Dreyfus
Pennsylvania
Intermediate
Municipal Bond Fund
SEMIANNUAL REPORT
May 31, 1999
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
- --------------------------------------------------------
Back Cover
<PAGE>
Dreyfus Pennsylvania The Fund
Intermediate Municipal Bond Fund
LETTER FROM THE PRESIDENT
- -------------------------
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Pennsylvania
Intermediate Municipal Bond Fund, covering the six-month period from December 1,
1998 through May 31, 1999. Inside, you'll find valuable information about how
the fund was managed during the reporting period, including a discussion with
the fund's portfolio manager, Douglas Gaylor.
Lower short-term interest rates adopted by the Federal Reserve Board and other
central banks in the fall of 1998 appear to have helped many U.S. businesses
withstand the effects of economic weakness in Japan, Asia and Latin America. At
the same time, the U.S. economy entered its eighth year of expansion in an
environment characterized by low inflation and high levels of consumer spending.
Tax-exempt fixed-income securities provided good results in this economic
climate, especially relative to taxable U.S. Treasury securities. While prices
of U.S. Treasury securities declined significantly through most of the reporting
period, a lack of new issuance relative to robust investor demand supported most
municipal bond prices.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Pennsylvania Intermediate Municipal Bond
Fund.
Sincerely,
/s/ Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
June 14, 1999
2
<PAGE>
DISCUSSION OF FUND PERFORMANCE
- ------------------------------
Douglas Gaylor, Portfolio Manager
How did Dreyfus Pennsylvania Intermediate
Municipal Bond Fund perform during the period?
The fund produced a 0.42% total return over the six-month period ended May 31,
1999,1 compared to a 0.41% total return for the average of the Lipper
Pennsylvania Municipal Debt Funds category.2
We attribute the fund's performance to its active management style, which
enables the fund to constantly sell bonds that have achieved our investment
objectives, while purchasing issues which are out of favor and undervalued. In
the current market environment, the fund has been selling modestly discounted
bonds while purchasing deeply discounted bonds. This strategy seeks to increase
the fund's total return performance.
What is the fund's investment approach?
Our goal is to seek a high level of federally and Pennsylvania tax-exempt income
from a diversified portfolio of intermediate-term municipal bonds. To achieve
this objective, we prefer to downplay interest rate trends and market forecasts
in favor of rigorous analysis of each individual bond's structure. Within the
context of our bond structure analyses, we strive to maximize both income and
total return, which is the combination of income and price changes.
First, we try to allocate between one-quarter and one-half of the total
portfolio to Pennsylvania bonds that we believe will offer attractive total
returns. We typically look for bonds that are selling at a discount to face
value because they may be temporarily out-of-favor among investors. Our
expectation is that these bonds' prices will rise as they return to favor over
time. This may be especially true for bonds that do not currently meet
institutions' "de minimus" requirements, but that we expect to do so in the
future.
The Fund 3
<PAGE>
DISCUSSION OF FUND PERFORMANCE (continued)
Second, for the remainder of the portfolio, we look for bonds that we expect to
provide consistently high yields. We often find such opportunities in premium
bonds in the one- to 15-year maturity range, for example. We not only look for
bonds with high yields, but we try to ensure that we select bonds that are most
likely to obtain attractive prices if and when we decide to sell them into the
secondary market.
What other factors influenced the fund's performance?
When the Asian currency and credit crisis threatened Latin America just before
the six-month reporting period began, investors flocked to U.S. Treasury
securities. As a result, yields on taxable Treasuries fell briefly to levels
that were roughly equivalent to yields on comparable tax-exempt bonds.
However, the Federal Reserve Board and other central banks moved quickly to
stimulate global economic growth by reducing key short-term interest rates.
Because lower short-term interest rates had the potential to reignite
inflationary pressures, yields on intermediate-term bonds rose throughout the
first half of 1999. However, the extent of that rise was much greater for
taxable U.S. Treasury securities than for tax-free municipal bonds.
Because of strong economic conditions throughout the country, Pennsylvania and
its municipalities have had less need to borrow. Yet, demand from investors
seeking to minimize their income tax liabilities has remained high. This balance
between supply and demand generally has helped municipal bond prices decline
less than prices of comparable U.S. Treasury bonds, as measured by major market
indices and benchmarks.
4
<PAGE>
What is the fund's current strategy?
We have continued to search for bonds with attractive structures in
Pennsylvania's municipal bond market. We have found such values, in our opinion,
in bonds that are selling at a discount to their face values and that cannot be
redeemed by their issuers anytime soon. In addition, we have continued to focus
on high-quality issuers. Because the differences in yields between the
highest-quality bonds and lower-quality bonds are narrow by historical
standards, we see little reason to assume the added credit risk lower-rated
bonds entail.
June 14, 1999
1 Total return includes reinvestment of dividends and any capital gains paid.
Past performance is no guarantee of future results. Share price and investment
return fluctuate such that upon redemption fund shares may be worth more or
less than their original cost. Income may be subject to state and local taxes
for non-Pennsylvania residents, and some income may be subject to the Federal
Alternative Minimum Tax (AMT) for certain shareholders. Capital gains, if any,
are fully taxable.
2 Source: Lipper Analytical Services, Inc.
The Fund 5
<PAGE>
STATEMENT OF INVESTMENTS
May 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Principal
Long-Term Municipal Investments--97.6% Amount ($) Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania--88.5%
Allegheny County Hospital Development Authority, Revenue:
(Magee Women's Hospital):
5.875%, 10/1/2002 (Insured; FGIC) 500,000 528,300
6%, 10/1/2005 (Insured; FGIC) 1,525,000 1,626,565
(UPMC Health Systems)
4.625%, 12/15/2015 (Insured; AMBAC) 1,000,000 937,740
Bangor Area School District:
4.50%, 3/15/2015 (Insured; FSA) 1,400,000 1,311,702
4.50%, 3/15/2016 (Insured; FSA) 1,150,000 1,068,396
Berks County Municipal Authority, Health, Hospital and Nursing
Home Revenue (Phoebe-Devitt Homes Project)
5.50%, 5/15/2011 965,000 960,715
Butler Area Sewer Authority, Sewer Revenue:
Zero Coupon, 1/1/2010 (Insured; FGIC) 600,000 358,944
Zero Coupon, 7/1/2010 (Insured; FGIC) 600,000 350,340
Cambria County 5.875%, 8/15/2008 (Insured; FGIC) 850,000 925,488
Cambria Township Water Authority, Industrial User Revenue
6%, 12/1/2002 (LOC; Banque Paribas) 1,250,000 1,272,612
Clinton County Industrial Development Authority, PCR
(International Paper Co. Project) 5.375%, 5/1/2004 500,000 520,570
Coatsville School District 4.50%, 10/1/2016 (Insured; FSA) 1,000,000 928,690
Dauphin County General Authority, Revenue:
6.25%, 6/1/2001 650,000 673,374
6%, 12/1/2006 (LOC; The Sakura Bank Ltd.) 785,000 843,561
Delaware County Industrial Development Authority, Revenue
(Martins Run Project) 5.60%, 12/15/2002 750,000 757,425
Erie School District
Zero Coupon, 9/1/2009 (Insured; FSA) 1,110,000 683,027
Franklin County Industrial Development Authority, HR
(The Chambersburg Hospital) 5.25%, 7/1/2014
(Insured; AMBAC) 1,075,000 1,079,182
Harrisburgh Authority, Office and Parking Revenue
5.75%, 5/1/2008 1,200,000 1,199,520
Harrisburg Redevelopment Authority
Zero Coupon, 11/1/2016 (Insured; FSA) 2,000,000 809,320
Jefferson County Hospital Authority, HR
(Brookville Hospital) 7%, 8/1/2002 (Insured; FHA) 765,000 769,491
Lancaster Area Sewer Authority, Sewer Revenue
4.50%, 4/1/2018 3,000,000 2,727,630
Langhorne Manor Borough Higher Education and Health Authority,
Health Hospital and Nursing Home Revenue (Woods
Services Inc.) 4.875%, 11/15/2015 (Insured; AMBAC) 2,310,000 2,218,940
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania (continued)
Lebanon County Good Samaritan Hospital Authority, Revenue
(Good Samaritan Hospital Project):
5.85%, 11/15/2007 845,000 890,233
6%, 11/15/2009 1,500,000 1,583,475
McKeesport Area School District
Zero Coupon, 10/1/2009 (Insured; FGIC) 1,070,000 661,474
Montgomery County Higher Education and Health Authority, HR
(Montgomery Hospital Medical Center) 6.60%, 7/1/2010 1,000,000 1,063,470
Montgomery County Industrial Development Authority, Revenue
(Friends Central School Project) 4.75%, 3/1/2016
(Insured; AGIC) 960,000 898,214
Norristown:
Zero Coupon 12/15/2011 (Insured; AGIC) 1,465,000 763,690
Zero Coupon 12/15/2013 (Insured; AGIC) 735,000 340,011
Pennsylvania, COP 5.40%, 7/1/2008 (Insured; AMBAC) 1,000,000 1,036,290
Pennsylvania Convention Center Authority, Revenue
6.25%, 9/1/2004 750,000 791,962
Pennsylvania Economic Development Financing Authority, RRR
(Northampton Generating Project) 6.40%, 1/1/2009 500,000 526,120
Pennsylvania Finance Authority, Revenue
(Municipal Capital Improvements Program)
6.60%, 11/1/2009 5,280,000 5,789,045
Pennsylvania Higher Educational Facilities Authority,
Health Services Revenue:
(Allegheny Delaware Valley)
5.60%, 11/15/2010 (Insured; MBIA) 1,250,000 1,262,825
(University of Pennsylvania Health Services)
5.35%, 1/1/2008 2,220,000 2,268,174
Pennsylvania Housing Finance Agency, Single Family Mortgage:
5.95%, 10/1/2003 365,000 379,611
6.20%, 4/1/2005 410,000 426,441
6.20%, 10/1/2005 420,000 438,056
5.75%, 4/1/2006 400,000 418,232
6.10%, 4/1/2006 455,000 474,165
5.75%, 10/1/2006 415,000 435,069
6.10%, 10/1/2006 465,000 485,762
Pennsylvania Industrial Development Authority, EDR
7%, 1/1/2006 (Insured; AMBAC) 1,795,000 2,051,164
Pennsylvania Infrastructure Investment Authority, Revenue
(Pennvest Loan Pool Program) 6%, 9/1/2005
(Insured; MBIA) 2,155,000 2,359,553
</TABLE>
The Fund 7
<PAGE>
STATEMENT OF INVESTMENTS (unaudited) (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania (continued)
Philadelphia:
5.70%, 11/15/2006 (Insured; FGIC) 370,000 399,826
5.70%, 11/15/2006 (Insured; FGIC)
(Prerefunded 11/15/2004)a 630,000 689,466
Airport Revenue (Philadelphia Airport System)
5.75%, 6/15/2008 (Insured; AMBAC) 1,000,000 1,069,310
Water and Wastewater Revenue:
5.50%, 6/15/2003 (Insured; FGIC) 1,000,000 1,053,030
5.75%, 6/15/2013 (Insured; MBIA) 1,500,000 1,598,010
Philadelphia Hospitals and Higher Education Facilities Authority,
Revenue:
(Children's Seashore House) 7%, 8/15/2003 650,000 702,878
(Community College) 5.90%, 5/1/2007 (Insured; MBIA) 445,000 487,141
(Temple University Hospital) 6.50%, 11/15/2008 1,000,000 1,080,030
Philadelphia Municipal Authority, LR:
6%, 7/15/2003 500,000 515,410
5.40%, 11/15/2006 (Insured; FGIC) 500,000 526,505
Philadelphia School District
5.75%, 7/1/2007 (Insured; MBIA) 600,000 649,434
Scranton-Lackawanna Health and Welfare Authority, Revenue
(University of Scranton Project) 5.80%, 3/1/2000 500,000 508,315
Southeast Pennsylvania Transportation Authority,
Special Revenue:
6.50%, 3/1/2004 (Insured; FGIC) 1,415,000 1,561,311
6.50%, 3/1/2004 (Insured; FGIC) (Escrowed to Maturity) 85,000 93,789
5.875%, 3/1/2009 (Insured; FGIC) 705,000 770,156
5.875%, 3/1/2009 (Insured; FGIC) (Prerefunded 3/1/2005)a 45,000 49,159
Upper Allegheny Joint Sanitary Authority, Sewer Revenue
5.70%, 9/1/2005 (Insured; FGIC, Prerefunded 9/1/2002)a 1,095,000 1,156,583
Westmoreland County:
Zero Coupon, 12/1/2006 (Insured; FGIC) 2,000,000 1,427,720
Zero Coupon, 12/1/2008 (Insured; FGIC) 1,790,000 1,145,511
Wilkinsburg Joint Water Authority, Water Revenue
6.15%, 8/15/2006 (Insured; AMBAC,
Prerefunded 8/15/2002)a 600,000 641,394
York County Hospital Authority, Revenue
(Lutheran Social Services Health Center) 6.25%, 4/1/2011 1,000,000 1,062,080
Yough School District
Zero Coupon, 10/1/2007 (Insured; FGIC) 1,000,000 684,290
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Principal
Long-Term Municipal Investments (continued) Amount ($) Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Related--9.1%
Puerto Rico Commonwealth Highway and Transportation
Authority, Highway Revenue:
5.40%, 7/1/2006 2,000,000 2,107,440
5.40%, 7/1/2006 (Insured; FSA) 4,000,000 4,214,600
Puerto Rico Electric Power Authority, Power Revenue:
5.90%, 7/1/2002 250,000 263,845
6%, 7/1/2006 225,000 244,481
Total Long-Term Municipal Investments
(cost $70,473,595) 72,596,282
- --------------------------------------------------------------------------------------------
Short-Term Municipal Investments--.7%
Pennsylvania;
Philadelphia Authority for Industrial Development, Revenues, VRDN
(Fox Chase Cancer Center Project) 3.40%b
(cost $500,000) 500,000 500,000
- --------------------------------------------------------------------------------------------
Total Investments (cost $70,973,595) 98.3% 73,096,282
Cash and Receivables (Net) 1.7% 1,194,520
Net Assets 100.0% 74,290,802
</TABLE>
The Fund 9
<PAGE>
STATEMENT OF INVESTMENTS (unaudited) (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Summary of Abbreviations
<S> <C> <C> <C>
AGIC Asset Guaranty Insurance LOC Letter of Credit
Company LR Lease Revenue
AMBAC American Municipal Bond MBIA Municipal Bond Investors
Assurance Corporation Assurance Insurance
COP Certificate of Participation Corporation
EDR Economic Development Revenue PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
FHA Federal Housing Administration Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
HR Hospital Revenue
</TABLE>
- -------------------------------------------------------------------------------
Summary of Combined Ratings
Fitch or Moody's or Standard & Poor's Value (%)
- -------------------------------------------------------------------------------
AAA Aaa AAA 57.3
AA Aa AA 10.0
A A A 17.0
BBB Baa BBB 9.5
F1 MIG1 SP1 .7
Not Ratedc Not Ratedc Not Ratedc 5.5
100.0
a Bonds which are prerefunded are collateralized by U.S. Government securities
which are held in escrow and are used to pay principal and interest on the
municipal issue and to retire the bonds in full at the earliest refunding
date.
b Securities payable on demand. Variable interest rate--subject to periodic
change.
c Securities which, while not rated by Fitch, Moody's and Standard & Poor's have
been determined by the Manager to be of comparable quality to those rated
securities in which the fund may invest.
See notes to financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Cost Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets ($):
Investments in securities--See Statement of Investments 70,973,595 73,096,282
Cash 67,799
Interest receivable 911,776
Receivable for investment securities sold 331,025
Prepaid expenses 14,842
74,421,724
- -----------------------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 29,050
Payable for shares of Common Stock redeemed 70,612
Accrued expenses 31,260
130,922
- -----------------------------------------------------------------------------------------------
Net Assets ($) 74,290,802
- -----------------------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 71,885,276
Accumulated undistributed investment income--net 26,658
Accumulated net realized gain (loss) on investments 256,181
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 2,122,687
- -----------------------------------------------------------------------------------------------
Net Assets ($) 74,290,802
- -----------------------------------------------------------------------------------------------
Shares Outstanding
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 5,537,104
Net Asset Value, offering and redemption price per share--Note 3(d) ($) 13.42
</TABLE>
See notes to financial statements.
The Fund 11
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income ($):
- --------------------------------------------------------------------------------
Interest Income 1,906,540
Expenses:
Management fee--Note 3(a) 224,150
Shareholder servicing costs--Note 3(b) 58,259
Professional fees 24,959
Trustee's fees and expenses-Note 3(c) 10,840
Prospectus and shareholders' reports 6,825
Registration fees 6,314
Custodian fees 4,293
Loan commitment fees--Note 2 171
Miscellaneous 6,359
Total Expenses 342,170
Less--reduction in management fee due to
undertaking--Note 3(a) (43,132)
Net Expenses 299,038
Investment Income--Net 1,607,502
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments--Note 4 ($):
Net realized gain (loss) on investments 191,021
Net unrealized appreciation (depreciation) on investments (1,449,715)
Net Realized and Unrealized Gain (Loss) on Investments (1,258,694)
Net Increase in Net Assets Resulting from Operations 348,808
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Six Months Ended
May 31, 1999 Year Ended
(Unaudited) November 30, 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Operations ($):
Investment income--net 1,607,502 3,005,592
Net realized gain (loss) on investments 191,021 555,173
Net unrealized appreciation (depreciation)
on investments (1,449,715) 952,486
Net Increase (Decrease) in Net Assets
Resulting from Operations 348,808 4,513,251
- ---------------------------------------------------------------------------------------------
Dividends to Shareholders from ($):
Investment income--net (1,580,844) (3,021,270)
Net realized gain on investments (491,297) (25,600)
Total Dividends (2,072,141) (3,046,870)
- ---------------------------------------------------------------------------------------------
Beneficial Interest Transactions ($):
Net proceeds from shares sold 7,885,840 15,327,694
Dividends reinvested 1,569,508 2,286,397
Cost of shares redeemed (7,403,867) (10,045,563)
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions 2,051,481 7,568,528
Total Increase (Decrease) in Net Assets 328,148 9,034,909
- ---------------------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 73,962,654 64,927,745
End of Period 74,290,802 73,962,654
Undistributed investment income--net 26,658 -
- ---------------------------------------------------------------------------------------------
Capital Share Transactions (Shares):
Shares sold 580,198 1,126,829
Shares issued for dividends reinvested 115,427 167,990
Shares redeemed (545,482) (739,218)
Net Increase (Decrease) in Shares Outstanding 150,143 555,601
</TABLE>
See notes to financial statements.
The Fund 13
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months Ended Year Ended November 30,
May 31, 1999 -------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994a
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data ($):
Net asset value,
beginning of period 13.73 13.44 13.18 13.12 11.84 12.50
Investment Operations:
Investment income--net .29 .60 .60 .59 .63 .61
Net realized and unrealized
gain (loss) on investments (.22) .30 .26 .06 1.28 (.66)
Total from Investment Operations .07 .90 .86 .65 1.91 (.05)
Distributions:
Dividends from investment
income--net (.29) (.60) (.60) (.59) (.63) (.61)
Dividends from net realized
gain on investments (.09) (.01) - - - -
Total Distributions (.38) (.61) (.60) (.59) (.63) (.61)
Net asset value, end of period 13.42 13.73 13.44 13.18 13.12 11.84
- -----------------------------------------------------------------------------------------
Total Return (%) .84b 6.76 6.67 5.10 16.47 (.60)
- -----------------------------------------------------------------------------------------
Ratios/Supplemental Data (%):
Ratio of expenses to average
net assets .80b .80 .80 .80 .48 -
Ratio of net investment income
to average net assets 4.30b 4.35 4.52 4.52 4.93 5.19
Decrease reflected in above
expense ratios due to
understakings by the Manager .12b .13 .13 .31 .62 1.39
Portfolio Turnover Rate 13.39c 26.03 23.94 53.83 5.07 20.13
Net Assets, end of period
($ x 1,000) 74,291 73,963 64,928 50,372 40,079 22,599
<FN>
a From December 16, 1993 (commencement of operations) to November 30, 1994.
b Annualized.
c Not annualized.
See notes to financial statements.
</FN>
</TABLE>
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Pennsylvania Intermediate Municipal Bond Fund (the "fund") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
non-diversified open-end management investment company. The fund's investment
objective is to provide investors with as high a level of current income exempt
from Federal and Pennsylvania income taxes as is consistent with the
preservation of capital. The Dreyfus Corporation (the "Manager") serves as the
fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. is the distributor of the fund's shares,
which are sold to the public without a sales charge.
The fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the Board
of Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no trans-
The Fund 15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
actions, are valued at the average of the most recent bid and asked prices. Bid
price is used when no asked price is available.
(b) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Under the terms of the custody
agreement, the fund received net earnings credits of $3,427 during the period
ended May 31, 1999 based on available cash balances left on deposit. Income
earned under this arrangement is included in interest income.
The fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the fund.
(c) Dividends to shareholders: It is the policy of the fund to declare dividends
daily from investment income-net. Such dividends are paid monthly. Dividends
from net realized capital gain are normally declared and paid annually, but the
fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). To the extent that net realized capital gain can be offset by capital
loss carryovers, if any, 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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
16
<PAGE>
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended May
31, 1999, the fund did not borrow under the Facility.
NOTE 3--Management Fee and Other Transactions
With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management fee is
computed at the annual rate of .60 of 1% of the value of the fund's average
daily net assets and is payable monthly. The Manager had undertaken through May
31, 1999 to reduce the management fee paid by the fund, to the extent that the
fund's aggregate annual expenses, exclusive of taxes, brokerage, interest on
borrowings, commitment fees and extraordinary expenses, exceed an annual rate of
.80 of 1% of the value of the fund's average daily net assets. The reduction in
management fee, pursuant to the undertaking, amounted to $43,132 during the
period ended May 31, 1999.
(b) Under the Shareholder Services Plan, the fund reimburses Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, 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
shareholders accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquires
regarding the fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the period ended May
31, 1999, the fund was charged $34,800 pursuant to the Shareholder Services
Plan.
The Fund 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended May 31, 1999, the fund was charged $16,773 pursuant to the transfer agency
agreement.
(c) Each trustee who is not an "affiliated person" as defined in the Act
receives from the fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
(d) A 1% redemption fee is charged and retained by the fund on shares redeemed
within fifteen days of their issuance, including redemptions through the use of
the fund's exchange privilege. During the period ended May 31, 1999, redemption
fees retained by the fund amounted to $2.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended May 31, 1999, amounted to
$10,874,691 and $9,850,782, respectively.
At May 31, 1999, accumulated net unrealized appreciation on investments was
$2,122,687, consisting of $2,510,159 gross unrealized appreciation and $387,472
gross unrealized depreciation.
At May 31, 1999, 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).
18
<PAGE>
NOTES
<PAGE>
For More Information
Dreyfus
Pennsylvania
Intermediate
Municipal Bond Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 WashingtonStreet
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
By telephone
Call 1-800-645-6561
By mail Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
By E-mail Send your request
to [email protected]
On the Internet Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
(C) 1999 Dreyfus Service Corporation 105SA995
