File No. 33-50211
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. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
(Check appropriate box or boxes.)
Dreyfus Pennsylvania Intermediate Municipal Bond Fund
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
on (date pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on March 31, 1995 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
X 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 November 30, 1994 was filed on or about
January 27, 1995.
Dreyfus Pennsylvania Intermediate 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 1
3 Condensed Financial Information 3
4 General Description of Registrant 4
5 Management of the Fund 15
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 26
7 Purchase of Securities Being Offered 16
8 Redemption or Repurchase 20
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
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10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-*
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-13
Holders of Securities
16 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus Pennsylvania Intermediate 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-22
18 Capital Stock and Other Securities B-21
19 Purchase, Redemption and Pricing B-16; B-17;
of Securities Being Offered B-21
20 Tax Status B-23
21 Underwriters B-16
22 Calculations of Performance Data B-24
23 Financial Statements B-41
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
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.
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PROSPECTUS MARCH 31, 1995
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
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DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND (THE "FUND") IS
AN OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A
MUTUAL FUND. ITS GOAL IS TO PROVIDE YOU WITH AS HIGH A LEVEL OF CURRENT
INCOME EXEMPT FROM FEDERAL AND PENNSYLVANIA INCOME TAXES AS IS CONSISTENT
WITH THE PRESERVATION OF CAPITAL. THE DOLLAR-WEIGHTED AVERAGE MATURITY OF THE
FUND'S PORTFOLIO RANGES BETWEEN THREE AND TEN YEARS.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO EARN INCOME
ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN PURCHASE OR REDEEM SHARES
BY TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MARCH 31, 1995, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 3
CONDENSED FINANCIAL INFORMATION................... 3
DESCRIPTION OF THE FUND........................... 4
MANAGEMENT OF THE FUND............................ 15
HOW TO BUY FUND SHARES............................ 16
SHAREHOLDER SERVICES.............................. 17
HOW TO REDEEM FUND SHARES......................... 20
SHAREHOLDER SERVICES PLAN......................... 23
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 23
PERFORMANCE INFORMATION........................... 25
GENERAL INFORMATION............................... 26
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C>
Management Fees ................................................................... .60%
Other Expenses..................................................................... .79%
Total Fund Operating Expenses...................................................... 1.39%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $14 $44 $76 $167
</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, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. You can
purchase Fund shares without charge directly from the Fund's distributor; you
may be charged a nominal fee if you effect transactions in Fund shares
through a securities dealer, bank or other financial institution. See
"Management of the Fund" and "Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young 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 the period from December
16, 1993 (commencement of operations) through November 30, 1994. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period................................................... $12.50
-------
INVESTMENT OPERATIONS:
Investment income_net ................................................................ .61
Net realized and unrealized (loss) on investments...................................... (.66)
-------
TOTAL FROM INVESTMENT OPERATIONS....................................................... (.05)
-------
DISTRIBUTIONS:
Dividends from investment income-net................................................... (.61)
-------
Net asset value, end of period......................................................... $11.84
========
TOTAL INVESTMENT RETURN*................................................................. (.60%)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ............................................... -_
Ratio of net investment income to average net assets .................................. 5.19%
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation................................................. 1.39%
Portfolio Turnover Rate................................................................ 20.13%
Net Assets, end of period (000's omitted).............................................. $22,599
- ----------------------
*Annualized.
</TABLE>
Page 3
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to provide you with as high a level of current
income exempt from Federal and Pennsylvania income taxes as is consistent
with the preservation of capital. To accomplish this goal, the Fund will
invest primarily in the debt securities of the Commonwealth of Pennsylvania,
its political subdivisions, authorities and corporations, and certain other
specified securities, the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal and Pennsylvania income taxes
(collectively, "Pennsylvania Municipal Obligations"). To the extent
acceptable Pennsylvania Municipal Obligations are at any time unavailable for
investment by the Fund, the Fund will invest temporarily in other debt
securities the interest from which is, in the opinion of bond counsel to the
issuer, exempt from Federal, but not Pennsylvania, income tax. The
dollar-weighted average maturity of the Fund's portfolio ranges between three
and ten years. The Fund's investment objective cannot be changed without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940) of the Fund's outstanding voting shares. There can be no
assurance that the Fund's investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development bonds
issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that do not
carry the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. Municipal Obligations
bear fixed, floating or variable rates of interest, which are determined in
some instances by formulas under which the Municipal Obligation's interest
rate will change directly or inversely to changes in interest rates or an
index, or multiples thereof, in many cases subject to a maximum and minimum.
Certain Municipal Obligations are subject to redemption at a date earlier
than their stated maturity pursuant to call options, which may be separated
from the related Municipal Obligation and purchased and sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at least
80% of the value of its net assets (except when maintaining a temporary
defensive position) in Municipal Obligations. At least 65% of the value of
the Fund's net assets (except when maintaining a temporary defensive
position) will be invested in bonds, debentures and other debt instruments.
Under normal circumstances, at least 65% of the value of the Fund's net
assets will be invested in Pennsylvania Municipal Obligations and the remainde
r may be invested in securities that are not Pennsylvania Municipal
Obligations and therefore may be subject to Pennsylvania income taxes. See
"Risk Factors_Investing in Pennsylvania Municipal Obligations" below, and
"Dividends, Distributions and Taxes." The Fund will not be limited in the
maturities of the securi-
Page 4
ties in which it will invest; currently, the longest available maturity of
Pennsylvania Municipal Obligations is 40 years.
At least 80% of the value of the Fund's net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than
Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch"). The
Fund may invest up to 20% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by Moody's
and BBB by S&P and Fitch and as low as the lowest rating assigned by Moody's,
S&P or Fitch, but it currently is the intention of the Fund that this portion
of the Fund's portfolio be invested primarily in Municipal Obligations rated
no lower than Baa by Moody's or BBB by S&P or Fitch. The Fund may invest in
short-term Municipal Obligations which are rated in the two highest rating
categories by Moody's, S&P or Fitch. See "Appendix B" in the Statement of
Additional Information. Municipal Obligations rated BBB by S&P or Fitch or
Baa by Moody's are considered investment grade obligations; those rated BBB
by S&P and Fitch are regarded as having an adequate capacity to pay principal
and interest, while those rated Baa by Moody's are considered medium grade
obligations which lack outstanding investment characteristics and have specula
tive characteristics. Investments rated Ba or lower by Moody's and BB or
lower by S&P and Fitch ordinarily provide higher yields but involve greater
risk because of their speculative characteristics. The Fund may invest in
Municipal Obligations rated C by Moody's or D by S&P or Fitch, which is such
rating organizations' lowest rating and indicates that the Municipal
Obligation is in default and interest and/or repayment of principal is in
arrears. See "Risk Factors_Lower Rated Bonds" below for a further discussion
of certain risks. The Fund also may invest in securities which, while not
rated, are determined by The Dreyfus Corporation to be of comparable quality
to the rated securities in which the Fund may invest; for purposes of the 80%
requirement described above, such unrated securities shall be deemed to have
the rating so determined. The Fund also may invest in Taxable Investments of
the quality described below.
The Fund may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security also
would affect the other securities; for example, securities the interest upon
which is paid from revenues of similar types of projects. As a result, the
Fund may be subject to greater risk as compared to a fund that does not
follow this practice.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The Fund may invest
without limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Risk Factors_Other Investment Considerations" below.
The Fund may purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated maturities
in excess of one year, but which permit the holder to demand payment of
principal at any time, or at specified intervals. Variable rate demand notes
include master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower.
Page 5
These obligations permit daily changes in the amount borrowed. Frequently,
such obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit
support arrangements will not adversely affect the tax exempt status of these
obligations. Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that such instruments
generally will be traded, and there generally is no established secondary
market for these obligations, although they are redeemable at face value, plus
accrued interest. Accordingly, where these obligations are not secured by
letters of credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Each obligation purchased by the Fund will meet the
quality criteria established for the purchase of Municipal Obligations. The
Dreyfus Corporation, on behalf of the Fund, will consider on an ongoing basis
the creditworthiness of the issuers of the floating and variable rate demand
obligations in the Fund's portfolio.
The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives the Fund
an undivided interest in the Municipal Obligation in the proportion that the
Fund's participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest. If the participation interest is unrated, it will be
backed by an irrevocable letter of credit or guarantee of a bank that the
Board of Trustees has determined meets the prescribed quality standards for
banks set forth below, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest
in the Municipal Obligation, plus accrued interest. As to these instruments,
the Fund intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity
to meet redemptions, or to maintain or improve the quality of its investment
portfolio.
The Fund may purchase custodial receipts representing the right to
receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each case,
payments on the two classes are based on payments received on the underlying
Municipal Obligations. One class has the characteristics of a typical auction
rate security, where at specified intervals its interest rate is adjusted,
and ownership changes, based on an auction mechanism. This class's interest
rate generally is expected to be below the coupon rate of the underlying
Municipal Obligations and generally is at a level comparable to that of a
Municipal Obligation of similar quality and having a maturity equal to the
period between interest rate adjustments. The second class bears interest at
a rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this case
inversely to changes in the rate of interest of the first class. If the
interest rate on the first class exceeds the coupon rate of the underlying
Municipal Obligations, its interest rate will exceed the rate paid on the
second class. In no event will the aggregate interest paid with respect to
the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should be
expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by the Fund should
increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund also
may purchase directly from issuers, and not in a private placement, Municipal
Obligations having
Page 6
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 a floor.
The Fund may invest up to 15% of the value of its net assets in
securities as to which a liquid trading market does not exist, provided such
investments are consistent with the Fund's investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, and repurchase agreements providing for settlement in more than seven
days after notice. As to these securities, the Fund is subject to a risk that
should the Fund desire to sell them when a ready buyer is not available at a
price that the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.
The Fund may acquire "stand-by commitments" with respect to Municipal
Obligations held in its portfolio. Under a stand-by commitment, the Fund
obligates a broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by
commitment therefore is subject to the ability of the seller to make payment
on demand. The Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The Fund may pay for stand-by commitments if such action is
deemed necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. The Fund also may acquire call options on specific Municipal
Obligations. The Fund generally would purchase these call options to protect
the Fund from the issuer of the related Municipal Obligation redeeming, or
other holder of the call option from calling away, the Municipal Obligation
before maturity. The sale by the Fund of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income
by the Fund.
The Fund may purchase tender option bonds. A tender option bond is a
Municipal Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed rate
substantially higher than 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 Obligation, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in
payment of principal or interest on the underlying Municipal Obligations and
for other reasons. The Fund will not invest more than 15% of the value of its
net assets in securities that are illiquid, which would include tender option
bonds as to which it cannot exercise the tender feature on not more than
seven days' notice if there is no secondary market available for these
obligations.
The Fund may invest in zero coupon securities which are debt
securities issued or sold at a discount from their face value which do not
entitle the holder to any periodic payment of interest prior to maturity or a
specified redemption date (or cash payment date). The amount of the discount
varies depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of debt
securities
Page 7
that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interests in
such stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
interest-bearing securities and are likely to respond to a greater degree to
changes in interest rates than interest-bearing securities having similar
maturities and credit qualities. See "Risk Factors_Lower Rated Bonds" and
"Other Investment Considerations" below, and "Investment Objective and
Management Policies_Risk Factors_Lower Rated Bonds" and "Dividends,
Distributions and Taxes" in the Statement of Additional Information.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in taxable
short-term investments ("Taxable Investments") consisting of: notes of
issuers having, at the time of purchase, a quality rating within the two
highest grades of Moody's, S&P or Fitch; obligations of the U.S. Government,
its agencies or instrumentalities; commercial paper rated not lower than P-1
by Moody's, A-1 by S&P or F-1 by Fitch; certificates of deposit of U.S.
domestic banks, including foreign branches of domestic banks, with assets of
one billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any of
the foregoing. Dividends paid by the Fund that are attributable to income
earned by the Fund from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets
be invested in Taxable Investments. When the Fund has adopted a temporary
defensive position, including when acceptable Pennsylvania Municipal
Obligations are unavailable for investment by the Fund, in excess of 35% of
the Fund's net assets may be invested in securities that are not exempt from
Pennsylvania income tax. Under normal market conditions, the Fund anticipates
that not more than 5% of the value of its total assets will be invested in
any one category of Taxable Investments. Taxable Investments are more fully
described in the Statement of Additional Information, to which reference
hereby is made.
INVESTMENT TECHNIQUES
The Fund may employ, among others, the investment techniques
described below. Use of these techniques may give rise to taxable income.
Options and futures transactions involve so-called "derivative securities."
WHEN-ISSUED SECURITIES _ New issues of Municipal Obligations usually are
offered on a when-issued basis, which means that delivery and payment for
such Municipal Obligations ordinarily take place within 45 days after the
date of the commitment to purchase. The payment obligation and the interest
rate that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable, although any gain realized on such
sale would be taxable. The Fund will not accrue income in respect of a
when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made for the Fund if more than 20% of the
value of the Fund's net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in the Fund's portfolio are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased
on a when-issued basis may expose the Fund to risk because they may experience
such fluctuations prior to their actual delivery. Purchasing Municipal
Obligations on a when-issued basis can involve the additional risk that the
yield available in the market when the delivery takes place
Page 8
actually may be higher than that obtained in the transaction itself. A
segregated account consisting of cash, cash equivalents or U.S. Government
securities or other high quality liquid debt securities at least equal at all
times to the amount of the when-issued commitments will be established and
maintained at the Fund's custodian bank. Purchasing Municipal Obligations on
a when-issued basis when the Fund is fully or almost fully invested may result
in greater potential fluctuation in the value of the Fund's net assets and
its net asset value per share.
FUTURES TRANSACTIONS _ IN GENERAL _ The Fund is not a commodity pool.
However, as a substitute for a comparable market position in the underlying
securities or for hedging purposes, the Fund may engage in futures and
options on futures transactions as described below.
The Fund's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, the Fund may not engage in
such transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired commodity options, other than for bona fide
hedging transactions, would exceed 5% of the liquidation value of the Fund's
assets, after taking into account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount
may be excluded in calculating the 5%. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission, the Fund may
be required to segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount generally equal to
the value of the underlying commodity. To the extent the Fund engages in the
use of futures and options on futures for other than bona fide hedging
purposes, the Fund may be subject to additional risk.
Initially, when purchasing or selling futures contracts the Fund will
be required to deposit with its custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and
is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures position,
assuming all contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker will be made
daily as the price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more
or less valuable, a process known as "marking-to-market." At any time prior
to the expiration of a futures contract, the Fund may elect to close the
position by taking an opposite position at the then prevailing price, which
will operate to terminate the Fund's existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond the limit or trading may be suspended for s
pecified periods during the trading day. Futures contract prices could move
to the limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and potentially
subjecting the Fund to a substantial loss. If it is not possible, or the Fund
determines not, to close a futures position in anticipation of adverse price
movements, the Fund will be required to make daily cash payments of variation
margin. In such circumstances, an increase in the value of the portion of the
portfolio being hedged, if any, may offset partially or completely losses on
the futures contract. However, no assurance can be given that the price of
the securities being hedged will correlate with the price movements in a
future contact and thus provide an offset to losses on the futures contract.
Page 9
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is possible
that the hedge will not be fully effective if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures contrac
ts based on indices, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition of the index.
In an effort to compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if the market does not move as
anticipated when the hedge is established.
Successful use of futures by the Fund also is subject to The Dreyfus
Corporation's ability to predict correctly movements in the direction of the
market or interest rates. For example, if the Fund has hedged against the
possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund will
lose part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the
market price of the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option
on the futures contract.
Call options sold by the Fund with respect to futures contracts will
be covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which
are expected to move relatively consistently with the instruments underlying,
the futures contract. Put options sold by the Fund with respect to futures
contracts will be covered when, among other things, cash or liquid securities
are placed in a segregated account to fulfill the obligation undertaken.
The Fund may utilize municipal bond index futures to protect against
changes in the market value of the Municipal Obligations in its portfolio or
which it intends to acquire. Municipal bond index futures contracts are based
on an index of long-term Municipal Obligations. The index assigns relative
values to the Municipal Obligations included in an index, and fluctuates with
changes in the market value of such Municipal Obligations. The contract is an
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash based upon the difference between the value of the index at
the close of the last trading day of the contract and the price at which the
index contract was originally written. The acquisition or sale of a municipal
bond index futures contract enables the Fund to protect its assets from
fluctuations in rates on tax exempt securities without actually buying or
selling such securities.
Page 10
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS _ The Fund may purchase and sell interest rate futures contracts
and options on interest rate futures contracts as a substitute for a
comparable market position or to hedge against adverse movements in interest
rates.
To the extent the Fund has invested in interest rate futures
contracts or options on interest rate futures contracts as a substitute for a
comparable market position, the Fund will be subject to the investment risks
of having purchased the securities underlying the contract.
The Fund may purchase call options on interest rate futures contracts
to hedge against a decline in interest rates and may purchase put options on
interest rate futures contracts to hedge its portfolio securities against the
risk of rising interest rates.
If the Fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in the Fund's
portfolio and rates decrease instead, the Fund will lose part or all of the
benefit of the increased value of the securities which it has hedged because
it will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices which reflect the decline in interest
rates.
The Fund may sell call options on interest rate futures contracts to
partially hedge against declining prices of its portfolio securities. If the
futures price at expiration of the option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in the Fund's
portfolio holdings. The Fund may sell put options on interest rate futures
contracts to hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Fund will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Fund intends to
purchase. If a put or call option sold by a Fund is exercised, the Fund will
incur a loss which will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions, the
Fund's losses from existing options on futures may to some extent be reduced
or increased by changes in the value of its portfolio securities.
The Fund also may sell options on interest rate futures contracts as
part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions can be effected or that
there will be a correlation between price movements in the options on
interest rate futures and price movements in the Fund's portfolio securities
which are the subject of the hedge. In addition, the Fund's purchase of such
options will be based upon predictions as to anticipated interest rate
trends, which could prove to be inaccurate.
FUTURE DEVELOPMENTS _ The Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and
any other derivative investments which are not presently contemplated for use
by the Fund or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Fund's
investment objective and legally permissible for the Fund. Before entering
into any such transactions or making any such investment, the Fund will
provide appropriate disclosure in its prospectus.
LENDING PORTFOLIO SECURITIES _ From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Fund can increase its income
through the investment of such
Page 11
collateral. The Fund continues to be entitled to payments in amounts equal
to the interest or other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with the Fund.
BORROWING MONEY _ As a fundamental policy, the Fund is permitted to borrow
to the extent permitted under the Investment Company Act of 1940. However,
the Fund currently intends to borrow money only for temporary or emergency
(not leveraging) purposes, in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
CERTAIN FUNDAMENTAL POLICIES
The Fund may (i) borrow money to the extent permitted under the
Investment Company Act of 1940, which currently limits borrowing to no
more than 33-1/3% of the Fund's total assets ; and (ii) invest up to 25%
of its total assets in the securities of issuers in any industry, provided
that there is no such limitation on investments in Municipal Obligations and,
for temporary defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. See "Investment Objective and Management Policies -
Investment Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
The Fund may (i) pledge, hypothecate, mortgage or otherwise encumber
its assets, but only to secure permitted borrowings; and (ii) invest up to
15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities (which securities could include participation interests (including
municipal lease/purchase agreements) that are not subject to the demand
feature described above, and floating and variable rate demand obligations as
to which the Fund cannot exercise the related demand feature described above
and as to which there is no secondary market). See "Investment Objective and
Management Policies _ Investment Restrictions" in the Statement of Additional
Information.
RISK FACTORS
INVESTING IN PENNSYLVANIA MUNICIPAL OBLIGATIONS _ You should consider
carefully the special risks inherent in the Fund's investment in Pennsylvania
Municipal Obligations. Pennsylvania has been historically identified as a
heavy industry state although that reputation has recently changed as the
coal, steel and railroad industries declined. A more diversified economy has
developed in Pennsylvania as a long-term shift in jobs, investment and
workers away from the northeast part of the nation took place. The major new
sources of growth are in the service sector, including trade, medical and
health services, education and financial institutions. Pennsylvania is highly
urbanized, with approximately 50% of the Commonwealth's total population
contained in the metropolitan areas which include the cities of Philadelphia
and Pittsburgh.
Pennsylvania's approved budget for fiscal 1993 authorized $14.046
billion of spending, an increase of less than .25% over total appropriations
for fiscal 1992. The small increase in expenditures resulted from constraints
on revenues as a result of a personal tax rate reduction effective July 1,
1992, a low rate of economic growth, higher tax refund reserves against
adverse decisions in pending litigation, and line item vetoes by the
Governor. The Fund balance of the General Fund increased by $611.4 million
during the 1993 fiscal year, led by an increase in the unreserved balance of
$576.8 million over he prior fiscal year balance. At June 1993, the fund
balance totaled $698.9 and the unreserved-undesignated balance totaled $64.4
million. A continuing recovery of the Commonwealth's financial condition from
the effects of the national economic recession of 1990 and 1991 is demonstrated
by this increase in the balance and a return to a positive unreserved-
undesignated balance. The previous positive unreserved-undesignated balance
was recorded in fiscal 1987. The Commonwealth maintained an operating balance
on a budgetary basis for fiscal 1994 producing a fiscal year ending
unappropriated surplus of $335.8 million.
Page 12
LOWER RATED BONDS _ You should carefully consider the relative risks of
investing in the higher yielding (and, therefore, higher risk) debt
securities in which the Fund may invest. These are securities such as those
rated Ba by Moody's or BB by S&P or Fitch or as low as the lowest rating
assigned by Moody's, S&P or Fitch. They generally are not meant for
short-term investing and may be subject to certain risks with respect to the
issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. Bonds rated Ba by Moody's are
judged to have speculative elements; their future cannot be considered as
well assured and often the protection of interest and principal payments may
be very moderate. Bonds rated BB by S&P are regarded as having predominantly
speculative characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. Bonds rated BB by Fitch are considered speculative
and the payment of principal and interest may be affected at any time by
adverse economic changes. Bonds rated C by Moody's are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Bonds rated D by S&P are in default and the payment of interest and/or
repayment of principal is in arrears. Bonds rated DDD, DD or D by Fitch are
in actual or imminent default, are extremely speculative and should be valued
on the basis of their ultimate recovery value in liquidation or
reorganization of the issuer; DDD represents the highest potential for
recovery of such bonds; and D represents the lowest potential for recovery.
Such bonds, though high yielding, are characterized by great risk. See
"Appendix B" in the Statement of Additional Information for a general
description of Moody's, S&P and Fitch ratings of Municipal Obligations. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality
of the Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and, although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of these bonds.
Therefore, although these ratings may be an initial criterion for selection
of portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. The Fund's ability to achieve its investment objective may be
more dependent on The Dreyfus Corporation's credit analysis than might be the
case for a fund that invested in higher rated securities. Once the rating of
a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.
The market price and yield of bonds rated Ba or lower by Moody's and
BB or lower by S&P and Fitch are more volatile than those of higher rated
bonds. Factors adversely affecting the market price and yield of these
securities will adversely affect the Fund's net asset value. In addition, the
retail secondary market for these bonds may be less liquid than that of
higher rated bonds; adverse market conditions could make it difficult at
times for the Fund to sell certain securities or could result in lower prices
than those used in calculating the Fund's net asset value.
The Fund may invest up to 5% of the value of its net assets in zero
coupon securities and pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds) rated Ba or lower by Moody's and BB or lower by
S&P and Fitch. These securities may be subject to greater fluctuations in
value due to changes in interest rates than interest-bearing securities and
thus may be considered more speculative than comparably rated
interest-bearing securities. See "Other Investment Considerations" below, and
"Investment Objective and Management Policies _ Risk Factors _ Lower Rated
Bonds" and "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
Page 13
OTHER INVESTMENT CONSIDERATIONS _ Even though interest-bearing securities
are investments which promise a stable stream of income, the prices of such
securities are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. Certain
securities that may be purchased by the Fund, such as those with interest
rates that fluctuate directly or indirectly based on multiples of a stated
index, are designed to be highly sensitive to changes in interest rates and
can subject the holders thereof to extreme reductions of yield and possibly
loss of principal. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuing
entities. The Fund's net asset value generally will not be stable and should
fluctuate based upon changes in the value of the Fund's portfolio securities.
Securities in which the Fund invests may earn a higher level of current
income than certain shorter-term or higher quality securities which generally
have greater liquidity, less market risk and less fluctuation in market
value.
Federal income tax law requires the holder of a zero coupon security
or of certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, the Fund may be required to distribute such income
accrued with respect to these securities and may have to dispose of portfolio
securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for the
leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund and
thus reduce the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax exemption for
interest on Municipal Obligations may be introduced in the future. If any
such proposal were enacted that would reduce the availability of Municipal
Obligations for investment by the Fund so as to adversely affect Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940. A "diversified" investment company is required by the Investment
Company Act of 1940 generally to invest, with respect to 75% of its total
assets, not more than 5% of such assets in the securities of a single issuer.
However, the Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Code, which requires that,
at the end of each quarter of its taxable year, (i) at least 50% of the
market value of the Fund's total assets be invested in cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets, and (ii) not more than 25% of the value of its
Page 14
total assets be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of the Fund's assets may be inv
ested in the obligations of a limited number of issuers, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company.
Investment decisions for the Fund are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time as
the Fund, available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of December 31, 1994, The Dreyfus Corporation managed or administered
approximately $70 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. The Fund's primary portfolio manager is
Monica S. Wieboldt. She has held that position since the Fund's inception and
has been employed by The Dreyfus Corporation since 1983. The Fund's other
portfolio managers are identified under "Management of the Fund" in the Fund's
Statement of Additional Information. The Dreyfus Corporation also provides
research services for the Fund as well as for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$201 billion in assets as of September 30, 1994, including approximately $76
billion in mutual fund assets. As of September 30, 1994, various subsidiaries
of Mellon provided non-investment services, such as custodial or
administration services, for approximately $659 billion in assets including
approximately $108 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily assume
certain expenses of the Fund, which would have the effect of lowering the
overall expense ratio of the Fund and increasing yield to investors at the
time such amounts are waived or assumed, as the case may be. The Fund will
not pay The Dreyfus Corporation at a later time for any amounts it may waive,
nor will the Fund reimburse The Dreyfus Corporation for any amounts it may
assume. For the fiscal year ended November 30, 1994, no management fee was
paid by the Fund pursuant to an undertaking by The Dreyfus Corporation.
Page 15
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of Institutional Administration
Services, Inc., a provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. Share certificates are issued
only upon your written request. No certificates are issued for fractional
shares. It is not recommended that the Fund be used as a vehicle for Keogh,
IRA or other qualified plans. The Fund reserves the right to reject any
purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a securities dealer, bank or other financial institution which has
made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment must be
accompanied by the Fund's Account Application. For full-time or part-time
employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Fund's Board, or
the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries who elect to have a
portion of their pay directly deposited into their Fund account, the minimum
initial investment is $50. The Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments to open new accounts which are mailed
should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor subseq
uent investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call the
telephone number listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900118393/Dreyfus
Pennsylvania Intermediate Municipal Bond Fund, for purchase of Fund shares in
your name. The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, please call 1-800-645-6561 after
completing your wire payment to
Page 16
obtain your Fund account number. Please include your Fund account number on
the Fund's Account Application and promptly mail the Account Application to
the Fund, as no redemptions will be permitted until the Account Application is
received. You may obtain further information about remitting funds in this
manner from your bank. All payments should be made in U.S. dollars and, to
avoid fees and delays, should be drawn only on U.S. banks. A charge will be
imposed if any check used for investment in your account does not clear. The
Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent. Net asset value per share is determined as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value per share, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the New York Stock Exchange. Net asset value per share is computed by
dividing the value of the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding. The Fund's
investments are valued by an independent pricing service approved by the
Board of Trustees and are valued at fair value as determined by the pricing
service. For further information regarding the methods employed in valuing
Fund investments, see "Determination of Net Asset Value" in the Fund's
Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000 per day)
without charge by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
FUND EXCHANGES
You may purchase, in exchange for shares of the Fund, shares of
certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you
Page 17
desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "NO" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account, or by a separate signed Shareholder Services
Form, also available by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306. See "How to Redeem Fund Shares _ Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital
gain distribution option (except for Dreyfus Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with respect
to the foregoing categories of shares. To qualify, at the time of your
exchange you must notify the Transfer Agent. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged to shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not less
than 60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the Securities and Exchange Commission.
The Fund reserves the right to reject any exchange request in whole or in
part. The availability of Fund Exchanges may be modified or terminated at any
time upon notice to shareholders.
The exchange of shares of one fund for 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.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of other funds in the Dreyfus Family of Funds of which
you are currently an investor. The amount you designate, which can be
expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth of
the month according to the schedule you have selected. Shares will be
exchanged at the then-current net asset value; however, a sales load may be
charged with respect
Page 18
to exchanges into funds sold with a sales load. See "Shareholder Services" in
the Statement of Additional Information. The right to exercise this Privilege
may be modified or cancelled by the Fund or the Transfer Agent. You may modify
or cancel your exercise of this Privilege at any time by writing to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
The Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. The exchange of shares of one fund for shares of
another is treated for Federal income tax purposes as a sale of the shares
given in exchange by the shareholder and, therefore, an exchanging shareholder
may realize a taxable gain or loss. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to participate
in this Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form,
please call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDER
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from bank account designated by you. At your option, the account designated
by you will be debited in the specified amount, and Fund shares will be
purchased, once a month, on either the first or fifteenth day, or twice a
month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so designated.
To establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of another fund in the Dreyfus Family of Funds of which you are a
shareholder. Shares of the other fund will be purchased at the then-current
net asset value; however, a sales load may be charged with respect to
investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. If you
are investing in a fund that charges a contingent deferred sales charge, the
shares purchased will be subject to the contingent deferred sales charge, if
any, applicable to the purchased shares. See "Shareholder Services" in the
Statement of Additional Information. Dreyfus Dividend ACH permits you to
transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a desig-
Page 19
nated 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
your participation in these privileges by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
To select a new fund after cancellation, you must submit a new Dividend
Options Form. Enrollment in or cancellation of 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. The Fund may modify or terminate these
privileges at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon your employer's direct deposit program, you may have part or all of your
paycheck transferred to your existing Dreyfus account electronically through
the Automated Clearing House system at each pay period. To establish a
Dreyfus Payroll Savings Plan account, you must file an authorization form
with your employer's payroll department. Your employer must complete the
reverse side of the form and return it to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form by calling 1-800-645-6561. You may change the amount of
purchase or cancel the authorization only by written notification to your
employer. It is the sole responsibility of your employer, not the
Distributor, The Dreyfus Corporation, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus Payroll Savings
Plan. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. There is a service
charge of 50cents for each withdrawal check. The 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.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Securities
dealers, banks and other financial institutions may charge a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
Page 20
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE
CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC ASSET
BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES
WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU
OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, the Check Redemption Privilege, the Wire
Redemption Privilege, the Telephone Redemption Privilege or the Dreyfus
TELETRANSFER Privilege. The Fund makes available to certain large institutions
the ability to issue redemption instructions through compatible computer
facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select the telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call the
telephone number listed under "General Information." Redemption requests must
be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards
and procedures pursuant to which signature-guarantees in proper form generally
will be accepted from domestic
Page 21
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. If you have any questions
with respect to signature-guarantees, please call the telephone number listed
under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may request on the Account Application,
Shareholder Services Form or by later written request that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Potential
fluctuations in the net asset value of Fund shares should be considered in
determining the amount of the check. Redemption Checks should not be used to
close your account. Redemption Checks are free, but the Transfer Agent will
impose a fee for stopping payment of a Redemption Check upon your request or
if the Transfer Agent cannot honor the Redemption Check due to insufficient
funds or other valid reason. You should date your Redemption Checks with the
current date when you write them. Please do not postdate your Redemption
Checks. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all postdated Redemption Checks which
are dated within six months of presentment of payment, if they are otherwise
in good order. Shares for which certificates have been issued may not be
redeemed by Redemption Check. This Privilege may be modified or terminated at
any time by the Fund or the Transfer Agent upon notice to shareholders.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $1,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of not more than $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. The Fund reserves the right
to refuse any redemption request, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at any time by the
Transfer Agent or the Fund. The Fund's Statement of Additional Information
sets forth instructions for transmitting redemption requests by wire. Shares
for which certificates have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE _ You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which certificates have been issued are not eligible for this
Privilege.
Page 22
DREYFUS TELETRANSFER PRIVILEGE _ You may redeem Fund shares (minimum $500
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in one
of these documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
Redemption proceeds will be on deposit in your account at an Automated
Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate
this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares issued in certificate form are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus Corporation, an amount not to exceed an annual rate of .25 of 1%
of the value of the Fund's average daily net assets for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange is open for business. Fund shares
begin earning income dividends on the day following the date of purchase. The
Fund's earnings for Saturdays, Sundays and holidays are declared as dividends
on the next business day. Dividends usually are paid on the last business day
of each month, and are automatically reinvested in additional Fund shares at
net asset value or, at your option, paid in cash. If you redeem all shares in
your account at any time during the month, all dividends to which you are
entitled will be paid to you along with the proceeds of the redemption.
Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Code, in
all events in a manner consistent with the provisions of the Investment
Company Act of 1940. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been utilized
or have expired. You may choose whether to receive distributions in cash or
to reinvest in additional Fund shares at net asset value. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by the Fund will not be subject to the Pennsylvania
personal income tax or to the Philadelphia School District investment net
income tax to the extent that the dividends are attributable to interest
received by the Fund from its investments in Pennsylvania Municipal
Obligations and U.S. Government obligations, including obligations issued by
U.S. possessions. Dividends or distributions by
Page 23
the Fund to a Pennsylvania resident that are attributable to most other
sources may be subject to the Pennsylvania personal income tax and (for
residents of Philadelphia) to the Philadelphia School District investment net
income tax.
Dividends paid by the Fund which are excludable as exempt income for
Federal tax purposes are not subject to the Pennsylvania corporate net income
tax. An additional deduction from Pennsylvania taxable income is permitted
for the amount of dividends paid by the Fund attributable to interest
received by the Fund from its investments in Pennsylvania Municipal
Obligations and U.S. Government Obligations, including obligations issued by
U.S. possessions, to the extent included in Federal taxable income, but such
a deduction if reduced by any interest on indebtedness incurred to carry the
securities and other expenses incurred in the production of such interest
income, including expenses deducted on the Federal income tax return that
would not have been allowed under the Internal Revenue Code if the interest
were exempt from Federal income tax. Dividends or distributions by the Fund
attributable to most other sources may be subject to the Pennsylvania
corporate net income tax. It is the current position of the Pennsylvania
Department of Revenue that Fund shares are considered exempt assets (with a
pro rata exclusion based on the value of the Fund attributable to its
investments in Pennsylvania Municipal Obligations and U.S. Government
Obligations) for purposes of determining a corporation's capital stock value
subject to the Pennsylvania capital stock/franchise tax.
Shares of the Fund are exempt from Pennsylvania county personal
property taxes and (as to residents of Pittsburgh) from personal property
taxes imposed by the City of Pittsburgh and the School District of Pittsburgh
to the extent that the Fund's portfolio consists of Pennsylvania Municipal
Obligations and U.S. Government obligations, including obligations issued by
U.S. possessions.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends from net investment income paid by the Fund
will not be subject to Federal income tax. Dividends derived from Taxable
Investments, together with distributions from any net realized short-term
securities gains and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds, are subject to Federal
income tax as ordinary income whether or not reinvested. No dividend paid by
the Fund will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions from net realized long-term
securities gains of the Fund generally are taxable as long-term capital gains
for Federal income tax purposes if you are a citizen or resident of the
United States. Dividends and distributions from gain derived from securities
transactions and from the use of the investment techniques described under
"Description of the Fund _ Investment Techniques" also will be subject to
Federal income tax. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Under the Code, interest on indebtedness incurred or continued
to purchase or carry Fund shares which is deemed to relate to exempt-interest
dividends is not deductible.
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by shareholders of the Fund from their gross income for
Federal income tax purposes, the Fund may purchase specified private activity
bonds, the interest from which may be (i) a preference item for purposes of
the alternative minimum tax, (ii) a component of the "adjusted current
earnings" preference item for purposes of the corporate alternative minimum
tax as well as a component in computing the corporate environmental tax or
(iii) a factor in determining the extent to which a shareholder's Social
Security benefits are taxable. If the Fund purchases such securities, the
portion of dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on Social
Security benefits and may cause an investor to be subject to such taxes.
Page 24
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in the Fund. If the Fund pays
dividends derived from taxable income, it intends to designate as taxable the
same percentage of the day's dividend as the actual taxable income earned on
that day bears to total income earned on that day. Thus, the percentage of
the dividend designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended November 30, 1994 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification is
in the best interest of its shareholders. Such qualification relieves the
Fund of any liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and
Page 25
distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated. Computations of average
annual total return for periods of less than one year represent an
annualization of the Fund's actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman Brothers
Municipal Bond Index, Morningstar, Inc. and other industry publications. The F
und's yield should generally be higher than money market funds (the Fund,
however, does not seek to maintain a stabilized price per share and may not
be able to return an investor's principal), and its price per share should
fluctuate less than long-term bond funds (which generally have somewhat
higher yields).
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated March 12, 1992, and
commenced operations on December 16, 1993. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
Each share has one vote.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Fund or a Trustee. The Trust Agreement provides for indemnification from the
Fund's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as to
avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As discussed under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent maintains a record of your ownership and will send
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 27
DREYFUS
PENNSYLVANIA
INTERMEDIATE
MUNICIPAL
BOND FUND
PROSPECTUS
(LION LOGO)
copyright logo 1995 Dreyfus Service Corporation
105p3033195
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 31, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Pennsylvania Intermediate Municipal Bond Fund (the "Fund"), dated
March 31, 1995 as it may be revised from time to time. To obtain a copy of
the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call toll free
1-800-645-6561.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . B-10
Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . B-13
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . . . . B-15
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . B-16
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . B-17
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . B-19
Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . . B-21
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . B-22
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . . . B-22
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . B-24
Information About the Fund. . . . . . . . . . . . . . . . . . . . . . . B-25
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . . B-25
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-34
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . B-43
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . B-53
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Description of the Fund."
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the period from December 16, 1993
(commencement of operations) to November 30, 1994, computed on a monthly
basis, was as follows:
Fitch Moody's Standard
Investors Investors & Poor's
Service, Inc. Service, Inc. Corporation Percentage
("Fitch") or ("Moody's") or ("S&P") of Value
-------------- ------------- ------------ ----------
AAA Aaa AAA 35.0%
AA Aa AA 16.1%
A A A 13.2%
BBB Baa BBB 14.6%
BB Ba BB 4.9%
F-1, F-1+ MIG 1, P-1, VMIG 1 SP-1, A-1, SP-1+ 9.6%
Not Rated Not Rated Not Rated 6.6% (*)
-------
100.0%
=======
- ---------------------------
(*) Included in the Not Rated category are securities comprising 6.6% of the
Fund's market value which, while not rated, have been determined by the
Manager to be of comparable quality to the following rating categories:
Baa/BBB (3.5%), Ba/BB (2.6%) and F-1, F-1+, MIG 1, P-1, VMIG 1, SP-1, A-1, SP-
1+ (0.5%).
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other public purposes for which Municipal
Obligations may be issued include refunding outstanding obligations, obtaining
funds for general operating expenses and lending such funds to other public
institutions and facilities. In addition, certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds to provide for the construction, equipment, repair or improvement of
privately operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, industrial, port or parking
facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity, or sewage or solid waste
disposal; the interest paid on such obligations may be exempt from Federal
income tax, although current tax laws place substantial limitations on the
size of such issues. Such obligations are considered to be Municipal
Obligations if the interest paid thereon qualifies as exempt from Federal
income tax in the opinion of bond counsel to the issuer. There are, of
course, variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders thereof. The interest rate
on a floating rate demand obligation is based on a known lending rate, such
as a bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation, and rating of the issue. The imposition
of the Fund's management fee, as well as other operating expenses, will have
the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily
associated with Municipal Obligations. Although lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation ordinarily is
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
The staff of the Securities and Exchange Commission currently considers
certain lease obligations to be illiquid. Determination as to the liquidity
of such securities is made in accordance with guidelines established by the
Fund's Board. Pursuant to such guidelines, the Board has directed the Manager
to monitor carefully the Fund's investment in such securities with particular
regard to (1) the frequency of trades and quotes for the lease obligation; (2)
the number of dealers willing to purchase or sell the lease obligation and the
number of other potential buyers; (3) the willingness of dealers to undertake
to make a market in the lease obligation; (4) the nature of the marketplace
trades including the time needed to dispose of the lease obligation, the
method of soliciting offers and the mechanics of transfer; and (5) such other
factors concerning the trading market for the lease obligation as the Manager
may deem relevant. In addition, in evaluating the liquidity and credit
quality of a lease obligation that is unrated, the Fund's Board has directed
the Manager to consider (a) whether the lease can be canceled; (b) what
assurance there is that the assets represented by the lease can be sold; (c)
the strength of the lessee's general credit (e.g., its debt, administrative,
economic, and financial characteristics); (d) the likelihood that the
municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an event of "nonappropriation"); (e) the
legal recourse in the event of failure to appropriate; and (f) such other
factors concerning credit quality as the Manager may deem relevant. The Fund
will not invest more than 15% of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 11" below.
The Fund will purchase tender option bonds only when it is satisfied that
the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for the Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Illiquid Securities. If a substantial market of qualified institutional
buyers develops pursuant to Rule 144A under the Securities Act of 1933, as
amended, for certain restricted securities held by the Fund, the Fund intends
to treat such securities as liquid securities in accordance with procedures
approved by the Fund's Board of Trustees. Because it is not possible to
predict with assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Fund's Board of Trustees has directed the Manager
to monitor carefully the Fund's investments in such securities with particular
regard to trading activity, availability of reliable price information and
other relevant information. To the extent that, for a period of time,
qualified institutional buyers cease purchasing restricted securities pursuant
to Rule 144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such
period.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the Fund,
but the Manager will consider such event in determining whether the Fund
should continue to hold the Municipal Obligations. To the extent that the
ratings given by Moody's, S&P or Fitch for Municipal Obligations may change
as a result of changes in such organizations or their rating systems, the Fund
will attempt to use comparable ratings as standards for its investments in
accordance with the investment policies contained in the Fund's Prospectus and
this Statement of Additional Information. The ratings of Moody's, S&P and
Fitch represent their opinions as to the quality of the Municipal Obligations
which they undertake to rate. It should be emphasized, however, that ratings
are relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of portfolio
investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
Futures Contracts and Options on Futures Contracts. Upon exercise of an
option on a futures contract, the writer of the option delivers to the holder
of the option the futures position and the accumulated balance in the writer's
futures margin account, which represents the amount by which the market price
of the futures contract exceeds, in the case of a call, or is less than, in
the case of a put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of an option on a futures contract
is limited to the premium paid for the option (plus transaction costs).
Because the value of the option is fixed at the time of sale, there are no
daily cash payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily and that change
would be reflected in the net asset value of the Fund.
Lending Portfolio Securities. To a limited extent, the Fund may lend its
portfolio securities to brokers, dealers and other financial institutions,
provided it receives cash collateral which at all times is maintained in an
amount equal to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, the Fund can increase its income
through the investment of the cash collateral. For purposes of this policy,
the Fund considers collateral consisting of U.S. Government securities or
irrevocable letters of credit issued by banks whose securities meet the
standards for investment by the Fund to be the equivalent of cash. From time
to time, the Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a part
of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower; (2)
the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable
interest on the loan, as well as any interest or other distributions payable
on the loaned securities, and any increase in market value; and (5) the Fund
may pay only reasonable custodian fees in connection with the loan. These
conditions may be subject to future modification.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the U.S. Treasury; others, such as those
issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest.
Principal and interest may fluctuate based on generally recognized reference
rates or the relationship of rates. While the U.S. Government provides
financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so, since
it is not so obligated by law. The Fund will invest in such securities only
when it is satisfied that the credit risk with respect to the issuer is
minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars. Time
deposits which may be held by the Fund will not benefit from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund administered
by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of
a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price usually
not more than one week after its purchase. The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated account,
securities acquired by the Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets in excess of
one billion dollars or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type in
which the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. The Manager will monitor on an ongoing basis the value
of the collateral to assure that it always equals or exceeds the repurchase
price. Certain costs may be incurred by the Fund in connection with the sale
of the securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on the
securities by the Fund may be delayed or limited. The Fund will consider on
an ongoing basis the creditworthiness of the institutions with which it enters
into repurchase agreements.
Risk Factors
Investing in Pennsylvania Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
Pennsylvania Municipal Obligations. These risks result from the financial
condition of the Commonwealth of Pennsylvania. Pennsylvania has been
historically identified as a heavy industry state although that reputation has
recently changed as the coal, steel and railroad industries declined. A more
diversified economy has developed in Pennsylvania as a long-term shift in
jobs, investment and workers away from the northeast part of the nation took
place. The major new sources of growth are in the service sector, including
trade, medical and health services, education and financial institutions.
Pennsylvania is highly urbanized, with approximately 50% of the Commonwealth's
total population contained in the metropolitan areas which include the cities
of Philadelphia and Pittsburgh.
Pennsylvania's approved budget for fiscal 1993 authorized $14.046 billion
of spending, an increase of less than .25% over total appropriations for
fiscal 1992. The small increase in expenditures resulted from constraints on
revenues as a result of a personal tax rate reduction effective July 1, 1992,
a low rate of economic growth, higher tax refund reserves against adverse
decisions in pending litigation, and line item vetoes by the Governor. The
fund balance of the General Fund increased by $611.4 million during the 1993
fiscal year, led by an increase in the unreserved balance of $576.8 million
over the prior fiscal year balance. At June 30, 1993, the fund balance
totaled $698.9 and the unreserved-undesignated balance totaled $64.4 million.
A continuing recovery of the Commonwealth's financial condition from the
effects of the national economic recession of 1990 and 1991 is demonstrated
by this increase in the balance and a return to a positive unreserved-
undesigned balance. The previous positive unreserved-undesignated balance was
recorded in fiscal 1987. The Commonwealth maintained an operating balance on
a budgetary basis for fiscal 1994 producing a fiscal year ending
unappropriated surplus of $335.8 million.
Lower Rated Bonds. The Fund is permitted to invest in securities rated
below Baa by Moody's and below BBB by S&P and Fitch. Such bonds, though
higher yielding, are characterized by risk. See "Description of the Fund-
- -Risk Factors--Lower Rated Bonds" in the Prospectus for a discussion of
certain risks and "Appendix B" for a general description of Moody's, S&P and
Fitch ratings of Municipal Obligations. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not evaluate
the market value risk of these bonds. The Fund will rely on the Manager's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer. In this evaluation, the Manager will take into consideration, among
other things, the issuer's financial resources, its sensitivity to economic
conditions and trends, the quality of the issuer's management and regulatory
matters. It also is possible that a rating agency might not timely change the
rating on a particular issue to reflect subsequent events. As stated above,
once the rating of a bond in the Fund's portfolio has been changed, the
Manager will consider all circumstances deemed relevant in determining whether
the Fund should continue to hold the bond.
Investors should be aware that the market values of many of these bonds
tend to be more sensitive to economic conditions than are higher rated
securities. These bonds are considered by S&P, Moody's and Fitch, on balance,
as predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation and generally
will involve more credit risk than securities in the higher rating categories.
Because there is no established retail secondary market for many of these
securities, the Fund anticipates that such securities could be sold only to
a limited number of dealers or institutional investors. To the extent a
secondary trading market for these bonds does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a
liquid secondary market may have an adverse impact on market price and yield
and the Fund's ability to dispose of particular issues when necessary to meet
the Fund's liquidity needs or in response to a specific economic event such
as a deterioration in the creditworthiness of the issuer. The lack of a
liquid secondary market for certain securities also may make it more difficult
for the Fund to obtain accurate market quotations for purposes of valuing the
Fund's portfolio and calculating its net asset value. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of these securities. In such cases,
judgment may play a greater role in valuation because less reliable objective
data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default for
such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Lower rated zero coupon securities, in which the Fund may invest up to
5% of its net assets, involve special considerations. The credit risk factors
pertaining to lower rated securities also apply to lower rated zero coupon
bonds. Such zero coupon bonds carry an additional risk in that, unlike bonds
which pay interest throughout the period to maturity, the Fund will realize
no cash until the cash payment date unless a portion of such securities are
sold and, if the issuer defaults, the Fund may obtain no return at all on its
investment. See "Dividends, Distributions and Taxes."
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 6 below as fundamental policies. These restrictions cannot
be changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of the Fund's
outstanding voting shares. Investment restrictions numbered 7 through 12 are
not fundamental policies and may be changed by vote of a majority of the
Trustees at any time. The Fund may not:
1. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33-1/3% of the Fund's total
assets). For purposes of this investment restriction, the entry into options,
forward contracts, futures contracts, including those relating to indices, and
options on futures contracts or indices shall not constitute borrowing.
2. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests, but
this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein, or prevent the Fund from
purchasing and selling options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
3. Underwrite the securities of other issuers, except that the Fund may
bid separately or as part of a group for the purchase of Municipal Obligations
directly from an issuer for its own portfolio to take advantage of the lower
purchase price available, and except to the extent the Fund may be deemed an
underwriter under the Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.
4. Make loans to others except through the purchase of debt obligations
and the entry into repurchase agreements; however, the Fund may lend its
portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the
Fund's Board of Trustees.
5. Invest more than 25% of its total assets in the securities of issuers
in any single industry; provided that there shall be no such limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
6. Issue any senior security (as such term is defined in Section 18(f)
of the Act), except to the extent that the activities permitted in Investment
Restriction Nos. 1, 2, 8 and 10 may be deemed to give rise to a senior
security.
7. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or
as otherwise provided in the Fund's Prospectus.
8. Purchase securities on margin, but the Fund may make margin deposits
in connection with transactions in options, forward contracts, futures,
including those relating to indices, and options on futures contracts or
indices.
9. Invest in securities of other investment companies, except to the
extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure borrowings for temporary or emergency
purposes and to the extent related to the deposit of assets in escrow in
connection with the purchase of securities on a when-issued or delayed-
delivery basis and the deposit of assets in escrow in connection with writing
covered put and call options and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid (which
securities could include participation interests (including municipal
lease/purchase agreements) that are not subject to the demand feature
described in the Fund's Prospectus, and floating and variable rate demand
obligations as to which the Fund cannot exercise the demand feature described
in the Fund's Prospectus on less than seven days' notice and as to which there
is no secondary market) if, in the aggregate, more than 15% of its net assets
would be so invested.
12. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 5, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as
an "industry." If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in values or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best interests
of the Fund and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Fund shares in the
state involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to their
principal business occupations during at least the last five years, are shown
below. Each Trustee who is deemed to be an "interested person" of the Fund,
as defined in the Act, is indicated by an asterisk.
Trustees and Officers of the Fund
*DAVID W. BURKE, Trustee. Since August 1994, Consultant to the
Manager. From October 1990 to August 1994, Vice President and
Chief Administrative Officer of the Manager. From 1977 to
1990, Mr. Burke was involved in the management of national
television news, as Vice President and Executive Vice
President at ABC News, and subsequently as President of CBS
News. He is also a Board member of 49 other funds in the
Dreyfus Family of Funds. He is 58 years old and his address
is 200 Park Avenue, New York, New York 10166.
DIANE DUNST, Trustee. Since January 1992, President of Diane Dunst
Promotion, Inc., a full service promotion agency. From
January 1989 to January 1992, Director of Promotion Services,
Lear's Magazine. From 1985 to January 1989, she was Sales
Promotion Manager of ELLE Magazine. She is 55 years old and
her address is 120 E. 87th Street, New York, New York 10128.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer
of AT&T Investment Management Corporation. He also is a
trustee of Corporate Property Investors, a real estate
investment company. He is also a Board member of 38 other
funds in the Dreyfus Family of Funds. He is 55 years old and
his address is One Oak Way, Berkeley Heights, New Jersey
07922.
ROSALIND GERSTEN JACOBS, Trustee. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate
investment company. From 1974 to 1976, she was owner and
manager of a merchandise and marketing consulting firm. Prior
to 1974, she was a Vice President of Macy's, New York. She is
also a Board member of 20 other funds in the Dreyfus Family of
Funds. She is 69 years old and her address is c/o Corporate
Property Investors, 305 East 47th Street, New York, New York
10017.
JAY I. MELTZER, Trustee. Physician engaged in private practice
specializing in internal medicine. He is also a member of the
Advisory Board of the Section of Society and Medicine, College
of Physicians and Surgeons, Columbia University and a Clinical
Professor of Medicine, Department of Medicine, Columbia
University College of Physicians and Surgeons. He is 66 years
old and his address is 903 Park Avenue, New York, New York
10021.
DANIEL ROSE, Trustee. President and Chief Executive Officer of
Rose Associates, Inc., a New York based real estate
development and management firm. He is also Chairman of the
Housing Committee of The Real Estate Board of New York, Inc.,
and a Trustee of Corporate Property Investors, a real estate
investment company. He is also a Board member of 21 other
funds in the Dreyfus Family of Funds. He is 65 years old and
his address is c/o Rose Associates, Inc., 380 Madison Avenue,
New York, New York 10017.
WARREN B. RUDMAN, Trustee. Since January 1993, Partner in the law
firm of Paul, Weiss, Rifkind, Wharton & Garrison. From
January 1981 to January 1993, Mr. Rudman served as a United
States Senator from the State of New Hampshire. Since January
1993, Mr. Rudman has also served as Vice Chairman of the
Federal Reserve Bank of Boston and as a director of Chubb
Corporation and Raytheon Company. Since 1988, Mr. Rudman has
also served as a trustee of Boston College and since 1986 as
a member of the Senior Advisory Board of the Institute of
Politics of the Kennedy School of Government at Harvard
University. He also serves as Deputy Chairman of the
President's Foreign Intelligence Advisory Board. He is also
a Board member of 17 other funds in the Dreyfus Family of
Funds. He is 64 years old and his address is c/o Paul, Weiss,
Rifkind, Wharton & Garrison, 1615 L Street, N.W., Washington,
D.C. 20036.
SANDER VANOCUR, Trustee. Since January 1992, President of Old Owl
Communications, a full-service communications firm. Since
November 1989, Mr. Vanocur has served as a Director of the
Damon Runyon-Walter Winchell Cancer Research Fund. From June
1986 to December 1991, he was a Senior Correspondent of ABC
News and, from October 1986 to December 31, 1991, he was
Anchor of the ABC News program "Business World," a weekly
business program on the ABC television network. He is also a
Board member of 21 other funds in the Dreyfus Family of Funds.
He is 66 years old and his address is 2928 P Street, N.W.,
Washington, D.C. 20007.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Trustees of the Fund who
are not "interested persons" of the Fund (as defined in the Act) will be
selected and nominated by the Trustees who are not "interested persons" of the
Fund.
Ordinarily, meetings of shareholders for the purpose of electing Trustees
will not be held unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Under the Act, shareholders of record of not less than two-thirds
of the outstanding shares of the Fund may remove a Trustee through a
declaration in writing or by vote cast in person or by proxy at a meeting
called for that purpose. The Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
such Trustee when requested in writing to do so by the shareholders of record
of not less than 10% of the Fund's outstanding shares.
The Fund typically pays its Trustees an annual retainer and a per meeting
fee and reimburses them for their expenses. For the fiscal year ended
November 30, 1994, (except as otherwise noted) the aggregate amount of fees
and expenses received by each Trustee from the Fund and all other funds in the
Dreyfus Family of Funds for which such person is a Board member were as
follows:
<TABLE>
(5) Total
(3) Pension or Compensation From
(2) Aggregate Retirement Benefits (4) Estimated Annual Fund and Fund
(1) Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
- ----------------- ------------------ ------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
David W. Burke
Diane Dunst
David P. Feldman
Rosalind Gersten Jacobs
Jay I. Meltzer
Daniel Rose
Warren B. Rudman
Sander Vanocur
</TABLE>
_____________________
* Amount does not include reimbursed expenses for attending Board meetings
which amounted to $______ for all Trustees as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating Officer of the Distributor and an officer of other
investment companies advised or administered by the Manager.
From December 1991 to July 1994, she was President and Chief
Compliance Officer of Funds Distributor, Inc., a wholly-owned
subsidiary of The Boston Company, Inc. Prior to December
1991, she served as Vice President and Controller, and later
as Senior Vice President, of The Boston Company Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice
President and General Counsel of the Distributor and an
officer of other investment companies advised or administered
by the Manager. From February 1992 to July 1994, he served as
Counsel for The Boston Company Advisors, Inc. From August
1990 to February 1992, he was employed as an Associate at
Ropes & Gray, and prior to August 1990, he was employed as an
Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior
Vice President of the Distributor and an officer of other
investment companies advised or administered by the Manager.
From 1988 to August 1994, he was Manager of the High
Performance Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary.
Associate General Counsel of the Distributor and an officer of
other investment companies advised or administered by the
Manager. From September 1992 to August 1994, he was an
attorney with the Board of Governors of the Federal Reserve
System.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and
an officer of other investment companies advised or
administered by the Manager. From July 1988 to August 1994,
he was employed by The Boston Company, Inc. where he held
various management positions in the Corporate Finance and
Treasury areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the
Distributor, and an officer of other investment companies
advised or administered by the Manager. From 1984 to July
1994, he was Assistant Vice President in the Mutual Fund
Accounting Department of the Manager.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of
the Distributor and an officer of other investment companies
advised or administered by the Manager. From January 1992 to
July 1994, he was a Senior Legal Product Manager, and from
January 1990 to January 1992, he was mutual fund accountant,
for The Boston Company Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of
the Distributor and an officer of other investment companies
advised or administered by the Manager. From March 1992 to
July 1994, she was a Compliance Officer for The Managers
Funds, a registered investment company. From March 1990 until
September 1991, she was Development Director of The Rockland
Center for the Arts and, prior thereto, was employed as a
Research Assistant for the Bureau of National Affairs.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of the
Fund's shares of beneficial interest outstanding on January 5, 1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Trustees or (ii) vote
of a majority (as defined in the Act) of the outstanding voting securities of
the Fund, provided that in either event the continuance also is approved by
a majority of the Trustees who are not "interested persons" (as defined in the
Act) of the Fund or the Manager, by vote cast in person at a meeting called
for the purpose of voting on such approval. The Agreement was approved by
shareholders on August 3, 1994 and last approved by the Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in The Act) of the Fund or the Manager at a meeting held on May 27,
1994. The Agreement is terminable without penalty, on 60 days' notice, by the
Fund's Board of Trustees or by vote of the holders of a majority of the Fund's
shares, or, on not less than 90 days' notice, by the Manager. The Agreement
will terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; Robert E.
Riley, President, Chief Operating Officer and a director; W. Keith Smith, Vice
Chairman and a director; Paul H. Synder, Vice President and Chief Financial
Officer; Lawrence S. Kash, Vice Chairman--Distribution and a director; Daniel
C. Maclean III, Vice President and General Counsel; Diane Coffey, Vice
President--Corporate Communications; Jeffrey N. Nachman, Vice President--Fund
Administration; Mark N. Jacobs, Vice President--Fund Legal and Compliance, and
Secretary; Henry D. Gottmann, Vice President--Retail; Philip L. Toia, Vice
Chairman--Operations and Administration; Katherine C. Wickham, Vice President-
- -Human Resources; Elie M. Genadry, Vice President--Wholesale; Barbara Casey,
Vice President--Retirement Services; Maurice Bendriham, Controller; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and
David B. Truman, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board of Trustees. The Manager is responsible for investment decisions, and
provides the Fund with portfolio managers who are authorized by the Board of
Trustees to execute purchases and sales of securities. The Fund's portfolio
managers are Richard J. Moynihan, Joseph A. Darcy, A. Paul Disdier, Karen M.
Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence Troutman, Samuel J.
Weinstock, and Monica S. Wieboldt. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Fund as well as for other funds
advised by the Manager. All purchases and sales are reported for the
Trustees' review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by the Manager. The expenses borne
by the Fund include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Manager, Securities and Exchange Commission fees, state Blue Sky qualification
fees, advisory fees, charges of custodians, transfer and dividend disbursing
8-e agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence, costs
of independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders, and any extraordinary expenses.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .60 of 1% of the
value of the Fund's average daily net assets. All fees and expenses are
accrued daily and deducted before the declaration of dividends to
shareholders. For the period December 16, 1993 (commencement of operations)
through November 30, 1994, no management fee was paid by the Fund pursuant to
an undertaking by the Manager.
The Manager has agreed that if in any fiscal year the aggregate expenses
of the Fund, exclusive of taxes, brokerage, interest on borrowings and (with
the prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may deduct
from the payment to be made to the Manager under the Agreement, or the Manager
will bear, such excess expense to the extent required by state law. Such
deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services
Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager, for certain allocated expenses of providing
personal services and/or maintaining shareholder accounts. The services
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of shareholder
accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by the
Trustees who are not "interested persons" (as defined in the Act) of the Fund
and have no direct or indirect financial interest in the operation of the Plan
by vote cast in person at a meeting called for the purpose of considering such
amendments. The Plan is subject to annual approval by such vote of the
Trustees cast in person at a meeting called for the purpose of voting on the
Plan. The Plan is terminable at any time by vote of a majority of the
Trustees who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan.
For the period December 16, 1993 (commencement of operations) through
November 30, 1994, no amounts were charged to the Fund under the Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and for
certain other investment companies.
Services Charges. There is no sales or service charge by the Fund or the
Distributor, although investment dealers, banks and other institutions may
make reasonable charges to investors for their services. The services
provided and the applicable fees are established by each dealer or other
institution acting independently of the Fund. The Fund has been given to
understand that these fees may be charged for customer services including, but
not limited to, same-day investment of client funds; same-day access to client
funds; advice to customers about the status of their accounts, yield currently
being paid or income earned to date; provision of periodic account statements
showing security and money market positions; other services available from the
dealer, bank or other institution; and assistance with inquiries related to
their investment. Any such fees will be deducted monthly from the investor's
account, which on smaller accounts could constitute a substantial portion of
distributions. Small, inactive, long-term accounts involving monthly service
charges may not be in the best interest of investors. Investors should be
aware that they may purchase shares of the Fund directly from the Fund without
imposition of any maintenance or service charges, other than those already
described herein. In some states, banks or other financial institutions
effecting transactions in Fund shares may be required to register as dealers
pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders may
be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any
business day that The Shareholder Services Group, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open. Such purchases will be credited to the shareholder's Fund
account on the next bank business day. To qualify to use the Dreyfus
TeleTransfer Privilege, the initial payment for purchase of Fund shares must
be drawn on, and redemption proceeds paid to, the same bank and account as are
designated in the Account Application or Shareholder Services Form on file.
If the proceeds of a particular redemption are to be wired to an account at
any other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Fund Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year, provided the information on the old Account Application is
still applicable.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record. The
Account Application or later written request must be manually signed by the
registered owner(s). Checks may be made payable to the order of any person
in an amount of $500 or more. When a Check is presented to the Transfer Agent
for payment, the Transfer Agent, as the investor's agent, will cause the Fund
to redeem a sufficient number of shares in the investor's account to cover the
amount of the Check. Dividends are earned until the Check clears. After
clearance, a copy of the Check will be returned to the investor. Investors
generally will be subject to the same rules and regulations that apply to
checking accounts, although election of this Privilege creates only a
shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in an
investor's account, the Check will be returned marked insufficient funds.
Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the redemption request in proper form. Redemption proceeds will be
transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Shareholder Services
Form. Redemption proceeds, if wired, must be in the amount of $1,000 or more
and will be wired to the investor's account at the bank of record designated
in the investor's file at the Transfer Agent, if the investor's bank is a
member of the Federal Reserve System, or to a correspondent bank if the
investor's bank is not a member. Fees ordinarily are imposed by such bank and
usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- -----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171,
toll free. Investors should advise the operator that the above transmittal
code must be used and should also inform the operator of the Transfer Agent's
answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if they
have selected the Dreyfus TeleTransfer Privilege, any request for a wire
redemption will be effected as a Dreyfus TeleTransfer transaction through the
Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at that ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Fund Shares--Dreyfus
TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each holder
of a joint account, and each signature must be guaranteed. Signatures on
endorsed certificates submitted for redemption also must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations, as well as from participants in the New York Stock Exchange
Medallion Signature Program, the Securities Transfers 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 guard-
ians, and may accept other suitable verification arrangements from foreign
investors, such as consular verification. For more information with respect
to signature-guarantees, please call the telephone number listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% or the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Securities and Exchange Commission. In the
case of requests for redemption in excess of such amount, the Board of
Trustees reserves the right to make payments in whole or in part in securities
or other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged or transferred without a sales load for shares
of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares
purchased with a sales load and additional shares acquired
through reinvestment of dividends or distributions of any
such funds (collectively referred to herein as "Purchased
Shares") may be exchanged for shares of other funds sold
with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load that
could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference
will be deducted.
To accomplish an exchange or transfer under item D above, shareholders
must notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing, by wire 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 this Privilege, the investor authorizes the Transfer
Agent to act on telephonic, the Telephone Exchange instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of telephone
exchanges permitted. Shares issued in certificate form are not eligible for
telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. For Dreyfus-
sponsored Keogh Plans, IRAs and IRAs set up under a Simplified Employee
Pension Plan ("SEP-IRAs") with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans, 403(b)(7)
Plans and SEP-IRAs with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among the funds
in the Dreyfus Family of Funds. To exchange shares held in Personal
Retirement Plans, the shares exchanged must have a current value of at least
$100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
an investor to purchase, in exchange for shares of the Fund, shares of another
fund in the Dreyfus Family of Funds. This Privilege is available only for
existing accounts. Shares will be exchanged on the basis of relative net
asset value as described above under "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified if
his account falls below the amount designated to be exchanged under this
Privilege. In this case, an investor's account will fall to zero unless
additional investments are made in excess of the designated amount prior to
the next Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchange of IRA shares may
be made between IRA accounts and from regular accounts to IRA accounts, but
not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject any
exchange request in whole or in part. The Fund Exchanges Service or the
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield
on the shares. If withdrawal payments exceed reinvested dividends and distri-
butions, the investor's shares will be reduced and eventually may be depleted.
There is a service charge of $.50 for each withdrawal check. Automatic
Withdrawal may be terminated at any time by the investor, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the Dreyfus
Family of Funds of which the investor is a shareholder. Shares of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other
funds that are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other
funds sold with a sales load, and the applicable sales
load will be deducted.
C. Dividends and distributions paid by a fund which charges
a sales load may be invested in shares of other funds sold
with a sales load (referred to herein as "Offered
Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged
by the fund from which dividends or distributions are
being swept, without giving effect to any reduced loads,
the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested
in shares of other funds that impose a contingent deferred
sales charge ("CDSC") and the applicable CDSC, if any,
will be imposed upon redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
Valuation of Portfolio Securities. The Fund's investments are valued by
an independent pricing service (the "Service") approved by the Board of
Trustees. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and asked
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal bonds of comparable quality, coupon, maturity and type; indications
as to values from dealers; and general market conditions. The Service may
employ electronic data processing techniques and/or a matrix system to
determine valuations. The Service's procedures are reviewed by the Fund's
officers under the general supervision of the Board of Trustees. Expenses and
fees, including the management fee (reduced by the expense limitation, if
any), are accrued daily and are taken into account for the purpose of
determining the net asset value of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases and
sales usually are placed with those dealers from which it appears that the
best price or execution will be obtained. Usually no brokerage commissions,
as such, are paid by the Fund for such purchases and sales, although the price
paid usually includes an undisclosed compensation to the dealer acting as
agent. The prices paid to underwriters of newly-issued securities usually
include a concession paid by the issuer to the underwriter, and purchases of
after-market securities from dealers ordinarily are executed at a price
between the bid and asked price. No brokerage commissions have been paid by
the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by brokers
in connection with other funds the Manager advises may be used by the Manager
in advising the Fund. Although it is not possible to place a dollar value on
these services, it is the opinion of the Manager that the receipt and study
of such services should not reduce the overall expenses of its research
department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions
and Taxes."
The Internal Revenue Code of 1986, as amended (the "Code"), provides that
if a shareholder has not held his Fund shares for more than six months (or
such shorter period as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to such
shares, any loss incurred on the sale of such shares shall be disallowed to
the extent of the exempt-interest dividend received. In addition, any
dividend or distribution paid shortly after an investor's purchase may have
the effect of reducing the net asset value of his shares below the cost of his
investment. Such a distribution should be a return on the investment in an
economic sense although taxable as stated in "Dividends, Distributions and
Taxes" in the Prospectus.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any 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.
"Conversion transactions" are defined to include certain forward, futures,
option and "straddle" transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be issued
in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain
or loss will arise upon exercise or lapse of such futures and options as well
as from closing transactions. In addition, any such futures or options
remaining unexercised at the end of the Fund's taxable year will be treated
as sold for their then fair market value, resulting in additional gain or loss
to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain financial futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles". "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section 1256.
As such all or a portion of any short or long term capital gain from certain
"straddle" and/or conversion transactions may be recharacterized to ordinary
income.
If the Fund were treated as entering into "straddles" by reasons of its
engaging in financial futures contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options comprising apart of such "straddles" were governed by Section 1256 of
the Code. The Fund may make one or more elections with respect to "mixed
straddles". If no election is made, to the extent the straddle rules apply
to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in any offsetting positions.
Moreover, as a result of the straddle and conversion transaction rules, short-
term capital loss on straddle positions may be recharacterized as long-term
capital loss, and long-term capital gain may be recharacterized as short-term
capital gain or ordinary income.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion
in order to maintain its qualification as a regulated investment company. In
such case, the Fund may have to dispose of securities which it might otherwise
have continued to hold in order to generate cash to satisfy these distribution
requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance Information."
For the 30-day period ended November 30, 1994, the Fund's yield was
5.98%. The Fund's yield reflects the absorption of certain expenses by the
Manager and the waiver of the management fee without which the Fund's yield
for the 30-day period ended November 30, 1994 would have been 4.82%. Current
yield is computed pursuant to a formula which operates as follows: The amount
of the Fund's expenses accrued for the 30-day period (net of reimbursements)
is subtracted from the amount of the dividends and interest earned (computed
in accordance with regulatory requirements) by the Fund during the period.
That result is then divided by the product of: (a) the average daily number
of shares outstanding during the period that were entitled to receive
dividends, and (b) the net asset value per share on the last day of the period
less any undistributed earned income per share reasonably expected to be
declared as a dividend shortly thereafter. The quotient is then added to 1,
and that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
Based upon a combined 1995 Federal and Pennsylvania personal income tax
rate of 41.29%, the Fund's tax equivalent yield for the period ended November
30, 1994 was 10.19%. Without the absorption of certain expenses and the
waiver of the management fee, the Fund's tax equivalent yield for the period
ended November 30, 1994 would have been 8.21%. Tax equivalent yield is
computed by dividing that portion of the yield or effective yield (calculated
as described above) which is tax exempt by 1 minus a stated tax rate and
adding the quotient to that portion, if any, of the yield of the Fund that is
not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal and Commonwealth of Pennsylvania marginal personal income tax
rates in effect during 1994. For Federal income tax purposes, a 39.60% tax
rate has been used and, for Pennsylvania personal income tax purposes, a 2.80%
tax rate has been used. The tax equivalent figure, however, does not reflect
the potential effect of any local (including, but not limited to, county,
district or city) taxes, including applicable surcharges. In addition, there
may be pending legislation which could affect such stated tax rates or yield.
Each investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant tax
equivalent yield.
For the period from the Fund's commencement of operations on December 16,
1993 through November 30, 1994, the Fund's total return was -0.58%. Total
return is calculated by subtracting the amount of the Fund's net asset value
per share at the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the reinvestment of
dividends and distributions during the periods), and dividing the result by
the net asset value per share at the beginning of the period.
For the period from the Fund's commencement of operations on December 16,
1993 through November 30, 1994, the Fund's average annual total return was -
0.60%. Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends
and distributions), dividing by the amount of the initial investment, taking
the "n"th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.
From time to time, the Fund may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and are not indicative of the Fund's past
or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or events,
and actual or proposed tax legislation. From time to time, 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 the rating.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Fund shares
are of one class and have equal rights as to dividends and in liquidation.
Shares have no preemptive, subscription or conversion rights and are freely
transferable.
The Fund will send annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a subsidiary
of First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the Fund's transfer and dividend disbursing agent. Neither The Bank of New
York nor The Shareholder Services Group, Inc. has any part in determining the
investment policies of the Fund or which securities are to be purchased or
sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
beneficial interest being sold pursuant to the Fund's Prospectus.
Ernst & Young 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 Pennsylvania 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 Commonwealth of
Pennsylvania (the "Commonwealth") 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.
General. Pennsylvania historically has been identified as a heavy
industry state, although that reputation has changed with the decline of the
coal, steel and railroad industries and the resulting diversification of
Pennsylvania's economy. The major new sources of economic growth in
Pennsylvania are in the service sector, including trade, medical and health
services, education and financial institutions. Agriculture continues to be
an important component of the Commonwealth's economic structure, with nearly
one-fourth of the Commonwealth's total land area devoted to cropland, pasture
and farm woodlands.
The population of Pennsylvania experienced a slight increase in the
period from 1984 to 1993 and has a high proportion of persons 65 or older.
The Commonwealth is highly urbanized, with almost 85% of the 1990 census
population residing in metropolitan statistical areas. The cities of
Philadelphia and Pittsburgh, the Commonwealth's largest metropolitan
statistical areas, together comprise approximately 50% of the Commonwealth's
total population.
Pennsylvania's average annual unemployment rate remained below the
national average between 1986 and 1990. Slower economic growth caused the
rate to rise to 6.9% in 1991, 7.5% in 1992 and 7.0% in 1993, slightly above
the national average. Seasonally adjusted data for February 1994, however,
shows an unemployment rate of 5.1% compared to an unemployment rate of 6.5%
for the United States as a whole.
Financial Accounting. Pennsylvania utilizes the fund method of
accounting and over 140 funds have been established for purposes of recording
receipts and disbursements, of which the General Fund is the largest. Most
of the Pennsylvania's operating and administrative expenses are payable from
the General Fund. The Motor License Fund is a special revenue fund that
receives tax and fee revenues relating to motor fuels and vehicles (except
one-half cent per gallon of the liquid fuels tax which is deposited in the
Liquid Fuels Tax Fund for distribution to local municipalities) and all such
revenues are required to be used for highway purposes. Other special revenue
funds have been established to receive specified revenues appropriated to
specific departments, boards and/or commissions. Such funds include the Game,
Fish, Boat, Banking Department, Milk Marketing, State Farm Products Show,
State Racing and State Lottery Funds. The General Fund, all special revenue
funds, the Debt Service Funds and the Capital Project Funds combine to form
the Governmental Fund Types.
Enterprise funds are maintained for departments or programs operated like
private enterprises. The largest of the Enterprise funds is the State Stores
Fund, which is used for the receipts and disbursements of the Commonwealth's
liquor store system. Sale and distribution of all liquor within Pennsylvania
is a government enterprise.
Financial information for the funds is maintained on a budgetary basis
of accounting ("Budgetary"). Since 1984, the Commonwealth has also prepared
financial statements in accordance with generally accepted accounting
principles ("GAAP"). The GAAP statements have been audited jointly by the
Auditor General of the Commonwealth and an independent public accounting firm.
The Budgetary information is adjusted at fiscal year end to reflect
appropriate accruals for financial reporting in conformity with GAAP. The
Commonwealth maintains a June 30th fiscal year end.
The Constitution of Pennsylvania provides that operating budget
appropriations may not exceed the estimated revenues and available surplus in
the fiscal year for which funds are appropriated. Annual budgets are enacted
for the General Fund and for certain special revenue funds which represent the
majority of expenditures of the Commonwealth.
Revenues and Expenditures. Pennsylvania's Governmental Fund Types
receive over 57% of their revenues from taxes levied by the Commonwealth.
Interest earnings, licenses and fees, lottery ticket sales, liquor store
profits, miscellaneous revenues, augmentations and federal government grants
supply the balance of the receipts of these funds. Revenues not required to
be deposited in another fund are deposited in the General Fund. The major tax
sources for the General Fund are the 6% sales and use tax (33% of General Fund
revenues in fiscal 1993), the 2.8% personal income tax (32.7% of General Fund
revenues in fiscal 1993) and the 12.25% corporate net income tax (10.0% of
General Fund revenues in fiscal 1993). Tax and fee proceeds relating to motor
fuels and vehicles are constitutionally dedicated to highway purposes and are
deposited into the Motor License Fund. The major sources of revenue for the
Motor License Fund include the liquid fuels tax, the oil company franchise
tax, aviation taxes and revenues from fees levied on heavy trucks. These
revenues are restricted to the repair and construction of highway bridges and
aviation programs. Lottery ticket sales revenues are deposited in the State
Lottery Fund and are reserved by statute for programs to benefit senior
citizens.
Pennsylvania's major expenditures include funding for education ($6.2
billion of fiscal 1993 expenditures and $6.4 billion of the fiscal 1994
budget) and public health and human services ($11.7 billion of fiscal 1993
expenditures and $12.7 billion of the fiscal 1994 budget).
Governmental Fund Types: Financial Condition/Results of Operations (GAAP
Basis). Reduced revenue growth and increased expenses contributed to negative
unreserved-undesignated fund balances of the Governmental Fund Types at the
end of the 1990 and 1991 fiscal years, largely due to operating deficits in
the General Fund and State Lottery Fund during those years. Actions taken
during fiscal 1992 to bring the General Fund back into balance, including tax
increases and expenditure restraints, resulted in a $1.1 billion reduction to
the unreserved-undesignated fund deficit for combined Governmental Fund Types
and a return to a positive fund balance. At the end of fiscal 1993, the total
fund balance and other credits for the total Governmental Fund Types was
$1.960 billion, an increase of $732.1 million from the balance at the end of
fiscal year 1992. During fiscal 1993, total assets for all Governmental Fund
Types increased by $1.297 billion to $7.1 billion, while liabilities increased
$564.6 million to $5.137 billion.
General Fund: Financial Condition/Results of Operations.
Five Year Overview (GAAP Basis). The five year period from fiscal 1989
through fiscal 1993 was marked by public health and welfare costs growing at
a rate double the growth rate for all the state expenditures. Rising
caseloads, increased utilization of services and rising prices joined to
produce the rapid rise of public health and welfare costs at a time when a
national recession caused tax revenues to stagnate and even decline. During
the period from fiscal 1989 through fiscal 1993, public health and welfare
costs rose by an average annual rate of 10.9% while tax revenues were growing
at an average annual rate of 5.5%. Consequently, spending on other budget
programs was restrained to a growth rate below 5.0% and sources of revenues
other than taxes became larger components of fund revenues. Those sources
included transfers from other funds and hospital and nursing home pooling of
contributions to use as federal matching funds.
Fiscal 1992 Financial Results (GAAP Basis). During fiscal 1992, the
General Fund recorded a $1.1 billion operating surplus. This operating
surplus was achieved through legislated tax rate increases and tax base
broadening measures enacted in August 1991 and by controlling expenditures
through numerous cost reduction measures implemented during the fiscal year.
As a result of the operating surplus, the General Fund balance increased to
$87.5 million at June 30, 1992.
Fiscal 1993 Financial Results (GAAP Basis). The fund balance of the
General Fund increases by $611.4 million during the fiscal year to a total of
$698.9 million at June 30, 1993. A continuing recovery of the Commonwealth's
financial condition from the effects of the national economic recession of
1990 and 1991 is demonstrated by this increase in the fund balance.
Fiscal 1994 Budget (Budgetary Basis). The budget estimates revenue
growth of 3.7% over fiscal 1993 actual revenues. The revenue estimate is
based on an expectation of continued economic recovery, but at a slow rate.
Sales tax receipts are projected to rise 4.4% over 1993 receipts while
personal income tax receipts are projected to increase by 3.3%, a rate that
is low because of the tax rate reduction in July 1992. The budget provides
for $14.995 billion of appropriations in fiscal 1994. The largest increase
in appropriations ($235 million) is for the Department of Public Welfare to
meet the increasing costs of medical care and rising caseloads. Other
departments slated to receive large appropriation increases include education
($196 million) and correctional institutions ($104 million).
In February 1994, the Governor recommended $46.4 million of additional
appropriations be enacted for fiscal 1994, raising total appropriations to
$15.041 billion. The largest increase in additional appropriations is $27.3
million to make audit payments to the federal Department of Health and Human
Services. No change to the aggregate Commonwealth revenue estimate was made
although individual tax estimates have been revised to reflect actual receipts
to date and the tax refund estimate was reduced to reflect a favorable
litigation ruling (see "Litigation" section). Through May 1994, General Fund
revenues are slightly ($24.2 million or 2.2%) above estimate as below
corporate estimate tax receipts are being offset by above estimate sales tax,
personal income tax and non-tax revenue receipts.
Realizing that the continuing rise in medical assistance costs cannot be
met from the resources provided by a much slower growing tax revenue base, the
Commonwealth plans to implement programs and financial changes in fiscal 1994
to keep costs within budget limits. The Commonwealth plans to save $247
million by receiving federal reimbursement for hospital services provided to
state general assistance recipients. Prior to this time, these costs were
fully paid by the Commonwealth. In addition, the Commonwealth will continue
to use pooled financing for medical assistance costs using intergovernmental
transfer in place of voluntary contributions as was done in earlier fiscal
years, resulting in an anticipated savings of $99 million.
Proposed Fiscal 1995 Budget. For the fiscal year beginning July 1, 1994,
the Governor has proposed a budget containing a 4.1% increase in
appropriations over the actual and proposed supplemental appropriations for
fiscal 1994. Total appropriations recommended amount to $15.665 billion. The
budget is balanced by drawing down on a projected $267 million unappropriated
surplus for fiscal 1994. The fastest growing portion of the budget continues
to be medical assistance, which is proposed to receive $264 million, or 42.4%,
of the proposed net increase in spending. Other program areas budgeted to
receive major increases are education ($165 million) and corrections ($126
million). The proposed budget recommends a tightening of eligibility criteria
for state-financed welfare benefits as a cost reduction measure.
The Governor's proposal also includes a recommended reduction in the
corporate net income tax rate from 12.25% to 9.99% over a three year period.
The corporate tax cut and a proposed increase in poverty exemption for the
personal income tax are estimated to cost $124.7 million in fiscal 1995. The
recommended budget includes Commonwealth revenue growth of 4.7% without
including the effect of the proposed tax reduction. The revenue estimate is
based on the expectation of a continued slow national economy recovery and
continued economic growth of the Pennsylvania economy at a rate slightly below
the national rate. Total estimated Commonwealth revenue, adjusted for refunds
and the proposed tax reduction, is $15.400 billion.
Commonwealth Debt. Current constitutional provisions permit Pennsylvania
to issue the following types of debt: (i) debt to suppress insurrection or
rehabilitate areas affected by disaster, (ii) electorate approved debt, (iii)
debt for capital projects subject to an aggregate debt limit of 1.75 times the
annual average tax revenues of the preceding five fiscal years and (iv) tax
anticipation notes payable in the fiscal year of issuance. All debt except
tax anticipation notes must be amortized in substantial and regular amounts.
General obligation debt totaled $5.039 billion at June 30, 1993. Over
the 10-year period ended June 30, 1993, total outstanding general obligation
debt increased at an annual rate of 1.2%; for the five year period ended June
30, 1993, it increased at an annual rate of 1.4%. All outstanding general
obligation bonds of the Commonwealth are rated AA- by Standard and Poor's
Corporation, A1 by Moody's Investors Service, and AA- by Fitch Investors
Service. The ratings reflect only the views of the rating agencies.
Pennsylvania engages in short-term borrowing to fund expenses within a
fiscal year through the sale of tax anticipation notes which must mature
within the fiscal year of issuance. The principal amount issued, when added
to that already outstanding, may not exceed in the aggregate 20% of the
revenues estimated to accrue to the appropriate fund in the fiscal year. The
Commonwealth is not permitted to fund deficits between fiscal years with any
form of debt. All year-end deficit balances must be funded within the
succeeding fiscal year's budget. Pennsylvania issued a total of $400.0
million of tax anticipation notes for the account of the General Fund in
fiscal 1994, all of which will mature on June 30, 1994, and will be paid from
fiscal 1994 General Fund receipts.
Pending the issuance of bonds, Pennsylvania may issue bond anticipation
notes subject to the applicable statutory and constitutional limitations
generally imposed on bonds. The term of such borrowings may not exceed three
years. The Commonwealth currently has no bond anticipation notes outstanding.
State-related Obligations. Certain state-created agencies have statutory
authorization to incur debt for which legislation providing for state
appropriations to pay debt service thereon is not required. The debt of these
agencies is supported by assets of, or revenues derived from, the various
projects financed and the debt of such agencies is not an obligation of
Pennsylvania although some of the agencies are indirectly dependent on
Commonwealth appropriations. The following agencies had debt currently
outstanding as of December 31, 1993: Delaware River Joint Toll Bridge
Commission ($57.4 million), Delaware River Port Authority ($239.4 million),
Pennsylvania Economic Development Financing Authority ($380.8 million),
Pennsylvania Energy Development Authority ($163.7 million), Pennsylvania
Higher Education Assistance Agency ($1.159 billion), Pennsylvania Higher
Education Facilities Authority ($1.806 billion), Pennsylvania Industrial
Development Authority ($256.4 million), Pennsylvania Infrastructure Investment
Authority ($192.5 million), Pennsylvania Turnpike Commission ($1.153 billion),
Philadelphia Regional Port Authority ($53.8 million) and the State Public
School Building Authority ($306.4 million). In addition, the Governor is
statutorily required to place in the budget of the Commonwealth an amount
sufficient to make up any deficiency in the capital reserve fund created for,
or to avoid default on, bonds issued by the Pennsylvania Housing Finance
Agency ($2.066 billion of revenue bonds and notes outstanding as of December
31, 1993), and an amount of funds sufficient to alleviate any deficiency that
may arise in the debt service reserve fund for bonds issued by The Hospitals
and Higher Education Facilities Authority of Philadelphia. The budget as
finally adopted by the legislation may or may not include the amounts
requested by the Governor.
Local Government Debt. Local government in Pennsylvania consists of
numerous individual units. Each unit is distinct and independent of other
local units, although they may overlap geographically. There is extensive
general legislation applying to local government. For example, the Local
Government Unit Debt Act provides for uniform debt limits for local government
units (except the City of Philadelphia), including municipalities and school
districts, and prescribes methods of incurring, evidencing, securing and
collecting debt. Under the Local Government Unit Debt Act, the ability of
Pennsylvania municipalities and school districts to engage in general
obligation borrowing without electoral approval is generally limited by their
recent revenue collection experience. Generally, such subdivisions can levy
real property taxes unlimited as to rate or amount to pay debt service on
general obligation borrowings. City of Philadelphia debt is limited by the
Pennsylvania Constitution to a percentage of the assessed value of taxable
realty in the City, except debt which is supported by project revenues and is
excluded from this limit.
Municipalities may also issue revenue obligations without limit and
without affecting their general obligation borrowing capacity if the
obligations are projected to be paid solely from project revenues. Municipal
authorities and industrial development authorities are also widespread in
Pennsylvania. An authority is organized by a municipality acting singly or
jointly with another municipality and is governed by a Board appointed by the
governing unit of the creating municipality or municipalities. Typically,
authorities are established to acquire, own and lease or operate one or more
projects and to borrow money and issue revenue bonds to finance them.
Projects of municipal authorities may include public facilities, such as
public buildings, parking facilities, airports, waterworks and sewage
facilities as well as projects for certain private not-for-profit entities,
such as hospitals and universities. A project may be leased by a municipal
authority to a municipality or school district or to a private user, in which
event the lessee is obligated to make rental payments sufficient to pay the
debt service on obligations issued by the authority. In cases involving
revenue producing public facilities, such as water or sewer systems, a
municipal authority may operate the system itself. The debt of municipal
authorities is not governed by the Local Government Unit Debt Act except
indirectly when the debt is guaranteed by a local government unit or the
project is leased to such a unit. Industrial development authorities issue
bonds to acquire or construct facilities for use by private companies, and the
debt service is normally dependent solely on the credit of the private user.
Litigation. Certain litigation is pending against the Commonwealth that
could adversely affect the ability of the Commonwealth to pay debt service on
its obligations, including suits relating to the following matters: (a)
approximately 3,500 tort suits are pending against the Commonwealth pursuant
to the General Assembly's 1978 approval of a limited waiver of sovereign
immunity which permits recovery of damages for any loss up to $250,000 per
person and $1,000,000 per accident ($17.5 million appropriated from the Motor
License Fund in fiscal 1993 has been increased to $32.0 million for fiscal
1994 to fund possible higher and more numerous payments resulting from recent
decisions by the Pennsylvania Supreme Court); (b) the ACLU filed suit in April
1990 in federal court demanding additional funding for child welfare services
(no available estimates of potential liability), which the Commonwealth is
seeking to have dismissed based on, among other things, the settlement in a
similar Commonwealth court action that provided for more funding in fiscal
1991 as well as a commitment to pay to counties $30.0 million over 5 years
(on April 12, 1993, the court dismissed all claims except for the
constitutional claims of some of the plaintiffs and two Americans with
Disabilities Act claims); (c) in 1987, the Supreme Court of Pennsylvania held
that the statutory scheme for county funding of the judicial system was in
conflict with the Pennsylvania Constitution but stayed judgment pending
enactment by the legislature of funding consistent with the opinion (the
legislature has yet to consider legislation implementing the judgement); (d)
several banks have filed suit against the Commonwealth contesting the
constitutionality of a 1989 law imposing a bank shares tax on banking
institutions (potential liability estimated at $1.024 billion through December
1993, plus appropriate statutory interest); (e) in November 1990, the ACLU
brought a class action suit on behalf of the inmates in thirteen Commonwealth
correctional institutions challenging confinement conditions and including a
variety of other allegations, and, although no damages are sought, if
injunctive relief is granted the cost to the Commonwealth in capital and
personnel expenses may be substantial (trial began on December 6, 1993;
prompted by settlement negotiations between the parties, the court recessed
on January 3, 1994; trial will resume if settlement is not reached); (f) on
December 10, 1993, the Pennsylvania Supreme Court overturned a decision of the
Commonwealth Court ruling that dividends received by a corporate taxpayer
which are accounted for under the equity method of accounting are not
includible in average net income for purposes of determining capital stock
value under the fixed formula (the decision permits the Commonwealth to
release $147 million held in reserve for potential tax refund); (g) in 1991,
a consortium of public interest law firms filed a class action suit alleging
that the Commonwealth had failed to comply with the 1989 federal mandate with
respect to certain services for Medicaid-eligible children under the age of
21, which if the relief requested were granted, would cost the Commonwealth
approximately $98 million; (h) litigation has been filed in both state and
federal court by an association of rural and small schools and several
individual school districts and parents challenging the constitutionality of
the Commonwealth's system for funding local school districts -- the federal
case has been stayed pending resolution of the state case and the state case
is in the pre-trial discovery stage (no available estimate of potential
liability); and (i) approximately 150 hospitals challenged the state's fiscal
1989 and 1990 reimbursement rates for inpatient hospital services provided to
needy citizens under the Medical Assistance Program, and these lawsuits were
settled in May 1991, with the dismissal of the litigation pending the disposal
of one appeal.
Philadelphia. For the fiscal year ending June 30, 1991, Philadelphia
experienced a cumulative General Fund balance deficit of $153.5 million. The
audit findings for the fiscal year ending June 30, 1992 place the cumulative
General Fund balance deficit at $224.9 million.
Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class cities
in remedying fiscal emergencies was enacted by the General Assembly and
approved by the Governor in June 1991. PICA is designed to provide assistance
through the issuance of funding debt to liquidate budget deficits and to make
factual findings and recommendations to the assisted city concerning its
budgetary and fiscal affairs. An intergovernmental cooperation agreement
between Philadelphia and PICA was approved by City Council on January 3, 1992,
and approved by the PICA Board and signed by the Mayor on January 8, 1992.
At this time, Philadelphia is operating under a five year fiscal plan approved
by PICA on April 6, 1992. Full implementation of the five year plan was
delayed due to labor negotiations that were not completed until October 1992,
three months after the expiration of the old labor contracts. The terms of
the new labor contracts are estimated to cost approximately $144.0 million
more than what was budgeted in the original five year plan. An amended five
year plan was approved by PICA in May 1993. The audit findings show a surplus
of approximately $3 million for the fiscal year ending June 30, 1993.
The fiscal 1994 budget projects no deficit and a balanced budget for the
year ended June 30, 1994. The Mayor presented the latest update of the five
year financial plan on January 13, 1994, which is being considered by PICA.
In June 1992, PICA issued $474.6 million of its Special Tax Revenue Bonds
to provide financial assistance to Philadelphia and to liquidate the
cumulative General Fund balance deficit. In July 1993, PICA issued $643.4
million of Special Tax Revenue Bonds to refund certain general obligation
bonds of the city and to fund additional capital projects.
APPENDIX B
Description of Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and Fitch Investors Service, Inc. ("Fitch") ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local economic
base, in debt burden, in the balance between revenues and expenditures, or in
quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at
some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between "A" and "BBB" rating is that the latter shows
more than one fundamental weakness, or one very substantial fundamental
weakness, whereas the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to pay
interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus sign (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to pay
principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than
365 days.
A
Issues assigned this rating are regarded as having the greatest capacity
for timely payment. Issues in this category are delineated with the numbers
1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment some time in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and therefore not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in categories below B. The modifier 1 indicates a ranking for the security
in the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with
no or limited legal recourse to the issuer in the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as MIG
1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for repayment
of short-term promissory obligations, and will normally be evidenced by
leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate
reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take
into consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of interest
and/or principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the AAA category covering 12-36 months or the
DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS NOVEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS_94.7% AMOUNT VALUE
----------- -----------
<S> <C> <C>
PENNSYLVANIA_89.8%
Allegheny County Hospital Development Authority, Revenue, Refunding
(Magee Womens Hospital) 5.875%, 10/1/2002 (Insured; FGIC)............... $ 500,000 $ 494,550
Berks County, GO 5.60%, 11/15/2007.......................................... 545,000 496,233
Bucks County 6.05%, 3/1/2002................................................ 500,000 506,965
Chester County Health and Educational Facilities Authority (Main Line Health
System):
4.90%, 5/15/2004........................................................ 350,000 303,485
5.40%, 5/15/2009........................................................ 500,000 425,935
Clinton County Industrial Development Authority, PCR, Refunding
(International Paper Co. Project) 5.375%, 5/1/2004...................... 500,000 460,475
Dauphin County General Authority, Revenue:
6%, 12/1/2006........................................................... 785,000 762,149
5%, 6/1/2026 (a)........................................................ 500,000 486,585
Delaware County Authority, HR (Crozer-Chester Medical Center)
4.75%, 12/15/2003 (Insured; MBIA)....................................... 430,000 374,599
Delaware County Industrial Development Authority, Revenue, Refunding
(Martins Run Project) 5.60%, 12/15/2002................................. 750,000 678,518
Harrisburg Water Authority, Revenue 5.30%, 7/15/2004 (Insured; FGIC)........ 300,000 275,925
Lackawanna County, Refunding 4.90%, 12/1/2006 (Insured; AMBAC).............. 500,000 420,175
Lancaster Higher Educational Authority, College Revenue
(Franklin & Marshall College Project) 5%, 4/15/2002 (Insured; MBIA)..... 350,000 324,044
Lehigh County General Purpose Authority, Revenue (Saint Lukes Hospital
Project)
4.75%, 11/15/2000 (Insured; AMBAC)...................................... 345,000 317,555
Northeastern Hospital and Education Authority, University Revenue, Refunding
(Wilkes University) 5.60%, 10/1/2005.................................... 200,000 177,148
Pennsylvania Convention Center Authority, Revenue, Refunding 6.25%, 9/1/2004 750,000 724,672
Pennsylvania Economic Development Financing Authority, RRR
(Northampton Generating Project) 6.40%, 1/1/2009........................ 500,000 441,140
Pennsylvania, GO:
5%, 5/1/2003............................................................ 500,000 453,735
5%, 9/1/2007............................................................ 350,000 295,214
Pennsylvania Higher Educational Facilities Authority:
College and Universities Revenue (Delaware Valley College of Science and
Agriculture)
6.50%, 4/1/2008....................................................... 790,000 760,644
Health Services Revenue (University of Pennsylvania) 5.75%, 1/1/2006.... 500,000 467,290
Pennsylvania Housing Finance Agency, Single Family Mortgage:
5.95%, 10/1/2003........................................................ 365,000 354,605
6.20%, 4/1/2005......................................................... 410,000 393,071
6.20%, 10/1/2005........................................................ 420,000 402,087
6.10%, 4/1/2006......................................................... 455,000 437,692
6.10%, 10/1/2006........................................................ 465,000 446,791
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
----------- -----------
PENNSYLVANIA (CONTINUED)
Pennsylvania Turnpike Commission, Turnpike Revenue, Refunding:
5.35%, 12/1/2002 (Insured; FGIC)........................................ $ 255,000 $ 242,564
5.45%, 12/1/2002........................................................ 500,000 473,300
Philadelphia, GO 5.70%, 11/15/2006 (Insured; FGIC) (b)...................... 1,000,000 916,260
Philadelphia, Revenue:
Gas Works 4.60%, 8/1/2003 (Insured; MBIA)............................... 500,000 430,560
Hospital And Higher Education Facilities Authority:
(Community College) 5.90%, 5/1/2007................................... 445,000 423,542
(Graduate Health Systems) 5.10%, 7/1/1998............................. 350,000 335,195
(Temple University) 6.50%, 11/15/2008................................. 1,000,000 918,370
School District 5.75%, 7/1/2007 (Insured; MBIA)......................... 600,000 552,000
Water and Wastewater, Refunding:
4.25%, 6/15/1996...................................................... 500,000 491,800
5.50%, 6/15/2003...................................................... 1,000,000 938,310
5.50%, 6/15/2006...................................................... 250,000 220,450
Philadelphia Municipal Authority, LR, Refunding:
6%, 7/15/2003........................................................... 500,000 481,380
(Criminal Justice Purpose) 5.40%, 11/15/2006 (Insured; FGIC)............ 500,000 452,810
Pittsburgh, GO, Refunding 4.70%, 9/1/2001 (Insured; AMBAC).................. 250,000 227,477
Pittsburgh Water and Sewer Authority, Water and Sewer Systems Revenue
4.70%, 9/1/2004 (Insured; FGIC)......................................... 300,000 256,929
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Resource) 6.50%, 1/1/2010............................ 300,000 264,285
Scranton-Lackawanna Health and Welfare Authority, Revenue
(University of Scranton Project) 5.80%, 3/1/2000........................ 500,000 484,790
Wilkinsburg Joint Water Authority, Water Revenue
6.15%, 8/15/2009 (Prerefunded 8/15/2002)(c)............................. 500,000 506,360
U.S. RELATED_4.9%
Puerto Rico, GO 5.40%, 7/1/2003............................................. 200,000 185,440
Puerto Rico, Electric Power Revenue, Refunding:
5.90%, 7/1/2002......................................................... 250,000 246,435
6%, 7/1/2006............................................................ 225,000 214,517
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding
5%, 7/1/2002............................................................ 225,000 203,864
Puerto Rico Housing Bank and Finance Agency, Single Family, Refunding 5%, 12/1/2002 300,000 267,531
----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $22,986,754).................... $21,415,451
===========
SHORT-TERM MUNICIPAL INVESTMENTS_5.3%
PENNSYLVANIA:
Allegheny County Higher Education Building Authority, VRDN
(University of Pittsburgh Project) 3.52% (LOC; Union Bank of Switzerland) (d,e) $ 300,000 $ 300,000
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1994
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
----------- -----------
PENNSYLVANIA (CONTINUED):
Bucks County Industrial Development Authority, VRDN (Oxford Falls)
4.12% (Guaranteed; Household Finance Corp.)(d).......................... $ 200,000 $ 200,000
Warren County Hospital Authority, VRDN (Warren General Hospital Authority)
3.80% (LOC; PNC Bank) (d,e)............................................. 700,000 700,000
----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,200,000).................... $ 1,200,000
===========
TOTAL INVESTMENTS_100.0% (cost $24,186,754)................................ $22,615,451
===========
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
FGIC Federal Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
GO General Obligation PCR Pollution Control Revenue
HR Hospital Revenue RRR Resources Recovery Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- -------- ---------------- ------------------
<S> <C> <C> <C>
AAA Aaa AAA 36.0%
AA Aa AA 19.8
A A A 13.4
BBB Baa BBB 15.2
BB Ba BB 5.3
F1 P1 A1 5.3
Not Rated (g) Not Rated (g) Not Rated (g) 5.0
-----
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Purchased on delayed delivery basis.
(b) Wholly held by the custodian in a segregated account as collateral
for delayed delivery securities.
(c) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(e) Secured by letters of credit.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Trustees to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $24,186,754)_see statement...................................... $22,615,451
Cash.................................................................... 11,875
Interest receivable..................................................... 364,373
Prepaid expenses and other assets_Note 1(e)............................. 49,239
Due from The Dreyfus Corporation........................................ 122,875
-----------
23,163,813
LIABILITIES:
Payable for investment securities purchased............................. $499,375
Accrued expenses and other liabilities.................................. 65,445 564,820
-----------
NET ASSETS ................................................................ $22,598,993
===========
REPRESENTED BY:
Paid-in capital......................................................... $24,277,626
Accumulated net realized (loss) on investments.......................... (107,330)
Accumulated gross unrealized (depreciation) on investments.............. (1,571,303)
-----------
NET ASSETS at value applicable to 1,909,451 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $22,598,993
============
NET ASSET VALUE, offering and redemption price per share
($22,598,993 / 1,909,451 shares)........................................ $11.84
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
FROM DECEMBER 16, 1993 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 806,326
EXPENSES:
Management fee_Note 2(a).............................................. $ 93,306
Shareholder servicing costs_Note 2(b)................................. 29,631
Auditing fees......................................................... 20,061
Registration fees..................................................... 15,847
Trustees' fees and expenses_Note 2(c)................................. 12,982
Legal fees............................................................ 12,973
Organization expenses_Note 1(e)....................................... 11,074
Prospectus and shareholders' reports.................................. 10,551
Custodian fees........................................................ 3,185
Miscellaneous......................................................... 6,571
-----------
216,181
Less_expense reimbursement from Manager due to
undertaking_Note 2(a)............................................. 216,181
-----------
TOTAL EXPENSES.................................................. --
------------
INVESTMENT INCOME_NET.......................................... 806,326
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments_Note 3............................... $ (107,330)
Net unrealized (depreciation) on investments............................ (1,571,303)
-----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (1,678,633)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (872,307)
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM DECEMBER 16, 1993 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994
<S> <C>
OPERATIONS:
Investment income_net............................................................... $ 806,326
Net realized (loss) on investments.................................................. (107,330)
Net unrealized (depreciation) on investments for the period......................... (1,571,303)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................ (872,307)
--------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net............................................................... (806,326)
--------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold....................................................... 35,130,538
Dividends reinvested................................................................ 590,723
Cost of shares redeemed............................................................. (11,543,635)
--------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...................... 24,177,626
--------------
TOTAL INCREASE IN NET ASSETS.................................................. 22,498,993
NET ASSETS:
Beginning of period_Note 1.......................................................... 100,000
--------------
End of period....................................................................... $ 22,598,993
============
SHARES
--------------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................................... 2,782,274
Shares issued for dividends reinvested.............................................. 47,728
Shares redeemed..................................................................... (928,551)
--------------
NET INCREASE IN SHARES OUTSTANDING................................................ 1,901,451
============
See notes to financial statements.
</TABLE>
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated March 31, 1995.
See notes to financial statements.
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Pennsylvania Intermediate Municipal Bond Fund (the "Fund") was
organized as a Massachusetts business trust on March 12, 1992, and had no
operations until December 16, 1993 (commencement of operations) other than
matters relating to its organization and registration as a non-diversified
open-end management investment company under the Investment Company Act of
1940 ("Act") and the Securities Act of 1933 and the sale and issuance of
8,000 shares of Beneficial Interest ("Initial Shares") to The Dreyfus
Corporation ("Manager"). Dreyfus Service Corporation, until August 24, 1994,
acted as the exclusive distributor of the Fund's shares, which are sold to
the public without a sales charge. Dreyfus Service Corporation is a
wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain , if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of approximately $1,400
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to November 30, 1994. The
carryover does not include net realized securities losses from November 1,
1994 through November 30, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the carryover expires in
fiscal 2002.
(E) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from December 16, 1993, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At November 30, 1994, the
unamortized balance of such expenses amounted to $44,296. In the event that
any of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of such shares being redeemed bears to
the number of such shares outstanding at the time of such redemption.
NOTE 2_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. However, the Manager had
undertaken, from December 16, 1993 through December 31, 1994, or until such
time as the net assets of the Fund exceed $50 million, regardless of whether
they remain at that level, to reimburse all fees and expenses of the Fund.
The expense reimbursement, pursuant to the undertaking, amounted to $216,181
for the period ended November 30, 1994.
The Manager has currently undertaken through March 31, 1995 or until such
time as the net assets of the Fund exceed $50 million, regardless of whether
they remain at that level, to waive receipt of the management fee paid by and
assume all others expenses of the Fund, to the extent that such expenses
(excluding certain expenses as described above) exceed an annual rate of .25
of 1% of the average daily value of the Fund's net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the period ended
November 30, 1994, no amounts were charged to the Fund pursuant to the
Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $1,000 and an attendance fee of $250 per meeting.
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $42,689,732 and $18,384,553, respectively, for the period ended
November 30, 1994, and consisted entirely of long-term and short-term
municipal investments.
At November 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus Pennsylvania Intermediate Municipal Bond Fund, including the
statement of investments, as of November 30, 1994, and the related statements
of operations and changes in net assets and financial highlights for the
period from December 16, 1993 (commencement of operations) to November 30,
1994. 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
audit.
We conducted our audit 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 November 30, 1994 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 audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Pennsylvania Intermediate Municipal Bond Fund at November
30, 1994, and the results of its operations, the changes in its net assets
and the financial highlights for the period from December 16, 1993 to
November 30, 1994, in conformity with generally accepted accounting
principles.
(logo signature)
New York, New York
January 5, 1995
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the period December 16, 1993
(commencement of operations) to November 30, 1994 as "exempt-interest
dividends" (not subject to regular Federal and, for individuals who are
Pennsylvania residents, Pennsylvania personal income taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
DREYFUS PENNSYLVANIA INTERMEDIATE 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 period from December 16,
1993 (commencement of operations) to November 30, 1994.
Included in Part B of the Registration Statement:
Statement of Investments--November 30, 1994.
Statement of Assets and Liabilities--November 30, 1994.
Statement of Operations for the period from December 16,
1993 (commencement of operations) to November 30, 1994.
Statement of Changes in Net Assets--for the period from
December 16, 1993 (commencement of operations) to
November 30, 1994.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
January 5, 1995.
All Schedules and financial 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 Declaration of Trust is
incorporated by reference to Exhibit (1) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on December 13, 1993, and Exhibit (1)(b) of Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on June 20, 1994.
(2) Registrant's By-Laws, as amended, are incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on June 20, 1993.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on December 13, 1993.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(8)(a) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit 8(a) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on June 20, 1994.
(8)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
8(b) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on June 20, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on December 13, 1993.
(11) Consent of Independent Auditors.
(16) Schedules of Computation of Performance Data. Reference is made
to Exhibit (16) of Post-Effective Amendment to the Registration
Statement on Form N-1A, filed on June 10, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(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 January 24, 1995
______________ _____________________________
Beneficial Interest
(Par value $.001) 1245
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a trustee, 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 trustee, 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 December 13, 1993.
Reference is also made to the Distribution Agreement attached as
Exhibit (6) hereto.
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 of
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
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
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.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
ROBERT E. RILEY Director:
President and Chief Dreyfus Service Corporation
Operating Officer,
and a Director
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Dreyfus Service Corporation*;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
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
Director:
The Dreyfus Corporation;
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale 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.*;
ELIE M. GENADRY Vice President:
(cont'd) The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
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
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
MAURICE BENDRIHEM Controller:
(cont'd) Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
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 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ 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.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
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 Strategy Fund, 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 Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
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) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus Global Investing, Inc.
26) Dreyfus GNMA Fund, Inc.
27) Dreyfus Government Cash Management
28) Dreyfus Growth and Income Fund, Inc.
29) Dreyfus Growth Opportunity Fund, Inc.
30) Dreyfus Institutional Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Equity Fund, Inc.
35) Dreyfus Investors GNMA Fund
36) The Dreyfus Leverage Fund, Inc.
37) Dreyfus Life and Annuity Index Fund, 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 Michigan Municipal Money Market Fund, Inc.
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 Ohio Municipal Money Market Fund, Inc.
57) Dreyfus 100% U.S. Treasury Intermediate Term Fund
58) Dreyfus 100% U.S. Treasury Long Term Fund
59) Dreyfus 100% U.S. Treasury Money Market Fund
60) Dreyfus 100% U.S. Treasury Short Term Fund
61) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
62) Dreyfus Pennsylvania Municipal Money Market Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) Dreyfus Short-Term Income Fund, Inc.
66) The Dreyfus Socially Responsible Growth Fund, Inc.
67) Dreyfus Strategic Growth, L.P.
68) Dreyfus Strategic Income
69) Dreyfus Strategic Investing
70) Dreyfus Tax Exempt Cash Management
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. Pelletier Senior Vice President and General Vice President
Counsel and Secretary
Frederick C. Dey Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn Vice President Assistant
Treasurer
Jean M. O'Leary Assistant Secretary None
Ruth D. Leibert Assistant Vice President Assistant
Secretary
Paul D. Furcinito Assistant Vice President Assistant
Secretary
John W. Gomez Director None
William J. Nutt Director None
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. 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 director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock 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 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 January, 1995.
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
BY: /s/Marie, E. Connolly*
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, 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 01/27/95
______________________________ Officer, Financial and Accounting
Marie E. Connolly Officer) and Treasurer
/s/David W. Burke* Trustee 01/27/95
______________________________
David W. Burke
/s/Diane Dunst* Trustee 01/27/95
______________________________
Diane Dunst
/s/David P. Feldman* Trustee 01/27/95
______________________________
David P. Feldman
/s/Rosalind Gersten Jacobs* Trustee 01/27/95
______________________________
Rosalind Gersten Jacobs
/s/Dr. Jay I. Meltzer* Trustee 01/27/95
______________________________
Dr. Jay I. Meltzer
/s/Daniel Rose* Trustee 01/27/95
______________________________
Daniel Rose
/s/Warren B. Rudman* Trustee 01/27/95
______________________________
Warren B. Rudman
/s/Sander Vanocur* Trustee 01/27/95
______________________________
Sander Vanocur
BY: /s/Eric B. Fischman
Eric B. Fischman,
Attorney-in-Fact
Dreyfus Pennsylvania Intermediate Municipal Bond Fund
EXHIBIT INDEX
Exhibit No.
24(b)(5) Management Agreement
24(b)(6)(a) Distribution Agreement
24(b)(9) Shareholder Services Plan
24(b)(11) Consent of Ernst & Young
Other Powers of Attorney
Certificate of Secretary
MANAGEMENT AGREEMENT
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or persons
may be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid
by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of the Fund's
portfolio in accordance with the Fund's investment objectives and
policies as stated in its Prospectus and Statement of Additional
Information as from time to time in effect. In connection
therewith, you will obtain and provide investment research and
will supervise the Fund's investments and conduct a continuous
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. You will furnish to the Fund
such statistical information, with respect to the investments
which the Fund may hold or contemplate purchasing, as the Fund
may reasonably request. The Fund wishes to be informed of
important developments materially affecting its portfolio and
shall expect you, on your own initiative, to furnish to the Fund
from time to time such information as you may believe appropriate
for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to the Fund's
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of the Fund's shares;
and generally assist in all aspects of the Fund's operations.
You shall have the right, at your expense, to engage other
entities to assist you in performing some or all of the
obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund agrees
as an inducement to your undertaking the same that you shall not
be liable hereunder for any error of judgment or mistake of law
or for any loss suffered by the Fund, provided that nothing
herein shall be deemed to protect or purport to protect you
against any liability to the Fund or to its security holders to
which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the annual rate of .60 of 1% of the value of
the Fund's average daily net assets. Net asset value shall be
computed on such days and at such time or times as described in
the Fund's then-current Prospectus and Statement of Additional
Information. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be pro-
rated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement.
For the purpose of determining fees payable to you, the
value of the Fund's net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be 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 your officers, directors or
employees or holders of 5% or more of your outstanding voting
securities, 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
stockholders, costs of stockholders' reports and meetings, and
any extraordinary expenses.
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement, but excluding
interest, taxes, brokerage and, with the prior written consent of
the necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the fees to
be paid hereunder, or you will bear, such excess expense to the
extent required by state law. Your obligation pursuant hereto
will be limited to the amount of your fees hereunder. 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 Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your so acting,
provided that when the purchase or sale of securities of the same
issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or
account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by the Fund or the
size of the position obtainable for or disposed of by the Fund.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for a
loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under
this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction even
though paid by you.
This Agreement shall continue until May 30, 1995, and
thereafter shall continue automatically for successive annual
periods ending on May 30th of each year, provided such
continuance is specifically approved at least annually by (i) the
Fund's Board or (ii) vote of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting
securities, provided that in either event its continuance also is
approved by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of holders of a majority of the Fund's shares
or, upon not less than 90 days' notice, by you. This Agreement
also will terminate automatically in the event of its assignment
(as defined in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other corporations,
business trusts, partnerships or other entities (including other
investment companies) and that such other entities may include
the name "Dreyfus" as part of their name, and that your
corporation or its affiliates may enter into investment advisory
or other agreements with such other entities. If you cease to
act as the Fund's investment adviser, the Fund agrees that, at
your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Dreyfus" in any
form or combination of words.
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS PENNSYLVANIA
INTERMEDIATE MUNICIPAL
BOND FUND
By:__________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
DISTRIBUTION AGREEMENT
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS PENNSYLVANIA INTERMEDIATE
MUNICIPAL BOND FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Reapproval Date Reapproval Day
May 30, 1996 May 30th
DREYFUS PENNSYLVANIA INTERMEDIATE MUNICIPAL BOND FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan (the "Plan") under which the Fund would reimburse
Dreyfus Service Corporation ("DSC") for certain allocated
expenses of providing personal services and/or maintaining
shareholder accounts to (a) shareholders of each series of the
Fund or class of Fund shares set forth on Exhibit A hereto, as
such Exhibit may be revised from time to time, or (b) if no
series or classes are set forth on such Exhibit, shareholders of
the Fund. The Plan is not to be adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "Act"),
and the fee under the Plan is intended to be a "service fee" as
defined in Article III, Section 26 (a "Service Fee"), of the NASD
Rules of Fair Practice (the "NASD Rules").
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall reimburse DSC an amount not to
exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for its allocated expenses of providing
personal services to shareholders and/or maintaining shareholder
accounts; provided that, at no time, shall the amount paid to DSC
under this Plan, together with amounts otherwise paid by the
Fund, or each series or class identified on Exhibit A, as a
Service Fee under the NASD Rules, exceed the maximum amount then
payable under the NASD Rules as a Service Fee. The amount of
such reimbursement shall be based on an expense allocation
methodology prepared by DSC annually and approved by the Fund's
Board or on any other basis from time to time deemed reasonable
by the Fund's Board.
2. For the purposes of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a majority
of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and property
of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
Dated: September 29, 1993
As Revised: November 9, 1994
EXHIBIT A
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated January 5, 1995, in this Registration Statement (Form N-1A 33-50211)
of Dreyfus Pennsylvania Intermediate Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
January 27, 1995
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Marie E. Connolly
Marie E. Connolly, President and Treasurer
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/David W. Burke
David W. Burke, Trustee
August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Diane Dunst
Diane Dunst, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/David P. Feldman
David P. Feldman, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Rosalind Gersten Jacobs
Rosalind Gersten Jacobs, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Jay I. Meltzer
Jay I. Meltzer, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Daniel Rose
Daniel Rose, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Warren B. Rudman
Warren B. Rudman, Trustee
Dated: August 29, 1994
Other Exhibit
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert 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 Dreyfus Pennsylvania Intermediate 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/Sander Vanocur
Sander Vanocur, Trustee
Dated: August 29, 1994
OTHER EXHIBIT
Pennsylvania Intermediate Municipal Bond Fund
Certificate of Assistant Secretary
The undersigned, Ruth D. Leibert, Assistant Secretary of Dreyfus
Pennsylvania Intermediate Municipal Bond Fund (the "Fund"), hereby
certifies that set forth below is a copy of the resolution adopted by the
Fund's Board of Trustees authorizing the signing by Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John Pelleteir 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 Frederick C. Dey, Eric B. Fischman, Ruth
D. Leibert and John Pelletier as the attorney-in-fact
for the proper offices of the Funds, with full power
of substitution and resubstitution; and that the
appointment of each of such persons as such attorney-
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 January 30, 1995.
/s/ Ruth D. Leibert
Ruth D. Leibert
Assistant Secretary
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<ACCUMULATED-NII-PRIOR> 0
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