawal Plan.
No CDSC with respect to Class B shares will be imposed on
withdrawals made under the Automatic Withdrawal Plan, provided that the
amounts withdrawn under the plan do not exceed on an annual basis 12% of
the account value at the time the shareholder elects to participate in
the Automatic Withdrawal Plan. Withdrawals with respect to Class B shares
under the Automatic Withdrawal Plan that exceed on an annual basis 12% of
the value of the shareholder's account will be subject to a CDSC on the
amounts exceeding 12% of the initial account value. Class C shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to
any applicable CDSC. Purchases of additional Class A shares where the
sales load is imposed concurrently with withdrawals of Class A shares
generally are undesirable.
LETTER OF INTENT--CLASS A SHARES
By signing a Letter of Intent form, which can be obtained by
calling 1-800-645-6561, you become eligible for the reduced sales load
applicable to the total number of Eligible Fund
Page 27
shares purchased in a 13-month period pursuant to the terms and conditions
set forth in the Letter of Intent. A minimum initial purchase of $5,000 is
required. To compute the applicable sales load, the offering price of
shares you hold (on the date of submission of the Letter of Intent) in any
Eligible Fund that may be used toward "Right of Accumulation" benefits
described above may be used as a credit toward completion of the Letter of
Intent. However, the reduced sales load will be applied only to new
purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent. Purchases pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the
redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Series' then-current net
asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT
HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL
REJECT REQUESTS TO REDEEM SHARES PURSUANT TO THE TELETRANSFER PRIVILEGE,
FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT
OF THE PURCHASE CHECK, THE TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC
ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE
PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAY-
Page 28
MENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION
IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU
WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received
your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption of Class B shares of a Series which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares
of such Series held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares
redeemed does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of your Class B
shares above the dollar amount of all your payments for the purchase of
Class B shares of such Series held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has
declined below their original cost as a result of the Series'
performance, a CDSC may be applied to the then-current net asset value
rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC for
Class B shares, except as set forth below:
<TABLE>
<CAPTION>
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
------------------- ------------------------
<S> <C>
First............................................. 4.00
Second............................................ 4.00
Third............................................. 3.00
Fourth............................................ 3.00
Fifth............................................. 2.00
Sixth............................................. 1.00
The following table sets forth the rates of the CDSC for
Class B shares purchased by shareholders who beneficially owned Class B
shares on November 30, 1996:
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
------------------- ------------------------
First............................................. 3.00
Second............................................ 3.00
Third............................................. 2.00
Fourth............................................ 2.00
Fifth............................................. 1.00
Sixth............................................. 0.00
</TABLE>
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the increase
in net asset value of
Page 29
Class B shares above the total amount of payments for the purchase of
Class B shares made during the preceding six years (five years for
shareholders beneficially owning Class B shares on November 30, 1996);
then of amounts representing the cost of shares purchased six years
(five years for shareholders beneficially owning Class B shares on
November 30, 1996) prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time
within the applicable six-year period (five-year period for shareholders
beneficially owning Class B shares on November 30, 1996).
For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired
five additional shares through dividend reinvestment. During the second
year after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate in the second year after purchase) for a total CDSC
of $9.60.
CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC -- The CDSC may be waived in connection with (a)
redemptions made within one year after the death or disability, as
defined in Section 72(m)(7) of the Code, of the shareholder, (b)
redemptions by employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs, or
(ii) such plan's or program's aggregate investment in the Dreyfus Family
of Funds or other products made available by the Distributor exceeds
$1,000,000, (c) redemptions as a result of a combination of any
investment company with one or more Series by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 701\2 in the case of
an IRA or Keogh plan or custodial account pursuant to Section 403(b) of
the Code, and (e) redemptions made pursuant to the Automatic Withdrawal
Plan, as described in the Fund's Prospectus. If the Fund's Board
determines to discontinue the waiver of the CDSC, the disclosure in the
Fund's Prospectus will be revised appropriately. Any Fund shares subject
to a CDSC which were purchased prior to the termination of such waiver
will have the CDSC waived as provided in the Fund's Prospectus at the
time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent, through the Check Redemption Privilege with respect to Class A
shares only, or the TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. If
you have given your Service Agent authority to instruct the Transfer
Agent to redeem shares and to credit the proceeds of such redemptions to
a designated account at your Service Agent, you may redeem shares only in
this manner and in accordance with the regular redemption procedure
described below. If you wish to use the other redemption methods
Page 30
described below, you must arrange with your Service Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities. The Fund
reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
any redemption Privilege at any time or charge a service fee upon notice
to shareholders. No such fee currently is contemplated. Shares for which
certificates have been issued are not eligible for the Check Redemption
or TELETRANSFER Privilege.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER redemption privilege or telephone exchange privilege
(which is granted automatically unless you refuse it), you authorize the
Transfer Agent to act on telephone instructions (including over The
Dreyfus TouchRegistration Mark Automated Telephone System) from any
person representing himself or herself to be you, or a representative of
your Service Agent, and reasonably believed by the Transfer Agent to be
genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a redemption or exchange of Series shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Series' net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Premier Insured Municipal Bond
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption
requests must be signed by each shareholder, including each owner of a
joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP") and the Stock Exchanges Medallion Program. If
you have any questions with respect to signature-guarantees, please
contact your Service Agent or call the telephone number listed on the
cover of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- CLASS A SHARES -- You may write
Redemption Checks drawn on your Fund account. Redemption Checks may be
made payable to the order of any person in the amount of $500 or more.
Potential fluctuations in the net asset value of Class A shares should be
considered in determining the amount of the check. Redemption Checks
should not be used to close your account. Redemption Checks are free, but
the Transfer Agent will impose a fee for stopping payment of a Redemption
Check upon your request or if the Transfer Agent cannot honor the
Redemption Check due to insufficient funds or other valid reason. You
should date your Redemption Checks with the current date when you write
them. Please do not postdate
Page 31
your Redemption Checks. If you do, the Transfer Agent will honor, upon
presentment, even if presented before the date of the check, all postdated
Redemption Checks which are dated within six months of presentment for
payment, if they are otherwise in good order. This Privilege will be
terminated immediately, without notice, with respect to any account which
is, or becomes, subject to backup withholding on redemptions
(see "Dividends, Distributions and Taxes"). Any Redemption Check written
on an account which has become subject to backup withholding on
redemptions will not be honored by the Transfer Agent.
TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your
Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House
member may be so designated. Redemption proceeds will be on deposit in
your account at an Automated Clearing House member bank ordinarily two
days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the
TELETRANSFER Privilege for transfer to their bank account not more than
$250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of
trading on the floor of the New York Stock Exchange, the redemption
request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor has sales
agreements for the repurchase of shares held by shareholders. Repurchase
orders received by dealers by the close of trading on the floor of the
New York Stock Exchange on any business day and transmitted to the
Distributor or its designee by the close of its business day (normally
5:15 p.m. New York time) are effected at the price determined as of the
close of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the shares will be redeemed at the next determined net asset
value. It is the responsibility of the dealer to transmit orders on a
timely basis. The dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE
Upon written request, you may reinvest up to the number of
Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing net asset value without a sales load,
or reinstate your account for the purpose of exercising the Exchange
Privilege. Upon reinvestment, with respect to Class B shares or Class A
shares if such shares were subject to a CDSC, the shareholder's account
will be credited with an amount equal to the CDSC previously paid upon
redemption of the Class A or Class B shares reinvested. The Reinvestment
Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
Page 32
DISTRIBUTION PLAN -- Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B and .75
of 1% of the value of the average daily net assets of Class C.
SHAREHOLDER SERVICES PLAN -- Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of each such
Class. 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. The Distributor may
make payments to Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS -- Each Series ordinarily declares
dividends from its net investment income on each day the New York Stock
Exchange is open for business. Fund shares begin earning income dividends
on the day immediately available funds ("Federal Funds" (monies of member
banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank)) are received by the Transfer Agent in written or
telegraphic form. If a purchase order is not accompanied by remittance in
Federal Funds, there may be a delay between the time the purchase order
becomes effective and the time the shares purchased start earning
dividends. If your payment is not made in Federal Funds, it must be
converted into Federal Funds. This usually occurs within one business day
of receipt of a bank wire and within two business days of receipt of a
check drawn on a member bank of the Federal Reserve System. Checks drawn
on banks which are not members of the Federal Reserve System may take
considerably longer to convert into Federal Funds.
Dividends usually are paid on the last calendar day of each
month and are automatically reinvested in additional shares of the Series
and the Class from which they were paid at net asset value without a
sales load or, at your option, paid in cash. Each Series' earnings for
Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. If you are an
omnibus account-holder and indicate in a partial redemption request that
a portion of any accrued dividends to which such account is entitled
belongs to an underlying accountholder who has redeemed all shares in his
or her account, such portion of the accrued dividends will be paid to you
along with the proceeds of the redemption. Distributions by each Series
from net realized securities gains, if any, generally are declared and
paid once a year, but the Series may make distributions on a more
frequent basis to comply with the distribution requirements of the Code,
in all events in a manner consistent with the provisions of 1940 Act. No
Series will make distributions from its net realized securities gains
unless capital loss carryovers, if any, have been utilized or have
expired. You may choose whether to receive dividends and distributions in
cash or to reinvest in additional shares of the Series and the Class from
which they were paid at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors. Dividends paid
by each Class will be calculated at the same time and in the same manner
and will be of the same amount, except that the expenses attributable
solely to a particular Class will be borne exclusively by such Class.
Class B and Class C shares will receive lower per share dividends than
Class A shares because of the higher expenses borne by the relevant
Class. See "Fee Table."
FEDERAL TAX TREATMENT -- Under the Code, each Series is treated as a
separate entity for purposes of qualification and taxation as a regulated
investment company. Except for dividends
Page 33
from Taxable Investments, the Fund anticipates that substantially all
dividends paid by a Series from net investment income will not be subject
to Federal income tax. Dividends derived from Taxable Investments,
together with distributions from any net realized short-term securities
gains and all or a portion of any gains realized from the sale or other
disposition of certain market discount bonds, paid by the Fund are subject
to Federal income tax as ordinary income whether received in cash or
reinvested in additional shares. Distributions from net realized long-term
securities gains of a Series generally are subject to Federal income tax
as long-term capital gains if you are a citizen or resident of the United
States. Dividends and distributions attributable to income or gain derived
from securities transactions and from the use of certain of the investment
techniques described under "Appendix_Investment Techniques," will be
subject to Federal income tax. No dividend paid by any Series will qualify
for the dividends received deduction allowable to certain U.S.
corporations. The Code provides that the net capital gain of an individual
generally will not be subject to Federal income tax at a rate in excess of
28%. Under the Code, interest on indebtedness incurred or continued to
purchase or carry shares of any Series which is deemed to relate to
exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid
by each Series may be excluded by shareholders of the Series from their
gross income for Federal income tax purposes, each Series may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for purposes
of the corporate alternative minimum tax as well as a component in
computing the corporate environmental tax or (iii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If a Series purchases such securities, the portion of the
Series' dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause an investor to be subject to such
taxes.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares of a Series if you exchange your
Class A shares for shares of another Series or fund advised or
administered by The Dreyfus Corporation within 91 days of purchase and
such other Series or fund reduces or eliminates its otherwise applicable
sales load for the purpose of the exchange. In this case, the amount of
your sales load charge for Class A shares, up to the amount of the
reduction of the sales load charge on the exchange, is not included in
the basis of your Class A shares for purposes of computing gain or loss
on the exchange, and instead is added to the basis of the other Series or
fund shares received on the exchange.
The exchange of shares of one fund or Series for shares of
another is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder and, therefore, an exchanging
shareholder may realize a taxable gain or loss.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt
from Federal tax and the dollar amount, if any, subject to Federal tax.
These dollar amounts will vary depending on the size and length of time
of your investment. If a Series pays dividends derived from taxable
income, it intends to designate as taxable the same percentage of the
day's dividend as the actual taxable income earned on that day bears to
total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains and the
proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished
Page 34
in connection with opening an account is correct or that such shareholder
has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend
or interest income on a Federal income tax return. Furthermore, the IRS
may notify the Fund to institute backup withholding if the IRS determines
a shareholder's TIN is incorrect or if a shareholder has failed to
properly report taxable dividend and interest income on a Federal income
tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that each Series has
qualified for the fiscal year ended July 31, 1996 as a "regulated
investment company" under the Code. Each Series intends to continue to so
qualify so long as such qualification is in the best interests of its
shareholders. Such qualification relieves the Series of any liability for
Federal income taxes to the extent its earnings are distributed in
accordance with applicable provisions of the Code. Each Series of the
Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable investment income and capital
gains, if any.
STATE AND LOCAL TAX TREATMENT -- Each State Series will invest
primarily in Municipal Obligations of the State after which the Series is
named. Except to the extent specifically noted below, dividends by a
State Series are not subject to an income tax by such State to the extent
that the dividends are attributable to interest on such Municipal
Obligations. However, some or all of the other dividends or distributions
by a Series may be taxable by those States that have income taxes, even
if the dividends or distributions are attributable to income of the
Series derived from obligations of the United States or its agencies or
instrumentalities.
The Fund anticipates that a substantial portion of the
dividends paid by each State Series will not be subject to income tax of
the State after which the Series is named. However, to the extent that
you are obligated to pay State or local taxes outside of such State,
dividends earned by an investment in such Series may represent taxable
income. Also, all or a portion of the dividends paid by a Series that are
not subject to income tax of the State after which the Series is named
may be a preference item for such State's alternative minimum tax (where
imposed). Finally, you should be aware that State and local taxes, other
than those described above, may apply to the dividends, distributions or
shares of a Series.
The paragraphs below discuss the State tax treatment of
dividends and distributions by each State Series to residents of the
State after which such Series is named. Investors should consult their
own tax advisers regarding specific questions as to Federal, State and
local taxes.
CALIFORNIA SERIES -- Except for dividends from Taxable Investments,
the Fund anticipates that substantially all dividends paid by the
California Series will not be subject to Federal or State of California
personal income taxes.
If, at the close of each quarter of its taxable year, at
least 50% of the value of the California Series' total assets consists of
Federal tax exempt obligations, then the California Series may designate
and pay Federal exempt-interest dividends from interest earned on all
such tax exempt obligations. Such exempt-interest dividends may be
excluded by shareholders of the California Series from their gross income
for Federal income tax purposes.
If, at the close of each quarter of its taxable year, at
least 50% of the value of the California Series' total assets consists of
obligations which, when held by an individual, the interest therefrom is
exempt from California personal income tax, and if the California Series
qualifies as a management company under the California Revenue and
Taxation Code, and sends written notice to its shareholders not later
than 60 days following the end of its taxable year designating the
dividend as exempt from California personal income tax, then the
California Series will
Page 35
be qualified to pay dividends to its shareholders that are exempt from
California personal income tax (but not from California franchise tax)
("California exempt-interest dividends"). However, the total amount of
California exempt-interest dividends paid by the California Series to a
noncorporate shareholder with respect to any taxable year cannot exceed
such shareholder's pro-rata share of interest received by the California
Series during such year that is exempt from California taxation less any
expenses and expenditures deemed to have been paid from such interest.
Unlike under Federal tax law, the California Series'
shareholders will not be subject to California personal income tax, or
receive a credit for California taxes paid by the California Series, on
undistributed capital gains. In addition, California tax law does not
consider any portion of the exempt-interest dividends paid an item of tax
preference for the purposes of computing the California alternative
minimum tax.
CONNECTICUT SERIES -- Dividends paid by the Connecticut Series that
qualify as exempt-interest dividends for Federal income tax purposes are
not subject to the Connecticut income tax imposed on individuals, trusts
and estates, to the extent that such dividends are derived from income
received by the Series as interest from Connecticut Municipal Obligations
or obligations the interest with respect to which Connecticut is
prohibited by Federal law from taxing. Dividends that qualify as capital
gain dividends for Federal income tax purposes are not subject to the
Connecticut income tax to the extent they are derived from Connecticut
Municipal Obligations. Dividends derived from other sources are subject
to the Connecticut income tax. In the case of a shareholder subject to the
Connecticut income tax and required to pay the Federal alternative minimum
tax, the portion of exempt-interest dividends paid by the Series that is
derived from income received by the Series as interest from Connecticut
Municipal Obligations or obligations the interest with respect to which
Connecticut is prohibited by Federal law from taxing is not subject to
the net Connecticut minimum tax even though treated as a preference item
for purposes of the Federal alternative minimum tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes that are distributed by the Series to entities taxed
as corporations under the Connecticut corporation business tax are not
exempt from that tax.
The shares of the Series are not subject to property taxation
by the State of Connecticut or its political subdivisions.
FLORIDA SERIES -- Dividends or distributions paid by the Florida
Series to a Florida individual resident are not taxable by Florida.
However, Florida imposes an intangible personal property tax on shares of
the Series owned by a Florida resident on January 1 of each year unless
such shares qualify for an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes as well as other Federally taxable dividends and
distributions that are distributed by the Series to entities taxed as
corporations under Florida law may not be exempt from the Florida
corporate income tax.
The Fund has received a Technical Assistance Advisement from
the State of Florida, Department of Revenue to the effect that Florida
Series' shares owned by a Florida resident will be exempt from the
intangible personal property tax so long as the Series' portfolio
includes only assets, such as notes, bonds, and other obligations issued
by the State of Florida or its municipalities, counties, and other taxing
districts, the United States Government, and its agencies, Puerto Rico,
Guam, and the U.S. Virgin Islands, and other assets which are exempt from
that tax.
NEW JERSEY SERIES -- The New Jersey Series intends to be a "qualified
investment fund" within the meaning of the New Jersey gross income tax.
The primary criteria for constituting a "qualified investment fund" are
that (i) such Series is an investment company registered with the
Securities and Exchange Commission, which for the calendar year in which
the dividends and distributions
Page 36
(if any) are paid, has no investments other than interest-bearing
obligations, obligations issued at a discount, and cash and cash items,
including receivables, and financial options, futures and forward
contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond
indices related thereto and (ii) at the close of each quarter of the
taxable year, the Series has not less than 80% of the aggregate principal
amount of all of its investments, excluding financial options, futures
and forward contracts, or other similar financial instruments related to
interest-bearing obligations, obligations issued at a discount or bond
indices related thereto, cash and cash items, which cash items shall
include receivables, in New Jersey Municipal Obligations, including
obligations of Puerto Rico, the Virgin Islands and other territories and
possessions of the United States, and certain other specified securities
exempt from Federal and New Jersey income taxes. Additionally, a qualified
investment fund must comply with certain continuing reporting requirements.
If the New Jersey Series qualifies as a qualified investment
fund and the New Jersey Series complies with its reporting obligations,
(a) dividends and distributions paid by the Series to a New Jersey
resident individual shareholder will not be subject to New Jersey gross
income tax to the extent that the dividends and distributions are
respectively attributable to income earned by the Series as interest on
or gain from New Jersey Municipal Obligations or certain other specified
securities, and (b) gain from the sale of shares in the Series by a New
Jersey resident individual shareholder will not be subject to the New
Jersey gross income tax.
Shares of the New Jersey Series are not subject to property
taxation by New Jersey or its political subdivisions.
NEW YORK SERIES -- Except for dividends from Taxable Investments, the
Fund anticipates that substantially all dividends paid by the New York
Series will not be subject to Federal, New York State or New York City
personal income taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares may be calculated on several bases, including current yield, tax
equivalent yield, average annual total return and/or total return. These
total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made
by the Fund during the measuring period were reinvested in shares of the
same Class. These figures also take into account any applicable service
and distribution fees. As a result, at any given time, the performance of
Class B and Class C should be expected to be lower than that of Class A.
Performance for each Class will be calculated separately.
Current yield refers to the Series' annualized net investment
income per share over a 30-day period, expressed as a percentage of the
net asset value (or maximum offering price in the case of Class A) per
share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate over a
six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire one-year
period. Calculations of the Series' current yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in a Series was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The
return is
Page 37
expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end
of the period. Advertisements of the Series' performance will include the
Series' average annual total return for one, five and ten year periods,
or for shorter periods depending upon the length of time during which the
Series has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (maximum offering price in the case of Class A) per share
at the beginning of the period. Advertisements may include the percentage
rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return. Total return also may be calculated by
using the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC
at the end of the period for Class B or Class C shares. Calculations
based on the net asset value per share do not reflect the deduction of
the applicable sales charge on Class A shares which, if reflected, would
reduce the performance quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. Investors should
remember that performance is a function of portfolio management in
selecting the type and quality of portfolio securities and is affected by
operating expenses. Performance information, such as that described
above, may not provide a basis for comparison with other investments or
other investment companies using a different method of calculating
performance.
Comparative performance information may be used from time to
time in advertising the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman
Brothers Municipal Bond Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated March
12, 1992. Before December 8, 1993, the Fund's name was Premier California
Insured Municipal Bond Fund. The Fund is authorized to issue an unlimited
number of shares of beneficial interest, par value $.001 per share. Each
Series' shares are classified into three classes_Class A, Class B and
Class C. Each share has one vote and shareholders will vote in the
aggregate and not by class except as otherwise required by law. Only
holders of Class B or Class C shares, as the case may be, will be
entitled to vote on matters submitted to shareholders pertaining to the
Distribution Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund
itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by
the Fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Fund intends to
conduct its operations in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the
Page 38
Fund. As discussed under "Management of the Fund" in the Statement of
Additional Information, the Fund ordinarily will not hold shareholder
meetings; however, shareholders under certain circumstances may have the
right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios, each of which is treated as a separate entity
for certain matters under the 1940 Act and for other purposes. A
shareholder of one Series is not deemed to be a shareholder of any
other Series. For certain matters Fund shareholders vote together
as a group; as to others they vote separately by Series.
To date, the Trustees have authorized the creation of six
Series of shares. All consideration received by the Fund for shares of
one of the Series and all assets in which such consideration is invested,
will belong to that Series (subject only to the rights of creditors of
the Fund) and will be subject to the liabilities related thereto. The
income attributable to, and the expenses of, one Series are treated
separately from those of the other Series. The Fund has the ability to
create, from time to time, new series without shareholder approval.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by
writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
Page 39
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- Each Series is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets. Each
Series currently intends to borrow money only for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the value of the
Series' total assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the amount borrowed)
at the time the borrowing is made. While borrowings exceed 5% of the
value of a Series' total assets, such Series will not make any additional
investments.
SHORT-SELLING -- Each Series may make short sales of securities. In
these transactions, a Series sells a security it does not own in
anticipation of a decline in the market value of the security. To
complete the transaction, the Series must borrow the security to make
delivery to the buyer. The Series is obligated to replace the security
borrowed by purchasing it subsequently at the market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Series, which would result in a loss
or gain, respectively.
Securities will not be sold short if, after effect is given
to any such short sale, the total market value of all securities sold
short would exceed 25% of the value of a Series' net assets. A Series may
not sell short the securities of any single issuer listed on a national
securities exchange to the extent of more than 5% of the value of the
Series' net assets. A Series may not make a short sale which results in
the Series having sold short in the aggregate more than 5% of the
outstanding securities of any class of an issuer.
Each Series also may make short sales "against the box," in
which the Series enters into a short sale of a security it owns in order
to hedge an unrealized gain on the security. At no time will a Series
have more than 15% of the value of its net assets in deposits on short
sales against the box.
USE OF DERIVATIVES -- Each Series may invest in the types of
Derivatives enumerated under "Description of the Fund -- Investment
Considerations and Risks -- Use of Derivatives." These instruments and
certain related risks are described more specifically under "Investment
Objective and Management Policies -- Management Policies -- Derivatives"
in the Statement of Additional Information.
Derivatives may entail investment exposures that are greater
than their cost would suggest, meaning that a small investment in
Derivatives could have a large potential impact on the Series'
performance.
If a Series invests in Derivatives at inappropriate times or
judges the market conditions incorrectly, such investments may lower the
Series' return or result in a loss. A Series also could experience losses
if its Derivatives were poorly correlated with its other investments, or
if the Series was unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant, rapid
and unpredictable changes in the prices for Derivatives.
Although neither the Fund nor any Series is a commodity pool,
Derivatives subject the Fund to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Series can invest in
certain Derivatives. Each Series may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
no Series may invest in such contracts and options for other purposes if
the sum of the amount of initial margin deposits and premiums paid for
unexpired options with respect to such contracts, other than bona fide
hedging purposes, exceed 5% of the liquidation value of the Series'
assets, after taking into account unrealized profits and
Page 40
unrealized losses on such contracts and options; provided, however, that
in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5% limitation.
Each Series may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. Each Series may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. When required by the Securities and Exchange Commission, a Series
will set aside permissible liquid assets in a segregated account to cover
its obligations relating to its transactions in Derivatives. To maintain
this required cover, the Series may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate
a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- Each Series may lend securities from
its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Series
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned securities which affords the
Series an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not
exceed 331\3% of the value of such Series' total assets, and the Series
will receive collateral consisting of cash, U.S. Government securities or
irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. Such loans are terminable at any time upon specified notice.
The Series might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its agreement with
the Series.
FORWARD COMMITMENTS -- Each Series may purchase Municipal Obligations
and other securities on a forward commitment or when-issued basis, which
means that delivery and payment take place a number of days after the
date of the commitment to purchase. The payment obligation and the
interest rate receivable on a forward commitment or when-issued security
are fixed when the Series enters into the commitment, but the Series does
not make payment until it receives delivery from the counterparty. The
Series will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Series may sell these
securities before the settlement date if it is deemed advisable. A
segregated account of the Series consisting of permissible liquid assets
at least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- Each Series may purchase floating
and variable rate demand notes and bonds, which are tax exempt
obligations ordinarily having stated maturities in excess of one year,
but which permit the holder to demand payment of principal at any time or
at specified intervals. Variable rate demand notes include master demand
notes which are obligations that permit the Series to invest fluctuating
amounts at varying rates of interest, pursuant to direct arrangements
between the Series, as lender, and the borrower. These obligations permit
daily changes in the amount borrowed. Because these obligations are
direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased will meet the quality criteria
established for the purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS --Each Series may purchase from
financial institutions participation interests in Municipal Obligations
(such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the Series an undivided
interest
Page 41
in the Municipal Obligation in the proportion that the Series'
participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated, or
has been given a rating below that which otherwise is permissible for
purchase by the Series, it will be backed by an irrevocable letter of
credit or guarantee of a bank that the Fund's Board has determined meets
prescribed quality standards for banks, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For
certain participation interests, the Series will have the right to demand
payment, on not more than seven days' notice, for all or any part of the
Series' participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, each Series intends to exercise its
right to demand payment only upon a default under the terms of the
Municipal Obligation, as needed to provide liquidity to meet redemptions,
or to maintain or improve the quality of its investment portfolio.
TENDER OPTIONS BONDS -- Each Series may purchase tender option bonds.
A tender option bond is a Municipal Obligation (generally held pursuant
to a custodial arrangement) having a relatively long maturity and bearing
interest at a fixed rate substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the agreement of a third
party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees
equal to the difference between the Municipal Obligation's fixed coupon
rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities,
coupled with the tender option, to trade at par on the date of such
determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the Fund, will consider on an ongoing basis the creditworthiness of
the issuer of the underlying Municipal Obligations, of any custodian and
of the third party provider of the tender option. In certain instances
and for certain tender option bonds, the option may be terminable in the
event of a default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons.
CUSTODIAL RECEIPTS -- Each Series may purchase custodial receipts
representing the right to receive certain future principal and interest
payments on Municipal Obligations which underlie the custodial receipts.
A number of different arrangements are possible. In a typical custodial
receipt arrangement, an issuer or a third party owner of Municipal
Obligations deposits such obligations with a custodian in exchange for
two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based
on payments received on the underlying Municipal Obligations. One class
has the characteristics of a typical auction rate security, where at
specified intervals its interest rate is adjusted, and ownership changes,
based on an auction mechanism. This class's interest rate generally is
expected to be below the coupon rate of the underlying Municipal
Obligations and generally is at a level comparable to that of a Municipal
Obligation of similar quality and having a maturity equal to the period
between interest rate adjustments. The second class bears interest at a
rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this
case inversely to changes in the rate of interest of the first class. In
no event will the aggregate interest paid with respect to the two classes
exceed the interest paid by the underlying Municipal Obligations. The
value of the second class and similar securities should be expected to
fluctuate more than the value of a Municipal Obligation of comparable
quality and maturity and their purchase by the Series should increase the
volatility of its net asset value and, thus, its price per share. These
custodial receipts are sold in private placements. Each Series also may
purchase directly from
Page 42
issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
STAND-BY COMMITMENTS -- Each Series may acquire "stand-by
commitments" with respect to Municipal Obligations held in its portfolio.
Under a stand-by commitment, the Fund obligates a broker, dealer or bank
to repurchase, at the Fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment, therefore, is subject to
the ability of the seller to make payment on demand. A Series will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
The Fund may pay for stand-by commitments if such action is deemed
necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. Gains realized in connection with stand-by commitments will be
taxable. Each Series also may acquire call options on specific Municipal
Obligations. A Series generally would purchase these call options to
protect the Series from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the
Municipal Obligation before maturity. The sale by the Series of a call
option that it owns on a specific Municipal Obligation could result in
the receipt of taxable income by the Series.
ZERO COUPON SECURITIES -- Each Series may invest in zero coupon
securities which are debt securities issued or sold at a discount from
their face value which do not entitle the holder to any periodic payment
of interest prior to maturity or a specified redemption date (or cash
payment date). The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer.
Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a
greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
ILLIQUID SECURITIES -- Each Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does
not exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, and repurchase agreements
providing for settlement in more than seven days after notice. As to
these securities, the Series is subject to a risk that should the Series
desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Series' net
assets could be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other
than for temporary defensive purposes (but not to exceed 20% of the value
of a Series' net assets) or for temporary defensive purposes, each Series
may invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of purchase, a
quality rating within the two highest grades of Moody's, S&P or Fitch;
obligations of the U.S. Government, its agencies or instrumentalities;
commercial paper rated not lower than P-1 by Moody's, A-1 by S&P or F-1
by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of one billion dollars or
more; time deposits; bankers' acceptances and other short-term bank
obligations; and repurchase agreements in respect of any of the foregoing.
Dividends paid by a Series that are attributable to income earned by the
Series from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more
Page 43
than 20% of the value of a Series' net assets be invested in Taxable
Investments. When a State Series has adopted a temporary defensive
position, including when acceptable State Municipal Obligations are
unavailable for investment by a State Series, in excess of 35% of such
Series' net assets may be invested in securities that are not exempt from
State personal income taxes, if applicable. Under normal market
conditions, each Series anticipates that not more than 5% of the value of
its total assets will be invested in any one category of Taxable
Investments. In certain states, dividends and distributions paid by a
Series that are attributable to interest income earned by the Series
from direct obligations of the United States may not be subject to state
income tax. Taxable Investments are more fully described in the Statement
of Additional Information, to which reference hereby is made.
RATINGS -- Obligations which are rated Baa are considered medium
grade obligations; they are neither highly protected nor poorly secured,
and are considered by Moody's to have speculative characteristics. Bonds
rated BBB by S&P are regarded as having adequate capacity to pay interest
and repay principal, and while such bonds normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories. Bonds rated BBB by Fitch 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. See "Appendix B" in the Statement of Additional
Information for a general description of Moody's, S&P and Fitch ratings
of Municipal Obligations
The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these bonds. Therefore, although these ratings may
be an initial criterion for selection of portfolio investments, The
Dreyfus Corporation also will evaluate these securities and the ability
of the issuers of such securities to pay interest and principal. The
Fund's ability to achieve its investment objective may be more dependent
on The Dreyfus Corporation's credit analysis than might be the case for a
series that invested in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
PIMBFP120296
Page 44
PREMIER INSURED MUNICIPAL BOND FUND
CLASS A, CLASS B AND CLASS C SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
DECEMBER 2, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Insured Municipal Bond Fund (the "Fund"), dated December 2,
1996, 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.
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-11
Management Agreement. . . . . . . . . . . . . . . . . . B-16
Purchase of Shares. . . . . . . . . . . . . . . . . . . B-19
Distribution Plan and Shareholder Services Plan . . . . B-21
Redemption of Shares. . . . . . . . . . . . . . . . . . B-22
Shareholder Services. . . . . . . . . . . . . . . . . . B-24
Determination of Net Asset Value. . . . . . . . . . . . B-27
Dividends, Distributions and Taxes. . . . . . . . . . . B-27
Portfolio Transactions. . . . . . . . . . . . . . . . . B-29
Performance Information . . . . . . . . . . . . . . . . B-30
Information About the Fund. . . . . . . . . . . . . . . B-35
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . B-35
Appendix A. . . . . . . . . . . . . . . . . . . . . . . B-37
Appendix B. . . . . . . . . . . . . . . . . . . . . . . B-70
Financial Statements. . . . . . . . . . . . . . . . . . B-76
Report of Independent Auditors
California Series. . . . . . . . . . . . . . . . . B-86
Connecticut Series . . . . . . . . . . . . . . . . B-97
Florida Series . . . . . . . . . . . . . . . . . . B-108
National Series. . . . . . . . . . . . . . . . . . B-119
New Jersey Series. . . . . . . . . . . . . . . . . B-129
New York Series. . . . . . . . . . . . . . . . . . B-139
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Portfolio Securities
Municipal Obligations. The average distribution of investments (at
value) in Municipal Obligations by ratings for each Series for the fiscal
year ended July 31, 1996, computed on a monthly basis, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fitch Investors Moody's Investors Standard & Poor's
Service, L.P. Service, Inc. Ratings Group California Connecticut Florida
("Fitch") or ("Moody's") or ("S&P") Series Series Series
AAA Aaa AAA 93.6% 100.0% 98.6%
F-1/F-1+ VMIG1/MIG1, P-1 SP-1+/SP-1, A-1 6.4% - 1.4%
100.0% 100.0% 100.0%
National New Jersey New York
Fitch or Moody's or S&P Series Series Series
AAA Aaa AAA 99.1% 98.7% 98.3%
F-1/F-1+ VMIG1/MIG1, P-1 SP-1+/SP-1, A-1 .9% 1.3% 1.7%
100.0% 100.0% 100.0%
</TABLE>
The term "Municipal Obligations" generally includes debt obligations
issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports,
bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other public purposes for which
Municipal Obligations may be issued include refunding outstanding
obligations, obtaining funds for general operating expenses and lending
such funds to other public institutions and facilities. In addition,
certain types of industrial development bonds are issued by or on behalf of
public authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated housing facilities,
sports facilities, convention or trade show facilities, airport, mass
transit, industrial, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although current tax
laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Fund's Shareholder Services Plan
and, with respect to Class B and Class C shares only, Distribution Plan,
will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The staff of the Securities
and Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully
the Fund's investment in such securities with particular regard to (1) the
frequency of trades and quotes for the lease obligation; (2) the number of
dealers willing to purchase or sell the lease obligation and the number of
other potential buyers; (3) the willingness of dealers to undertake to make
a market in the lease obligation; (4) the nature of the marketplace trades
including the time needed to dispose of the lease obligation, the method of
soliciting offers and the mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may
deem relevant. In addition, in evaluating the liquidity and credit quality
of a lease obligation that is unrated, the Fund's Board has directed the
Manager to consider (a) whether the lease can be cancelled; (b) what
assurance there is that the assets represented by the lease can be sold;
(c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. No Series will 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.
A Series will purchase tender option bonds only when the Fund 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 Series. 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.
Insurance Feature. The Mutual Fund Insurance policies provide for a
policy period of one year which the insurer typically renews for successive
annual periods at the request of the Fund for so long as the Fund is in
compliance with the terms of the relevant policy. The insurance premiums
are payable monthly by the Fund and are adjustable for purchases and sales
of covered Municipal Obligations during the month on a daily basis.
Premium rates for each issue of Municipal Obligations covered by the Mutual
Fund Insurance are fixed for as long as the Fund owns the security,
although similar Municipal Obligations purchased at different times may
have different premiums. In addition to the payment of premiums, each
Mutual Fund Insurance policy requires that the Fund notify the insurer on a
daily basis as to all Municipal Obligations in the insured portfolio and
permits the insurer to audit its records. The insurer cannot cancel
coverage already in force with respect to Municipal Obligations owned by
the Fund and covered by the Mutual Fund Insurance policy, except for
nonpayment of premiums.
Municipal Obligations are eligible for Mutual Fund Insurance if, at
the time of purchase by the Fund, they are identified separately or by
category in qualitative guidelines furnished by the insurer and are in
compliance with the aggregate limitations set forth in such guidelines.
Premium variations are based in part on the rating of the security being
insured at the time the Fund purchases such security. The insurer may
prospectively withdraw particular securities from the classifications of
securities eligible for insurance or change the aggregate amount limitation
of each issue or category of eligible Municipal Obligations but must
continue to insure the full amount of such securities previously acquired
so long as they remain in the Fund's portfolio. The qualitative guidelines
and aggregate amount limitations established by the insurer from time to
time will not necessarily be the same as the Fund or the Manager would use
to govern selection of securities for the Fund's portfolio. Therefore,
from time to time such guidelines and limitations may affect portfolio
decisions.
New Issue Insurance provides that in the event of a municipality's
failure to make payment of principal or interest on an insured Municipal
Obligation, the payment will be made promptly by the insurer. There are no
deductible clauses or cancellation provisions, and the tax exempt status of
the securities is not affected. The premiums, whether paid by the issuing
municipality or the municipal bond dealer underwriting the issue, are paid
in full for the life of the Municipal Obligation. The statement of
insurance is attached to or printed on the instrument evidencing the
Municipal Obligation purchased by the Fund and becomes part of the
Municipal Obligation. The benefits of the insurance accompany the
Municipal Obligations in any resale.
The Fund, at its option, may purchase secondary market insurance
("Secondary Market Insurance") on any Municipal Obligation purchased by a
Series. By purchasing Secondary Market Insurance, the Fund would obtain,
upon payment of a single premium, insurance against nonpayment of scheduled
principal and interest for the remaining term of the Municipal Obligation,
regardless of whether the Series then owned such security. Such insurance
coverage would be non-cancelable and would continue in force so long as the
security so insured is outstanding and the insurer remains in business.
The purpose of acquiring Secondary Market Insurance would be to enable a
Series to sell a Municipal Obligation to a third party as a high rated
insured Municipal Obligation at a market price greater than what otherwise
might be obtainable if the security were sold without the insurance
coverage.
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.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased
by the Fund pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. 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 has directed the
Manager to monitor carefully each Series' 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, a Series' investing in such securities
may have the effect of increasing the level of illiquidity in the Series'
investments during such period.
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 are supported by the full faith and credit
of the U.S. Treasury; others by the right of the issuer to borrow from the
U.S. Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities bear
fixed, floating or variable rates of interest. 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.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by the Fund
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
In a repurchase agreement, the Series buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. 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 Series. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement,
each Series will enter into repurchase agreements only with domestic banks
with total assets in excess of $1 billion, or primary government securities
dealers reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which such Series may invest, and will require
that additional securities be deposited with it if the value of the
securities purchased should decrease below resale price. Repurchase
agreements could involve risks in the event of a default or insolvency of
the other party to the agreement, including possible delays or restrictions
upon the Series' ability to dispose of the underlying securities.
Management Policies
Short Selling. Until a Series closes its short position or replaces
the borrowed security, it will: (a) maintain a segregated account,
containing permissible liquid assets, at such a level that the amount
deposited in the account plus the amount deposited with the broker as
collateral always equals the current value of the security sold short; or
(b) otherwise cover its short position.
Lending Portfolio Securities. In connection with its securities
lending transactions, each Series 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 Series 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 Series must be able to terminate the loan at any time; (4) the
Series 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 Series may pay only reasonable
custodian fees in connection with the loan.
Derivatives. Each Series may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Series to invest
than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Series to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Series can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the
Series. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. Each Series may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade.
Engaging in these transactions involves risk of loss to a Series which
could adversely affect the value of the Series' net assets. Although each
Series intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Series to substantial losses.
Successful use of futures by a Series also is subject to the ability
of the Manager to predict correctly movements in the direction of the
relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if a Series uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, the Series will lose part or
all of the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Series has insufficient cash, it
may have to sell securities to meet daily variation margin requirements. A
Series may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, a Series may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting a Series' ability otherwise
to invest those assets.
Specific Futures Transactions. Each Series may purchase and sell interest
rate futures contracts. An interest rate future obligates the Series to
purchase or sell an amount of a specific debt security at a future date at
a specific price.
Options--In General. Each Series may purchase and write (i.e., sell) call
or put options with respect to specific securities. A call option gives
the purchaser of the option the right to buy, and obligates the writer to
sell, the underlying security or securities at the exercise price at any
time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
A covered call option written by a Series is a call option with
respect to which the Series owns the underlying security or otherwise
covers the transaction by segregating cash or other securities. A put
option written by a Series is covered when, among other things, cash or
liquid securities having a value equal to or greater than the exercise
price of the option are placed in a segregated account with the Fund's
custodian to fulfill the obligation undertaken. The principal reason for
writing covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. A Series receives a premium from writing covered call or
put options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events, or events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If,
as a covered call option writer, the Series is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent
the Manager's predictions are incorrect, the Fund may incur losses.
Future Developments. Each Series may take advantage of opportunities
in the area of options and futures contracts and options on futures
contracts and any other Derivatives which are not presently contemplated
for use by the Series or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Series' investment objective and legally permissible for the Series.
Before entering into such transactions or making any such investment, the
Fund will provide appropriate disclosure in its Prospectus or Statement of
Additional Information.
Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to
changes in value (generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may
expose a Series to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued
basis can involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Series is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Series' net assets and its net asset value per share.
Investment Considerations and Risks
Investing in State Municipal Obligations (State Series only).
Investors should review the information in "Appendix A," which provides a
brief summary of special investment considerations and risk factors
relating to investing in State Municipal Obligations.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 7 as
fundamental policies which will apply to each Series. These restrictions
cannot be changed as to a Series without approval by the holders of a ma-
jority (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of such Series' outstanding voting shares. Investment
restrictions numbered 8 through 12 are not fundamental policies and may be
changed by vote of a majority of the Fund's Board members at any time. No
Series may:
1. Invest more than 25% of the value of its assets in the securities
of issuers in any single industry; provided that there shall be no
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Series' total assets). For purposes of this Investment Restriction,
the entry into options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices
shall not constitute borrowing.
3. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from
investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Fund from purchasing and selling options, forward
contracts, futures contracts, including those relating to indices, and
options on futures contracts or indices.
4. Underwrite the securities of other issuers, except that the
Series 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 Series may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund may
lend each Series' portfolio securities in an amount not to exceed 33-1/3%
of the value of the Series' 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.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities permitted
in Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise
to a senior security.
7. Purchase securities on margin, but the Series may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or
as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related 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, if there is no secondary market,
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), if, in the aggregate, more
than 15% of the value of the Series' net assets would be so invested.
12. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."
As a fundamental policy, the Fund may invest, notwithstanding any
other investment restriction (whether or not fundamental), all of a Series'
assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objective, policies and
restrictions as such Series. The Fund will notify shareholders at least 60
days prior to any implementation of such policy.
If a percentage restriction is adhered to at the time of investment, a
later increase 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 Series shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series shares in the
state involved.
MANAGEMENT OF THE FUND
Board members of the Fund, together with information as to their
principal business occupations during at least the last five years, are
shown below. Each Board member who is deemed to be an "interested person"
of the Fund (as defined in the 1940 Act) is indicated by an asterisk.
Board Members of the Fund
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981,
Mr. Alexander served as Secretary of the Army and Chairman of the
Board of the Panama Canal Company, and from 1975 to 1977, he was a
member of the Washington, D.C. law firm of Verner, Liipfert, Bernhard,
McPherson and Alexander. He is a director of American Home Products
Corporation, The Dun & Bradstreet Corporation, MCI Communications
Corporation, Mutual of America Life Insurance Company and TLC Beatrice
International Holdings, Inc. He is 63 years old and his address is
400 C Street, N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Board Member. Shad Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served for
three years as a judge in the courts of New York State; was engaged
for eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. She is 53 years old and her address is c/o
New York University School of Law, 249 Sullivan Street, New York, New
York 10012.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway, Inc.,
a manufacturer and marketer of industrial threads, specialty yarns and
home furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals, and automotive and other
hardware, and Staffing Resources, Inc. For more than five years prior
to January 1995, he was President, a director and, until August 1994,
Chief Operating Officer of the Manager and Executive Vice President
and a director of Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager and, until August 24, 1994, the Fund's
distributor. From August 1994 to December 31, 1994, he was a director
of Mellon Bank Corporation. He is 53 years old and his address is
200 Park Avenue, New York, New York 10166.
ERNEST KAFKA, Board Member. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
For more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on subjects
in the field of psychoanalysis. He is 64 years old and his address is
23 East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Board Member. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions, and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. He is 76 years old and his address is 431-B
Dedham Street, The Gables, Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Board Member. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations
of New York City from September 1979 to March 1984 and Commissioner of
the Department of Housing Preservation and Development of New York
City from February 1978 to September 1979. Mr. Leventhal was an
associate and then a member of the New York law firm of Poletti
Freidin Prashker Feldman and Gartner from 1974 to 1978. He was
Commissioner of Rent and Housing Maintenance for New York City from
1972 to 1973. Mr. Leventhal also serves as Chairman of Citizens
Union, an organization which strives to reform and modernize City and
State government. He is 53 years old and his address is 70 Lincoln
Center Plaza, New York, New York 10023-6583.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Board members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board
members who are not "interested persons" of the Fund.
Ordinarily meetings of shareholders for the purpose of electing Board
members will not be held unless and until such time as less than a majority
of the Board members holding office have been elected by shareholders, at
which time the Board members then in office will call a shareholders'
meeting for the election of Board members. Under the 1940 Act,
shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board is required to call a meeting of shareholders for the
purpose of voting upon the question of removal of any Board member when
requested in writing to do so by the shareholders of record of not less
than 10% of the Fund's outstanding shares.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year
ended July 31, 1996, and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member (the number of which is set forth
in parenthesis next to each Board member's total compensation) for the year
ended December 31, 1995 were as follows:
Total Compensation
Aggregate from Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Member
Clifford L. Alexander, Jr. $ 2,250 $94,386 (17)
Peggy C. Davis $ 2,250 $81,636 (15)
Joseph S. DiMartino $ 2,813 $448,618 (94)
Ernest Kafka $ 2,250 $81,136 (15)
Saul B. Klaman $ 2,250 $81,886 (15)
Nathan Leventhal $ 2,250 $81,636 (15)
_________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $468 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director 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 39 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. He is 32 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company, Inc. She is 32 years old.
JOSEPH F. TOWER, III, Vice President and 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 33 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.
RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director - Mutual Funds of The
Boston Company, Inc. He is 40 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of each Series' shares of beneficial interest outstanding on November 18,
1996.
The following shareholders are known by the Fund to own of record or
beneficially 5% or more of the indicated Series' voting securities
outstanding on November 18, 1996:
California Series
Class A: Prudential Securities FBO Ilse Jamin and Judith I. Friedman
CO-TTEES FBO Noah Ned Jamin and Ilse Jamin Trust, Palm Springs, California-
- -owned of record 11.9%; Smith Barney, Inc., New York, New York--owned of
record 7.4%; Wedbush Morgan Securities, Los Angeles, California--owned of
record 7.3%; Merrill Lynch Pierce Fenner & Smith, Inc. For the Sole
Benefit of its Customers, Jacksonville, Florida--owned of record 5.5%.
Class B: Prudential Securities, Palm Springs, California--owned of
record 7.8%; Lena V. Lippi, San Bruno, California--owned of record 6.0%.
Class C: Premier Mutual Fund Services, Inc., Boston, Massachusetts--
owned beneficially 100%.
Connecticut Series
Class A: Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville,
Florida--owned of record 16.4%.
Class C: Marie G. Kretzmer, Wethersfield, Connecticut--owned
beneficially 41.5%; Reloads Inc., Manchester, Connecticut--owned
beneficially 40.7%, Edward J. Sicard, Coventry, Connecticut--owned
beneficially 17.3%
Florida Series
Class B: Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville,
Florida--owned of record 12.7%.
Class C: Premier Mutual Fund Services, Inc., Boston, Massachusetts--
owned beneficially 100%.
National Series
Class A: Joseph G. Alden and Mary Catherine Alden, Arlington Heights,
Illinois--owned beneficially 6.7%; Dominic F. Salleroli, Franklin Lakes,
New Jersey--owned beneficially 5.56%; Stanley Wus & Michael Wus, JT WROS,
Sarasota, Florida--owned beneficially 5.1%.
Class C: Premier Mutual Fund Serives, Inc., Boston, Massachusetts--
owned beneficially 100%.
New Jersey Series
Class A: Bernard Stern & Rhoda Stern, Cranbury, New Jersey, JT TEN--
owned beneficially 7.8%; Stuart G. Mann & Susan B. Mann, JT WROS, Cedar
Knolls, New Jersey--owned beneficially 5.3%.
Class B: Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville,
Florida--owned of record 8.7%; Lakeview Developers Limited, West New York,
New Jersey--owned beneficially 5.3%.
Class C: James Wilhelmson, Teaneck, New Jersey--owned beneficially
83.5%; Premier Mutual Fund Services, Inc., Boston, Massachusetts--owned
beneficially 16.4%.
New York Series
Class A: Prudential Securities, New York, New York--owned of record
11.1%.
Class B: Merrill Lynch Pierce Fenner & Smith, Jacksonville, Florida--
owned of record 21.4%; Tice & Co., Buffalo, New York--owned beneficially
5.0%.
Class C: Prudential Securities Inc., New York, New York--owned of
record 94.4%.
A shareholder who beneficially owned, directly or indirectly, 25% or
more of a Series' voting securities may be deemed to be a "control person"
(as defined in the 1940 Act) of that Series.
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") with the Fund dated August 24, 1994. As to
each Series, the Agreement is subject to annual approval by (i) the Fund's
Board or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Series, provided that in either event
the continuance also is approved by a majority of the Board members who are
not "interested persons" (as defined in the 1940 Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. Shareholders of each Series approved the
Agreement on August 3, 1994. The Agreement was last approved by the Fund's
Board, including a majority of the Board members who are not "interested
persons" of any party to the Agreement, at a meeting held on January 10,
1996. The Agreement is terminable without penalty, as to each Series, on
60 days' notice, by the Fund's Board or by vote of the holders of a
majority of such Series' shares, or, on not less than 90 days' notice, by
the Manager. The Agreement will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in the 1940
Act).
The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; Philip L. Toia, Vice
Chairman-Operations and Administration and a director; William T. Sandalls,
Jr., Senior Vice President and Chief Financial Officer; Elie M. Genadry,
Vice President-Institutional Sales; William F. Glavin, Jr., Vice President-
Corporate Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-
Information Systems; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian
M. Smerling, directors.
The Manager manages each Series' portfolio of investments in
accordance with the stated policies of such Series, subject to the approval
of the Fund's Board. The Manager is responsible for investment decisions,
and provides the Fund with portfolio managers who are authorized by the
Fund's Board to execute purchases and sales of securities. The Fund's
portfolio managers are Joseph P. Darcy, A. Paul Disdier, Karen M. Hand,
Stephen C. Kris, Richard J. Moynihan, Jill C. Shaffro, Samuel J. Weinstock
and Monica S. Wieboldt. The Manager also maintains a research department
with a professional staff of portfolio managers and securities analysts who
provide research services for the Fund as well as for other funds advised
by the Manager. All purchases and sales are reported for the Board's
review at the meeting subsequent to such transactions.
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.
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 without limitation, the following:
organizational costs, taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees and 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 independent
pricing services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
meetings and any extraordinary expenses. In addition, shares of each Class
are subject to an annual service fee and Class B and Class C shares are
subject to an annual distribution fee. See "Distribution Plan and
Shareholder Services Plan." Expenses attributable to a particular Series
are charged against the assets of that Series; other expenses of the Fund
are allocated among the Series on the basis determined by the Board,
including, but not limited to, proportionately in relation to the net
assets of each Series.
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .55 of 1% of the
value of each Series' average daily net assets. For the period ended July
31, 1994 and the fiscal years ended July 31, 1995 and 1996, the management
fee payable, the reduction in such fee pursuant to undertakings then in
effect, and the net management fee paid for each Series was as set forth
below:
<TABLE>
<CAPTION>
Management Fee Payable Reduction in Fee Net Fee Paid
Series 1994 1995 1996 1994 1995 1996 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California $ 13,958(1) $ 32,794 $ 39,781 $ 13,958(1) $ 32,794 $ 19,320 $ -0- $ -0- $ 20,461
Connecticut 7,485(2) 119,902 165,914 7,485(2) 119,902 36,681 -0- -0- 129,233
Florida 12,159(3) 179,450 213,934 12,159(3) 179,450 55,951 -0- -0- 157,983
National 3,491(3) 64,630 106,758 3,491(3) 64,630 25,258 -0- -0- 81,500
New Jersey 2,995(3) 38,710 74,073 2,995(3) 38,710 10,732 -0- -0- 63,341
New York 2,971(4) 38,887 78,481 2,971(4) 38,887 8,907 -0- -0- 69,574
________________
(1) For the period from August 19, 1993 (commencement of operations) through
July 31, 1994.
(2) For the period from May 5, 1994 (commencement of operations) through July
31, 1994.
(3) For the period from May 4, 1994 (commencement of operations) through July
31, 1994. (4) For the period from May 6, 1994 (commencement of
operations) through July 31, 1994.
</TABLE>
The Manager has agreed that if in any fiscal year the aggregate
expenses of each Series, exclusive of taxes, brokerage fees, 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 such Series, 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 a Series' net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for funds in the Dreyfus Family of Funds and for certain
other investment companies. In some states, certain financial institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
For the fiscal year ended July 31, 1996, the Distributor retained
$14,566.53 from sales loads on Class A shares, and $215,139 from contingent
deferred sales charges ("CDSC") on Class B shares. No amount was retained
by the Distributor from CDSC on Class C shares. For the period August 24,
1994 through July 31, 1995, the Distributor retained $68,122 from sales
loads on Class A shares and $55,054 from CDSC on Class B shares. For the
period August 1, 1994 through August 23, 1994 and for the fiscal year ended
July 31, 1994, Dreyfus Service Corporation, as the Fund's distributor
during such periods, retained $18,967 and $48,739, respectively, from sales
loads on Class A shares and $598 and $0, respectively, from CDSCs on Class
B shares.
Using Federal Funds. Dreyfus Transfer, Inc., the Fund's transfer and
dividend disbursing agent (the "Transfer Agent"), or the Fund may attempt
to notify the investor upon receipt of checks drawn on banks that are not
members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means
of transmitting the money. If the investor is a customer of a securities
dealer ("Selected Dealer") and his order to purchase Fund shares is paid
for other than in Federal Funds, the Selected Dealer, acting on behalf of
its customer, will complete the conversion into, or itself advance, Federal
Funds generally on the business day following receipt of the customer
order. The order is effective only when so converted and received by the
Transfer Agent. An order for the purchase of Fund shares placed by an
investor with sufficient Federal Funds or a cash balance in his brokerage
account with a Selected Dealer will become effective on the day that the
order, including Federal Funds, is received by the Transfer Agent.
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code")), although more than
one beneficiary is involved; or a group of accounts established by or on
behalf of the employees of an employer or affiliated employers pursuant to
an employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k), and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that
it is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Set forth below is an example of the method of computing the offering
price of each Series' Class A shares. The examples assume a purchase of
Class A shares of the Series aggregating less than $50,000 subject to the
schedule of sales charges set forth in the Fund's Prospectus at a price
based upon the net asset value of the Series' Class A shares on July 31,
1996.
California Connecticut Florida
Series Series Series
Class A shares:
NET ASSET VALUE per share. . . . . $11.95 $12.98 $13.28
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5%
of offering price (approximately 4.7%
of net asset value per share). . . . .56 .61 .63
Offering price to public . . . . . . . $12.51 $13.59 $13.91
National New Jersey New York
Series Series Series
Class A shares:
NET ASSET VALUE per share. . . . . $13.06 $12.79 $12.91
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5% of
offering price (approximately 4.7% of
net asset value per share) . . . . . .62 .60 .61
Offering price to public . . . . . . . $13.68 $13.39 $13.52
TeleTransfer Privilege. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day the Transfer Agent and the New York Stock Exchange are open
for business will be credited to the shareholder's Fund account on the next
bank business day following such purchase order. Purchase orders made
after 4:00 p.m., New York time, on any business day the Transfer Agent and
the New York Stock Exchange are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the New York Stock
Exchange is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order.
To qualify to use the TeleTransfer Privilege, the initial payment for the
purchase of Fund shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of
Shares--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.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
Class B and Class C shares only are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the 1940 Act provides, among other things,
that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. The Fund's
Board has adopted such a plan (the "Distribution Plan") with respect to
Class B and Class C shares of each Series, pursuant to which the Fund pays
the Distributor for distributing the relevant Class of shares. The Fund's
Board believes that there is a reasonable likelihood that the Distribution
Plan will benefit the Fund and the holders of the Series' Class B and Class
C shares.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Fund's Board for its review. In addition, the Distribution
Plan provides that it may not be amended to increase materially the costs
which holders of the relevant Class of shares may bear for distribution
pursuant to the Distribution Plan without such shareholders' approval and
that other material amendments of the Distribution Plan must be approved by
the Fund's Board and by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements entered into in connection with the Distribution Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution 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 Distribution Plan. The Distribution Plan was last
so approved on January 10, 1996. As to each Series and Class, the
Distribution Plan may be terminated 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 Distribution Plan or in
any of the related agreements entered into in connection with the
Distribution Plan, or by vote of the holders of a majority of the
outstanding shares of such Class.
For the fiscal year ended July 31, 1996, each Series paid the
Distributor the following amounts with respect to Class B shares and Class
C shares under the Distribution Plan:
Amount Charged Amount Charged
Series Class B Class C
California $19,352 $ 5
Connecticut 89,077 305
Florida 99,881 5
National 53,526 5
New Jersey 41,664 18
New York 46,260 46
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A, Class B and Class
C shares. 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 such shareholder accounts. Under the Shareholder
Services Plan, the Distributor may make payments to certain financial
institutions (which may include banks), Selected Dealers and other
financial industry professionals (collectively, "Service Agents") in
respect to these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Fund's Board for its review. In addition, the
Shareholder Services Plan provides that material amendments must be
approved by the Fund's Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services 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 Shareholder
Services Plan. The Shareholder Services Plan was last so approved on
January 10, 1996. As to each Series and Class, the Shareholder Services
Plan is terminable at any time by vote of a majority of the Board members
who are not "interested persons" and who have no direct or indirect
financial interest in the operation of the Shareholder Services Plan or in
any agreements entered into in connection with the Shareholder Services
Plan.
For the fiscal year ended July 31, 1996, each Series paid the
Distributor the following amounts with respect to Class A, Class B and
Class C under the Shareholder Services Plan:
Amount Charged Amount Charged Amount Charged
Series Class A Class B Class C
California $ 8,404 $ 9,676 $ 2
Connecticut 30,775 44,538 102
Florida 47,301 49,940 2
National 21,762 26,763 2
New Jersey 12,831 20,832 6
New York 12,528 23,130 15
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Shares."
Check Redemption Privilege - Class A Shares. An investor may indicate
on the Account Application, Shareholder Services Form or by later written
request that the Fund provide Redemption Checks ("Checks") with respect to
Class A shares, drawn on the investor's Fund account. Checks will be sent
only to the registered owner(s) of the account and only to the address of
record. The Account Application, Shareholder Services Form or later
written request must be manually signed by the registered owner(s). Checks
may be made payable to the order of any person in an amount of $500 or
more. When a Check is presented to the Transfer Agent for payment, the
Transfer Agent, as the investor's agent, will cause the Fund to redeem a
sufficient number of full and fractional Class A 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 Class A
shares in an investor's account, the Check will be returned marked
insufficient funds. Checks should not be used to close an account.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected 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 Shares--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 owner 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.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Series, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Series' 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 Fund's Board reserves the right to make payments in whole
or in part in securities (which may include non-marketable securities) or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Series to the detriment of the existing
shareholders. In this event, the securities would be valued in the same
manner as the Series' portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Class A, Class B and Class C shares of the Fund may
be exchanged for shares of the respective Class of certain other funds
advised or administered by the Manager. Shares of the same Class of such
other funds purchased by exchange will be purchased on the basis of
relative net asset value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales load,
and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales load
may be exchanged without a sales load for Class A shares of other
funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A shares
purchased with a sales load, and additional Class A shares acquired
through reinvestment of dividends or distributions of any such funds
(collectively referred to herein as "Purchased Shares") may be
exchanged for Class A 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.
D. Class B or Class C shares of any fund may be exchanged for the
same Class of shares of other funds without a sales load. Class B or
Class C shares of any fund exchanged for the same Class of shares of
another fund will be subject to the higher applicable CDSC of the two
exchanged funds and, for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the date
the Class B or Class C shares being exchanged were initially
purchased.
To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's account number.
To request an exchange, the investor's Service Agent acting on the
investor's behalf 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 (including over The Dreyfus Touch(R)
Automated Telephone System) from any person representing himself or herself
to be a representative of the investor's Service Agent, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of telephone
exchanges permitted. Shares issued in certificate form are not eligible
for telephone exchange.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment being required for shares of the same Class of the fund into
which the exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs
and IRAs set up under a Simplified Employee Pension Plans ("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 shares of the same Class of 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.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for Class A, Class B or Class C shares of
a Series, shares of the same Class of one of the other Series or another
fund in the Premier Family of Funds or 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 Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the series or 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 Exchanges service or
the 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. 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.
Class B or Class C shares withdrawn pursuant to the Automatic Withdrawal
Plan will be subject to any applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest
automatically their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class 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 with respect to Class A shares
by a fund may be invested without imposition of a sales load in Class
A shares of other funds that are offered without a sales load.
B. Dividends and distributions paid with respect to Class A shares
by a fund which does not charge a sales load may be invested in Class
A shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Dividends and distributions paid with respect to Class A shares
by a fund which charges a sales load may be invested in Class A 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 with respect to Class B or Class
C shares by a fund may be invested without imposition of any
applicable CDSC in the same Class of shares of other funds and the
relevant Class of shares of such other funds will be subject on
redemption to any applicable CDSC.
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
Shares."
Valuation of Portfolio Securities. Each Series' investments are
valued each business day by an independent pricing service (the "Service")
approved by the Fund's Board. When, in the judgment of the Service, quoted
bid prices for investments are readily available and are representative of
the bid side of the market, these investments are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at
fair value as determined by the Service, based on methods which include
consideration of: yields or prices of municipal bonds of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. The Service may employ electronic data
processing techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the Fund's officers under the general
supervision of the Fund's Board. Expenses and fees, including the
management fee (reduced by the expense limitation, if any) and fees
pursuant to the Shareholder Services Plan and, with respect to Class B and
Class C shares only, Distribution Plan, are accrued daily and are taken
into account for the purpose of determining the net asset value of the
relevant Class of each Series' shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value of
each Class will differ.
Subject to guidelines established by the Fund's Board, the Manager
intends to retain in the Fund's portfolio Municipal Obligations which are
insured under the Mutual Fund Insurance policy and which are in default or
in significant risk of default in the payment of principal or interest
until the default has been cured or the principal and interest are paid by
the issuer or the insurer. In establishing fair value for these securities
the Board will give recognition to the value of the insurance feature as
well as the market value of the securities. Absent any unusual or
unforeseen circumstances, the Manager will recommend valuing these
securities at the same price as similar securities of a minimum investment
grade (i.e., rated Baa by Moody's or BBB by S&P or Fitch).
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.
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."
Management believes that each Series has qualified as a "regulated
investment company" under the Code for the fiscal year ended July 31, 1996,
and each Series intends to continue to so qualify, so long as such
qualification is in the best interests of its shareholders. As a regulated
investment company, a Series will pay no Federal income tax on net
investment income and net realized capital gains to the extent that such
income and gains are distributed to shareholders in accordance with
applicable provisions of the Code. To qualify as a regulated investment
company, a Series must distribute to its shareholders at least 90% of its
net income (consisting of net investment income from tax-exempt obligations
and taxable obligations, if any, and net short-term capital gains), must
derive less than 30% of its annual gross income from gain on the sale of
securities held for less than three months, and must meet certain asset
diversification and other requirements. The term "regulated investment
company" does not imply the supervision of management or investment
practices or policies by any government agency.
The Code provides that if a shareholder has not held his Fund shares
for more than six months (or such shorter period as the Internal Revenue
Service may prescribe by regulation) and has received an exempt-interest
dividend with respect to such shares, any loss incurred on the sale of such
shares will be disallowed to the extent of the exempt-interest dividend
received. In addition, any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
his shares below the cost of his investment. Such a distribution would be
a return on investment in an economic sense although taxable as stated
under "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 gain
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by a Series 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 a Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to a Series characterized in the manner described above.
Offsetting positions held by a Series involving certain futures 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 a Series were treated as entering into "straddles" by reason of its
engaging in certain futures or options transactions, such "straddles" would
be characterized as "mixed straddles" if the futures or options
transactions comprising a part of such "straddles" were governed by Section
1256 of the Code. A Series may make one or more elections with respect to
"mixed straddles." Depending on which election is made, if any, the
results to a Series may differ. If no election is made to the extent the
"straddle" rules apply to positions established by a Series, losses
realized by a Series will be deferred to the extent of unrealized gain in
the offsetting position. Moreover, as a result of the "straddle" and the
conversion transaction rules, short-term capital losses on "straddle"
positions may be recharacterized as long-term capital losses, and long-term
capital gains may be treated as short-term capital gains or ordinary
income.
Investment by the Series 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, a
Series 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, a Series may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to
the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
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.
Each Series anticipates that its annual portfolio turnover rate
generally will not exceed 100% but the turnover rate will not be a limiting
factor when each Series deems it desirable to sell or purchase securities.
Therefore, depending upon market conditions, each Series' annual portfolio
turnover rate may exceed 100% in certain years.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The current yield for the 30-day period ended July 31, 1996 for Class
A, Class B and Class C of each Series was as follows:
Current Net of Absorbed
Series Yield Expenses(1)
Class A:
California 3.88% 3.72%
Connecticut 4.54 -
Florida 4.36 -
National 4.43 4.40
New Jersey 4.34 -
New York 4.44 -
____________________________
(1) This column sets forth current yield had expenses not been absorbed.
Current Net of Absorbed
Series Yield Expenses(1)
Class B:
California 3.54% 3.35%
Connecticut 4.25 -
Florida 4.08 -
National 4.12 4.08
New Jersey 4.06 -
New York 4.16 -
____________________________
(1) This column sets forth current yield had expenses not been absorbed.
Current Net of Absorbed
Series Yield Expenses(1)
Class C:
California 3.49% 3.35%
Connecticut 4.00 -
Florida 3.79 -
National 3.90 -
New Jersey 3.85 -
New York 3.92 -
____________________________
(1) This column sets forth current yield had expenses not been absorbed.
Current yield is computed pursuant to a formula which operates as follows:
The amount of each Series' 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 Series
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 (or maximum
offering price in the case of Class A) 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 the 1996 combined (except where noted) Federal and
applicable State tax rate specified below, the tax equivalent yield for the
30-day period ended July 31, 1996 for Class A, Class B and Class C of each
Series was as follows:
Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)
Class A:
California 45.22% 7.08% 6.79%
Connecticut 42.32 7.87 -
Florida(2) 39.60 7.22 -
National 39.60 7.33 7.28
New Jersey 43.45 7.67 -
New York 46.60 8.31 -
Class B:
California 45.22% 6.46% 6.12%
Connecticut 42.32 7.37 -
Florida(2) 39.60 6.75 -
National 39.60 6.82 6.75
New Jersey 43.45 7.18 -
New York 46.60 7.79 -
Class C:
California 45.22% 6.37% 6.12%
Connecticut 42.32 6.93 -
Florida(2) 39.60 6.27 -
National 39.60 6.64 -
New Jersey 43.45 6.81 -
New York 46.60 7.34 -
____________________________
(1) This column sets forth tax equivalent yield had expenses
not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed
during 1996.
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 Series that is not tax exempt.
The tax equivalent yield quoted above represents the application of
the highest marginal personal income tax rates currently in effect. For
Federal personal income tax purposes, a 39.6% 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.
The average annual total return since inception and for the period
indicated for Class A of each Series was as follows:
Series Year ended July 31, 1996 Since Inception
California 2.96% 1.99% (1)
Connecticut 0.29 5.00 (2)
Florida 1.66 6.11 (3)
National 0.83 5.62 (3)
New Jersey 0.56 4.26 (3)
New York 1.20 4.69 (4)
________________
(1) For the 2.951 year period ended July 31, 1996.
(2) For the 2.244 year period ended July 31, 1996.
(3) For the 2.247 year period ended July 31, 1996.
(4) For the 2.241 year period ended July 31, 1996.
The average annual total return since inception and for the period
indicated for Class B of each Series was as follows:
Series Year ended July 31, 1996 Since Inception
California 4.30% 2.51% (1)
Connecticut 1.40 5.81 (2)
Florida 2.89 6.96 (3)
National 2.09 6.48 (3)
New Jersey 1.79 5.06 (3)
New York 2.35 5.52 (4)
________________
(1) For the 2.951 year period ended July 31, 1996.
(2) For the 2.244 year period ended July 31, 1996.
(3) For the 2.247 year period ended July 31, 1996.
(4) For the 2.241 year period ended July 31, 1996.
The average annual total return for the period from December 4, 1995
(initial offering of Class C shares of each Series) to July 31, 1996 for
Class C of each Series was as follows:
Series Period ended July 31, 1996
California - 1.59%
Connecticut - 2.78
Florida - 2.96
National - 2.41
New Jersey - 2.68
New York - 2.96
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share 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. A Class's
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or in the case of Class B or Class C the maximum applicable CDSC has been
paid upon redemption at the end of the period.
The total return for the period indicated for Class A of each Series
was as follows:
Class A: Based on Maximum Based on Net Asset
Series Offering Price Value
California(1) 6.00% 11.01%
Connecticut(2) 11.61 16.88
Florida(3) 14.27 19.66
National(3) 13.09 18.42
New Jersey(3) 9.85 15.02
New York(4) 10.81 16.03
____________________________
(1) For the period August 19, 1993 (commencement of operations) through
July 31, 1996.
(2) For the period May 4, 1994 (commencement of operations) through
July 31, 1996.
(3) For the period May 3, 1994 (commencement of operations) through
July 31, 1996.
(4) For the period May 5, 1994 (commencement of operations) through
July 31, 1996.
The total return for the period indicated for Class B of each Series
was as follows:
Class B: Based on Net Asset Based on
Series Value Maximum CDSC
California(1) 9.52% 7.60%
Connecticut(2) 15.54 13.54
Florida(3) 18.34 16.34
National(3) 17.18 15.18
New Jersey(3) 13.75 11.75
New York(4) 14.80 12.80
____________________________
(1) For the period August 19, 1993 (commencement of operations) through
July 31, 1996.
(2) For the period May 4, 1994 (commencement of operations) through
July 31, 1996.
(3) For the period May 3, 1994 (commencement of operations) through
July 31, 1996.
(4) For the period May 5, 1994 (commencement of operations) through
July 31, 1996.
The total return for the period from December 4, 1995 (initial offering
of Class C shares of each Series) to July 31, 1996 for Class C of each
Series was as follows:
Class C: Based on Net Asset Based on
Series Value Maximum CDSC
California -0.07% -1.05%
Connecticut -0.87 -1.84
Florida -1.00 -1.96
National -0.62 -1.59
New Jersey -0.80 -1.77
New York -1.00 -1.96
Total return is calculated by subtracting the amount of the Series'
net asset value (maximum offering price in the case of Class A) per share
at the beginning of a stated period from the net asset value per share at
the end of the period (after giving effect to the reinvestment of dividends
and distributions during the period and any applicable CDSC), and dividing
the result by the net asset value (maximum offering price in the case of
Class A) per share at the beginning of the period. Total return also may
be calculated based on the net asset value per share at the beginning of
the period for Class A shares or without giving effect to any applicable
CDSC at the end of the period for Class B or Class C shares. In such
cases, the calculation would not reflect the deduction of the sales load
with respect to Class A shares or any applicable CDSC with respect to Class
B or Class C shares which, if reflected, would reduce the performance
quoted.
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 not as representative of the Fund's
past or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to actual or proposed tax legislation.
Advertising materials for the Fund may also refer to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute. From
time to time, advertising materials for the Fund, also may refer to
Morningstar ratings and related analyses supporting such ratings.
The Fund may compare its performance, directly as well as against
inflation, with that of other instruments, such as short-term Treasury
bills (which are direct obligations of the U.S. Government), FDIC-insured
bank money market accounts and FDIC-insured fixed-rate certificates of
deposit. In addition, advertising for the Fund may indicate that investors
may consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation.
From time to time, advertising materials for the Fund may include
biographical information relating to its portfolio managers and may refer
to, or include commentary by a portfolio manager relating to an investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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 Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series' shares have no preemptive or subscription rights
and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
The Manager's legislative efforts led to the 1976 Congressional
amendment to the Code permitting an incorporated mutual fund to pass
through tax exempt income to its shareholders. The Manager offered to the
public the first incorporated tax exempt fund and currently manages or
administers over $25 billion in tax exempt assets.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995 (effective
date of transfer agency agreement) through July 31, 1996, each Series paid
the Transfer Agent the following: California Series--$2,214; Connecticut
Series--$9,453; Florida Series--$11,171; National Series--$6,146; New
Jersey Series--$4,564; and New York Series--$4,640.
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian.
Neither the Transfer Agent nor The Bank of New York 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 shares
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 STATE 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 relevant
State and various local agencies, 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.
California Series . . . . . . . . . . . . . . . . B-37
Connecticut Series. . . . . . . . . . . . . . . . B-49
Florida Series. . . . . . . . . . . . . . . . . . B-51
New Jersey Series . . . . . . . . . . . . . . . . B-55
New York Series . . . . . . . . . . . . . . . . . B-57
California Series
Recent Developments. From mid-1990 to late 1993, the State suffered a
recession with the worst economic, fiscal and budget conditions since the
1930s. Construction, manufacturing (especially aerospace), exports and
financial services, among others, were all severely affected. Job losses
have been the worst of any post-war recession. Unemployment reached 10.1%
in January 1994, but fell sharply to 7.7% in October and November 1994.
According to the State's Department of Finance, recovery from the recession
in California began in 1994.
The recession seriously affected State tax revenues, which basically
mirror economic conditions. It also has caused increased expenditures for
health and welfare programs. The State also has been facing a structural
imbalance in its budget with the largest programs supported by the General
Fund (K-12 schools and community colleges, health and welfare, and
corrections) growing at rates higher than the growth rates for the
principal revenue sources of the General Fund. As a result, the State
experienced recurring budget deficits in the late 1980s and early 1990s.
The State Controller reported that expenditures exceeded revenues for four
of the five fiscal years ending with 1991-92. The State had an operating
surplus of approximately $109 million in 1992-93 and $836 million in 1993-
94. However, at June 30, 1994, according to the Department of Finance, the
State's Special Fund for Economic Uncertainties ("SFEU") still had a
deficit, on a budget basis, of approximately $1.8 billion.
The accumulated budget deficits over the past several years, together
with expenditures for school funding which have not been reflected in the
budget, and reduction of available internal borrowable funds, have combined
to significantly deplete the State's cash resources to pay its ongoing
expenses. In order to meet its cash needs, the State has had to rely for
several years on a series of external borrowings, including borrowings past
the end of a fiscal year. Such borrowings are expected to continue in
future fiscal years. To meet its cash flow needs in the 1994-95 fiscal
year the State issued, in July and August 1994, $4.0 billion of revenue
anticipation warrants which mature on April 25, 1996, and $3.0 billion of
revenue anticipation notes which matured on June 28, 1995.
As a result of the deterioration in the State's budget and cash
situation, the rating agencies reduced the State's credit ratings. Between
October 1991 and July 1994, the rating on the State's general obligation
bonds was reduced by S&P from "AAA" to "A," by Moody's from "Aaa" to "A1"
and by Fitch from "AAA" to "A."
The 1994-95 Fiscal Year Budget (as updated in the January 10, 1995
Governor's Budget) projected $42.4 billion of General Fund revenues and
transfers and $41.7 billion of budgeted expenditures. In addition, the
1994-95 Budget Act anticipated deferring retirement of about $1 billion of
the accumulated budget deficit to the 1995-96 fiscal year when it is
intended to be fully retired by June 30, 1996.
The Governor's Budget for 1995-96 proposed General Fund revenues and
transfers of $42.5 billion and expenditures of $41.7 billion, which was
estimated to leave a balance of approximately $92 million in the budget
reserve, the SFEU, at June 30, 1996 after repayment of the accumulated
budget deficits. The Budget proposal was based on a number of assumptions,
including receipt of $830 million from the Federal government to offset
costs of undocumented and refugee immigrants.
On December 6, 1994, Orange County, California (the "County"),
together with its pooled investment funds (the "County Funds") filed for
protection under Chapter 9 of the Federal Bankruptcy Code, after reports
that the County Funds had suffered significant market losses in their
investments, causing a liquidity crisis for the County Funds and the
County. More than 200 other public entities, most of which, but not all,
are located in the County, were also depositors in the County Funds. As of
mid-January 1995, following a restructuring of most of the County Funds'
assets to increase their liquidity and reduce their exposure to interest
rate increases, the County estimated the County Funds' loss at about $1.69
billion, or about 23% of their initial deposits of approximately $7.5
billion. Many of the entities which deposited monies in the County Funds,
including the County, faced interim and/or extended cash flow difficulties
because of the bankruptcy filing and may be required to reduce programs or
capital projects. The County has embarked on a fiscal recovery plan based
on sharp reductions in services and personnel, and rescheduling of
outstanding short term debt using certain new revenues transferred to the
County from other local governments pursuant to special legislation enacted
in October 1995.
The State has no existing obligation with respect to any outstanding
obligations or securities of the County or any of the other participating
entities. However, in the event the County is unable to maintain county
administered State programs because of insufficient resources, it may be
necessary for the State to intervene, but the State cannot presently
predict what, if any, action may occur.
On January 17, 1994, an earthquake of the magnitude of an estimated
6.8 on the Richter Scale struck Los Angeles causing significant damage to
public and private structures and facilities. Although some individuals
and businesses suffered losses totaling in the billions of dollars, the
overall effect of the earthquake on the regional and State economy is not
expected to be serious.
State Finances. State moneys are segregated into the General Fund and
approximately 600 Special Funds. The General Fund consists of the revenues
received into the State Treasury and earnings from State investments, which
are not required by law to be credited to any other fund. The General Fund
is the principal operating fund for the majority of governmental activities
and is the depository of most major State revenue sources.
The SFEU is funded with General Fund revenues and was established to
protect the State from unforeseen reduced levels of revenues and/or
unanticipated expenditure increases. Amounts in the SFEU may be
transferred by the Controller as necessary to meet cash needs of the
General Fund. The Controller is required to return moneys so transferred
without payment of interest as soon as there are sufficient moneys in the
General Fund. For budgeting and accounting purposes, any appropriation
made from the SFEU is deemed an appropriation from the General Fund. For
year-end reporting purposes, the Controller is required to add the balance
in the SFEU to the balance in the General Fund so as to show the total
monies then available for General Fund purposes.
Inter-fund borrowing has been used for many years to meet temporary
imbalances of receipts and disbursements in the General Fund. As of June
30, 1994, the General Fund had outstanding loans in the aggregate principal
amount of $43 million to the General Fund from the SFEU and outstanding
loans in the aggregate principal amount of $5.2 billion, which consisted of
$4.0 billion of internal loans to the General Fund from the SFEU and other
Special Funds and $1.2 billion of external loans represented by the 1994
revenue anticipation warrants.
Articles XIIIA and XIIIB to the State Constitution and Other Revenue
Law Changes. Prior to 1977, revenues of the State government experienced
significant growth primarily as a result of inflation and continuous
expansion of the tax base of the State. In 1978, State voters approved an
amendment to the State Constitution known as Proposition 13, which added
Article XIIIA to the State Constitution, reducing ad valorem local property
taxes by more than 50%. In addition, Article XIIIA provides that
additional taxes may be levied by cities, counties and special districts
only upon approval of not less than a two-thirds vote of the "qualified
electors" of such district, and requires not less than a two-thirds vote of
each of the two houses of the State Legislature to enact any changes in
State taxes for the purpose of increasing revenues, whether by increased
rate or changes in methods of computation.
Primarily as a result of the reductions in local property tax revenues
received by local governments following the passage of Proposition 13, the
Legislature undertook to provide assistance to such governments by
substantially increasing expenditures from the General Fund for that
purpose beginning in the 1978-79 fiscal year. In recent years, in addition
to such increased expenditures, the indexing of personal income tax rates
(to adjust such rates for the effects of inflation), the elimination of
certain inheritance and gift taxes and the increase of exemption levels for
certain other such taxes had a moderating impact on the growth in State
revenues. In addition, the State has increased expenditures by providing a
variety of tax credits, including renters' and senior citizens' credits and
energy credits.
The State is subject to an annual "appropriations limit" imposed by
Article XIIIB of the State Constitution adopted in 1979. Article XIIIB
prohibits the State from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitations" are authorizations to spend "proceeds of taxes," which consist
of tax revenues, and certain other funds, including proceeds from
regulatory licenses, user charges or other fees to the extent that such
proceeds exceed "the cost reasonably borne by such entity in providing the
regulation, product or service." One of the exclusions from these
limitations is "debt service" (defined as "appropriations required to pay
the cost of interest and redemption charges, including the funding of any
reserve or sinking fund required in connection therewith, on indebtedness
existing or legally authorized as of January 1, 1979 or on bonded
indebtedness thereafter approved" by the voters). In addition,
appropriations required to comply with mandates of courts or the Federal
government and, pursuant to Proposition 111 enacted in June 1990,
appropriations for qualified capital outlay projects and appropriations of
revenues derived from any increase in gasoline taxes and motor vehicle
weight fees above January 1, 1990 levels are not included as appropriations
subject to limitation. In addition, a number of recent initiatives were
structured or proposed to create new tax revenues dedicated to certain
specific uses, with such new taxes expressly exempted from the Article
XIIIB limits (e.g., increased cigarette and tobacco taxes enacted by
Proposition 99 in 1988). The appropriations limit also may be exceeded in
cases of emergency. However, unless the emergency arises from civil
disturbance or natural disaster declared by the Governor, and the
appropriations are approved by two-thirds of the Legislature, the
appropriations limit for the next three years must be reduced by the amount
of the excess.
The State's appropriations limit in each year is based on the limit
for the prior year, adjusted annually for changes in California per capita
personal income and changes in population, and adjusted, when applicable,
for any transfer of financial responsibility of providing services to or
from another unit of government. The measurement of change in population
is a blended average of statewide overall population growth, and change in
attendance at local school and community college ("K-14") districts. As
amended by Proposition 111, the appropriations limit is tested over
consecutive two-year periods. Any excess of the aggregate "proceeds of
taxes" received over such two-year periods above the combined
appropriations limits for those two years is divided equally between
transfers to K-14 districts and refunds to taxpayers.
As originally enacted in 1979, the State's appropriations limit was
based on its 1978-79 fiscal year authorizations to expend proceeds of taxes
and was adjusted annually to reflect changes in cost of living and
population (using different definitions, which were modified by Proposition
111). Commencing with the 1991-92 fiscal year, the State's appropriations
limit is adjusted annually based on the actual 1986-87 limit, and as if
Proposition 111 had been in effect. The State Legislature has enacted
legislation to implement Article XIIIB which defines certain terms used in
Article XIIIB and sets forth the methods for determining the State's
appropriations limit. Government Code Section 7912 requires an estimate of
the State's appropriations limit to be included in the Governor's Budget,
and thereafter to be subject to the budget process and established in the
Budget Act.
For the 1990-91 fiscal year, the State appropriations limit was $32.7
billion, and appropriations subject to limitation were $7.51 billion under
the limit. The limit for the 1991-92 fiscal year was $34.2 billion, and
appropriations subject to limitations were $3.8 billion under the limit.
The limit for the 1992-93 fiscal year was $35.01 billion, and the
appropriations subject to limitation were $7.53 billion under the limit.
The limit for the 1993-94 fiscal year was $36.60 billion, and the
appropriations subject to limitation were $6.74 billion under the limit.
The limit for the 1994-95 fiscal year was $37.55 billion, and the
appropriations subject to limitations were $5.93 billion under the limit.
The estimated limit for the 1995-96 fiscal year is $39.31 billion, and the
appropriations subject to limitations are estimated to be $6.47 billion
under the limit.
In November 1988, State voters approved Proposition 98, which changed
State funding of public education below the university level and the
operation of the State's appropriations limit, primarily by guaranteeing K-
14 schools a minimum share of General Fund revenues. Under Proposition 98
(as modified by Proposition 111, which was enacted in June 1990), K-14
schools are guaranteed the greater of (a) 40.3% of General Fund revenues
("Test 1"), (b) the amount appropriated to K-14 schools in the prior year,
adjusted for changes in the cost of living (measured as in Article XIIIB by
reference to California per capita personal income) and enrollment ("Test
2"), or (c) a third test, which would replace the second test in any year
when the percentage growth in per capita General Fund revenues from the
prior year plus .5% is less than the percentage growth in California per
capita personal income ("Test 3"). Under "Test 3," schools would receive
the amount appropriated in the prior year adjusted for changes in
enrollment and per capita General Fund revenues, plus an additional small
adjustment factor. If "Test 3" is used in any year, the difference between
"Test 3" and "Test 2" would become a "credit" to schools which would be the
basis of payments in future years when per capita General Fund revenue
growth exceeds per capita personal income growth.
Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools'
minimum funding formula for a one-year period. In the fall of 1989, the
Legislature and the Governor utilized this provision to avoid having 40.3%
of revenues generated by a special supplemental sales tax enacted for
earthquake relief go to K-14 schools. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the Article
XIIIB limit to K-14 schools.
The 1991-92 Budget Act, applying "Test 2" of Proposition 98,
appropriated approximately $18.5 billion for K-14 schools pursuant to
Proposition 98. During the course of the fiscal year, revenues proved to
be substantially below expectations. By the time the Governor's Budget was
introduced in January 1992, it became clear that per capita growth in
General Fund revenues for 1991-92 would be far smaller than the growth in
California per capita personal income and the Governor's Budget therefore
reflected a reduction in Proposition 98 funding in 1991-92 by applying
"Test 3" rather than "Test 2."
In response to the changing revenue situation and to fully fund the
Proposition 98 guarantee in both the 1991-92 and 1992-93 fiscal years
without exceeding it, the Legislature enacted several bills as part of the
1992-93 budget package which responded to the fiscal crisis in education
funding. Fiscal year 1991-92 Proposition 98 appropriations for K-14
schools were reduced by $1.083 billion. In order to not adversely impact
cash received by school districts, however, a short-term loan was
appropriated from the non-Proposition 98 State General Fund. The
Legislature then appropriated $16.6 billion to K-14 schools for 1992-93
(the minimum guaranteed by Proposition 98), but designated $1.083 billion
of this amount to "repay" the prior year loan, thereby reducing cash
outlays in 1992-93 by that amount. In addition to reducing the 1991-92
fiscal year appropriations for K-14 schools by $1.083 billion and
converting the amount to a loan (the "inter-year adjustment"), Chapter 703,
Statutes of 1992 also made an adjustment to "Test 1," based on the
additional $1.2 billion of local property taxes that were shifted to
schools and community colleges. The "Test 1" percentage changed from 40%
to 37%. Additionally, Chapter 703 contained a provision that if an
appellate court should determine that the "Test 1" recalculation or the
inter-year adjustment is unconstitutional, unenforceable or invalid,
Proposition 98 would be suspended for the 1992-93 fiscal year, with the
result that K-14 schools would receive the amount intended by the 1992-93
Budget Act compromise.
The State Controller stated in October 1992 that, because of a
drafting error in Chapter 703, he could not implement the $1.083 billion
reduction of the 1991-92 school funding appropriation, which was part of
the inter-year adjustment. The Legislature untimely enacted corrective
legislation as part of the 1993-94 Budget package to implement the $1.083
billion inter-year adjustment as originally intended.
In the 1992-93 Budget Act, a new loan of $732 million was made to K-12
schools in order to maintain per-average daily attendance ("ADA") funding
at the same level as 1991-92, at $4,187. An additional loan of $241
million was made to community college districts. These loans are to be
repaid from future Proposition 98 entitlements. (The teachers'
organization lawsuit also seeks to declare invalid the provision making the
$732 million a loan "repayable" from future years' Proposition 98 funds.
Including both State and local funds, and adjusting for the loans and
repayments, on a cash basis, total Proposition 98 K-12 funding in 1992-93
increased to $21.5 billion, 2.4% more than the amount in 1992-93 ($21.0
billion).
Based on revised State tax revenues and estimated decreased reported
pupil enrollment, the 1993-94 Budget Act projected that the 1992-93
Proposition 98 Budget Act appropriations of $16.6 billion exceeded a
revised minimum guarantee by $313 million. As a result, the 1993-94 Budget
Act reverted $25 million in 1992-93 appropriations to the General Fund.
Limiting the reversion to this amount ensures that per ADA funding for
general purposes will remain at the prior year level of $4,217 per pupil.
The 1993-94 Governor's Budget subsequently proposed deficiency funding of
$121 million for school apportionments and special education, increasing
funding per pupil in 1992-93 to $4,244. The 1993-94 Budget Act also
designated $98 million in 1992-93 appropriations toward satisfying prior
years' guarantee levels, an obligation that resulted primarily from
updating State tax revenues for 1991-92, and designates $190 million as a
loan repayable from 1993-94 funding.
The 1993-94 Budget Act projected the Proposition 98 minimum funding
level at $13.5 billion based on the "Test 3" calculation where the
guarantee is determined by the change in per capita growth in General Fund
revenues, which are projected to decrease on a year-over-year basis. This
amount also takes into account increased property taxes transferred to
school districts from other local governments.
Legislation accompanying the 1993-94 Budget Act (Chapter 66/93)
provided a new loan of $609 million to K-12 schools in order to maintain
per ADA funding at $4,217 and a loan of $178 million to community colleges.
These loans have been combined with the K-14 1992-93 loans into one loan
totalling $1.760 billion. Repayment of this loan would be from future
years' Proposition 98 entitlements, and would be conditioned on maintaining
current funding levels per pupil for K-12 schools. Chapter 66 also reduced
the "Test 1" percentage to 35% to reflect the property tax shift among
local government agencies.
The 1994-95 Budget Act appropriated $14.4 billion of Proposition 98
funds for K-14 schools based on Test 2. This exceeded the minimum
Proposition 98 guarantee by $8 million to maintain K-12 funding per pupil
at $4,217. Based upon updated State revenues, growth rates and inflation
factors, the 1994-95 Budget Act appropriated an additional $286 million
within Proposition 98 for the 1993-94 fiscal year, to reflect a need in
appropriations for school districts and county offices of education, as
well as an anticipated deficiency in special education fundings. These and
other minor appropriation adjustments increased the 1993-94 Proposition 98
guarantee to $13.8 billion, which exceeded the minimum guarantee in that
year by $272 million and provided per pupil funding of $4,225.
The 1995-96 Governor's Budget adjusted the 1993-94 minimum guarantee
to reflect changes in enrollment and inflation, and 1993-94 Proposition 98
appropriations were increased to $14.1 billion, primarily to reflect
changes in the statutory continuous appropriation for apportionments. The
revised appropriations exceeded the minimum guarantee by $32 million. This
appropriation level still provided per-pupil funding of $4,225.
The 1994-95 Proposition 98 minimum guarantee also has been adjusted
for changes in factors described above, and was calculated to be $14.9
billion. Within the minimum guarantee, the dollars per pupil were
maintained at the prior year's level; consequently, the 1994-95 minimum
guarantee included a loan repayment of $135 million, and the per-pupil
funding increased to $4,231.
The 1995-96 Governor's Budget proposes to appropriate $15.9 billion of
Proposition 98 funds to K-14 to meet the guarantee level. Included within
the guarantee is a loan repayment of $379 million for the combined
outstanding loans of $1.76 billion. Funding per pupil is estimated to
increase by $61 over 1994-95 to $4,292.
Sources of Tax Revenue. The California personal income tax, which in
1994-95 contributed about 43% of General Fund revenues, is closely modeled
after the Federal income tax law. It is imposed on net taxable income
(gross income less exclusions and deductions). The tax is progressive with
rates ranging from 1% to 9.3%. Personal, dependent, and other credits are
allowed against the gross tax liability. In addition, taxpayers may be
subject to an alternative minimum tax ("AMT") which is much like the
Federal AMT. This is designed to ensure that excessive use of tax
preferences does not reduce taxpayers' liabilities below some minimum
level. Legislation enacted in July 1991 added two new marginal tax rates,
at 10% and 11%, effective for tax years 1991 through 1995.
The personal income tax is adjusted annually by the change in the
consumer price index to prevent taxpayers from being pushed into higher tax
brackets without a real increase in income.
The sales tax is imposed upon retailers for the privilege of selling
tangible personal property in California. Most retail sales and leases are
subject to the tax. However, exemptions have been provided for certain
essentials such as food for home consumption, prescription drugs, gas,
electricity and water. Sales tax accounted for about 34% of General Fund
revenue in 1994-95. Bank and corporation tax revenues comprised about 13%
of General Fund revenue in 1994-95. In 1989, Proposition 99 added a 25
cents per pack excise tax on cigarettes, and a new equivalent excise tax on
other tobacco products. Legislation enacted in 1993 added an additional 2
cents per pack for the purpose of funding breast cancer research.
General Financial Condition of the State. In the years following
enactment of the Federal Tax Reform Act of 1986, and conforming changes to
the State's tax laws, taxpayer behavior became more difficult to predict,
and the State experienced a series of fiscal years in which revenue came in
significantly higher or lower than original estimates. The 1989-90 fiscal
year ended with revenues below estimates and the SFEU was fully depleted by
June 30, 1990. This date essentially coincided with the date of the most
recent recession, and the State subsequently accumulated a budget deficit
in the SFEU approaching $2.8 billion at its peak. The State's budget
problems in recent years also have been caused by a structural imbalance
which has been identified by the current and previous Administrations. The
largest General Fund programs -- K-14 education, health, welfare and
corrections -- were increasing faster than the revenue base, driven by the
State's rapid population increases.
Starting in the 1990-91 fiscal year, each budget required multibillion
dollar actions to bring projected revenues and expenditures into balance
and to close large "budget gaps" which were identified. The Legislature
and Governor eventually agreed on significant cuts in program expenditures,
some transfers of program responsibilities and funding from the State to
local governments, revenue increases (particularly in the 1991-92 fiscal
year budget), and various one-time adjustments and accounting changes.
However, as the recession took hold and deepened after the summer of 1990,
revenues dropped sharply and expenditures for health and welfare programs
increased as job losses mounted, so that the State ended each of the 1990-
91 and 1991-92 fiscal years with an unanticipated deficit in the budget
reserve, the SFEU, as compared to projected positive balances.
As a result of the revenue shortfalls accumulating for the previous
two fiscal years, the Controller in April 1992 indicated that cash
resources (including borrowing from Special Funds) would not be sufficient
to meet all General Fund obligations due on June 30 and July 1, 1992. On
June 25, 1992, the Controller issued $475 million of 1992 Revenue
Anticipation Warrants (the "1992 Warrants") in order to provide funds to
cover all necessary payments from the General Fund at the end of the 1991-
92 fiscal year and on July 1, 1992. The 1992 Warrants were paid on July 24,
1992. In addition to the 1992 Warrants, the Controller reported that as of
June 30, 1992, the General Fund had borrowed $1.336 billion from the SFEU
and $4.699 billion from other Special Funds, using all but about $183
million of borrowable cash resources.
To balance the 1992-93 Governor's Budget, program reductions totalling
$4.365 billion and a revenue and transfer increase of $872 million were
proposed for the 1991-92 and 1992-93 fiscal years. Economic performance in
the State continued to be sluggish after the 1992-93 Governor's Budget was
prepared. By the time of the "May Revision," issued on May 20, 1992, the
Administration estimated that the 1992-93 Budget needed to address a gap of
about $7.9 billion, much of which was needed to repay the accumulated
budget deficits of the previous two years.
The severity of the budget actions needed led to a long delay in
adopting the budget. With the failure to enact a budget by July 1, 1992,
the State had no legal authority to pay many of its vendors until the
budget was passed. Starting on July 1, 1992, the Controller was required
to issue "registered warrants" in lieu of normal warrants backed by cash to
pay many State obligations. Available cash was used to pay
constitutionally mandated and priority obligations, such as debt service on
bonds and revenue anticipation warrants. Between July 1 and September 4,
1992, the Controller issued an aggregate of approximately $3.8 billion of
registered warrants payable from the General Fund, all of which were called
for redemption by September 4, 1992 following enactment of the 1992-93
Budget Act and issuance by the State of $3.3 billion of interim notes.
The Legislature enacted the 1992-93 Budget Bill on August 29, 1992,
and it was signed by the Governor on September 2, 1992. The 1992-93 Budget
Act provided for expenditures of $57.4 billion and consisted of General
Fund expenditures of $40.8 billion and Special Fund and Bond Fund
expenditures of $16.6 billion. The Department of Finance estimated a
balance in the SFEU of $28 million on June 30, 1993.
The $7.9 billion budget gap was closed primarily through cuts in the
program expenditures (principally for health and welfare programs, aid to
schools and support for higher education), together with some increases in
revenues from accelerated collections and changes in tax laws to confirm to
Federal law changes, and a variety of on-time inter-fund transfers and
deferrals. The other major component of the budget compromise was a law
requiring local governments to transfer a total of $1.3 billion to K-12
school and community college districts, thereby reducing by that amount
General Fund support for those districts under Proposition 98.
In May 1993, the Department of Finance projected that the General Fund
would end the fiscal year on June 30, 1993 with an accumulated budget
deficit of about $2.8 billion, and a negative fund balance of about $2.2
billion (the difference being certain reserves for encumbrances and school
funding costs). As a result, the State issued $5 billion of revenue
anticipation notes and warrants.
The Governor's 1993-94 Budget, introduced on January 8, 1993, proposed
General Fund expenditures of $37.3 billion, with projected revenues of
$39.9 billion. It also proposed Special Fund expenditures of $12.4 billion
and Special Fund revenues of $12.1 billion. The 1993-94 fiscal year
represented the third consecutive year the Governor and the Legislature
were faced with a very difficult budget environment, requiring revenue
actions and expenditure cuts totaling billions of dollars to produce a
balanced budget. To balance the budget in the face of declining revenues,
the Governor proposed a series of revenue shifts from local government,
reliance on increased Federal aid and reductions in state spending.
The "May Revision" of the Governor's Budget, released on May 20, 1993,
indicated that the revenue projections of the January Budget Proposal were
tracking well, with the full year 1992-93 about $80 million higher than the
January projection. Personal income tax revenue was higher than projected,
sales tax was close to target, and bank and corporation taxes were lagging
behind projections. The May Revision projected the State would have an
accumulated deficit of about $2.75 billion by June 30, 1993. The Governor
proposed to eliminate this deficit over an 18-month period. He also agreed
to retain the 0.5% sales tax scheduled to expire June 30 for a six-month
period, dedicated to local public safety purposes, with a November election
to determine a permanent extension. Unlike previous years, the Governor's
Budget and May Revision did not calculate a "gap" to be closed, but rather
set forth revenue and expenditure forecasts and proposals designed to
produce a balanced budget.
The 1993-94 Budget Act was signed by the Governor on June 30, 1993,
along with implementing legislation. The Governor vetoed about $71 million
in spending. With enactment of the Budget Act, the State carried out its
regular cash flow borrowing program for the fiscal year, which included the
issuance of approximately $2 billion of revenue anticipation notes that
matured on June 28, 1994.
The 1993-94 Budget Act was predicated on General Fund revenues and
transfers estimated at $40.6 billion, about $700 million higher than the
January Governor's Budget, but still about $400 million below 1992-93 (and
the second consecutive year of actual decline). The principal reasons for
declining revenues were the continued weak economy and the expiration (or
repeal) of three fiscal steps taken in 1991--a half cent temporary sales
tax, a deferral of operating loss carry forwards, and repeal by initiative
of a sales tax on candy and snack foods.
The 1993-94 Budget Act also assumed Special Fund revenues of $11.9
billion, an increase of 2.9% over 1992-93.
The 1993-94 Budget Act included General Fund expenditures of $38.5
billion (a 6.3% reduction from projected 1992-93 expenditures of $41.1
billion), in order to keep a balanced budget within the available revenues.
The Budget also included Special Fund expenditures of $12.1 billion, a 4.2%
increase.
The 1993-94 Budget Act contained no General Fund tax/revenue increases
other than a two year suspension of the renters' tax credit.
Administration reports during the course of the 1993-94 fiscal year
indicated that while economic recovery appeared to have started in the
second half of the fiscal year, recessionary conditions continued longer
than had been anticipated when the 1993-94 Budget Act was adopted.
Overall, revenues for the 1993-94 fiscal year were about $800 million lower
than original projections, and expenditures were about $780 million higher,
primarily because of higher health and welfare caseloads, lower property
taxes which require greater State support for K-14 education to make up to
shortfall, and lower than anticipated Federal government payments for
immigration-related costs. The reports in May and June 1994, indicated that
revenues in the second half of the 1993-94 fiscal year were very close to
the projections made in the Governor's Budget of January 10, 1994, which
was consistent with a slow turn around in the economy.
The Department of Finance's July 1994 Bulletin, which included final
June receipts, reported that June revenues were $114 million (2.5%) above
projection, with final end-of-year results at $377 million (about 1%) above
the May Revision projections. Part of this result was due to the end-of-
year adjustments and reconciliations. Personal income tax and sales tax
continued to track projections. The largest factor in the higher than
anticipated revenues was from bank and corporation taxes, which were $140
million (18.4%) above projection in June.
During the 1993-94 fiscal year, the State implemented the Deficit
Retirement Plan, which was part of the 1993-94 Budget Act, by issuing $1.2
billion of revenue anticipation warrants in February 1994 that matured
December 21, 1994. This borrowing reduced the cash deficit at the end of
the 1993-94 fiscal year. Nevertheless, because of the $1.5 billion
variance from the original 1993-94 Budget Act assumptions, the General Fund
ended the fiscal year at June 30, 1994 carrying forward an accumulated
deficit of approximately $1.8 billion.
Because of the revenue shortfall and the State's reduced internal
borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the Deficit Retirement Plan, the
State issued an additional $2.0 billion of revenue anticipation warrants
that matured July 26, 1994, which were needed to fund the State's
obligations and expenses through the end of the 1993-94 fiscal year.
The 1994-95 fiscal year represented the fourth consecutive year the
Governor and Legislature were faced with a very difficult budget
environment to produce a balanced budget. Many program cost and budgetary
adjustments had already been made in the last three years. The Governor's
Budget Proposal, as updated in May and June 1994, recognized that the
accumulated deficit could not be repaid in one year, and proposed a two-
year solution. The budget proposal set forth revenue and expenditure
forecasts and revenue and expenditure proposals which estimated operating
surpluses for the budget for both 1994-95 and 1995-96, and lead to the
elimination of the accumulated budget deficit, estimated at about $1.8
billion at June 30, 1994, by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on July 8, 1994,
projected revenues and transfers of $41.9 billion, $2.1 billion higher than
revenues in 1993-94. This reflected the Administration's forecast of an
improving economy. Also included in this figure was the projected receipt
of about $360 million from the Federal government to reimburse the State's
cost of incarcerating undocumented immigrants, most of which eventually was
not received.
The 1994-95 Budget Act projected Special Fund revenues of $12.1
billion, a decrease of 2.4% from 1993-94 estimated revenues.
The 1994-95 Budget Act projected General Fund expenditures of $40.9
billion, an increase of $1.6 billion over the 1993-94 fiscal year. The
1994-95 Budget Act also projected Special Fund expenditures of $13.7
billion, a 5.4% increase over 1993-94 fiscal year estimated expenditures.
The 1994-95 Budget Act contained no tax increases. Under legislation
enacted for the 1993-94 Budget Act, the renters' tax credit was suspended
for two years (1993 and 1994). A ballot proposition to permanently restore
the renters' tax credit after 1995 failed at the June 1994 election. The
Legislature enacted a further one-year suspension of the renters' tax
credit, for 1995, saving about $390 million in the 1995-96 fiscal year.
The 1994-95 Budget Act assumed that the State would use a cash flow
borrowing program in 1994-95 which combines one-year notes and two-year
warrants, which were issued. Issuance of the warrants allows the State to
defer repayment of approximately $1.0 billion of its accumulated budget
deficit into the 1995-96 fiscal year. The Budget Adjustment Law enacted
along with the 1994-95 Budget Act is designed to ensure that the warrants
will be repaid in the 1995-96 fiscal year.
The Department of Finance Bulletin for April 1995 reported that
General Fund revenues for March 1995 were $28 million, or 1.1%, below
forecast, and that year-to-date General Fund revenues were $110 million, or
0.4%, below forecast.
Initial analysis of the Federal fiscal year 1995 budget by the
Department of Finance indicates that about $98 million was appropriated for
California to offset costs of incarceration of undocumented and refugee
immigrants, less than the $356 million which was assumed in the State's
1994-95 Budget Act.
For the first time in four years, the State entered the upcoming 1995-
96 fiscal year with strengthening revenues based on an improving economy.
On January 10, 1995, the Governor presented his 1995-96 Fiscal Year Budget
Proposal (the "Proposed Budget"). The Proposed Budget estimated General
Fund revenues and transfers of $42.5 billion (an increase of 0.2% over
1994-95). This nominal increase from 1994-95 fiscal year reflected the
Governor's realignment proposal and the first year of his tax cut proposal.
Without these two proposals, General Fund revenues would have been
projected at approximately $43.8 billion, or an increase of 3.3% over 1994-
95. Expenditures were estimated at $41.7 billion (essentially unchanged
from 1994-95). Special Fund revenues were estimated at $13.5 billion
(10.7% higher than 1994-95) and Special Fund expenditures were estimated at
$13.8 billion (12.2% higher than 1994-95). The Proposed Budget projected
that the General Fund would end the fiscal year at June 30, 1996 with a
budget surplus in SFEU of about $92 million, or less than 1% of General
Fund expenditures, and will have repaid all of the accumulated budget
deficits. The Department of Finance projected in June 1996 that the
General Fund would end the fiscal year at June 30, 1996 with a budget
surplus in SFEU of $ $28 million.
On January 10, 1996, the Governor released his proposed budget for the
Fiscal Year 1996-97 (the "Governor's Budget"). The Governor requested
total General Fund appropriations of about $45.2 billion, based on
projected revenues and transfers of about $45.6 billion, which would leave
a budget reserve in SFEU at June 30, 1997 of about $400 million. The
Governor renewed a proposal, which had been rejected by the Legislature in
1995, for a 15% phased cut in individual and corporate tax rates over three
years (the budget proposal assumes this will be enacted, reducing revenues
in 1996-97 by about $600 million). There was also a proposal to
restructure trial court funding in a way which would result in a $300
million decrease in General Fund revenues. The Governor requested
legislation to make permanent a moratorium on cost of living increases for
welfare payments, and suspension of a renters tax credit, which otherwise
would go back into effect in the 1996-97 Fiscal Year. He further proposed
additional cuts in certain health and welfare programs, and assumed that
cuts previously approved by the Legislature will receive Federal approval.
The Governor's Budget proposes increases in funding for K-12 schools under
Proposition 98, for State higher education systems (with a second year of
no student fee increases), and for corrections. The Governor's Budget
projects external cash flow borrowing of up to $3.2 billion, to mature by
June 30, 1997.
Recent Economic Trends. Revised employment data indicate that
California's recession ended in 1993, and following a period of stability,
a solid recovery is now underway. The State's unemployment rate fell
sharply last year, from 10.1% in January to 7.7% in October and November
1994. The gap between the national and California jobless rates narrowed
from 3.4 percentage points at the beginning of 1994 to an average of 2
percentage points in October and November. The number of unemployed
Californians fell by nearly 400,000 during the year, while civilian
employment increased more than 300,000 in 1994.
Other indicators, including retail sales, homebuilding activity,
existing home sales and bank lending volume all confirm the State's
recovery.
Personal income was severely affected by the Northridge Earthquake,
which reduced the first quarter 1994 figure by $22 billion at an annual
rate, reflecting the uninsured damage to residences and unincorporated
businesses. As a result, personal income growth for all of 1994 was about
4.2%. However, excluding the Northridge effects, growth would have been in
excess of 5%. Personal income is expected to grow 6.6% for 1995.
Connecticut Series
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 1994 manufacturing employment declined 35.4%, while non-
manufacturing employment increased 66.3%, particularly in the service,
trade and finance categories, resulting in an increase of 28.8% 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.
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
these 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 1994 was $95.1 billion, a 3.3% increase over the previous
year. Total personal income in the State increased 18.0% from 1989 to 1994
and 11.6% from 1991 to 1994. According to U.S. Department of Commerce
projections, the State is expected to continue to rank among the highest in
State per capita income. For 1994, the estimated rate of unemployment (on
a seasonably adjusted basis) in the State was 5.6%.
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, $28.0 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 April 4, 1996, $311,055,000 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 State's 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
Comptroller's annual report for the fiscal year ended June 30, 1995
reflected a General Fund operating surplus of $80.5 million, which was
transfer to the Budget Reserve Fund.
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. On a GAAP basis
the cumulative deficit was $576.9 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
1995-96 and 1996-97, the adopted budget anticipates General Fund
expenditures of $9.055 billion and $9.201 billion, respectively, and
General Fund revenues of $8.988 billion and $9.203 billion, respectively.
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.
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.
As of April 4, 1996, the General Assembly has empowered, pursuant to
bonds acts in effect, the State Bond Commission to authorize general
obligation bonds in the amount of $10,534,394,000. As of April 4, 1996,
the State Bond Commission has authorized $9,381,215,000 in such bonds and
the balance of $1,153,179,000 was available for authorization. From such
total authorizations of $9,381,215,000, bonds in the aggregate of
$8,237,794,000 have been issued and the balance of $1,143,421,000 remained
authorized but unissued as of April 4, 1996.
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.
Florida Series
Revenues and Expenditures. Financial operations of the State of
Florida covering all receipts and expenditures are maintained through the
use of three funds: General Revenue Fund, Trust Funds and Working Capital
Fund. The General Revenue Fund receives the majority of State tax
revenues. The Trust Funds consist of monies received by the State which
under law or trust agreement are segregated for a purpose authorized by
law. Revenues in the General Revenue Fund which are in excess of the
amount needed to meet appropriations may be transferred to the Working
Capital Fund. Beginning in 1993-94, the Florida Constitution requires that
the State establish a Budget Stabilization Fund. This fund is to contain a
balance of at least 1% of the previous year's net General Revenue
collections in 1994-95, 2% in 1995-96, 3% in 1996-97, 4% in 1997-98 and 5%
in 1998-99 and thereafter. These moneys can be only spent for the purpose
of covering revenue shortfalls and for emergency purposes as defined by
general law. Implementing legislation establishing this fund was enacted
during the 1994 Session of the Florida legislature.
In November of 1994, Florida voters approved an amendment to the
Florida Constitution which set forth limitations on revenue collections by
the State. With certain exceptions, State revenues collected for any
fiscal year are limited to State revenues allowed under the amendment for
the prior fiscal year plus an adjustment for growth.
As used in the amendment, "growth" means an amount equal to the
average annual rate of growth in Florida personal income over the most
recent twenty quarters times the State revenues allowed under the amendment
for the prior fiscal year. For the 1995-1996 fiscal year, the State
revenues allowed under the amendment for the prior fiscal year shall equal
the State revenues collected for the 1994-1995 fiscal year. Florida
personal income will be determined by the Legislature, from information
available from the United States Department of Commerce or its successor on
the first day of February prior to the beginning of the fiscal year. State
revenues collected for any fiscal year in excess of this limitation will be
transferred to the Budget Stabilization Fund until the fund reaches the
maximum balance specified above, and thereafter shall be refunded to
taxpayers as provided by general law. State revenues allowed under the
amendment for any fiscal year may be increased by a two-thirds vote of the
membership of each house of the Florida Legislature.
For purposes of the amendment "State revenues" means taxes, fees,
licenses, and charges for services imposed by the Legislature on
individuals, businesses, or agencies outside State government. However,
"State revenues" does not include: revenues that are necessary to meet the
requirements set forth in documents authorizing the issuance of bonds by
the State; revenues that are used to provide matching funds for the federal
Medicaid program with the exception of the revenues used to support the
Public Medical Assistance Trust Fund or its successor program and with the
exception of State matching funds used to fund elective expansions made
after July 1, 1994; proceeds from the State Lottery returned as prizes;
receipts of the Florida Hurricane Catastrophe Fund; balances carried
forward from prior fiscal years; taxes, licenses, fees and charges for
services imposed by local, regional, or school district governing bodies;
or revenue from taxes, licenses, fees and charges for services required to
be imposed by any amendment or revision to the Constitution after July 1,
1994. An adjustment to the revenue limitation will be made by general law
to reflect the fiscal impact of transfers of responsibility for the funding
of governmental functions between the State and other levels of government.
The amendment became effective January 1, 1995.
The Florida Constitution and Statutes mandate that the State budget as
a whole, and each separate fund within the State budget, be kept in balance
from currently available revenues each State fiscal year.
Florida ended fiscal years 1993-94 and 1994-95 with General Revenue
plus Working Capital Funds unencumbered reserves of approximately $351.8
million and $319.5 million, respectively. Estimated fiscal year 1995-96
General Revenue plus Working Capital Funds available total $14.99 billion.
Total effective appropriations for the 1995-96 fiscal year are estimated at
$14.85 billion, resulting in estimated unencumbered reserves of $140.0
million at the end of the fiscal year.
In fiscal year 1994-95, the State derived approximately 61% of its
total direct revenues from the General Revenue Fund, Trust Funds and
Working Capital Fund from State taxes. Federal grants and other special
revenues accounted for the remaining revenues. Major sources of tax
revenues to the General Revenue Fund are the sales and use tax, corporate
income tax, and beverage tax, which amounted to 61%, 6% and 3%,
respectively, of total General Revenue Fund receipts.
State expenditures are categorized for budget and appropriation
purposes by type of fund and spending unit, which are further subdivided by
line item. In fiscal year 1993-94, expenditures from the General Revenue
Fund for education, health and welfare and public safety amounted to
approximately 48.9%, 31.6% and 13%, respectively, of total General
Revenues.
Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax. The sales tax is 6% of the sales price
of tangible property sold at retail in the State. The use tax is 6% of the
cost price of tangible personal property when the same is not sold but is
used, or stored for use, in the State. The use tax also applies to the use
in the State of tangible personal property purchased outside Florida which
would have been subject to the sales tax if purchased from a Florida
dealer. Less than 10% of the sales tax is designated for local governments
and is distributed to the respective counties in which it is collected for
use by such counties and municipalities therein. In addition to this
distribution, local governments may (by referendum) assess a .5% or 1%
discretionary sales surtax within their county. Proceeds from this local
option sales tax are earmarked for funding local infrastructure programs
and acquiring land for public recreation or conservation or protection of
natural resources. In addition, non-consolidated counties with populations
in excess of 800,000 may levy a local option sales tax to fund indigent
health care. This tax rate may not exceed .5% and the combined levy of the
indigent health care surtax and the infrastructure surtax described above
may not exceed 1%. Furthermore, charter counties which adopted a charter
prior to June 1, 1976, and each county with a consolidated county/municipal
government, may (by referendum) assess up to a 1% discretionary sales
surtax within their county. Proceeds from this tax are earmarked for the
development, construction, maintenance and operation of a fixed guideway
rapid transit system or may be remitted to an expressway or transportation
authority for use on country roads and bridges, for a bus system, or to
service bonds financing roads and bridges. The two taxes, sales and use,
stand as complements to each other, and taken together provide a uniform
tax upon either the sale at retail or the use of all tangible personal
property irrespective of where it may have been purchased. This tax also
includes a levy on the following: (i) rentals of tangible personal
property, transient lodging and non-residential real property; (ii)
admissions to places of amusements, most sports and recreation events;
(iii) utilities, except those used in homes; and (iv) restaurant meals.
Exemptions include: groceries; medicines; hospital rooms and meals; fuels
used to produce electricity; purchases by religious, charitable and
educational nonprofit institutions; most professional, insurance and
personal service transactions; apartments used as permanent dwellings; the
trade-in value of motor vehicles; and residential utilities.
All receipts of the sales and use tax, with the exception of the tax
on gasoline and special fuels, are credited to either the General Revenue
Fund, the Solid Waste Management Trust Fund, or countries and cities. For
the State fiscal year which ended June 30, 1994, receipts from this source
were $10.505 billion, an increase of 11.4% from fiscal year 1992-93.
Motor Fuel Tax. The second largest source of State tax receipts is
the tax on motor fuels. Preliminary data show collections from this source
in the State fiscal year ended June 30, 1994, were $1.416 billion.
However, these revenues are almost entirely dedicated trust funds for
specific purposes and are not included in the State General Revenue Fund.
State and local taxes on motor fuels (gasoline and special fuel)
include several distinct fuel taxes: (i) the State sales tax on motor
fuels, levied at 6% of the average retail price per gallon of fuel, not to
fall below 6.9 cents per gallon; (ii) the State excise tax of four cents
per gallon of motor fuel, proceeds distributed to local governments; (iii)
the State Comprehensive Enhanced Transportation System (SCETS) tax, which
is levied at a rate in each county equal to two-thirds of the sum of the
county's local option motor fuel taxes; and (iv) local option motor fuel
taxes, which may range between one cent to seven cents per gallon.
Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an excise
tax on beer, wine, and liquor. This tax is one of the State's major tax
sources, with revenues totalling $559.3 million in State fiscal year ended
June 30, 1994. Alcoholic beverage receipts declined from the previous
year's total. The revenues collected from this tax are deposited into the
State's General Revenue Fund.
The 1990 Legislature established a surcharge on alcoholic beverages.
This cargo is levied on alcoholic beverages sold for consumption on
premises. The surcharge is at ten cents per ounce of liquor, ten cents per
four ounces of wine, four cents per twelve ounces of beer. Most of these
proceeds are deposited into the General Revenue Fund. In fiscal 1993-94 a
total of $95.1 million was collected.
Corporate Income Tax. Pursuant to an amendment to the State
Constitution, the State Legislature adopted, effective January 1, 1972, the
"Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations and other artificial entities for
the privilege of conducting business, deriving income or existing within
the State. This tax does not apply to natural persons who engage in a
trade or business or profession under their own or any fictitious name,
whether individually as proprietorships or in partnerships with others,
estates of decedents or incompetents, or testamentary trusts.
The tax is imposed in an amount equal to 5.5% of the taxpayer's net
corporate income for the taxable year, less a $5,000 exemption, as defined
in such Code. Net income is defined by the Code as that share of a
taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales (50%),
property (25%) and payroll (25%). All business income is apportioned and
non-business income is allocated to a single jurisdiction, usually the
State of commercial domicile.
All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year ended June 30, 1995, receipts from this
source were $1.267 billion, an increase of 3% from fiscal year 1993-94.
Documentary Stamp Tax. Deeds and other documents relating to a realty
are taxed at 70 cents per $100 of consideration, while corporate shares,
bonds, certificates of indebtedness, promissory notes, wage assignments and
retail charge accounts are taxed at 35 cents per $100 of consideration.
Documentary stamp tax collections totalled $699.7 million during fiscal
year 1994-95, posting a 10% decrease from the previous fiscal year. The
General Revenue Fund receives approximately 62% of documentary stamp tax
collections.
Gross Receipts Tax. Effective July 1, 1992, the tax rate was
increased from 2.25% to 2.5% of the gross receipts of electric, natural gas
and telecommunications services. All gross receipts utilities collections
are credited to the Public Education Capital Outlay and Debt Service Trust
Fund. In fiscal year 1994-95, gross receipts utilities tax collections
totalled $511.9 million, an increase of 9% over the previous fiscal year.
Intangible Personal Property Tax. This tax is levied on two distinct
bases: (i) stocks, bonds, including bonds secured by Florida realty,
notes, government leaseholds, interests in limited partnerships registered
with the SEC, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2 mills,
(ii) mortgages and other obligations secured by liens on Florida realty,
taxed with a non-recurring 2 mill tax.
Of the tax proceeds, 33.5% is distributed to the Municipal Revenue
Sharing Trust Fund. The remainder is distributed to the General Reserve
Fund.
Fiscal year 1994-95 total intangible personal property tax collections
were $1.055 billion, a 1% increase over the prior year.
Severance Taxes. The severance tax includes the taxation of oil, gas
and sulfur production and a tax on the severance of primarily phosphate
rock and other solid minerals. Total collections from severance taxes
totalled $56.5 million during fiscal year 1994-95, up 3% from the previous
fiscal year.
Lottery. The 1987 Legislature created the Department of the Lottery
to operate the State Lottery and setting forth the allocation of the
revenues. Of the revenues generated by the Lottery, 50% is to be returned
to the public as prizes; at least 38% is to be deposited in the Educational
Enhancement Trust Fund (for public education); and no more than 12% can be
spent on the administrative cost of operating the lottery.
Fiscal year 1994-95 produced ticket sales of $2.7 billion of which
education received approximately $1.1 billion.
New Jersey Series
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's principal
manufacturing industries produce chemicals, pharmaceuticals, electrical
equipment and instruments, machinery, services, wholesale and retail trade,
food products, and printing. Other economic activities include services,
wholesale and retail trade, insurance, tourism, petroleum refining and
truck farming.
While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. By the beginning of
the national recession in July 1990 (according to the National Bureau of
Economic Research), construction activity had already been declining in New
Jersey for nearly two years, growth had tapered off markedly in the service
sectors and the long-term downward trend of factory employment had
accelerated, partly because of a leveling off of industrial demand
nationally. The onset of recession caused an acceleration of New Jersey's
job losses in construction and manufacturing, as well as an employment
downturn in such previously growing sectors as wholesale trade, retail
trade, finance, utilities and trucking and warehousing. The net effect was
a decline in the State's total nonfarm wage and salary employment from a
peak of 3,689,800 in 1989 to a low of 3,445,000 in 1992. This loss has
been followed by an employment gain of 176,400 from May 1992 to October
1995, a recovery of 67% of the jobs lost during the recession. In July
1991, S&P lowered the State's general obligation bond rating from AAA to
AA+.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary peak
of 8.4% during 1992. Since then, the unemployment rate fell to 6.4% during
the first ten months of 1995. Despite an increase reported in December
1995, the annualized unemployment rate remained 6.4% for the fourth quarter
of 1995.
The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Sales and Use Tax collections for Fiscal Year 1996
as $4.310 billion, a 4.3% increase from Fiscal Year 1995 revenue. The
Fiscal Year 1997 estimate of $4.403 billion, is a 2.2% increase from the
Fiscal Year 1996 estimate.
The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Gross Income Tax collections for Fiscal Year 1996
of $4.547 billion, a 0.2% increase from Fiscal Year 1995 revenue. Included
in the Fiscal Year 1995 revenue is a 5% reduction of personal income tax
rates effective January 1, 1994 and a further 10% reduction of personal
income tax rates effective January 1, 1995 (on joint income under $80,000).
The estimate for fiscal year 1997 as shown in the Governor's Fiscal Year
1997 Budget Message of $4.610 billion, is a 1.4% increase from the Fiscal
Year 1996 estimate. Included in the Fiscal Year 1996 forecast is the 10%
reduction of personal income tax rates effective January 1, 1995 and a
further 15% reduction of personal income tax rates effective January 1,
1996 (on joint incomes under $80,000).
The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Corporation Business Tax collections for Fiscal
Year 1996 of $1.198 billion, a 10.4% increase from Fiscal Year 1995
revenue. Included in the Corporation Business Tax forecast is a reduction
in the Corporation Business Tax rate from 9.375% to 9.0% of net New Jersey
income. The Fiscal Year 1997 forecast as shown in the Governor's Fiscal
1997 Budget Message of $1.210 billion, represents a 1.0% increase from the
Fiscal Year 1996 estimate.
The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Other Miscellaneous Taxes Fees and Revenues
collections for Fiscal Year 1996 as $1.514 billion, a decrease from fiscal
year 1995 revenue.
The Fiscal Year 1996 revised estimates anticipate that the Legislature
will enact a Tax Amnesty program. It is estimated that a 90-day tax
amnesty will yield $70 million.
Should revenues be less than the amount anticipated in the budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent
any expenditure under any appropriation. There are additional means by
which the Governor may ensure that the State is operated efficiently and
does not incur a deficit. No supplemental appropriation may be enacted
after adoption of an appropriations act except where there are sufficient
revenues on hand or anticipated, as certified by the Governor, to meet such
appropriation. In the past when actual revenues have been less than the
amount anticipated in the budget, the Governor has exercised her plenary
powers leading to, among other actions, implementation of a hiring freeze
for all State departments and the discontinuation of programs for which
appropriations were budgeted but not yet spent.
The State appropriated approximately $15.439 billion and $16.109
billion for Fiscal 1995 and 1996, respectively. Of the $16.109 billion
appropriated in Fiscal Year 1996 from the General Fund, the Property Tax
Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $6.447 billion (40.0%) is appropriated for
State aid to local governments, $3.746 billion (23.3%) is appropriated for
grants-in-aid (payments to individuals or public or private agencies for
benefits to which a recipient is entitled by law or for the provision of
service on behalf of the State), $5.233 billion (32.5%) for Direct State
services, $466.3 million (2.9%) for debt service on State general
obligation bonds and $217.1 million (1.3%) for capital construction.
Should tax revenues be less than the amount anticipated in the Budget
for a fiscal year, the Governor may, pursuant to statutory authority,
prevent any expenditure under any appropriation. The appropriations for
Fiscal Year 1996 and for Fiscal year 1997 reflect the amounts contained in
the Governor's Fiscal Year 1997 Budget Message.
The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1993 through 1996 in the
amounts of $444.3 million, $119.9 million, $103.6 million and $466.3
million, respectively. The Governor's Fiscal Year 1997 Budget Message for
Fiscal Year 1997 includes an appropriation in the amount of $463.1 million
for principal and interest payments for general obligations bonds.
New York Series
The financial condition of New York State (the "State") and certain of
its public bodies (the "Agencies") and municipalities, particularly New
York City (the "City"), could affect the market values and marketability of
New York Municipal Obligations which may be held by the Fund. 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, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") 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.
A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economy expanded modestly during 1995. Although industries that export
goods and services abroad are expected to benefit from the lower dollar,
growth will be slowed by government cutbacks at all levels. On an average
annual basis, employment growth in 1995 was estimated to be about the same
as 1994. Both personal income and wages were estimated to have recorded
moderate gains in 1995. Employment growth is expected to slow
significantly in 1996 as the pace of national economic growth slackens,
entire industries experience consolidations, and governmental employment
continues to shrink. Personal income is estimated to increase by
approximately 5.0% in 1996.
The State's budget for the 1996-97 fiscal year was enacted by the
Legislature on July 13, 1996, more than three months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for the 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's budget as enacted
by the Legislature and signed into law by the Governor, as well as actual
results for the first quarter of the 1996-97 fiscal year.
After adjustments for comparability between fiscal years, the adopted
1996-97 budget projects a year-over-year increase in General Fund
disbursements of 0.2%. Adjusted State Funds (excluding federal grants)
disbursements are projected to increase by 1.6% from the prior fiscal year.
All Governmental Funds projected disbursements increase by 4.1% over the
prior fiscal year, after adjustments for comparability.
The 1996-97 State Financial Plan is projected to be balanced on a cash
basis. As compared to the Governor's proposed budget as revised on March
20, 1996, the State's adopted budget for 1996-97 increases General Fund
spending by $842 million, primarily from increases for education, special
education and higher education ($563 million). The balance represents
funding increases to a variety of other programs, including community
projects and increased assistance to fiscally distressed cities. Resources
used to fund these additional expenditures include $540 million in
increased revenues projected for 1996-97 based on higher-than-projected tax
collections during the first half of calendar 1996, $110 million in
projected receipts from a new State tax amnesty program, and other
resources including certain non-recurring resources. The total amount of
non-recurring resources included in the 1996-97 State budget is projected
to be $1.3 billion, or 3.9% of total General Fund receipts.
The State Financial Plan was based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward spending,
Federal financial and monetary policies, the availability of credit and the
condition of the world economy, which could have an adverse effect on the
State. There can be no assurance that the State economy will not
experience worse-than-predicted results, with corresponding material and
adverse effects on the State's projections of receipts and disbursements.
There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant
disparity between tax revenues projected from a lower recurring receipts
base and the spending required to maintain State programs at current
levels. To address any potential budgetary imbalance, the State may need
to take significant actions to align recurring receipts and disbursements
in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's outstanding
general obligation bonds from AA- to A and from A to A-, respectively. In
February 1991, Moody's lowered its rating on the City's general obligation
bonds from A to Baa1 and in July 1995, S&P lowered its rating on such bonds
from A- to BBB+. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New York
State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term notes
issued by the New York State Urban Development Corporation ("UDC") in
February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by some of its
municipalities and Agencies. For a time, in late 1975 and early 1976,
these difficulties resulted in a virtual closing of public credit markets
for State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92 million
that actually resulted was financed by issuing notes that were paid during
the first quarter of the State's 1978 fiscal year). In addition,
legislation was enacted limiting the occurrence of additional so-called
"moral obligation" and certain other Agency debt, which legislation does
not, however, apply to MAC debt.
GAAP-Basis Results--1995-96 Fiscal Year. The State completed its 1995-96
fiscal year with a combined Governmental Funds operating surplus of $432
million, which included an operating surplus in the General Fund of $380
million, in the Capital Projects Funds of $276 million and in the Debt
Service Funds of $185 million. There was an operating deficit of $409
million in the Special Revenue Funds. The State's Combined Balance Sheet
as of March 31, 1996 showed an accumulated deficit in its combined
Governmental Funds of $1.23 billion, reflecting liabilities of $14.59
billion and assets of $13.35 billion. This accumulated Governmental Funds
deficit includes a $2.93 billion accumulated deficit in the General Fund
and an accumulated deficit of $712 million in the Capital Projects Fund
type as partially offset by accumulated surpluses of $468 million and $1.94
billion in the Special Revenue and Debt Service fund types, respectively.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance
Sheet as of March 31, 1995 showed an accumulated deficit in its combined
governmental funds of $1.666 billion reflecting liabilities of $14.778
billion and assets of $13.112 billion. This accumulated governmental funds
deficit includes a $3.308 billion accumulated deficit in the General Fund,
as well as accumulated surpluses in the special Revenue and Debt Service
fund types of $877 million and $1.753 billion, respectively, and a $988
million accumulated deficit in the Capital Projects fund type.
The State completed its 1994-95 fiscal year with a combined
Governmental Funds operating deficit of $1.791 billion, which included
operating deficits in the General Fund of $1.426 billion, in the Capital
Projects Funds of $366 million, and in the Debt Service Funds of $38
million. There was an operating surplus in the Special Revenue Funds of
$39 million.
GAAP-Basis Results--1993-94 Fiscal Year. The State reported a General Fund
operating surplus of $914 million for the 1993-94 fiscal year, as compared
to an operating surplus of $2.065 billion for the prior fiscal year. The
1993-94 fiscal year surplus reflects several major factors, including the
cash basis surplus recorded in 1993-94, the use of $671 million of the
1992-93 surplus to fund operating expenses in 1993-94, net proceeds of $575
million in bonds issued by the New York Local Government Assistance
Corporation ("LGAC") and the accumulation of a $265 million balance in the
Contingency Reserve Fund ("CRF"). Revenues increased $543 million (1.7%)
over prior fiscal year revenues with the largest increase occurring in
personal income taxes. Expenditures increased $1.659 billion (5.6%) over
the prior fiscal year, with the largest increase occurring in State aid for
social services programs.
The Special Revenue fund and Debt Service fund ended 1993-94 with
operating surpluses of $149 million and $23 million, respectively. The
Capital Projects fund ended with an operating deficit of $35 million.
GAAP-Basis Results--1992-93 Fiscal Year. The State completed its 1992-93
fiscal year with a GAAP-basis operating surplus of $2.065 billion in the
General Fund and an accumulated deficit of $2.551 billion. The Combined
Statement of Revenues, Expenditures and Changes in Fund Balances reported
total revenues of $31.085 billion, total expenditures of $29.337 billion,
and net other financing sources and uses of $317 million. The surplus
primarily reflects the 1992-93 cash-basis surplus and the net proceeds of
$881 million in bonds issued by LGAC.
The Special Revenue, Debt Service and Capital Projects fund types
ended the 1992-93 fiscal year with GAAP-basis operating surpluses of $131
million, $381 million, and $57 million, respectively.
State Financial Plan--Cash-Basis Results--General Fund. The General
Fund is the principal operating fund of the State and is used to account
for all financial transactions, except those required to be accounted for
in another fund. It is the State's largest fund and receives almost all
State taxes and other resources not dedicated to particular purposes.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types.
In the State's 1996-97 fiscal year, the General Fund is expected to
account for approximately 47% of total Governmental Funds disbursements and
71% of total State Funds disbursements. The General Fund is projected to
be balanced on a cash basis for the 1996-97 fiscal year. Total receipts
and transfers from other funds are projected to be $33.17 billion, an
increase of $365 million from the prior fiscal year. Total General Fund
disbursements and transfers to other funds are projected to be $33.12
billion, an increase of $444 million from the total in the prior fiscal
year.
New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State
incurred General Fund operating deficits that were closed with receipts
from the issuance of tax and revenue anticipation notes ("TRANs"). First,
the national recession, and then the lingering economic slowdown in the New
York and regional economy, resulted in repeated shortfalls in receipts and
three budget deficits. During its last four fiscal years, however, the
State recorded balanced budgets on a cash basis, with positive fund
balances as described below.
The State ended its 1995-96 fiscal year on March 31, 1996 with a
General Fund cash surplus. The Division of the Budget reported that
revenues exceeded projections by $270 million, while spending for social
service programs was lower than forecast by $120 million and all other
spending was lower by $55 million. From the resulting benefit of $445
million, a $65 million voluntary deposit was made into the Tax
Stabilization Reserve Fund ("TSRF"), and $380 million was used to reduce
1996-97 Financial Plan liabilities by accelerating 1996-97 payments,
deferring 1995-96 revenues, and making a deposit to the tax refund reserve
account.
The General Fund closing fund balance was $287 million, an increase of
$129 million from 1994-95 levels. The $129 million change in fund balance
is attributable to the $65 million voluntary deposit to the TSRF, a $15
million required deposit to the TSRF, a $40 million deposit to the
Contingency Reserve Fund ("CRF"), and a $9 million deposit to the Revenue
Accumulation Fund. The closing fund balance includes $237 million on
deposit in the TSRF, to be used in the event of any future General Fund
deficit as provided under the State Constitution and State Finance Law. In
addition, $41 million is on deposit in the CRF. The CRF was established in
State fiscal year 1993-94 to assist the State in financing the costs of
extraordinary litigation. The remaining $9 million reflects amounts on
deposit in the Revenue Accumulation Fund. This fund was created to hold
certain tax receipts temporarily before their deposit to other accounts.
In addition, $678 million was on deposit in the tax refund reserve account,
of which $521 million was necessary to complete the restructuring of the
State's cash flow under the New York Local Government Assistance
Corporation ("LGAC") program.
General Fund receipts totaled $32.81 billion, a decrease of 1.1% from
1994-95 levels. This decrease reflects the impact of tax reductions
enacted and effective in both 1994 and 1995. General Fund disbursements
totaled $32.68 billion for the 1995-96 fiscal year, a decrease of 2.2% from
1994-95 levels.
The State ended its 1994-95 fiscal year with the General Fund in
balance. The $241 million decline in the fund balance reflects the planned
use of $264 million from the CRF, partially offset by the required deposit
of $23 million to the TSRF. In addition, $278 million was on deposit in
the tax refund reserve account, $250 million of which was deposited to
continue the process of restructuring the State's cash flow as part of the
LGAC program. The closing fund balance of $158 million reflects $157
million in the TSRF and $1 million in the CRF.
General Fund receipts totaled $33.16 billion, an increase of 2.9% from
1993-94 levels. General Fund disbursements totaled $33.40 billion for the
1994-95 fiscal year, an increase of 4.7% from the previous fiscal year.
The increase in disbursements was primarily the result of one-time
litigation costs for the State, funded by the use of the CRF, offset by
$188 million in spending reductions initiated in January 1995 to avert a
potential gap in the 1994-95 State Financial Plan. These actions included
savings from a hiring freeze, halting the development of certain services,
and the suspension of non-essential capital projects.
The State ended its 1993-94 fiscal year with a General Fund cash
surplus, primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. A deposit of $268 million was
made to the CRF, with a withdrawal during the year of $3 million, and a
deposit of $67 million was made to the TSRF. These three transactions
resulted in the change in fund balance of $332 million. In addition, a
deposit of $1.14 billion was made to the tax refund reserve account, of
which $1.03 billion was available for budgetary purposes in the 1994-95
fiscal year. The remaining $114 million was redeposited in the tax refund
reserve account at the end of the State's 1994-95 fiscal year to continue
the process of restructuring the State's cash flow as part of the LGAC
program. The General Fund closing balance was $399 million, of which $265
million was on deposit in the CRF and $134 million in the TSRF. The CRF
was initially funded with a transfer of $100 million attributable to a
positive margin recorded in the 1992-93 fiscal year.
General Fund receipts totaled $32.23 billion, an increase of 2.6% from
1992-93 levels. General Fund disbursements totaled $31.90 billion for the
1993-94 fiscal year, 3.5% higher than the previous fiscal year. Receipts
were higher in part due to improved tax collections from renewed State
economic growth, although the State continued to lag behind the national
economic recovery. Disbursements were higher due in part to increased
local assistance costs for school aid and social services, accelerated
payment of certain Medicaid expenses, and the cost of an additional payroll
for State employees.
Cash-Basis Results--Other Governmental Funds. Activity in the three other
governmental funds has remained relatively stable over the last three
fiscal years, with Federally-funded programs comprising approximately two-
thirds of these funds. The most significant change in the structure of
these funds has been the redirection, beginning in the 1993-94 fiscal year,
of a portion of transportation-related revenues from the General Fund to
two new dedicated funds in the Special Revenue and Capital Projects Fund
types. These revenues are used to support the capital programs of the
Department of Transportation and the Metropolitan Transportation Authority
("MTA").
The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and
include all moneys received from the Federal government. Revenues in
Special Revenue Funds in the State's 1995-96 fiscal year increased $1.45
billion over the prior fiscal year as a result of increases in federal
grants and lottery revenues. Disbursements from Special Revenue Funds in
the State's 1995-96 fiscal year increased $1.21 billion over the prior
fiscal year as a result of increased costs for social services programs and
an increase in the distribution of lottery proceeds to school districts.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Revenues in the Capital
Projects Funds in the State's 1995-96 fiscal year increased $260 million
primarily because a larger share of the petroleum business tax was shifted
from the General Fund to the Dedicated Highway and Bridge Trust Fund and by
an increase in federal grant revenues. Expenditures increased $194 million
because of increased expenditures for education and health and
environmental projects.
The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Revenues in the Debt Service
Funds in the State's 1995-96 fiscal year increased $10 million because of
increases in both dedicated taxes and mental hygiene patient fees.
Expenditures increased $201 million.
State Borrowing Plan. The State anticipates that its capital programs
will be financed, in part, through borrowings by the State and public
authorities in the 1996-97 fiscal year. The State expects to issue $411
million in general obligation bonds (including $153.6 million for purposes
of redeeming outstanding BANs) and $154 million in general obligation
commercial paper. The Legislature has also authorized the issuance of up
to $101 million in COPs during the State's 1996-97 fiscal year for
equipment purchases. The projection of the State regarding its borrowings
for the 1996-97 fiscal year may change if circumstances require.
State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1995, there were 17 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies was $73.45 billion as of September
30, 1995. As of March 31, 1995, aggregate Agency debt outstanding as
State-supported debt was $27.9 billion and as State-related was $36.1
billion. Debt service on the outstanding Agency obligations normally is
paid out of revenues generated by the Agencies' projects or programs, but
in recent years the State has provided special financial assistance, in
some cases on a recurring basis, to certain Agencies for operating and
other expenses and for debt service pursuant to moral obligation
indebtedness provisions or otherwise. Additional assistance is expected to
continue to be required in future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to
meet their obligations could result in a default by one or more of such
Agencies. If a default were to occur, it would likely have a significant
effect on the marketability of obligations of the State and the Agencies.
These Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and
nursing home development, and other programs. In general, HFA depends upon
mortgagors in the housing programs it finances to generate sufficient funds
from rental income, subsidies and other payments to meet their respective
mortgage repayment obligations to HFA, which provide the principal source
of funds for the payment of debt service on HFA bonds, as well as to meet
operating and maintenance costs of the projects financed. From January 1,
1976 through March 31, 1987, the State was called upon to appropriate a
total of $162.8 million to make up deficiencies in the debt service reserve
funds of HFA pursuant to moral obligation provisions. The State has not
been called upon to make such payments since the 1986-87 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable
to make full payments on their mortgage loans. Through a subsidiary, UDC
is currently attempting to increase its rate of collection by accelerating
its program of foreclosures and by entering into settlement agreements.
UDC has been, and will remain, dependent upon the State for appropriations
to meet its operating expenses. The State also has appropriated money to
assist in the curing of a default by UDC on notes which did not contain the
State's moral obligation provision.
The MTA oversees New York City's subway and bus lines by its
affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA"). Through
MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North
Commuter Railroad Company and the Metropolitan Suburban Bus Authority, the
MTA operates certain commuter rail and bus lines in the New York
metropolitan area. In addition, the Staten Island Rapid Transit Authority,
an MTA subsidiary, operates a rapid transit line on Staten Island. Through
its affiliated agency, the Triborough Bridge and Tunnel Authority (the
"TBTA"), the MTA operates certain toll bridges and tunnels. Because fare
revenues are not sufficient to finance the mass transit portion of these
operations, the MTA has depended and will continue to depend for operating
support upon a system of State, local government and TBTA support and, to
the extent available, Federal operating assistance, including loans, grants
and subsidies. If current revenue projections are not realized and/or
operating expenses exceed current projections, the TA or commuter railroads
may be required to seek additional State assistance, raise fares or take
other actions.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. In
addition, since 1987, State law has required that the proceeds of .25%
mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. Further, in 1993, the State dedicated a portion of
certain additional State petroleum business tax receipts to fund operating
or capital assistance to the MTA. For the 1996-97 State fiscal year, total
State assistance to the MTA is estimated at approximately $1.09 billion.
In 1981, the State Legislature authorized procedures for the adoption,
approval and amendment of a five-year plan for the capital program designed
to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabilitate facilities and equipment, and also
granted certain additional bonding authorization therefor.
State legislation accompanying the 1996-97 adopted State budget
authorized the MTA, TBTA and TA to issue an aggregate of $6.5 billion in
bonds to finance a portion of a new $11.98 billion MTA capital plan for the
1995 through 1999 calendar years (the "1995-99 Capital Program"), and
authorized the MTA to submit the 1995-99 Capital Program to the Capital
Program Review Board for approval. This plan will supersede the
overlapping portion of the MTA's 1992-96 Capital Program. This is the
fourth capital plan since the Legislature authorized procedures for the
adoption, approval and amendment of MTA capital programs and is designed to
upgrade the performance of the MTA's transportation systems by investing in
new rolling stock, maintaining replacement schedules for existing assets
and bringing the MTA system into a state of good repair. The 1995-99
Capital Program assumes the issuance of an estimated $5.1 billion in bonds
under this $6.5 billion aggregate bonding authority. The remainder of the
plan is projected to be financed through assistance from the State, the
federal government, and the City of New York, and from various other
revenues generated from actions taken by the MTA.
There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1995-1999 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad
powers and responsibilities with respect to the government, finances and
welfare of these political subdivisions, especially in education and social
services. In recent years the State has been called upon to provide added
financial assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the last several State fiscal years. The potential impact on the
State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1996-97 fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by
the State in 1984. That Board is charged with oversight of the fiscal
affairs of Yonkers. Future actions taken by the State to assist Yonkers
could result in increased State expenditures for extraordinary local
assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the
City of Troy in 1994. The Supervisory Board's powers were increased in
1995, when Troy MAC was created to help Troy avoid default on certain
obligations. The legislation creating Troy MAC prohibits the City of Troy
from seeking federal bankruptcy protection while Troy MAC bonds are
outstanding.
Seventeen municipalities received extraordinary assistance during the
1996 legislative session through $50 million in special appropriations
targeted for distressed cities.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1994, the total indebtedness of
all localities in the State, other than the City, was approximately $17.7
billion. A small portion (approximately $82.9 million) of this
indebtedness represented borrowing to finance budgetary deficits and was
issued pursuant to enabling State legislation. State law requires the
Comptroller to review and make recommendations concerning the budgets of
those local government units other than the City authorized by State law to
issue debt to finance deficits during the period that such deficit
financing is outstanding. Seventeen localities had outstanding
indebtedness for deficit financing at the close of their fiscal year ending
in 1994.
From time to time, Federal expenditure reductions could reduce, or in
some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued by
localities within the State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. The
longer-range, potential problems of declining city population, increasing
expenditures and other economic trends could adversely affect localities
and require increasing State assistance in the future.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession
of certain funds taken pursuant to the State's Abandoned Property law;
(vii) alleged responsibility of State officials to assist in remedying
racial segregation in the City of Yonkers; (viii) an action, in which the
State is a third party defendant, for injunctive or other appropriate
relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (ix) actions
challenging the constitutionality of legislation enacted during the 1990
legislative session which changed the actuarial funding methods for
determining contributions to State employee retirement systems; (x) an
action against State and City officials alleging that the present level of
shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (xi) an action challenging
legislation enacted in 1990 which had the effect of deferring certain
employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge
to the constitutionality of financing programs of the Thruway Authority
authorized by Chapters 166 and 410 of the Laws of 1991 (described below in
this Part); (xiii) a challenge to the constitutionality of financing
programs of the Metropolitan Transportation Authority and the Thruway
Authority authorized by Chapter 56 of the Laws of 1993 (described below in
this Part); (xiv) challenges to the delay by the State Department of Social
Services in making two one-week Medicaid payments to the service providers;
(xv) challenges by commercial insurers, employee welfare benefit plans, and
health maintenance organizations to provisions of Section 2807-c of the
Public Health Law which impose 13%, 11% and 9% surcharges on inpatient
hospital bills and a bad debt and charity care allowance on all hospital
bills paid by such entities; (xvi) challenges to the promulgation of the
State's proposed procedure to determine the eligibility for and nature of
home care services for Medicaid recipients; (xvii) a challenge to State
implementation of a program which reduces Medicaid benefits to certain
home-relief recipients; and (xviii) challenges to the rationality and
retroactive application of State regulations recelebrating nursing home
Medicaid rates.
(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax
and other ongoing revenues to cover expenses in each fiscal year. However,
the City has achieved balanced operating results for each of its fiscal
years since 1981 as reported in accordance with the then-applicable GAAP
standards. The City's ability to maintain balanced operating results in
future years is subject to numerous contingencies and future developments.
The City's economy, whose rate of growth slowed substantially over the
past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and increases
in social services costs, and has been required to take actions to close
substantial budget gaps in order to maintain balanced budgets in accordance
with the Financial Plan.
In 1975, the City became unable to market its securities and entered a
period of extraordinary financial difficulties. In response to this
crisis, the State created MAC to provide financing assistance to the City
and also enacted the New York State Financial Emergency Act for the City of
New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of approval
over the City Financial Plan were suspended pursuant to the Emergency Act.
However, the Control Board, MAC and OSDC continue to exercise various
monitoring functions relating to the City's financial condition. The City
prepares and operates under a four-year financial plan which is submitted
annually to the Control Board for review and which the City periodically
updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1995 show a General Fund surplus reported in
accordance with GAAP. The City has eliminated the cumulative deficit in
its net General Fund position.
According to a recent OSDC economic report, the City's economy was
slow to recover from the recession and is expected to experience a weak
employment situation, and moderate wage and income growth, during the 1995-
96 period. Also, Financial Plan reports of OSDC, the Control Board, and
the City Comptroller have variously indicated that many of the City's
balanced budgets have been accomplished, in part, through the use of non-
recurring resource, tax and fee increases, personnel reductions and
additional State assistance; that the City has not yet brought its long-
term expenditures in line with recurring revenues; that the City's proposed
gap-closing programs, if implemented, would narrow future budget gaps; that
these programs tend to rely heavily on actions outside the direct control
of the City; and that the City is therefore likely to continue to face
futures projected budget gaps requiring the City to reduce expenditures
and/or increase revenues. According to the most recent staff reports of
OSDC, the Control Board and the City Comptroller during the four-year
period covered by the current Financial Plan, the City is relying on
obtaining substantial resources from initiatives needing approval and
cooperation of its municipal labor unions, Covered Organizations, and City
Council, as well as the State and Federal governments, among others, and
there can be no assurance that such approval can be obtained.
The City requires certain amounts of financing for seasonal and
capital spending purposes. The City has issued $1.75 billion of notes for
seasonal financing purposes during the 1994 fiscal year. The City's
capital financing program projects long-term financing requirements of
approximately $17 billion for the City's fiscal years 1995 through 1998 for
the construction and rehabilitation of the City's infrastructure and other
fixed assets. The major capital requirement include expenditures for the
City's water supply system, and waste disposal systems, roads, bridges,
mass transit, schools and housing. In addition, the City and the Municipal
Water Finance Authority issued about $1.8 billion in refunding bonds in the
1994 fiscal year.
State Economic Trends. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its relative
economic position. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an
influx of generally less affluent residents. Regionally, the older
Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City
has also had to face greater competition as other major cities have
developed financial and business capabilities which make them less
dependent on the specialized services traditionally available almost
exclusively in the City.
During the 1982-83 recession, overall economic activity in the State
declined less than that of the nation as a whole. However, in the calendar
years 1984 through 1991, the State's rate of economic expansion was
somewhat slower than that of the nation. In the 1990-91 recession, the
economy of the State, and that of the rest of the Northeast, was more
heavily damaged than that of the nation as a whole and has been slower to
recover. The total employment growth rate in the State has been below the
national average since 1984. The unemployment rate in the State dipped
below the national rate in the second half of 1981 and remained lower until
1991; since then, it has been higher. According to data published by the
U.S. Bureau of Economic Analysis, during the past ten years, total personal
income in the State rose slightly faster than the national average only
from 1986 through 1988.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific 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.
Plus (+) or minus (-): The ratings from AA to BBB may be modified by
the addition of a plus or minus designation 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. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus 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.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category.
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 ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
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.
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.
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>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
______ ______
<S> <C> <C>
Burbank Wastewater Treatment, Revenue 5.50%, 6/1/2025 (Insured; FGIC)....... $ 500,000 $ 481,435
California 6.60%, 2/1/2010 (Insured; AMBAC)................................. 400,000 449,076
California Health Facilities Financing Authority, Revenue
(Children's Hospital of San Diego) 6.50%, 7/1/2020 (Insured; MBIA)...... 200,000 218,816
California Maritime Infrastructure Authority, Airport Revenue
(San Diego Unified Port District Airport) 5%, 11/1/2020 (Insured; AMBAC) 250,000 224,263
California State University, Fresno Association Inc., Revenue
Auxiliary Residence (Student Project) 6.25%, 2/1/2017 (Insured; MBIA)... 300,000 310,308
Campbell Unified School District 6.25%, 8/1/2019 (Insured; MBIA)........... 500,000 515,935
Central Coast Water Authority, Revenue (Water Project Regional Facilities)
6.60%, 10/1/2022 (Insured; AMBAC)....................................... 200,000 215,580
East Bay Municipal Utility District, Wastewater Treatment System Revenue,
Refunding 5.55%, 6/1/2020 (Insured; AMBAC).................................. 200,000 188,892
Fairfield, Water Revenue, Refunding 5.375%, 4/1/2017 (Insured; AMBAC)....... 250,000 239,455
Fresno, Sewer Revenue (Fowler Avenue Project) 6.25%, 8/1/2011 (Insured; AMBAC) 500,000 523,465
Port Oakland, Port Revenue 6.50%, 11/1/2016 (Insured; MBIA)................. 200,000 209,522
Riverside County Transportation Commission, Sales Tax Revenue
5.75%, 6/1/2008 (Insured; AMBAC)........................................ 300,000 313,746
San Diego County, COP, Regional Communications System
5.50%, 8/15/2013 (Insured; AMBAC)....................................... 400,000 392,408
San Francisco, City and County Airports Commission, International Airport
Revenue:
6.25%, 5/1/2012 (Insured; FGIC)......................................... 150,000 156,432
5.70%, 5/1/2026 (Insured; MBIA) ........................................ 500,000 489,090
San Mateo County Joint Powers Financing Authority, LR (Capital Projects)
5.75%, 7/15/2017 (Insured; FSA)......................................... 200,000 200,074
University of California, Revenues, Hospital-UC Davis Medical Center
5.75%, 7/1/2012 (Insured; AMBAC)........................................ 500,000 508,825
Victor, Elementary School District, Zero Coupon, 6/1/2015 (Insured; MBIA)... 1,000,000 329,050
_____
TOTAL INVESTMENTS (cost $5,848,930)......................................... $5,966,372
=====
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
(b) At July 31, 1996, 41.9% of the Series' net assets are insured by
AMBAC and 28.4% are insured by MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $5,848,930)-see statement....................................... $5,966,372
Cash.................................................................... 747,178
Receivable for investment securities sold............................... 460,286
Interest receivable..................................................... 104,083
Receivable for shares of Beneficial Interest subscribed................. 20,000
Prepaid expenses........................................................ 27,779
Due from The Dreyfus Corporation........................................ 573
_____
7,326,271
LIABILITIES:
Due to Distributor...................................................... $ 3,251
Accrued expenses and other liabilities.................................. 30,663 33,914
____ _____
NET ASSETS.................................................................. $7,292,357
=====
REPRESENTED BY:
Paid-in capital......................................................... $7,269,619
Accumulated net realized (loss) on investments.......................... (94,704)
Accumulated net unrealized appreciation on investments-Note 3........... 117,442
_____
NET ASSETS at value......................................................... $7,292,357
=====
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 264,003
=====
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 345,382
=====
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 84
=====
NET ASSET VALUE per share:
Class A Shares
($3,156,089 / 264,003 shares)......................................... $11.95
=====
Class B Shares
($4,135,263 / 345,382 shares)......................................... $11.97
=====
Class C Shares
($1,005.40 / 84 shares)............................................... $11.97
=====
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $388,923
EXPENSES:
Management fee-Note 2(a).............................................. $ 39,781
Shareholder servicing costs-Note 2(c)................................. 33,012
Distribution fees-Note 2(b)........................................... 19,357
Organization expenses................................................. 11,040
Prospectus and shareholders' reports.................................. 6,167
Registration fees..................................................... 5,049
Custodian fees........................................................ 1,127
Professional fees..................................................... 979
Trustees' fees and expenses-Note 2(d)................................. 877
Miscellaneous......................................................... 7,367
_____
TOTAL EXPENSES.................................................. 124,756
Less-reduction in management fee due to undertakings-Note 2(a)........ 19,320
_____
NET EXPENSES.................................................... 105,436
_____
INVESTMENT INCOME-NET........................................... 283,487
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments...................................... $ (83,146)
Net unrealized appreciation on investments.............................. 334,442
_____
NET REALIZED AND UNREALIZED GAIN ON INVESMENTS.................. 251,296
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $534,783
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
______________________________
1995 1996
______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 317,088 $ 283,487
Net realized (loss) on investments...................................... (11,558) (83,146)
Net unrealized appreciation on investments for the year................. 67,281 334,442
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 372,811 534,783
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (157,005) (141,525)
Class B shares........................................................ (160,083) (141,941)
Class C shares........................................................ - (21)
______ ______
TOTAL DIVIDENDS................................................... (317,088) (283,487)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 2,395,751 239,140
Class B shares........................................................ 1,798,008 748,137
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 52,720 42,498
Class B shares........................................................ 99,361 106,237
Class C shares........................................................ - 21
Cost of shares redeemed:
Class A shares........................................................ (441,885) (780,827)
Class B shares........................................................ (771,920) (633,353)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 3,132,035 (277,147)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,187,758 (25,851)
NET ASSETS:
Beginning of year....................................................... 4,130,450 7,318,208
______ ______
End of year............................................................. $7,318,208 $7,292,357
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ ____________________________ ____________
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
____________________________ ____________________________ JULY 31,
CAPITAL SHARE TRANSACTIONS: 1995 1996 1995 1996 1996*
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Shares sold............. 211,279 19,872 158,840 62,126 82
Shares issued for dividends
reinvested............ 4,664 3,545 8,762 8,868 2
Shares redeemed......... (38,340) (64,393) (69,492) (53,525) -
______ ______ ______ ______ ______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING..... 177,603 (40,976) 98,110 17,469 84
====== ====== ====== ====== ======
*From December 4, 1995 (commencement of initial offering) to July 31,
1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 6 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series including the California Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State personal income taxes to the extent
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series 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 Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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 $17,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to July 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through July 31, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, the carryover expires in
fiscal 2004.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 29, 1995 through September 30, 1996, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (excluding 12b-1 distribution plan fees
and certain expenses as described above) exceed an annual rate of 1.25% of
the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $19,320 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $258 during the year ended July 31, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$19,352 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$8,404, $9,676 and $2 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $2,214 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $3,725,154 and $4,391,372 , respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $117,442, consisting of $139,052 gross unrealized appreciation and
$21,610 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, California Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Insured Municipal Bond Fund, California Series at July
31, 1996, 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 LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ ______
<S> <C> <C>
Cheshire:
5.80%, 8/15/2010 (Insured; FGIC)........................................ $ 500,000 $ 515,215
5.85%, 8/15/2011 (Insured; FGIC)........................................ 675,000 696,121
Columbia:
5.75%, 4/1/2014 (Insured; MBIA)......................................... 320,000 325,459
5.75%, 4/1/2015 (Insured; MBIA)......................................... 320,000 324,173
Connecticut:
Airport Revenue, Refunding 7.20%, 10/1/1997 (Insured; FGIC)............. 220,000 227,918
COP (Middletown Courthouse Facilities Project)
5.90%, 12/15/2001 (Insured; MBIA)..................................... 250,000 265,237
Special Tax Obligation Revenue (Transportation Infrastructure)
5.65%, 4/1/2013 (Insured; FGIC)....................................... 1,500,000 1,501,965
Connecticut Development Authority:
Governmental LR 6.60%, 6/15/2014 (Insured; MBIA)........................ 350,000 379,925
Health Care Revenue (Masonic) 6.50%, 8/1/2020 (Insured; AMBAC).......... 250,000 261,932
Water Facility Revenue, Refunding:
(Bridgeport Hydraulic) 5.60%, 6/1/2028 (Insured; MBIA)................ 700,000 671,384
(Connecticut Water Co. Project) 5.875%, 9/1/2022 (Insured; AMBAC)..... 250,000 247,027
Connecticut Health and Educational Facilities Authority, Revenue:
(Bridgeport Hospital) 6.625%, 7/1/2018 (Insured; MBIA).................. 700,000 746,025
(Connecticut College) 6.625%, 7/1/2011 (Insured; MBIA).................. 200,000 217,184
(Danbury Hospital):
6.50%, 7/1/2014 (Insured; MBIA)....................................... 250,000 265,737
5.375%, 7/1/2023 (Insured; AMBAC)..................................... 2,000,000 1,875,760
(Day Kimball Hospital) 5.375%, 7/1/2026 (Insured; FSA).................. 1,000,000 935,220
(Lawrence and Memorial Hospital) 6.25%, 7/1/2022 (Insured; MBIA)........ 285,000 310,590
(Loomis Chaffee School Project):
6%, 7/1/2015 (Insured; MBIA).......................................... 715,000 731,338
6%, 7/1/2025 (Insured; MBIA).......................................... 1,000,000 1,013,130
(Manchester Memorial Hospital) 5.75%, 7/1/2022 (Insured; MBIA).......... 100,000 97,562
(Mansfield Nursing) 5.875%, 11/1/2012 (Insured; AMBAC).................. 500,000 510,860
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA).................... 1,000,000 1,020,870
(New Britain General Hospital):
6.125%, 7/1/2014 (Insured; AMBAC)..................................... 1,000,000 1,035,250
6%, 7/1/2024 (Insured; AMBAC)......................................... 200,000 200,804
(Newington Children's Hospital):
6.05%, 7/1/2010 (Insured; MBIA)....................................... 235,000 244,311
6.10%, 7/1/2011 (Insured; MBIA)....................................... 250,000 259,880
6.25%, 7/1/2015 (Insured; MBIA)....................................... 500,000 517,710
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)...................... 260,000 268,076
(Nursing-Noble Horizon) 6%, 11/1/2022 (Insured; AMBAC).................. 500,000 501,880
(Refunding-Hospital of Saint Raphael) 6.625%, 7/1/2014 (Insured; AMBAC). 250,000 267,295
(Refunding-Sharon Health Care Project) 6.25%, 11/1/2021 (Insured; AMBAC) 500,000 516,175
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Saint Francis Hospital and Medical Center) 5%, 7/1/2023 (Insured; FGIC) $ 2,760,000 $ 2,425,184
Connecticut Housing Finance Authority
(Housing Mortgage Finance Program):
6.20%, 5/15/2012 (Insured; MBIA)...................................... 1,000,000 1,022,990
6.40%, 5/15/2015 (Insured; MBIA)...................................... 1,000,000 1,035,160
6.125%, 5/15/2018 (Insured; MBIA)..................................... 1,655,000 1,675,009
6.30%, 5/15/2024 (Insured; MBIA)...................................... 1,000,000 1,016,050
Derby 5.90%, 5/15/2010 (Insured; AMBAC)..................................... 615,000 643,856
East Hampton:
5.80%, 7/15/2010 (Insured; FGIC)........................................ 295,000 304,697
5.90%, 7/15/2011 (Insured; FGIC)........................................ 320,000 332,013
Meriden 5.50%, 11/15/2001 (Insured; MBIA)................................... 250,000 264,100
New Haven:
5.75%, 2/15/2012 (Insured; FGIC)........................................ 500,000 510,485
Air Rights Parking Facility Revenue 6.50%, 12/1/2015 (Insured; MBIA).... 500,000 535,925
Plainfield 5.80%, 8/1/2001 (Insured; MBIA).................................. 250,000 266,770
Regional School District Number 5:
5.90%, 1/15/2010 (Insured; MBIA)........................................ 280,000 290,223
5.90%, 1/15/2011 (Insured; MBIA)........................................ 320,000 330,582
Waterbury, Refunding 4.90%, 4/15/2002 (Insured; FGIC)....................... 280,000 281,711
Woodstock:
5.85%, 2/15/2009 (Insured; FGIC)........................................ 345,000 360,822
6%, 2/15/2013 (Insured; FGIC)........................................... 340,000 354,521
______
TOTAL INVESTMENTS (cost $27,911,704)........................................ $28,602,111
======
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
(b) At July 31, 1996, 26.2% of the Series' net assets are insured by
FGIC and 49.2% are insured by MBIA.
(c) At July 31, 1996, the Series' had $11,999,189 (41.9% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $27,911,704)-see statement...................................... $28,602,111
Interest receivable..................................................... 311,319
Prepaid expenses........................................................ 8,032
______
28,921,462
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 13,869
Due to Distributor...................................................... 13,656
Due to Custodian........................................................ 218,471
Payable for shares of Beneficial Interest redeemed...................... 2,265
Accrued expenses and other liabilities.................................. 50,054 298,315
_____ ______
NET ASSETS ................................................................ $28,623,147
======
REPRESENTED BY:
Paid-in capital......................................................... $27,869,122
Accumulated undistributed net realized gain on investments.............. 63,618
Accumulated net unrealized appreciation on investments-Note 3........... 690,407
______
NET ASSETS at value......................................................... $28,623,147
======
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 856,775
======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,334,918
======
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 13,319
======
NET ASSET VALUE per share:
Class A Shares
($11,117,393 / 856,775 shares)........................................ $12.98
======
Class B Shares
($17,332,932 / 1,334,918 shares)...................................... $12.98
======
Class C Shares
($172,822 / 13,319 shares)............................................ $12.98
======
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,720,866
EXPENSES:
Management fee-Note 2(a).............................................. $165,914
Shareholder servicing costs-Note 2(c)................................. 101,772
Distribution fees-Note 2(b)........................................... 89,382
Auditing fees......................................................... 43,025
Legal fees............................................................ 12,607
Trustees' fees and expenses-Note 2(d)................................. 3,918
Registration fees..................................................... 3,812
Custodian fees........................................................ 3,370
Prospectus and shareholders' reports.................................. 2,596
Miscellaneous......................................................... 12,895
_____
TOTAL EXPENSES.................................................. 439,291
Less-reduction in management fee due to undertakings-Note 2(a)........ 36,681
_____
NET EXPENSES.................................................... 402,610
_____
INVESTMENT INCOME-NET........................................... 1,318,256
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $ 83,650
Net unrealized appreciation on investments.............................. 7,914
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 91,564
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,409,820
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
________________________________
1995 1996
_______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,170,030 $ 1,318,256
Net realized gain (loss) on investments................................. (20,032) 83,650
Net unrealized appreciation on investments for the year................. 543,616 7,914
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,693,614 1,409,820
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (586,262) (575,778)
Class B shares........................................................ (583,768) (740,873)
Class C shares........................................................ - (1,605)
______ ______
TOTAL DIVIDENDS................................................... (1,170,030) (1,318,256)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 6,196,536 1,488,845
Class B shares........................................................ 11,068,365 2,773,704
Class C shares........................................................ - 171,568
Dividends reinvested:
Class A shares........................................................ 320,037 266,864
Class B shares........................................................ 359,096 483,988
Class C shares........................................................ - 1,605
Cost of shares redeemed:
Class A shares........................................................ (2,682,798) (3,172,879)
Class B shares........................................................ (2,076,477) (2,544,794)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 13,184,759 (531,099)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,708,343 (439,535)
NET ASSETS:
Beginning of year....................................................... 15,354,339 29,062,682
______ ______
End of year............................................................. $29,062,682 $28,623,147
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
____________________________________________________________________________
CLASS A CLASS B CLASS C
________________________________ ________________________________ ______________
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
________________________________ ________________________________ ______________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 490,513 114,141 875,988 212,187 13,193
Shares issued for dividends
reinvested........... 25,429 20,292 28,348 36,852 126
Shares redeemed........ (216,046) (239,044) (164,414) (195,936) -
_______ _______ _______ _______ _______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING.... 299,896 (104,611) 739,922 53,103 13,319
======= ======= ======= ======= =======
______________________________
*From December 4, 1995 (commencement of initial offering) to July 31, 1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 7 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series including the Connecticut Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State personal income taxes to the extent
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series 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 Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series 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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the value of the Series' average daily net assets. The Manager has currently
undertaken from September 29, 1995 through September 30, 1996, to reduce the
management fee and reimburse such excess expenses paid by the Series, to the
extent that the Series' aggregate annual expenses (excluding 12b-1
distribution plan fees and certain expenses as described above) exceed an
annual rate of 1.25% of the value of the Series' average daily net assets.
The reduction in management fee, pursuant to the undertakings, amounted to
$36,681 during the year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$89,077 was charged to the Series for the Class B shares and $305 was charged
to the Series for the Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$30,775, $44,538 and $102 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $9,453 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $9,341,682 and $8,972,919, respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $690,407, consisting of $808,051 gross unrealized appreciation and
$117,644 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, Connecticut Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 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 Premier Insured Municipal Bond Fund, Connecticut Series at July
31, 1996, 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 LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS JULY 31,1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.6% AMOUNT VALUE
_______ ______
<S> <C> <C>
Boca Raton Community Redevelopment Agency, Tax Increment Revenue
(Mizner Park Project) 5.875%, 3/1/2013 (Insured; FGIC).................. $ 250,000 $ 254,265
Brevard County, IDR (NUI Corp. Project) 6.40%, 10/1/2024 (Insured; AMBAC)... 1,000,000 1,052,170
Broward County Tourist Development, Special Tax Revenue, Refunding
(Convention Center) 5.60%, 10/1/2009 (Insured; AMBAC)................... 350,000 355,530
Celebration Community Development District, Special Assessment
6.10%, 5/1/2016 (Insured; MBIA)......................................... 500,000 516,185
Collier County, Capital Improvement Revenue, Refunding
6%, 10/1/2012 (Insured; MBIA)........................................... 1,000,000 1,042,810
Collier County Water - Sewer District, Water Revenue, Refunding
5%, 7/1/2016 (Insured; FGIC)............................................ 1,000,000 920,030
Dade County:
Aviation Revenue 6.125%, 10/1/2020 (Insured; MBIA)...................... 1,000,000 1,018,840
Public Facilities Revenue, Refunding (Jackson Memorial Hospital)
5.625%, 6/1/2018 (Insured; MBIA)...................................... 250,000 244,448
Water and Sewer Systems Revenue 5.50%, 10/1/2025 (Insured; FGIC)........ 2,500,000 2,410,175
Dade County Housing Finance Authority, MFMR, Refunding
(Lincoln Fields Apartments) 6.25%, 7/1/2024 (Insured; MBIA)............. 600,000 606,672
Dade County School Board, COP 5.50%, 5/1/2025 (Insured; AMBAC).............. 1,475,000 1,420,292
Escambia County, Sales Tax Revenue, Refunding 5.80%, 1/1/2015 (Insured; FGIC) 500,000 501,785
Florida Board of Education, Capital Outlay 5.80%, 6/1/2024 (Insured; FGIC).. 1,000,000 1,002,990
Florida Correctional Privatization Commission, COP:
(Bay County Correctional Facility Project) 6%, 8/1/2015 (Insured; MBIA). 250,000 253,280
(Glades County Correctional Facility) 6%, 8/1/2014 (Insured; MBIA)...... 350,000 368,809
Florida Department of General Services Division, Facilities Management
Revenue 6.125%, 9/1/2023 (Insured; AMBAC)................................... 1,000,000 1,031,540
Florida Division of Bond Finance Department, General Services Revenues:
(Department of Environmental-Preservation 2000)
5.75%, 7/1/2013 (Insured; AMBAC)...................................... 1,000,000 1,013,140
(Department of Natural Resources-Preservation 2000)
5.80%, 7/1/2013 (Insured; FSA)........................................ 700,000 708,239
Florida Housing Finance Agency, Single Family Mortgage
6.65%, 7/1/2026 (Insured; MBIA)......................................... 1,820,000 1,869,559
Florida Municipal Power Agency, Revenue (All Requirements Power Supply
Project) 5.10%, 10/1/2025 (Insured; AMBAC).................................. 1,000,000 907,860
Florida Turnpike Authority, Turnpike Revenue, Refunding
5%, 7/1/2019 (Insured; FGIC)............................................ 1,000,000 904,510
Fort Pierce Utilities Authority, Revenue, Refunding
5.25%, 10/1/2016 (Insured; AMBAC)....................................... 500,000 476,360
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31,1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
Gainesville, Guaranteed Entitlement Revenue, Refunding
5.50%, 8/1/2017 (Insured; AMBAC)........................................ $ 750,000 $ 736,718
Hillsborough County Aviation Authority, Revenue (Tampa International
Airport):
5.375%, 10/1/2023 (Insured; FGIC)....................................... 1,000,000 938,900
Refunding 5.50%, 10/1/2013 (Insured; FGIC).............................. 500,000 493,675
Hillsborough County Industrial Development Authority:
IDR (University Community Hospital) 5.80%, 8/15/2024 (Insured; MBIA).... 500,000 498,270
PCR, Refunding (Tampa Electric Company Project)
6.25%, 12/1/2034 (Insured; MBIA)...................................... 1,000,000 1,036,480
Hillsborough County Port District, Special Revenue, Refunding
(Tampa Port Authority) 6%, 6/1/2020 (Insured; FSA)...................... 1,000,000 1,003,460
Hollywood, Water and Sewer Revenue, Refunding 5.50%, 10/1/2015 (Insured; FGIC) 500,000 492,685
Jacksonville Health Facilities Authority, HR
(Memorial Regional Rehabilitation Center Project)
6.625%, 5/1/2022 (Insured; MBIA)........................................ 500,000 557,360
Lee County, Tourist Development Tax Revenue, Refunding
5.625%, 10/1/2011 (Insured; FGIC)....................................... 250,000 253,102
Miami Health Facilities Authority, Health Facilities Revenue, Refunding
(Mercy Hospital Project) 5.125%, 8/15/2020 (Insured; AMBAC)............. 200,000 182,246
Miramar:
Public Service Tax Revenue 6.15%, 10/1/2024 (Insured; FGIC)............. 1,000,000 1,026,970
Water Improvement Assessment Revenue 5.60%, 10/1/2024 (Insured; FGIC)... 200,000 195,686
Okeechobee, Water and Sewer Revenue
6.50%, 1/1/2017 (Insured; MBIA, Prerefunded 1/1/2003) (a)............... 1,220,000 1,359,568
Orange County, Tourist Development Tax Revenue:
6.50%, 10/1/2019 (Insured; AMBAC)....................................... 1,000,000 1,064,650
6%, 10/1/2024 (Insured; MBIA)........................................... 200,000 202,790
Orlando and Orange County Expressway Authority, Expressway Revenue,
Refunding:
(Junior Lien) 5.25%, 7/1/2019 (Insured; FGIC)........................... 250,000 234,027
(Senior Lien) 5.50%, 7/1/2018 (Insured; FGIC)........................... 200,000 196,368
Osceola County School Board, COP 5.75%, 6/1/2014 (Insured; AMBAC)........... 250,000 250,630
Polk County School Board, COP (Master Lease Program)
5.875%, 1/1/2015 (Insured; MBIA)........................................ 1,000,000 1,013,120
Seminole County School Board, COP 6.125%, 7/1/2019 (Insured; MBIA).......... 325,000 333,232
Tampa, Revenue (Allegany Health Systems - Saint Joseph)
6.50%, 12/1/2023 (Insured; MBIA)........................................ 1,000,000 1,058,120
Tampa Sports Authority, Sales Tax Revenue (Tampa Bay Arena Project)
5.75%, 10/1/2025 (Insured; MBIA)........................................ 1,000,000 1,013,410
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31,1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
Venice, Utility Revenue, Refunding 5.50%, 7/1/2014 (Insured; MBIA).......... $ 500,000 $ 495,200
Volusia County, Sales Tax Improvement Revenue 5.75%, 10/1/2013 (Insured; MBIA) 500,000 505,635
______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $32,676,810).................... $34,021,791
======
SHORT-TERM MUNICIPAL INVESTMENTS-1.4%
U.S. RELATED;
Puerto Rico Commonwealth, Government Development Bank, VRDN
3.25% (LOC; Credit Suisse) (b,c) (cost $500,000)........................ $ 500,000 $ 500,000
======
TOTAL INVESTMENTS-100.0% (cost $33,176,810)................................. $34,521,791
======
</TABLE>
<TABLE>
<CAPTION>
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 Insurance Corporation
FSA Financial Security Assurance MFMR Multi-Family Mortgage Revenue
HR Hospital Revenue PCR Pollution Control Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 98.6%
F-1+ & F-1 MIG1, VMIG1 & P1 SP1 & A1 1.4
____
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 refunding date.
(b) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon prime rates or an index of market interest rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) At July 31, 1996, 28.3% of the Series' net assets are insured by
FGIC and 40.3% are insured by MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $33,176,810)-see statement...................................... $34,521,791
Interest receivable..................................................... 484,464
Prepaid expenses........................................................ 9,252
______
35,015,507
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 16,522
Due to Distributor...................................................... 14,971
Due to Custodian........................................................ 36,606
Payable for shares of Beneficial Interest redeemed...................... 165,747
Accrued expenses and other liabilities.................................. 55,926 289,772
_____ ______
NET ASSETS ................................................................ $34,725,735
======
REPRESENTED BY:
Paid-in capital......................................................... $32,850,681
Accumulated undistributed net realized gain on investments.............. 530,073
Accumulated net unrealized appreciation on investments-Note 3........... 1,344,981
______
NET ASSETS at value......................................................... $34,725,735
======
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 1,243,656
======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,371,066
======
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 75
======
NET ASSET VALUE per share:
Class A Shares
($16,515,051 / 1,243,656 shares)...................................... $13.28
======
Class B Shares
($18,209,688 / 1,371,066 shares)...................................... $13.28
======
Class C Shares
($996 / 75 shares).................................................... $13.28
======
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $2,240,447
EXPENSES:
Management fee-Note 2(a).............................................. $213,934
Shareholder servicing costs-Note 2(c)................................. 133,574
Distribution fees-Note 2(b)........................................... 99,886
Auditing fees......................................................... 64,062
Legal fees............................................................ 11,548
Prospectus and shareholders' reports.................................. 8,732
Trustees' fees and expenses-Note 2(d)................................. 4,783
Custodian fees........................................................ 4,189
Registration fees..................................................... 2,472
Miscellaneous......................................................... 13,800
_____
TOTAL EXPENSES.................................................... 556,980
Less-reduction in management fee due to undertakings-Note 2(a)........ 55,951
_____
NET EXPENSES...................................................... 501,029
_____
INVESTMENT INCOME-NET............................................. 1,739,418
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $544,013
Net unrealized appreciation on investments.............................. 234,447
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 778,460
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,517,878
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
________________________________
1995 1996
_______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,778,772 $ 1,739,418
Net realized gain (loss) on investments................................. (13,940) 544,013
Net unrealized appreciation on investments for the year................. 1,006,080 234,447
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 2,770,912 2,517,878
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (908,374) (892,605)
Class B shares........................................................ (870,398) (846,788)
Class C shares........................................................ - (25)
______ ______
TOTAL DIVIDENDS................................................... (1,778,772) (1,739,418)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 10,509,582 1,538,063
Class B shares........................................................ 10,076,918 1,792,518
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 247,303 263,295
Class B shares........................................................ 207,188 213,415
Class C shares........................................................ - 25
Cost of shares redeemed:
Class A shares........................................................ (2,204,011) (5,172,213)
Class B shares........................................................ (1,737,649) (5,505,499)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS................................ 17,099,331 (6,869,396)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 18,091,471 (6,090,936)
NET ASSETS:
Beginning of year....................................................... 22,725,200 40,816,671
______ ______
End of year............................................................. $40,816,671 $34,725,735
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
___________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ _____________________________ _______
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
____________________________ _____________________________
1995 1996 1995 1996 1996*
_______ _______ ______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 835,533 115,320 788,466 134,247 73
Shares issued for dividends
reinvested........... 19,412 19,649 16,298 15,934 2
Shares redeemed........ (173,967) (386,026) (141,512) (406,174) -
_______ _______ ______ _______ _______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING.... 680,978 (251,057) 663,252 (255,993) 75
======= ======= ======= ======= =======
___________________________
*From December 4, 1995 (commencement of initial offering) to July 31, 1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 7 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series, including the Florida Series (the "Series"). The Fund's
investment objective is to maximize current income exempt from Federal and,
where applicable, from State personal income taxes to the extent consistent
with the preservation of capital. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series 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 Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series 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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995 to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 29, 1995 through September 30, 1996 to reduce the management
fees paid by, or reimburse such excess expenses of the Series, to the extent
that the Series' aggregate annual expenses (excluding 12b-1 distribution plan
fees and certain expenses as described above) exceed an annual rate of 1.25%
of the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $55,951 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$99,881 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets of
Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$47,301, $49,940 and $2 were charged to Class A, B and C shares, respectively,
by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $11,171 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996,
amounted to $4,910,070 and $11,354,360, respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $1,344,981, consisting of $1,468,556 gross unrealized appreciation and
$123,575 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, FLORIDA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, Florida Series (one of the series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 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 Premier Insured Municipal Bond Fund, Florida Series at July 31,
1996, the results of its operations for the period 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 LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-96.8% AMOUNT VALUE
_______ ______
<S> <C> <C>
CALIFORNIA-15.0%
Bay Area Association, Tax Allocation Revenue (California Redevelopment Agency
Pool)
6%, 12/15/2024 (Insured; CGIC).......................................... $ 250,000 $ 251,032
California Housing Finance Agency, Revenue 5.70%, 8/1/2016 (Insured; MBIA).. 200,000 195,340
California Pollution Control Financing Authority, PCR
(Southern California Edison Co.) 6.40%, 12/1/2024 (Insured; AMBAC)...... 400,000 412,580
Los Angeles, Wastewater System Revenue:
5.20%, 11/1/2021 (Insured; FGIC)........................................ 200,000 180,870
Refunding, 5.875%, 6/1/2024 (Insured; MBIA)............................. 200,000 200,722
Redding Redevelopment Agency, Tax Allocation Notes
5%, 9/1/2023 (Insured; CGIC)............................................ 200,000 174,704
San Marcos Public Facilities Authority, Tax Allocation Revenue, Refunding
5.50%, 8/1/2023 (Insured; CGIC)......................................... 1,000,000 940,540
San Mateo County Joint Powers Financing Authority, LR
(San Mateo County Health Care Center) 5.75%, 7/15/2022 (Insured; FSA)... 500,000 496,980
FLORIDA-1.0%
Miami Health Facilities Authority, Health Facility Revenue, Refunding
(Mercy Hospital Project) 5.125%, 8/15/2020 (Insured; AMBAC)............. 200,000 182,246
ILLINOIS-11.7%
Chicago, Wastewater Transmission Revenue:
6.375%, 1/1/2024 (Insured; MBIA)........................................ 200,000 207,854
Refunding, 5.125%, 1/1/2025 (Insured; FGIC)............................. 1,000,000 890,620
Chicago Midway Airport, Revenue 6.25%, 1/1/2024 (Insured; MBIA)............. 200,000 202,326
Chicago O'Hare International Airport, Revenue, Refunding
5.60%, 1/1/2018 (Insured; MBIA)......................................... 200,000 190,994
Illinois Health Facilities Authority, Revenue:
(Northwestern Medical Faculty Foundation-Health Care)
6.625%, 11/15/2025 (Insured; MBIA).................................... 500,000 535,375
Refunding (Lutheran General Health System) 6.25%, 4/1/2018 (Insured; FSA) 200,000 202,580
INDIANA-14.7%
Indiana Development Finance Authority, Environmental Revenue (PSI Energy,
Inc.)
5.75%, 2/15/2028 (Insured; MBIA)........................................ 1,000,000 957,270
Indiana Health Facility Financing Authority, HR:
(Lutheran Hospital of Indiana, Inc.) 7%, 2/15/2019 (Insured; AMBAC)..... 600,000 647,892
Refunding (County Hospital of Anderson Project) 6%, 1/1/2014 (Insured; MBIA) 1,000,000 1,001,570
Lafayette Redevelopment Authority, Redevelopment Lease Rent
5.95%, 1/1/2020 (Insured; MBIA)......................................... 200,000 199,112
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
IOWA-1.7%
Clinton, PCR, Refunding (Interstate Power Co. Project)
6.35%, 12/1/2012 (Insured; AMBAC)....................................... $ 300,000 $ 324,843
MASSACHUSETTS-10.8%
Massachusetts Housing Finance Agency:
Housing Revenue, Refunding 6.75%, 7/1/2028 (Insured; AMBAC)............. 1,000,000 1,034,980
SFHR 6.60%, 12/1/2026 (Insured; AMBAC).................................. 1,000,000 1,027,770
NEVADA-2.1%
Clark County Passenger Facility Charge, Revenue, Custodial Receipts
(Las Vegas McCarran International Airport) 6.25%, 7/1/2022 (Insured; AMBAC) 200,000 201,662
Washoe County Gas & Water Facilities Revenue (Sierra Pacific Power Co.)
5.90%, 6/1/2023 (Insured; MBIA)......................................... 200,000 200,732
NEW JERSEY-13.2%
New Jersey Building Authority, Building Revenue, Refunding
5%, 6/15/2017 (Insured; MBIA)........................................... 500,000 458,990
New Jersey Economic Development Authority:
PCR (Public Service Electric & Gas Co.) 6.40%, 5/1/2032 (Insured; MBIA). 200,000 207,838
Water Facilities Revenue (NJ American Water Co., Inc. Project)
6.875%, 11/1/2034 (Insured; FGIC)..................................... 500,000 544,990
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.375%, 10/1/2026 (Insured; MBIA)....................................... 500,000 505,270
Passaic Valley Water Commission, Water Supply Revenue, Refunding
5%, 12/15/2022 (Insured; FGIC).......................................... 880,000 798,081
NEW MEXICO-6.4%
Farmington, PCR, Refunding (Southern California Edison Co.)
5.875%, 6/1/2023 (Insured; MBIA)........................................ 1,000,000 1,003,320
Santa Fe 6.30%, 6/1/2024 (Insured; AMBAC)................................... 200,000 219,586
NEW YORK-1.1%
New York State Energy Research and Development Authority, PCR, Refunding
(Rochester Gas & Electric Project) 6.50%, 5/15/2032 (Insured; MBIA)..... 200,000 206,944
NORTH DAKOTA-1.1%
Grand Forks, Health Care Facilities Revenue (United Hospital Obligated Group)
6.25%, 12/1/2019 (Insured; MBIA)........................................ 200,000 206,040
OKLAHOMA-2.3%
Oklahoma Industries Authority, HR (Baptist Medical Center)
7%, 8/15/2014 (Insured; AMBAC).......................................... 400,000 442,212
OREGON-3.7%
Oregon Health Sciences, University Revenue 5.25%, 7/1/2025 (Insured; MBIA).. 750,000 701,903
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
SOUTH CAROLINA-1.1%
South Carolina Public Service Authority, Revenue, Refunding
6.375%, 7/1/2021 (Insured; AMBAC)....................................... $ 200,000 $ 208,170
TEXAS-3.8%
Austin, Airport Systems Revenue 6.125%, 11/15/2025 (Insured; MBIA).......... 500,000 504,405
Gulf Coast Waste Disposal Authority, Revenue, Refunding
(Houston Light & Power Co. Project) 6.375%, 4/1/2012 (Insured; MBIA).... 200,000 211,438
VERMONT-1.4%
Vermont Student Assistance Corp. (Education Loan Revenue Financing Program)
6.70%, 12/15/2012 (Insured; FSA)........................................ 250,000 262,427
WASHINGTON-5.7%
Washington, MFMR 7.40%, 1/1/2030 (Insured; FSA)............................. 1,000,000 1,074,960
______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $17,959,627)...................................................... $18,417,168
======
SHORT-TERM MUNICIPAL INVESTMENTS-3.2%
U.S. RELATED;
Puerto Rico Electric Power Authority, Power Revenue 3.41%, 7/1/2023 (a)
(cost $600,000)......................................................... $ 600,000 $ 600,000
======
TOTAL INVESTMENTS-100.0% (cost $18,559,627)................................. $19,017,168
======
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
CGIC Capital Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance MFMR Multi-Family Mortgage Revenue
HR Hospital Revenue PCR Pollution Control Revenue
SFHR Single Family Housing Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security-the interest rate is subject to change
periodically.
(b) Fitch currently provides creditworthiness information for a limited
number of investments.
(c) At July 31, 1996, 41.0% of the Series' net assets are insured by
MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $18,559,627)-see statement...................................... $19,017,168
Cash.................................................................... 34,584
Interest receivable..................................................... 233,209
Prepaid expenses........................................................ 35,273
______
19,320,234
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 6,710
Due to Distributor...................................................... 8,581
Accrued expenses and other liabilities.................................. 34,909 50,200
____ ______
NET ASSETS ................................................................ $19,270,034
======
REPRESENTED BY:
Paid-in capital......................................................... $18,720,804
Accumulated undistributed net realized gain on investments.............. 91,689
Accumulated net unrealized appreciation on investments-Note 3........... 457,541
______
NET ASSETS at value......................................................... $19,270,034
======
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 643,717
======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 831,077
======
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 76
======
NET ASSET VALUE per share:
Class A Shares
($8,408,991 / 643,717 shares)......................................... $13.06
======
Class B Shares
($10,860,050 / 831,077 shares)........................................ $13.07
======
Class C Shares
($993 / 76 shares).................................................... $13.07
======
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,160,228
EXPENSES:
Management fee-Note 2(a).............................................. $106,758
Shareholder servicing costs-Note 2(c)................................. 71,848
Distribution fees-Note 2(b)........................................... 53,531
Registration fees..................................................... 29,217
Auditing fees......................................................... 16,268
Legal fees............................................................ 6,185
Prospectus and shareholders' reports.................................. 3,258
Trustees' fees and expenses-Note 2(d)................................. 2,304
Custodian fees........................................................ 2,178
Miscellaneous......................................................... 16,395
_____
TOTAL EXPENSES.................................................... 307,942
Less-reduction in management fee due to undertakings-Note 2(a)........ 25,258
_____
NET EXPENSES...................................................... 282,684
_____
INVESTMENT INCOME-NET............................................. 877,544
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $107,880
Net unrealized appreciation on investments.............................. 21,056
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 128,936
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,006,480
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
_____________________________
1995 1996
_____________________________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 676,423 $ 877,544
Net realized gain on investments........................................ 30,500 107,880
Net unrealized appreciation on investments for the year................. 350,233 21,056
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,057,156 1,006,480
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (344,399) (418,559)
Class B shares........................................................ (332,024) (458,960)
Class C shares........................................................ - (25)
Net realized gain on investments:
Class A shares........................................................ - (20,944)
Class B shares........................................................ - (25,745)
Class C shares........................................................ - (2)
______ ______
TOTAL DIVIDENDS................................................... (676,423) (924,235)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 6,783,807 1,931,728
Class B shares........................................................ 6,636,400 1,825,900
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 196,495 267,130
Class B shares........................................................ 220,212 311,548
Class C shares........................................................ - 28
Cost of shares redeemed:
Class A shares........................................................ (1,446,725) (2,111,785)
Class B shares........................................................ (628,161) (1,048,828)
______ ______
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 11,762,028 1,176,721
______ ______
TOTAL INCREASE IN NET ASSETS.................................... 12,142,761 1,258,966
NET ASSETS:
Beginning of year....................................................... 5,868,307 18,011,068
______ ______
End of year............................................................. $18,011,068 $19,270,034
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
________________________________________________________________________________
CLASS A CLASS B CLASS C
________________________________ ________________________________ _______
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
________________________________ ________________________________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 542,334 147,108 522,906 138,665 74
Shares issued for dividends
reinvested........... 15,476 20,186 17,318 23,538 2
Shares redeemed........ (117,090) (159,424) (49,943) (79,501) -
_______ _______ _______ _______ _______
NET INCREASE IN SHARES
OUTSTANDING.... 440,720 7,870 490,281 82,702 76
======= ======= ======= ======= =======
_______________________________
*From December 4, 1995 (commencement of initial offering) to July 31,
1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 8 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series, including the National Series (the "Series"). The Fund's
investment objective is to maximize current income exempt from Federal and,
where applicable, from State personal income taxes to the extent consistent
with the preservation of capital. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principals which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series 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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 27, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 28, 1995 through September 30, 1996, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (excluding 12b-1 distribution plan fees
and certain expenses as described above) exceed an annual rate of 1.25% of
the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $25,258 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$53,526 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$21,762, $26,763 and $2 were charged to Class A, B and C shares, respectively,
by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $6,146 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person," as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $7,273,519 and $5,624,350, respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $457,541, consisting of $671,889 gross unrealized appreciation and
$214,348 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, NATIONAL SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, National Series (one of the series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 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 Premier Insured Municipal Bond Fund, National Series at July 31,
1996, 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 LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-95.6% AMOUNT VALUE
___________ ___________
<S> <C> <C>
Board of Education of the Township of Montgomery
5.45%, 8/1/2018 (Insured; FGIC)......................................... $ 500,000 $ 488,420
Camden County Municipal Utilities Authority, Sewer Revenue, Refunding
5.125%, 7/15/2017 (Insured; FGIC)....................................... 500,000 466,525
Cape May County Industrial Pollution Control Financing Authority, Revenue
(Atlantic City Electric Co. Project)
7.20%, 11/1/2029 (Insured; MBIA)........................................ 800,000 902,496
Evesham Township Board of Education, COP
6.875%, 9/1/2011 (Insured; FGIC)........................................ 200,000 219,514
Gloucester Township Municipal Utilities Authority, Refunding
5.65%, 3/1/2018 (Insured; AMBAC)........................................ 200,000 200,610
Mercer County Improvement Authority, Solid Waste Revenue, Refunding
6.70%, 4/1/2013 (Insured; FGIC)......................................... 500,000 512,170
New Jersey Building Authority, State Building Revenue, Refunding
5%, 6/15/2017 (Insured; MBIA)........................................... 500,000 458,990
New Jersey Economic Development Authority, Revenue:
Market Transition Facility 5.80%, 7/1/2008 (Insured; MBIA)............. 350,000 361,736
Pollution Control (Public Service Electric and Gas) 6.40%, 5/1/2032 (Insured; MBIA) 365,000 379,304
(Rutgers State University - Civic Square)
6.10%, 7/1/2018 (Insured; AMBAC)...................................... 200,000 206,826
Water Facilities:
(Hackensack Water Co. Project)
Refunding 5.80%, 3/1/2024 (Insured; MBIA)......................... 350,000 351,382
(New Jersey American Water Co. Inc. Project)
6.875%, 11/1/2034 (Insured; FGIC)................................. 400,000 435,992
New Jersey Educational Facilities Authority, Revenue, Refunding:
(New Jersey Institute of Technology) 6%, 7/1/2024 (Insured; MBIA)....... 400,000 408,212
(Trenton State College):
6%, 7/1/2019 (Insured; AMBAC)......................................... 1,000,000 1,017,250
5.125%, 7/1/2024 (Insured; MBIA)...................................... 845,000 779,124
New Jersey Health Care Facilities Financing Authority, Revenue:
(General Hospital Center at Passaic) 6.75%, 7/1/2019 (Insured; FSA)..... 885,000 959,853
(Jersey Shore Medical Center) 6.25%, 7/1/2021 (Insured; AMBAC).......... 400,000 412,036
Refunding (Monmouth Medical Center):
6.25%, 7/1/2016 (Insured; CGIC)....................................... 250,000 258,855
6.25%, 7/1/2024 (Insured; CGIC)....................................... 200,000 207,084
(Saint Clares - Riverside Medical Center) 5.75%, 7/1/2014 (Insured; MBIA) 250,000 248,743
(Underwood Memorial Hospital) 5.70%, 7/1/2023 (Insured; AMBAC).......... 400,000 388,988
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue:
6.20%, 10/1/2025 (Insured; MBIA)........................................ 450,000 448,749
6.375%, 10/1/2026 (Insured; MBIA)....................................... 230,000 232,424
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
New Jersey Sports and Exposition Authority, Convention Center Luxury Tax Revenue,
Refunding 6%, 7/1/2012 (Insured; MBIA).................................. $ 500,000 $ 517,950
Passaic Valley Sewer Commissioner, Sewer System Refunding
5.75%, 12/1/2015 (Insured; AMBAC)....................................... 500,000 497,360
Passaic Valley Water Commission, Water Supply Revenue, Refunding
5%, 12/15/2022 (Insured; FGIC).......................................... 1,000,000 906,910
Port Authority of New York and New Jersey
5.20%, 7/15/2016 (Insured; AMBAC)....................................... 500,000 469,565
Salem County Industrial Pollution Control Financing Authority, Revenue,
Refunding (Atlantic City Electric) 6.15%, 6/1/2029 (Insured; FSA)....... 400,000 412,004
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $12,985,938)...................................................... $13,149,072
=============
SHORT-TERM MUNICIPAL INVESTMENT-4.4%
U.S. RELATED;
Puerto Rico Electric Power Authority, Power Revenue 3.25% (Insured; FSA) (a)
(cost $600,000)......................................................... $ 600,000 $ 600,000
=============
TOTAL INVESTMENTS-100.0%
(cost $13,585,938)...................................................... $13,749,072
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company
CGIC Capital Guaranty Insurance Company FSA Financial Security Assurance
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ___________________
AAA Aaa AAA 100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse Floater Security - the interest rate is subject to change
periodically.
(b) Fitch currently provides creditworthiness information for a limited
number of investments.
(c) At July 31, 1996, 36.0% of the Series' net assets are insured by
MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $13,585,938)-see statement...................................... $13,749,072
Cash.................................................................... 193,945
Interest receivable..................................................... 140,195
Receivable for shares of Beneficial Interest subscribed................. 94,998
Prepaid expenses........................................................ 7,171
__________
14,185,381
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 6,453
Due to Distributor...................................................... 6,631
Payable for shares of Beneficial Interest redeemed...................... 10,117
Accrued expenses........................................................ 34,317 57,518
__________ __________
NET ASSETS ................................................................ $14,127,863
===========
REPRESENTED BY:
Paid-in capital......................................................... $13,819,886
Accumulated undistributed net realized gain on investments.............. 144,843
Accumulated net unrealized appreciation on investments-Note 3........... 163,134
__________
NET ASSETS at value......................................................... $14,127,863
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 407,454
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 696,616
===========
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 473
===========
NET ASSET VALUE per share:
Class A Shares
($5,211,644 / 407,454 shares)......................................... $12.79
=======
Class B Shares
($8,910,172 / 696,616 shares)......................................... $12.79
=======
Class C Shares
($6,047 / 473 shares)................................................. $12.78
=======
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $767,023
EXPENSES:
Management fee-Note 2(a).............................................. $ 74,073
Shareholder servicing costs-Note 2(c)................................. 52,216
Distribution fees-Note 2(b)........................................... 41,682
Auditing fees......................................................... 14,745
Legal fees............................................................ 4,204
Registration fees..................................................... 3,996
Prospectus and shareholders' reports.................................. 2,861
Custodian fees........................................................ 1,987
Trustees' fees and expenses-Note 2(d)................................. 1,781
Miscellaneous......................................................... 8,036
___________
TOTAL EXPENSES.................................................... 205,581
Less-reduction in management fee due to undertakings-Note 2(a)........ 10,732
___________
NET EXPENSES...................................................... 194,849
____________
INVESTMENT INCOME-NET............................................. 572,174
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $150,113
Net unrealized (depreciation) on investments............................ (76,768)
___________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:.................. 73,345
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $645,519
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
__________________________
1995 1996
_________ _________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 371,134 $ 572,174
Net realized gain (loss) on investments................................. (5,270) 150,113
Net unrealized appreciation (depreciation) on investments for the year.. 221,333 (76,768)
____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 587,197 645,519
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (176,046) (234,320)
Class B shares........................................................ (195,088) (337,766)
Class C shares........................................................ __ (88)
____________ ____________
TOTAL DIVIDENDS................................................... (371,134) (572,174)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 3,591,050 977,750
Class B shares........................................................ 5,060,548 3,045,391
Class C shares........................................................ __ 6,000
Dividends reinvested:
Class A shares........................................................ 97,360 134,625
Class B shares........................................................ 81,648 176,239
Class C shares........................................................ __ 88
Cost of shares redeemed:
Class A shares........................................................ (1,128,148) (927,041)
Class B shares........................................................ (776,686) (1,191,057)
____________ ____________
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 6,925,772 2,221,995
____________ ____________
TOTAL INCREASE IN NET ASSETS.................................... 7,141,835 2,295,340
NET ASSETS:
Beginning of year....................................................... 4,690,688 11,832,523
____________ ____________
End of year............................................................. $11,832,523 $14,127,863
============= =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ ___________________________ ____________
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
_____________________________ ___________________________ ____________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 291,207 76,280 406,583 236,936 466
Shares issued for dividends
reinvested........... 7,845 10,439 6,544 13,678 7
Shares redeemed........ (91,442) (71,136) (62,636) (93,155) __
_______ _______ _______ _______ _______
NET INCREASE IN
SHARES
OUTSTANDING.... 207,610 15,583 350,491 157,459 473
======== ========= ========= =========== ===========
___________________________
*From December 4, 1995 (commencement of initial offering) through July 31, 1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 9 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series, including the New Jersey Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State personal income taxes to the extent
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series 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 Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series 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 Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the average value of the Series' net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 17, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 18, 1995 through September 30, 1996, to reduce the management
fees paid by, or reimburse such excess expenses of the Series, to the extent
that the Series aggregate annual expenses (excluding 12b-1 distribution plan
fees and certain expenses as described above) exceed an annual rate of 1.25%
of the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $10,732 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$41,664 was charged to the Series for the Class B shares and $18 was charged
to the Series for the Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets of
Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$12,831, $20,832 and $6 were charged to Class A, B and C shares, respectively,
by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $4,564 during the period ended
July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996,
amounted to $6,826,707 and $3,554,605 respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $163,134, consisting of $310,495 gross unrealized appreciation and
$147,361 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, NEW JERSEY SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, New Jersey Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 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 Premier Insured Municipal Bond Fund, New Jersey Series at July
31, 1996, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst & Young LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-96.0% AMOUNT VALUE
__________ __________
<S> <C> <C>
Albany Municipal Water Finance Authority, Water and Sewer
System Revenue, Refunding 5.50%, 12/1/2022 (Insured; FGIC).............. $ 1,000,000 $ 962,930
Buffalo Municipal Water Finance Authority,
Water System Revenue 5%, 7/1/2025 (Insured; FGIC)....................... 750,000 668,715
Erie County 5.50%, 6/15/2025 (Insured; FGIC)................................ 500,000 481,435
Metropolitan Transportation Authority, Revenue:
Commuter Facilities (Grand Central Terminal) 5.70%, 7/1/2024 (Insured; FSA) 550,000 542,784
Transit Facility 6.375%, 7/1/2020 (Insured; MBIA)....................... 750,000 785,295
New York City Health and Hospital Corp., Revenue, Refunding
5.75%, 2/15/2022 (Insured; AMBAC)....................................... 200,000 195,932
New York City Municipal Water Finance Authority, Water and Sewer System Revenue:
5.375%, 6/15/2019 (Insured; MBIA)....................................... 350,000 331,051
6%, 6/15/2019 (Insured; FGIC)........................................... 200,000 200,636
6.20%, 6/15/2021 (Insured; AMBAC)....................................... 600,000 617,040
5.50%, 6/15/2023 (Insured; MBIA)........................................ 500,000 479,335
New York City Transit Authority, Transit Facility Revenue (Livingston Plaza Project)
6%, 1/1/2021 (Insured; FSA)............................................. 200,000 200,384
New York State, COP (City University - John Jay College)
5.50%, 8/15/2009 (Insured; AMBAC) (Prerefunded 8/15/1996) (a)........... 200,000 204,148
New York State Dormitory Authority, Revenue:
(City University System - Third Resolution) 6.30%, 7/1/2024 (Insured; AMBAC) 500,000 520,725
(Refunding - Fordham University) 5.75%, 7/1/2015 (Insured; FGIC)........ 200,000 200,364
(Refunding - Skidmore College) 5.375%, 7/1/2023 (Insured; FSA).......... 200,000 187,832
(Rochester University) 5.90%, 7/1/2017 (Insured; MBIA).................. 950,000 951,007
(State University Educational Facilities) 5.40%, 5/15/2023 (Insured; FGIC) 600,000 570,246
New York State Energy Research and Development Authority, Revenue:
Facilities (Refunding - Con Edison Co. of New York Inc. Project)
5.25%, 8/15/2020 (Insured; MBIA)...................................... 200,000 184,248
Gas Facilities (Brooklyn Union Gas):
Refunding 5.50%, 1/1/2021 (Insured; MBIA)............................. 500,000 482,725
5.60%, 6/1/2025 (Insured; MBIA)....................................... 200,000 193,732
Pollution Control, Refunding:
(New York State Electric and Gas Corp.) 6.05%, 4/1/2034 (Insured; MBIA) 500,000 506,335
(Rochester Gas and Electric Project) 6.50%, 5/15/2032 (Insured; MBIA). 400,000 413,888
New York State Housing Finance Agency, MFMR
6.35%, 8/15/2023 (Insured; AMBAC)....................................... 500,000 510,770
New York State Medical Care Facilities Finance Agency, Revenue:
(Hospital and Nursing Home) 6.125%, 2/15/2015 (Insured; MBIA)........... 400,000 410,608
(Long Term Health Care) 6.50%, 11/1/2015 (Insured; FSA)................. 200,000 213,168
(Mental Health Service) 5.25%, 8/15/2023 (Insured; FSA)................. 220,000 200,651
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
New York State Medical Care Facilities Finance Agency, Revenue (continued):
(Mental Health Service Facilities Improvement) 5.80%, 2/15/2019 (Insured; FSA) $ 350,000 $ 345,443
(Montefiore Medical Center):
5.75%, 2/15/2025 (Insured; AMBAC)..................................... 1,000,000 987,130
6%, 2/15/2035 (Insured; AMBAC)........................................ 500,000 500,950
(New York Hospital) 6.50%, 8/15/2029 (Insured; AMBAC)................... 500,000 528,425
(Refunding - Saint Mary's Hospital Project) 6.20%, 11/1/2014 (Insured; AMBAC) 200,000 206,438
New York State Urban Development Corporation, Revenue, Refunding
(Correctional Capital Facilities) 5.50%, 1/1/2018 (Insured; FSA)........ 280,000 271,292
Niagara Falls Bridge Commission, Toll Revenue, Refunding
5.25%, 10/1/2021 (Insured; FGIC)........................................ 200,000 186,392
Suffolk County Water Authority, Waterworks Revenue 5%, 6/1/2012 (Insured; MBIA) 200,000 186,400
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $14,199,858).................... $14,428,454
==============
SHORT-TERM MUNICIPAL INVESTMENTS-4.0%
U.S. RELATED;
Puerto Rico Electric Power Authority, Power Revenue 3.25% (Insured; FSA) (b)
(cost $600,000)......................................................... $ 600,000 $ 600,000
==============
TOTAL INVESTMENTS-100% (cost $14,799,858)................................... $15,028,454
==============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________________ ___________________
AAA Aaa AAA 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 refunding date.
(b) Inverse Floater Security - the interest rate is subject to change
periodically.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) At July 31, 1996, 28.3% of the Series' net assets are insured by
AMBAC and 32.7% are insured by MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $14,799,858)-see statement...................................... $15,028,454
Interest receivable..................................................... 196,917
Prepaid expenses........................................................ 13,353
____________
15,238,724
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 6,786
Due to Distributor...................................................... 7,483
Due to Custodian........................................................ 114,478
Payable for shares of Beneficial Interest redeemed...................... 10,183
Accrued expenses and other liabilities.................................. 32,148 171,078
__________ ____________
NET ASSETS ................................................................ $15,067,646
==============
REPRESENTED BY:
Paid-in capital......................................................... $14,867,744
Accumulated net realized (loss) on investments.......................... (28,694)
Accumulated net unrealized appreciation on investments-Note 3........... 228,596
____________
NET ASSETS at value......................................................... $15,067,646
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 369,327
==============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 788,979
==============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 7,951
==============
NET ASSET VALUE per share:
Class A Shares
($4,767,941 / 369,327 shares)......................................... $12.91
=========
Class B Shares
($10,196,918 / 788,979 shares)........................................ $12.92
=========
Class C Shares
($102,787 / 7,951 shares)............................................. $12.93
=========
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $818,182
EXPENSES:
Management fee-Note 2(a).............................................. $ 78,481
Shareholder servicing costs-Note 2(c)................................. 54,269
Distribution fees-Note 2(b)........................................... 46,306
Auditing fees......................................................... 15,388
Registration fees..................................................... 10,556
Legal fees............................................................ 4,410
Prospectus and shareholders' reports.................................. 2,675
Custodian fees........................................................ 1,907
Trustees' fees and expenses-Note 2(d)................................. 1,796
Miscellaneous......................................................... 8,043
_____________
TOTAL EXPENSES.................................................... 223,831
Less-reduction in management fee due to undertakings-Note 2(a)........ 8,907
_____________
NET EXPENSES...................................................... 214,924
____________
INVESTMENT INCOME-NET............................................. 603,258
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments.................................... $(15,804)
Net unrealized appreciation on investments............................ 131,041
_____________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 115,237
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $718,495
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
_____________________________________
1995 1996
_____________ _____________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 373,738 $ 603,258
Net realized (loss) on investments...................................... (12,890) (15,804)
Net unrealized appreciation on investments for the year................. 76,318 131,041
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 437,166 718,495
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (172,061) (228,880)
Class B shares........................................................ (201,677) (374,193)
Class C shares........................................................ __ (185)
_____________ _____________
TOTAL DIVIDENDS................................................... (373,738) (603,258)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 3,665,511 958,421
Class B shares........................................................ 5,533,055 4,434,130
Class C shares........................................................ __ 101,004
Dividends reinvested:
Class A shares........................................................ 98,623 155,716
Class B shares........................................................ 118,605 193,346
Class C shares........................................................ __ 185
Cost of shares redeemed:
Class A shares........................................................ (1,027,887) (1,190,783)
Class B shares........................................................ (1,301,859) (1,102,021)
_____________ _____________
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 7,086,048 3,549,998
_____________ _____________
TOTAL INCREASE IN NET ASSETS.................................... 7,149,476 3,665,235
NET ASSETS:
Beginning of year....................................................... 4,252,935 11,402,411
_____________ _____________
End of year............................................................. $11,402,411 $15,067,646
============= ===============
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ ___________________________ ____________
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
_____________________________ ___________________________ ____________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 292,256 73,469 441,378 340,948 7,937
Shares issued for dividends
reinvested........... 7,927 11,953 9,489 14,843 14
Shares redeemed........ (85,165) (91,724) (104,836) (84,644) __
_______ _______ _______ _______ _______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING.... 215,018 (6,302) 346,031 271,147 7,951
========== ========= ======== ========== ==========
___________________________
*From December 4, 1995 (commencement of initial offering) to July 31, 1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 10 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series, including the New York Series (the "Series"). The Fund's
investment objective is to maximize current income exempt from Federal and,
where applicable, from State personal income taxes to the extent consistent
with the preservation of capital. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(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.
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series 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 Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series 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 Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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 Series has an unused capital loss carryover of approximately $13,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to July 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through July 31, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied the carryover expires in
fiscal 2004.
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 .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 17, 1995 to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 18, 1995 through September 30, 1996 to reduce the management
fees paid by, or reimburse such excess expenses of the Series, to the extent
that the Series' aggregate annual expenses (excluding 12b-1 distribution plan
fees and certain expenses as described above) exceed an annual rate of 1.25%
of the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $8,907 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average daily
net assets of Class B shares and .75 of 1% of the value of the average daily
net assets of Class C shares. During the period ended July 31, 1996, $46,260
was charged to the Series for the Class B shares and $46 was charged to the
Series for the Class C shares.
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$12,528, $23,130 and $15 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $4,640 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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,
excluding short-term securities, during the year ended July 31, 1996,
amounted to $7,391,303 and $3,536,274, respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $228,596, consisting of $310,514 gross unrealized appreciation and
$81,918 gross unrealized depreciation.
At July 31, 1996, 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).
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, NEW YORK SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, New York Series (one of the series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, 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 July 31, 1996 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 Premier Insured Municipal Bond Fund, New York Series at July 31,
1996, the results of its operations for the period then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst & Young LLP signature logo]
New York, New York
September 4, 1996
PREMIER INSURED MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the California Series for
the period from August 19, 1993 (commencement of operations) to
July 31, 1994. Condensed Financial Information for the
Connecticut Series for the period from May 5, 1994
(commencement of operations) to July 31, 1994. Condensed
Financial Information for each of the Florida, National and New
Jersey Series for the period from May 4, 1994 (commencement of
operations of each of the Florida, National and New Jersey
Series) to July 31, 1994. Condensed Financial Information for
the New York Series for the period from May 6, 1994
(commencement of operations) to July 31, 1994. Condensed
Financial Information for each of the Series for each of the
two years ended July 31, 1996.
Included in Part B of the Registration Statement:
Statement of Investments-- July 31, 1996
Statement of Assets and Liabilities-- July 31, 1996
Statement of Operations--year ended July 31, 1996
Statement of Changes in Net Assets--for each of the years
ended July 31, 1995 and 1996.
Notes to Financial Statements
Reports of Ernst & Young LLP, Independent Auditors, dated
September 4, 1996
All Schedules and other financial statement information, for which provision is
made in the applicable accounting regulations of the Securities and Exchange
Commission, are either omitted because they are not required under the related
instructions, they are inapplicable, or the required information is presented in
the financial statements or notes thereto which are included in Part B of the
Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration of Trust
is incorporated by reference to Exhibit (1) of Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A, filed on
November 24, 1995.
(2) Registrant's By-Laws, as amended, are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on February 10, 1994.
(5) Management Agreement is incorporated by reference to Exhibit (5) of
Post-Effective Amendment No. 5 to the Registration Statement on Form
N-1A, filed on November 24, 1995.
(6)(a) Distribution Agreement is incorporated by reference to Exhibit (6)(a)
of Post-Effective Amendment No. 5 to the Registration Statement on
Form N-1A, filed on November 24, 1995.
(6)(b) Forms of Distribution Plan Agreement are incorporated by reference to
Exhibit (6)(b) of Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed on November 24, 1995.
(6)(c) Forms of Shareholder Services Plan Agreement are incorporated by
reference to Exhibit (6)(c) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on November 24, 1995.
(8)(a) Custody Agreement is incorporated by reference to Exhibit 8(a) of
Post-Effective Amendment No. 2 to the Registration Statement on Form
N-1A, filed on February 10, 1994.
(8)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 2 to the Registration Statement
on Form N-1A, filed on February 10, 1994.
(9) Shareholder Services Plan is incorporated by reference to Exhibit (9)
of Post-Effective Amendment No. 5 to the Registration Statement on
Form N-1A, filed on November 24, 1995.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on November 24, 1995.
(11) Consent of Independent Auditors.
(15) Distribution Plan is incorporated by reference to Exhibit (15) of
Post-Effective Amendment No. 5 to the Registration Statement on Form
N-1A, filed on November 24, 1995.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit (16) of Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A, filed on February 10, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(17) Financial Data Schedules.
(18) Rule 18f-3 Plan.
Other Exhibits
______________
(a) Powers of Attorney of the Board members.
(b) Certificate of Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of November 18, 1996
______________ _______________________________
Beneficial Interest
(Par value $.001) Class A Class B Class C
National Series 196 323 1
California Series 55 117 1
Connecticut Series 277 529 4
Florida Series 451 382 1
New Jersey Series 161 229 2
New York Series 140 272 3
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract, arrangements
or statute under which a director, officer, underwriter or affiliated
person of the Registrant is insured or indemnified in any manner
against any liability which may be incurred in such capacity, other
than insurance provided by any director, officer, affiliated person
or underwriter for their own protection, is incorporated by reference
to Item 4 of Part II of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on July 16, 1993.
Reference is also made to the Distribution Agreement incorporated by
reference to Exhibit (6)(a) to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on November 24, 1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise
a financial service organization whose business consists primarily of
providing investment management services as the investment adviser,
manager and distributor for sponsored investment companies registered
under the Investment Company Act of 1940 and as an investment adviser
to institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-
investment adviser or administrator. Dreyfus Management, Inc.,
another wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and Member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE None
Director
JULIAN M. SMERLING None
Director
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Executive Officer, The Boston Company*****;
Chief Operating Deputy Director:
Officer and a Mellon Trust****;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
Dreyfus America Fund
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit
Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
ELIE M. GENADRY President:
Vice President- Institutional Services Division of
Institutional Sales Dreyfus Service Corporation*;
Broker-Dealer Division of Dreyfus
Service Corporation*;
Group Retirement Plans Division of
Dreyfus Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
+ The address of the business so indicated is Atrium Building,
80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) The Dreyfus/Laurel Funds, Inc.
34) The Dreyfus/Laurel Funds Trust
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus Stock Index Fund, Inc.
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus S&P 500 Index Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Investment Grade Bond Funds, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Tax Exempt Cash Management
68) The Dreyfus Third Century Fund, Inc.
69) Dreyfus Treasury Cash Management
70) Dreyfus Treasury Prime Cash Management
71) Dreyfus Variable Investment Fund
72) Dreyfus Worldwide Dollar Money Market Fund, Inc.
73) General California Municipal Bond Fund, Inc.
74) General California Municipal Money Market Fund
75) General Government Securities Money Market Fund, Inc.
76) General Money Market Fund, Inc.
77) General Municipal Bond Fund, Inc.
78) General Municipal Money Market Fund, Inc.
79) General New York Municipal Bond Fund, Inc.
80) General New York Municipal Money Market Fund
81) Premier Insured Municipal Bond Fund
82) Premier California Municipal Bond Fund
83) Premier Equity Funds, Inc.
84) Premier Global Investing, Inc.
85) Premier GNMA Fund
86) Premier Growth Fund, Inc.
87) Premier Municipal Bond Fund
88) Premier New York Municipal Bond Fund
89) Premier State Municipal Bond Fund
90) Premier Strategic Growth Fund
91) Premier Value Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth A. Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 27th day of November, 1996.
PREMIER INSURED MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signatures Title Date
/s/Marie E. Connolly* President (Principal Executive 11/27/96
Marie E. Connolly Officer) and Treasurer
/s/Joseph F. Tower, III* Vice President and Assistant 11/27/96
Joseph F. Tower, III Treasurer (Principal Accounting
and Financial Officer)
/s/Clifford L. Alexander, Jr.* Board member 11/27/96
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Board member 11/27/96
Peggy C. Davis
/s/Joseph S. DiMartino* Chairman of the Board 11/27/96
Joseph S. DiMartino
/s/Ernest Kafka* Board member 11/27/96
Ernest Kafka
/s/Saul B. Klaman* Board member 11/27/96
Saul B. Klaman
/s/Nathan Leventhal* Board member 11/27/96
Nathan Leventhal
BY: /s/ Elizabeth A. Bachman
__________________________*
Elizabeth A. Bachman,
Attorney-in-Fact
PREMIER INSURED MUNICIPAL BOND FUND
ITEM 24
(b) Exhibits
(11) Consent of Independent Auditors
(18) Rule 18f-3 Plan
Other Exhibits
(a) Powers of Attorney of the Board Members
(b) Certificate of Secretary
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information," "Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors" and to the use of our reports dated
September 4, 1996, in this Registration Statement (Form N-1A 33-61738) of
Premier Insured Municipal Bond Fund including the National Series, California
Series, Connecticut Series, Florida Series, New Jersey Series, and the
New York Series.
ERNST & YOUNG LLP
New York, New York
November 25, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 001
<NAME> CALIFORNIA SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 5849
<INVESTMENTS-AT-VALUE> 5966
<RECEIVABLES> 584
<ASSETS-OTHER> 776
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7326
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7270
<SHARES-COMMON-STOCK> 264
<SHARES-COMMON-PRIOR> 305
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (95)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 117
<NET-ASSETS> 3156
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 389
<OTHER-INCOME> 0
<EXPENSES-NET> 105
<NET-INVESTMENT-INCOME> 284
<REALIZED-GAINS-CURRENT> (83)
<APPREC-INCREASE-CURRENT> 334
<NET-CHANGE-FROM-OPS> 535
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (141)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20
<NUMBER-OF-SHARES-REDEEMED> (64)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> (26)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 124
<AVERAGE-NET-ASSETS> 3362
<PER-SHARE-NAV-BEGIN> 11.56
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> .39
<PER-SHARE-DIVIDEND> (.50)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.95
<EXPENSE-RATIO> .012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 002
<NAME> CALIFORNIA SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 5849
<INVESTMENTS-AT-VALUE> 5966
<RECEIVABLES> 584
<ASSETS-OTHER> 776
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7326
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7270
<SHARES-COMMON-STOCK> 345
<SHARES-COMMON-PRIOR> 328
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (95)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 117
<NET-ASSETS> 4135
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 389
<OTHER-INCOME> 0
<EXPENSES-NET> 105
<NET-INVESTMENT-INCOME> 284
<REALIZED-GAINS-CURRENT> (83)
<APPREC-INCREASE-CURRENT> 334
<NET-CHANGE-FROM-OPS> 535
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (142)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62
<NUMBER-OF-SHARES-REDEEMED> (54)
<SHARES-REINVESTED> 9
<NET-CHANGE-IN-ASSETS> (26)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 124
<AVERAGE-NET-ASSETS> 3870
<PER-SHARE-NAV-BEGIN> 11.57
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .40
<PER-SHARE-DIVIDEND> (.44)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.97
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 003
<NAME> CALIFORNIA SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 5849
<INVESTMENTS-AT-VALUE> 5966
<RECEIVABLES> 584
<ASSETS-OTHER> 776
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7326
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7270
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (95)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 117
<NET-ASSETS> 1
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 389
<OTHER-INCOME> 0
<EXPENSES-NET> 105
<NET-INVESTMENT-INCOME> 284
<REALIZED-GAINS-CURRENT> (83)
<APPREC-INCREASE-CURRENT> 334
<NET-CHANGE-FROM-OPS> 535
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (26)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 124
<AVERAGE-NET-ASSETS> 1
<PER-SHARE-NAV-BEGIN> 12.24
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> (.27)
<PER-SHARE-DIVIDEND> (.26)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.97
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 004
<NAME> CONNECTICUT SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 27912
<INVESTMENTS-AT-VALUE> 28602
<RECEIVABLES> 311
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28921
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 298
<TOTAL-LIABILITIES> 298
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27869
<SHARES-COMMON-STOCK> 857
<SHARES-COMMON-PRIOR> 961
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 690
<NET-ASSETS> 11117
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1721
<OTHER-INCOME> 0
<EXPENSES-NET> 403
<NET-INVESTMENT-INCOME> 1318
<REALIZED-GAINS-CURRENT> 84
<APPREC-INCREASE-CURRENT> 8
<NET-CHANGE-FROM-OPS> 1410
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (576)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114
<NUMBER-OF-SHARES-REDEEMED> (239)
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> (440)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (20)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440
<AVERAGE-NET-ASSETS> 12310
<PER-SHARE-NAV-BEGIN> 12.95
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> (.61)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> .010
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 005
<NAME> CONNECTICUT SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 27912
<INVESTMENTS-AT-VALUE> 28602
<RECEIVABLES> 311
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28921
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 298
<TOTAL-LIABILITIES> 298
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27869
<SHARES-COMMON-STOCK> 1335
<SHARES-COMMON-PRIOR> 1282
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 690
<NET-ASSETS> 17333
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1721
<OTHER-INCOME> 0
<EXPENSES-NET> 403
<NET-INVESTMENT-INCOME> 1318
<REALIZED-GAINS-CURRENT> 84
<APPREC-INCREASE-CURRENT> 8
<NET-CHANGE-FROM-OPS> 1410
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (741)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 212
<NUMBER-OF-SHARES-REDEEMED> (196)
<SHARES-REINVESTED> 37
<NET-CHANGE-IN-ASSETS> (440)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (20)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440
<AVERAGE-NET-ASSETS> 17815
<PER-SHARE-NAV-BEGIN> 12.96
<PER-SHARE-NII> .55
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> (.55)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> .015
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 006
<NAME> CONNECTICUT SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 27912
<INVESTMENTS-AT-VALUE> 28602
<RECEIVABLES> 311
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28921
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 298
<TOTAL-LIABILITIES> 298
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27869
<SHARES-COMMON-STOCK> 13
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 64
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 690
<NET-ASSETS> 173
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1721
<OTHER-INCOME> 0
<EXPENSES-NET> 403
<NET-INVESTMENT-INCOME> 1318
<REALIZED-GAINS-CURRENT> 84
<APPREC-INCREASE-CURRENT> 8
<NET-CHANGE-FROM-OPS> 1410
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (440)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (20)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440
<AVERAGE-NET-ASSETS> 62
<PER-SHARE-NAV-BEGIN> 13.43
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> (.45)
<PER-SHARE-DIVIDEND> (.33)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 07
<NAME> FLORIDA SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 33177
<INVESTMENTS-AT-VALUE> 34522
<RECEIVABLES> 485
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35016
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 290
<TOTAL-LIABILITIES> 290
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32851
<SHARES-COMMON-STOCK> 1244
<SHARES-COMMON-PRIOR> 1495
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1345
<NET-ASSETS> 16515
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2240
<OTHER-INCOME> 0
<EXPENSES-NET> 501
<NET-INVESTMENT-INCOME> 1739
<REALIZED-GAINS-CURRENT> 544
<APPREC-INCREASE-CURRENT> 235
<NET-CHANGE-FROM-OPS> 2518
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (892)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115
<NUMBER-OF-SHARES-REDEEMED> (386)
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> (6091)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (14)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 557
<AVERAGE-NET-ASSETS> 18920
<PER-SHARE-NAV-BEGIN> 13.07
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> .21
<PER-SHARE-DIVIDEND> (.63)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> .010
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 08
<NAME> FLORIDA SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 33177
<INVESTMENTS-AT-VALUE> 34522
<RECEIVABLES> 485
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35016
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 290
<TOTAL-LIABILITIES> 290
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32851
<SHARES-COMMON-STOCK> 1371
<SHARES-COMMON-PRIOR> 1627
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1345
<NET-ASSETS> 18210
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2240
<OTHER-INCOME> 0
<EXPENSES-NET> 501
<NET-INVESTMENT-INCOME> 1739
<REALIZED-GAINS-CURRENT> 544
<APPREC-INCREASE-CURRENT> 235
<NET-CHANGE-FROM-OPS> 2518
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (847)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 134
<NUMBER-OF-SHARES-REDEEMED> (406)
<SHARES-REINVESTED> 16
<NET-CHANGE-IN-ASSETS> (6091)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (14)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 557
<AVERAGE-NET-ASSETS> 19976
<PER-SHARE-NAV-BEGIN> 13.08
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> .20
<PER-SHARE-DIVIDEND> (.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> .015
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 09
<NAME> FLORIDA SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 33177
<INVESTMENTS-AT-VALUE> 34522
<RECEIVABLES> 485
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35016
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 290
<TOTAL-LIABILITIES> 290
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32851
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1345
<NET-ASSETS> 1
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2240
<OTHER-INCOME> 0
<EXPENSES-NET> 501
<NET-INVESTMENT-INCOME> 1739
<REALIZED-GAINS-CURRENT> 544
<APPREC-INCREASE-CURRENT> 235
<NET-CHANGE-FROM-OPS> 2518
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (6091)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (14)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 557
<AVERAGE-NET-ASSETS> 1
<PER-SHARE-NAV-BEGIN> 13.76
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> (.48)
<PER-SHARE-DIVIDEND> (.34)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> .019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 010
<NAME> NATIONAL SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 18559
<INVESTMENTS-AT-VALUE> 19017
<RECEIVABLES> 233
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19320
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 50
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18721
<SHARES-COMMON-STOCK> 644
<SHARES-COMMON-PRIOR> 636
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 92
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 457
<NET-ASSETS> 8409
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1160
<OTHER-INCOME> 0
<EXPENSES-NET> 282
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> 107
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 1006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (418)
<DISTRIBUTIONS-OF-GAINS> (21)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 147
<NUMBER-OF-SHARES-REDEEMED> (159)
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> 1259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 31
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 307
<AVERAGE-NET-ASSETS> 8705
<PER-SHARE-NAV-BEGIN> 13.01
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> (.63)
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.06
<EXPENSE-RATIO> .012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 011
<NAME> NATIONAL SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 18559
<INVESTMENTS-AT-VALUE> 19017
<RECEIVABLES> 233
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19320
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 50
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18721
<SHARES-COMMON-STOCK> 831
<SHARES-COMMON-PRIOR> 748
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 92
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 457
<NET-ASSETS> 10860
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1160
<OTHER-INCOME> 0
<EXPENSES-NET> 282
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> 107
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 1006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (459)
<DISTRIBUTIONS-OF-GAINS> (26)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 139
<NUMBER-OF-SHARES-REDEEMED> (80)
<SHARES-REINVESTED> 24
<NET-CHANGE-IN-ASSETS> 1259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 31
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 307
<AVERAGE-NET-ASSETS> 10705
<PER-SHARE-NAV-BEGIN> 13.01
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> (.57)
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.07
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 012
<NAME> NATIONAL SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 18559
<INVESTMENTS-AT-VALUE> 19017
<RECEIVABLES> 233
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19320
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 50
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18721
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 92
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 457
<NET-ASSETS> 1
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1160
<OTHER-INCOME> 0
<EXPENSES-NET> 282
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> 107
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 1006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 31
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 307
<AVERAGE-NET-ASSETS> 1
<PER-SHARE-NAV-BEGIN> 13.53
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> (.43)
<PER-SHARE-DIVIDEND> (.34)
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.07
<EXPENSE-RATIO> .021
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 013
<NAME> NEW JERSEY SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 13586
<INVESTMENTS-AT-VALUE> 13749
<RECEIVABLES> 235
<ASSETS-OTHER> 201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13820
<SHARES-COMMON-STOCK> 407
<SHARES-COMMON-PRIOR> 392
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 163
<NET-ASSETS> 5212
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 767
<OTHER-INCOME> 0
<EXPENSES-NET> 195
<NET-INVESTMENT-INCOME> 572
<REALIZED-GAINS-CURRENT> 150
<APPREC-INCREASE-CURRENT> (76)
<NET-CHANGE-FROM-OPS> 646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (234)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76
<NUMBER-OF-SHARES-REDEEMED> (71)
<SHARES-REINVESTED> 11
<NET-CHANGE-IN-ASSETS> 2295
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (5)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 74
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 206
<AVERAGE-NET-ASSETS> 5133
<PER-SHARE-NAV-BEGIN> 12.71
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> (.59)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.79
<EXPENSE-RATIO> .011
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 014
<NAME> NEW JERSEY SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 13586
<INVESTMENTS-AT-VALUE> 13749
<RECEIVABLES> 235
<ASSETS-OTHER> 201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13820
<SHARES-COMMON-STOCK> 697
<SHARES-COMMON-PRIOR> 539
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 163
<NET-ASSETS> 8910
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 767
<OTHER-INCOME> 0
<EXPENSES-NET> 195
<NET-INVESTMENT-INCOME> 572
<REALIZED-GAINS-CURRENT> 150
<APPREC-INCREASE-CURRENT> (76)
<NET-CHANGE-FROM-OPS> 646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (338)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 237
<NUMBER-OF-SHARES-REDEEMED> (93)
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 2295
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (5)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 74
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 206
<AVERAGE-NET-ASSETS> 8333
<PER-SHARE-NAV-BEGIN> 12.71
<PER-SHARE-NII> .52
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> (.52)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.79
<EXPENSE-RATIO> .016
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 015
<NAME> NEW JERSEY SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 13586
<INVESTMENTS-AT-VALUE> 13749
<RECEIVABLES> 235
<ASSETS-OTHER> 201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13820
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 163
<NET-ASSETS> 6
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 767
<OTHER-INCOME> 0
<EXPENSES-NET> 195
<NET-INVESTMENT-INCOME> 572
<REALIZED-GAINS-CURRENT> 150
<APPREC-INCREASE-CURRENT> (76)
<NET-CHANGE-FROM-OPS> 646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2295
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (5)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 74
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 206
<AVERAGE-NET-ASSETS> 4
<PER-SHARE-NAV-BEGIN> 13.21
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> (.43)
<PER-SHARE-DIVIDEND> (.32)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.78
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 016
<NAME> NEW YORK SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 14800
<INVESTMENTS-AT-VALUE> 15029
<RECEIVABLES> 197
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15239
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14868
<SHARES-COMMON-STOCK> 369
<SHARES-COMMON-PRIOR> 376
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 229
<NET-ASSETS> 4768
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 818
<OTHER-INCOME> 0
<EXPENSES-NET> 215
<NET-INVESTMENT-INCOME> 603
<REALIZED-GAINS-CURRENT> (16)
<APPREC-INCREASE-CURRENT> 131
<NET-CHANGE-FROM-OPS> 718
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (229)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73
<NUMBER-OF-SHARES-REDEEMED> (92)
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 3665
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (13)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 224
<AVERAGE-NET-ASSETS> 5011
<PER-SHARE-NAV-BEGIN> 12.75
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> .16
<PER-SHARE-DIVIDEND> (.59)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.91
<EXPENSE-RATIO> .012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 017
<NAME> NEW YORK SERIES-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 14800
<INVESTMENTS-AT-VALUE> 15029
<RECEIVABLES> 197
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15239
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14868
<SHARES-COMMON-STOCK> 789
<SHARES-COMMON-PRIOR> 518
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 229
<NET-ASSETS> 10197
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 818
<OTHER-INCOME> 0
<EXPENSES-NET> 215
<NET-INVESTMENT-INCOME> 603
<REALIZED-GAINS-CURRENT> (16)
<APPREC-INCREASE-CURRENT> 131
<NET-CHANGE-FROM-OPS> 718
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (374)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 341
<NUMBER-OF-SHARES-REDEEMED> (85)
<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 3665
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (13)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 224
<AVERAGE-NET-ASSETS> 9252
<PER-SHARE-NAV-BEGIN> 12.77
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> (.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.92
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000902976
<NAME> PREMIER INSURED MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 018
<NAME> NEW YORK SERIES-CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 14800
<INVESTMENTS-AT-VALUE> 15029
<RECEIVABLES> 197
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15239
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14868
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 229
<NET-ASSETS> 103
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 818
<OTHER-INCOME> 0
<EXPENSES-NET> 215
<NET-INVESTMENT-INCOME> 603
<REALIZED-GAINS-CURRENT> (16)
<APPREC-INCREASE-CURRENT> 131
<NET-CHANGE-FROM-OPS> 718
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3665
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (13)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 224
<AVERAGE-NET-ASSETS> 9
<PER-SHARE-NAV-BEGIN> 13.39
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> (.46)
<PER-SHARE-DIVIDEND> (.33)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.93
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
THE DREYFUS FAMILY OF FUNDS
(Premier Family of Fixed-Income Funds)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), requires that the Board of an
investment company desiring to offer multiple classes pursuant
to said Rule adopt a plan setting forth the separate arrangement
and expense allocation of each class, and any related conversion
features or exchange privileges.
The Board, including a majority of the non-interested
Board members, of each of the investment companies, or series
thereof, listed on Schedule A attached hereto (each, a "Fund")
which desires to offer multiple classes has determined that the
following plan is in the best interests of each class
individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided
into Class A, Class B and Class C.
2. Differences in Services: The services offered to
shareholders of each Class shall be substantially the same,
except that Right of Accumulation, Letter of Intent, and
Checkwriting services shall be available only to holders of
Class A shares.
3. Differences in Distribution Arrangements: Class
A shares shall be offered with a front-end sales charge, as such
term is defined in Article III, Section 26(b), of the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., and a deferred sales charge (a "CDSC"), as such term is
defined in said Section 26(b), may be assessed on certain
redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The
amount of the sales charge and the amount of and provisions
relating to the CDSC pertaining to the Class A shares are set
forth on Schedule B hereto.
Class B shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class B
shares, are set forth on Schedule C hereto.
Class C shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class C
shares, are set forth on Schedule D hereto.
Each Class of shares shall be subject to an annual
service fee at the rate of .25% of the value of the average
daily net assets of such Class pursuant to a Shareholder
Services Plan.
4. Expense Allocation. The following expenses
shall be allocated, to the extent practicable, on a Class-by-
Class basis: (a) fees under the Distribution Plan and
Shareholder Services Plan; (b) printing and postage expenses
related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current
shareholders of a specific Class; (c) Securities and Exchange
Commission and Blue Sky registration fees incurred by a specific
Class; (d) the expense of administrative personnel and services
as required to support the shareholders of a specific Class; (e)
litigation or other legal expenses relating solely to a specific
Class; (f) transfer agent fees identified by the Fund's transfer
agent as being attributable to a specific Class; and (g) Board
members' fees incurred as a result of issues relating to a
specific Class.
5. Conversion Features. Class B shares shall
automatically convert to Class A shares after a specified period
of time after the date of purchase, based on the relative net
asset value of each such Class without the imposition of any
sales charge, fee or other charge, as set forth on Schedule E
hereto. No other Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges. Shares of a Class shall be
exchangeable only for (a) shares of the same Class of other
investment companies managed or administered by The Dreyfus
Corporation and (b) shares of certain other investment companies
specified from time to time.
Dated: April 12, 1995
Revised as of: December 1, 1996 SCHEDULE A
Premier California Municipal Bond Fund
Premier GNMA Fund
Premier Insured Municipal Bond Fund
Premier Municipal Bond Fund
Premier New York Municipal Bond Fund
Premier State Municipal Bond Fund
SCHEDULE B
Front-End Sales Charge--Class A Shares--The public offering
price for Class A shares shall be the net asset value per share
of that Class plus a sales load as shown below:
Amount of Transaction
As a % of offering As a % of net asset
Total Sales Load price per share value per share
Less than $50,000. . . . . . 4.50 4.70
$50,000 to less than $100,000 4.00 4.20
$100,000 to less than $250,000 3.00 3.10
$250,000 to less than $500,000 2.50 2.60
$500,000 to less than $1,000,000 2.00 2.00
$1,000,000 or more -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of
1.00% shall be assessed at the time of redemption of Class A
shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year
of purchase. The terms contained in Schedule C pertaining to
the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the
provisions for waiving the CDSC, shall be applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation shall apply to such purchases of Class A shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable
to the Fund's Distributor shall be imposed on any redemption of
Class B shares which reduces the current net asset value of such
Class B shares to an amount which is lower than the dollar
amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder
at the time of redemption. No CDSC shall be imposed to the
extent that the net asset value of the Class B shares redeemed
does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital
gain distributions, plus (ii) increases in the net asset value
of the shareholder's Class B shares above the dollar amount of
all payments for the purchase of Class B shares of the Fund held
by such shareholder at the time of redemption.
If the aggregate value of the Class B shares redeemed
has declined below their original cost as a result of the Fund's
performance, a CDSC may be applied to the then-current net asset
value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount
of the charge shall depend on the number of years from the time
the shareholder purchased the Class B shares until the time of
redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the
purchase of Class B shares, all payments during a month shall be
aggregated and deemed to have been made on the first day of the
month.
The following table sets forth the rates of the CDSC
for Class B shares, except as set forth below, effective
December 1, 1996:
Year Since
Purchase Payment
Was Made CDSC as a % of
Amount Invested
or Redemption
Proceeds First. . . . 4.00 Second 4.00 Third 3.00
Fourth 3.00 Fifth 2.00 Sixth 1.00
The following table sets forth the rates of the CDSC
for Class B shares purchased by shareholders who beneficially
owned Class B shares on November 30, 1996:
Year Since
Purchase Payment
Was Made CDSC as a % of
Amount Invested
or Redemption
Proceeds First. . . . 3.00 Second 3.00
Third 2.00 Fourth 2.00
Fifth 1.00 Sixth 0.00
In determining whether a CDSC is applicable to a
redemption, the calculation shall be made in a manner that
results in the lowest possible rate. Therefore, it shall be
assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the
increase in net asset value of Class B shares above the total
amount of payments for the purchase of Class B shares made
during the preceding six years (five years for shareholders
beneficially owning Class B shares on November 30, 1996); then
of amounts representing the cost of shares purchased six years
(five years for shareholders beneficially owning Class B shares
on November 30, 1996) prior to the redemption; and finally, of
amounts representing the cost of shares held for the longest
period of time within the applicable six-year period (five-year
period for shareholders beneficially owning Class B shares on
November 30, 1996).
Waiver of CDSC--The CDSC shall be waived in connection with (a)
redemptions made within one year after the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended (the "Code"), of the shareholder,
(b) redemptions by employees participating in qualified or non-
qualified employee benefit plans or other programs where (i) the
employers or affiliated employers maintaining such plans or
programs have a minimum of 250 employees eligible for
participation in such plans or programs, or (ii) such plan's or
program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Fund's Distributor
exceeds one million dollars, (c) redemptions as a result of a
combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, (d) a distribution following
retirement under a tax-deferred retirement plan or upon
attaining age 70-1/2 in the case of an IRA or Keogh plan or
custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions pursuant to any systematic withdrawal plan as
described in the Fund's prospectus. Any Fund shares subject to
a CDSC which were purchased prior to the termination of such
waiver shall have the CDSC waived as provided in the Fund's
prospectus at the time of the purchase of such shares.
Amount of Distribution Plan Fees--Class B Shares--.50 of 1% of
the value of the average daily net assets of Class B.
SCHEDULE D
Contingent Deferred Sales Charge--Class C Shares--A CDSC of
1.00% payable to the Fund's Distributor shall be imposed on any
redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such
CDSC shall be the method used in calculating the CDSC for Class
B shares. In addition, the provisions for waiving the CDSC
shall be those set forth for Class B shares.
Amount of Distribution Plan Fees--Class C Shares--.75 of 1% of
the value of the average daily net assets of Class C.
SCHEDULE E
Conversion of Class B Shares--Approximately six years after the
date of purchase, Class B shares automatically shall convert to
Class A shares, based on the relative net asset values for
shares of each such Class, and shall no longer be subject to the
distribution fee. At that time, Class B shares that have been
acquired through the reinvestment of dividends and distributions
("Dividend Shares") shall be converted in the proportion that a
shareholder's Class B shares (other than Dividend Shares)
converting to Class A shares bears to the total Class B shares
then held by the shareholder which were not acquired through the
reinvestment of dividends and distributions.
Item 24.(b)
Other Exhibits (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Bachman, Marie
E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier and each of
them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to the
Registration Statement of Premier Insured Municipal Bond Fund (including post-
effective amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/Clifford L. Alexander, Jr. November 7, 1996
- --------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis November 7, 1996
- --------------------------------
Peggy C. Davis
/s/Joseph S. DiMartino November 7, 1996
- --------------------------------
Joseph S. DiMartino
/s/Ernst Kafka November 7, 1996
- --------------------------------
Ernst Kafka
/s/Saul B. Klaman November 7, 1996
- --------------------------------
Saul B. Klaman
/s/Nathan Leventhal November 7, 1996
- --------------------------------
Nathan Leventhal
ITEM 24.(b)
OTHER EXHIBIT (b)
PREMIER INSURED MUNICIPAL BOND FUND
Certificate of Assistant Secretary
The undersigned, Elizabeth A. Bachman, Vice President and Assistant
Secretary of Premier Insured Municipal Bond Fund (the "Fund"), hereby certifies
that set forth below is a copy of the resolution adopted by the Fund's Board
authorizing the signing by Elizabeth A. Bachman, Marie E. Connolly, Richard W.
Ingram, Mark A. Karpe and John Pelletier on behalf of the proper officers of the
Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any and all amendments
and supplements thereto, may be signed by any one of Elizabeth A.
Bachman, Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and
John Pelletier as the attorney-in-fact for the proper officers of
the Fund, with full power of substitution and resubstitution; and
that the appointment of each of such persons as such attorney-in-
fact hereby is authorized and approved; and that such attorneys-in-
fact, and each of them, shall have full power and authority to do
and perform each and every act and thing requisite and necessary to
be done in connection with such Registration Statement and any and
all amendments and supplements thereto, as fully to all intents and
purposes as the officer, for whom he or she is acting as attorney-
in-fact, might or could do in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Fund on November 26, 1996.
/s/ Elizabeth A. Bachman
------------------------
Elizabeth A. Bachman
Vice President and
Assistant Secretary
