Registration No. 333-__________
______________________________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No. __ |_| Post-Effective Amendment No. __
(Check appropriate box or boxes)
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
________________________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
(212) 922-6000
________________________________________________________________________________
(Area Code and Telephone Number)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
________________________________________________________________________________
(Address of Principal Executive Offices: Number,
Street, City, State, Zip Code)
(Name and Address of Agent for Service)
Mark N. Jacobs, Esq.
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
copy to:
Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement is declared effective.
It is proposed that this filing will become effective on March 5, 2001
pursuant to Rule 488.
An indefinite number of Registrant's shares of common stock, par
value $0.001 per share, has been registered pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Accordingly, no filing fee is being paid at this
time.
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
Form N-14
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
FORM N-14 PROSPECTUS/PROXY
ITEM NO. STATEMENT CAPTION
Part A
- ------
Item 1. Beginning of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
Item 2. Beginning and Outside Back Cover Page of Cover Page
Prospectus
Item 3. Synopsis Information and Risk Factors Summary
Item 4. Information About the Transaction Letter to Shareholders;
Summary; Reasons for
the Exchange;
Information About the
Exchange
Item 5. Information About the Registrant Letter to Shareholders;
Summary; Reasons for
the Exchange;
Information About the
Exchange; Additional
Information About the
Acquiring Fund and the
Series
Item 6. Information About the Company Being Letter to Shareholders;
Acquired Reasons for the
Exchange; Information
About the Exchange;
Additional Information
About the Acquiring
Fund and the Series
Item 7. Voting Information Letter to Shareholders;
Cover Page; Voting
Information
Item 8. Interest of Certain Persons and Experts Not Applicable
Item 9. Additional Information Required for Not Applicable
Reoffering by Persons Deemed to be
Underwriters
STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION
- ------ ------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Not Applicable
Item 12. Additional Information About the Statement of Additional
Registrant Information of Dreyfus
New Jersey Municipal Bond
Fund, Inc. dated May 1,
2000(1)
Item 13. Additional Information About the Statement of Additional
Company Being Acquired Information of Dreyfus
Premier State Municipal
Bond Fund dated September
1, 2000, as revised
January 19, 2001(2)
Item 14. Financial Statements Annual Report of Dreyfus
New Jersey Municipal Bond
Fund, Inc. dated December
31, 2000; Annual Report
and Semi-Annual Report of
Dreyfus Premier State
Municipal Bond Fund (New
Jersey Series) dated
April 30, 2000 and
October 31, 2000,
respectively.
PART C
- ------
Item 15. Indemnification
Item 16. Exhibits
Item 17. Undertakings
- ----------------------
(1) Incorporated herein by reference to the Registration Statement of the
Registrant on Form N-1A (File No. 33-19655).
(2) Incorporated herein by reference to the Registration Statement on Form N-1A
of Dreyfus Premier State Municipal Bond Fund (File No. 33-10238).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
NEW JERSEY SERIES
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Shareholder:
As a shareholder of the New Jersey Series (the "Series") of Dreyfus
Premier State Municipal Bond Fund (the "Trust"), you are being asked to vote on
a Plan of Reorganization for the Series under which all of the Series' assets
would be transferred in a tax-free reorganization to Dreyfus New Jersey
Municipal Bond Fund, Inc. (the "Acquiring Fund"), in exchange for shares of the
Acquiring Fund. If the Plan of Reorganization is approved and consummated for
the Series, you would no longer be a shareholder of the Series, but would become
a shareholder of the Acquiring Fund which has substantially similar investment
objectives and management policies as the Series.
Shareholders who do not wish to participate in the proposed
Reorganization may redeem their shares and any contingent deferred sales charge
applicable upon redemption of such shares will be waived. In addition, any sales
load deducted at the time of purchase of Series shares by shareholders on or
after January 1, 2000 will be reimbursed to such shareholders by The Dreyfus
Corporation.
AFTER CAREFUL REVIEW, THE TRUST'S BOARD MEMBERS HAVE APPROVED THE
PROPOSED REORGANIZATION. THE TRUST'S BOARD MEMBERS BELIEVE THAT THE PROPOSAL SET
FORTH IN THE NOTICE OF MEETING FOR THE SERIES IS IMPORTANT AND RECOMMEND THAT
YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR THE PROPOSAL.
Your vote is important. PLEASE TAKE A MOMENT TO SIGN AND RETURN YOUR
PROXY CARD IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. The Trust, on behalf of
the Series, also may solicit proxies by letter or telephone. Voting by telephone
will reduce the time and costs associated with the proxy solicitation. When the
Series records proxies by telephone, it will use procedures designed to (i)
authenticate shareholders' identities, (ii) allow shareholders to authorize the
voting of their shares in accordance with their instructions and (iii) confirm
that their instructions have been properly recorded.
Further information about the transaction is contained in the enclosed
materials, which you should review carefully. If you have any questions after
considering the enclosed materials, please contact your Service Agent.
Sincerely,
Stephen E. Canter,
President
March 12, 2001
TRANSFER OF THE ASSETS OF
DREYFUS PREMIER STATE MUNICIPAL BOND FUND--NEW JERSEY SERIES
TO AND IN EXCHANGE FOR SHARES OF
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
QUESTIONS AND ANSWERS
THE ENCLOSED MATERIALS INCLUDE A PROSPECTUS/PROXY STATEMENT CONTAINING
INFORMATION YOU NEED TO MAKE AN INFORMED DECISION. HOWEVER, WE THOUGHT IT WOULD
ALSO BE HELPFUL TO BEGIN BY ANSWERING SOME OF THE IMPORTANT QUESTIONS YOU MIGHT
HAVE ABOUT THE PROPOSED REORGANIZATION.
WHAT WILL HAPPEN TO MY SHARES IF THE PROPOSED REORGANIZATION IS APPROVED?
You will become a shareholder of Dreyfus New Jersey Municipal Bond Fund, Inc. on
or about May 9, 2001 and will no longer be a shareholder of the New Jersey
Series, which will be terminated pursuant to the proposed reorganization. You
will receive shares of Dreyfus New Jersey Municipal Bond Fund, Inc. with a value
equal to the value of your investment in the New Jersey Series at the time of
the transaction.
WHAT IS THE KEY REASON FOR THIS REORGANIZATION?
The Trust's Board believes that the reorganization will permit shareholders of
the New Jersey Series to pursue substantially the same investment goals in a
larger fund that has a lower expense ratio.
DO THE FUNDS HAVE SIMILAR INVESTMENT OBJECTIVES AND STRATEGIES?
The investment objective of each fund is to maximize current income exempt from
Federal and New Jersey personal income taxes. However, the investment practices
and limitations of each fund (and related risks) are not identical. The Dreyfus
Corporation is the investment adviser for each fund. W. Michael Petty is each
fund's primary portfolio manager. For additional information regarding the
differences between the funds, please refer to the enclosed Prospectus/Proxy
Statement.
WHAT ARE THE TAX CONSEQUENCES OF THIS PROPOSED REORGANIZATION?
The proposed reorganization will NOT be a taxable event. Shareholders will not
realize any capital gain or loss as a direct result of the proposed
reorganization.
WILL I ENJOY THE SAME PRIVILEGES AS A SHAREHOLDER OF DREYFUS NEW JERSEY
MUNICIPAL BOND FUND, INC. THAT I CURRENTLY HAVE AS A SHAREHOLDER OF THE NEW
JERSEY SERIES?
Yes. You will continue to enjoy the same shareholder privileges (or find that
additional privileges are available) such as Checkwriting Privilege, Exchange
Privilege, Dreyfus TeleTransfer Privilege, Dreyfus Automatic Asset Builder,
Dreyfus Payroll Savings Plan, Dreyfus Government Direct Deposit, Dreyfus
Dividend Sweep, Dreyfus Auto-Exchange Privilege and Dreyfus Automatic Withdrawal
Plan. The privileges you currently have on your New Jersey Series account will
transfer automatically to your Dreyfus New Jersey Municipal Bond Fund, Inc.
account.
HOW DOES THE BOARD OF TRUSTEES RECOMMEND I VOTE?
The Trustees recommend that you vote FOR the reorganization. The Trustees
believe the reorganization is in the best interests of the New Jersey Series and
its shareholders.
Please note if you sign and date your proxy card, but do not provide voting
instructions, your shares will be voted FOR the proposal. Thank you in advance
for your vote.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
NEW JERSEY SERIES
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------------
To the Shareholders:
A Special Meeting of Shareholders of the New Jersey Series (the
"Series") of Dreyfus Premier State Municipal Bond Fund (the "Trust") will be
held at the offices of The Dreyfus Corporation, 200 Park Avenue, 7th Floor, New
York, New York 10166, on Tuesday, May 1, 2001, at 10:00 a.m., for the following
purposes:
1. To consider an Agreement and Plan of Reorganization
providing for the transfer of all of the assets,
subject to liabilities, of the Series to Dreyfus New
Jersey Municipal Bond Fund, Inc. (the "Acquiring Fund")
in exchange for the Acquiring Fund's shares and the
assumption by the Acquiring Fund of the Series' stated
liabilities (the "Exchange"). Shares of the Acquiring
Fund received in the Exchange will be distributed by
the Series to its shareholders in liquidation of the
Series, after which the Series will be terminated as a
series of the Trust; and
2. To transact such other business as may properly come
before the meeting, or any adjournment or adjournments
thereof.
Shareholders of record at the close of business on March 6, 2001, will
be entitled to receive notice of and to vote at the meeting.
By Order of the Board of Trustees
Steven F. Newman,
Secretary
New York, New York
March 12, 2001
================================================================================
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS
VITAL. BY LAW, THE MEETING OF SHAREHOLDERS OF THE SERIES WILL HAVE TO BE
ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A QUORUM OF ITS SHARES
ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE SERIES, AT SHAREHOLDERS'
EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM.
CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE SERIES TO HOLD THE MEETING AS
SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU AND ALL OTHER
SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION. MARCH 12, 2001
================================================================================
TRANSFER OF THE ASSETS OF
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
NEW JERSEY SERIES
TO AND IN EXCHANGE FOR SHARES OF
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 1, 2001
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Dreyfus Premier State Municipal Bond
Fund (the "Trust") on behalf of its New Jersey Series (the "Series") to be used
at the Special Meeting of Shareholders (the "Meeting") of the Series to be held
on Tuesday, May 1, 2001, at 10:00 a.m., at the offices of The Dreyfus
Corporation, 200 Park Avenue, 7th Floor, New York, New York 10166, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. Shareholders of record at the close of business on March 6, 2001,
are entitled to receive notice of and to vote at the Meeting.
It is proposed that the Series transfer all of its assets, subject to
liabilities, to Dreyfus New Jersey Municipal Bond Fund, Inc. (the "Acquiring
Fund") in exchange for shares of the Acquiring Fund, all as more fully described
in this Prospectus/Proxy Statement (the "Exchange"). Upon consummation of the
Exchange, Acquiring Fund shares received by the Series will be distributed to
Series shareholders, with each shareholder receiving a pro rata distribution of
Acquiring Fund shares (or fractions thereof) for Class A, Class B or Class C
shares of the Series held prior to the Exchange. Thus, it is contemplated that
each shareholder will receive for his or her Series shares a number of Acquiring
Fund shares (or fractions thereof) equal in value to the aggregate net asset
value of the shareholder's Series shares as of the date of the Exchange.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely information about the Acquiring Fund that Series
shareholders should know before voting on the proposal or investing in the
Acquiring Fund.
A Statement of Additional Information ("SAI") dated _______, 2001,
relating to this Prospectus/Proxy Statement, has been filed with the Securities
and Exchange Commission (the "Commission") and is incorporated by reference in
its entirety. The Commission maintains a Web site (HTTP://WWW.SEC.GOV) that
contains the SAI, material incorporated in this Prospectus/Proxy Statement by
reference, and other information regarding the Acquiring Fund and the Series. A
copy of the SAI is available without charge by calling 1-800-554-4611, or
writing to the Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144.
- ------------------------------------------------------------------------------
SHARES OF THE ACQUIRING FUND AND SERIES ARE NOT BANK DEPOSITS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. INVESTING IN THE ACQUIRING FUND, AS IN THE SERIES, INVOLVES
CERTAIN RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- ------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
ACQUIRING FUND'S SHARES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
The Series and the Acquiring Fund are open-end, non-diversified, management
investment companies advised by The Dreyfus Corporation ("Dreyfus"). They have
substantially similar investment objectives and management policies. The
substantive differences between the Series and the Acquiring Fund are set forth
in this Prospectus/Proxy Statement.
The Acquiring Fund's Prospectus dated May 1, 2000 and the Acquiring
Fund's Annual Report for its fiscal year ended December 31, 2000, including its
audited financial statements for the fiscal year each accompany this
Prospectus/Proxy Statement. Such Prospectus and financial statements are
incorporated in this Prospectus/Proxy Statement by reference. FOR A FREE COPY OF
THE SERIES' PROSPECTUS DATED SEPTEMBER 1, 2000, THE SERIES' ANNUAL REPORT FOR
ITS FISCAL YEAR ENDED APRIL 30, 2000, AND THE SERIES' SEMI-ANNUAL REPORT FOR THE
SIX MONTHS ENDED OCTOBER 31, 2000, WRITE TO THE SERIES AT THE TRUST'S PRINCIPAL
EXECUTIVE OFFICES LOCATED AT 200 PARK AVENUE, NEW YORK, NEW YORK 10166, OR CALL
1-800-554-4611.
Shareholders are entitled to one vote for each Series share held and
fractional votes for each fractional Series share held. Class A, Class B and
Class C shareholders will vote together as a single class on the proposal.
Series shares represented by executed and unrevoked proxies will be voted in
accordance with the specifications made thereon. If the enclosed form of proxy
is executed and returned, it nevertheless may be revoked by giving another proxy
or by letter or telegram directed to the Series, which must indicate the
shareholder's name and account number. To be effective, such revocation must be
received before the Meeting. Also, any shareholder who attends the Meeting in
person may vote by ballot at the Meeting, thereby canceling any proxy previously
given. As of January 18, 2001, the following numbers of Series shares were
issued and outstanding:
Class A Shares Class B Shares Class C Shares
OUTSTANDING OUTSTANDING OUTSTANDING
----------- ----------- -----------
483,206.690 631,450.879 38,221.853
Proxy materials will be mailed to shareholders of record on or about
March 12, 2001.
TABLE OF CONTENTS
Summary......................................................................7
Reasons for the Exchange....................................................18
Information about the Exchange..............................................18
Additional Information about the Acquiring Fund and the Series..............21
Voting Information..........................................................21
Financial Statements and Experts............................................24
Other Matters...............................................................24
Notice to Banks, Broker/Dealers and Voting Trustees and Their Nominees......24
Exhibit A: Agreement and Plan of Reorganization............................A-1
APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION
PROVIDING FOR THE TRANSFER OF ALL OF THE ASSETS OF THE
SERIES TO THE ACQUIRING FUND
SUMMARY
This Summary is qualified by reference to the more complete
information contained elsewhere in this Prospectus/Proxy Statement, the
Acquiring Fund Prospectus, the Series Prospectus and the form of Agreement and
Plan of Reorganization attached to this Prospectus/Proxy Statement as Exhibit A.
PROPOSED TRANSACTION. The Trust's Board, including the Board members
who are not "interested persons" (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")), has unanimously approved an Agreement and
Plan of Reorganization (the "Plan") for the Series. The Plan provides that,
subject to the requisite approval of the Series' shareholders, on the date of
the Exchange the Series will assign, transfer and convey to the Acquiring Fund
all of the assets (subject to liabilities) of the Series, including all
securities and cash, attributable to its Class A, Class B and Class C shares, in
exchange for shares of the Acquiring Fund having an aggregate net asset value
equal to the value of the net assets attributable to the Series' shares. The
Series will distribute all Acquiring Fund shares received by it among its
shareholders so that each Class A, Class B and Class C shareholder will receive
a pro rata distribution of Acquiring Fund shares (or fractions thereof) having
an aggregate net asset value equal to the aggregate net asset value of the
shareholder's Series shares as of the date of the Exchange. Thereafter, the
Series will be terminated as a series of the Trust.
As a result of the Exchange, each Series shareholder will cease to be
a shareholder of the Series and will become a shareholder of the Acquiring Fund
as of the close of business on the date of the Exchange. No sales charge or
contingent deferred sales charge ("CDSC") will be imposed at the time of the
Exchange.
The Trust's Board has concluded unanimously that the Exchange would be
in the best interests of the Series and its shareholders, and the interests of
existing shareholders of the Series would not be diluted as a result of the
transactions contemplated by the Exchange. See "Reasons for the Exchange."
TAX CONSEQUENCES. As a condition to the closing of the Exchange, the
Trust and the Acquiring Fund will receive an opinion of counsel to the effect
that, for Federal income tax purposes, (a) no gain or loss will be recognized by
the Series' shareholders as a result of the Exchange, (b) the holding period and
aggregate tax basis of Acquiring Fund shares received by a Series' shareholder
will be the same as the holding period and aggregate tax basis of the
shareholder's Series shares, and (c) the holding period and tax basis of the
Series' assets transferred to the Acquiring Fund as a result of the Exchange
will be the same as the holding period and tax basis of such assets held by the
Series immediately prior to the Exchange. See "Information about the
Exchange--Federal Income Tax Consequences."
COMPARISON OF THE SERIES AND ACQUIRING FUND. The following discussion
is primarily a summary of certain parts of the Series Prospectus and the
Acquiring Fund Prospectus. Information contained in this Prospectus/Proxy
Statement is qualified by the more complete information set forth in such
Prospectuses, which are incorporated herein by reference.
GOAL/APPROACH. Both the Series and Acquiring Fund seek to maximize
current income exempt from Federal and New Jersey personal income taxes, to the
extent consistent with the preservation of capital, with respect to the
Acquiring Fund, or without undue risk, with respect to the Series.
To pursue its goal, each of the Acquiring Fund and Series normally
invests substantially all of its assets in municipal bonds that provide income
exempt from Federal and New Jersey personal income taxes for New Jersey
residents ("New Jersey Municipal Obligations").
The Series must invest at least 70% of its assets in investment grade
municipal bonds or the unrated equivalent as determined by Dreyfus. For
additional yield, the Series may invest up to 30% of its assets in municipal
bonds rated below investment grade ("high yield" or "junk" bonds) or the unrated
equivalent as determined by Dreyfus.
The Acquiring Fund must invest at least 80% of its assets in
investment grade municipal bonds or the unrated equivalent as determined by
Dreyfus. For additional yield, the Acquiring Fund may invest up to 20% of its
assets in municipal bonds rated below investment grade or the unrated equivalent
as determined by Dreyfus.
Municipal bonds are typically of two types:
o General obligation bonds, which are secured by the full
faith and credit of the issuer and its taxing power
o Revenue bonds, which are payable from the revenues derived
from a specific revenue source, such as charges for water
and sewer service or highway tolls
The Series and Acquiring Fund are each required, under ordinary
circumstances, to invest at least 65% of its respective assets in New Jersey
Municipal Obligations.
Each of the Series and Acquiring Fund may engage in various investment
techniques, such as options, borrowing money, and lending portfolio securities.
In addition, the Series may engage - but the Acquiring Fund may not engage - in
short-selling or futures transactions.
For more information on either the Series or Acquiring Fund's
management policies, see "Goal/Approach" in the relevant prospectus.
The Acquiring Fund is incorporated under the laws of the State of
Maryland. The Series is a separate portfolio of the Trust, which is an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts. See "Certain Organizational Differences Between the Acquiring
Fund and the Series" below.
MAIN RISKS The risks associated with an investment in the Acquiring
Fund and Series are substantially similar and include interest rate, income,
credit, market and call risks. As a result, the value of your investment in the
Acquiring Fund, as in the Series, will fluctuate, which means that you could
lose money.
Other risk factors could have an effect on the performance of the
Series and Acquiring Fund:
o New Jersey's economy and revenues underlying municipal bonds may
decline
o Investing primarily in a single state may make the Series' and
the Acquiring Fund's portfolio securities more sensitive to risks
specific to the state
o If the municipal bond market becomes less liquid, typically when
there are many more sellers than buyers for municipal securities,
the value of such securities, particularly those purchased at a
discounted price, and the fund's share price, may fall
dramatically
o The Series and the Acquiring Fund are each non-diversified, which
means that a relatively high percentage of their respective
assets may be invested in a limited number of issuers. Therefore,
their performance may be more vulnerable to changes in the market
value of a single issuer or group of issuers.
The Series may invest up to 30% and the Acquiring Fund may invest up
to 20% of their respective assets in lower-rated, higher-yielding municipal
bonds. The market price and yield of these bonds are more volatile than those of
investment grade municipal bonds. Factors adversely affecting the market price
and yield of these bonds will adversely affect the Series' or Acquiring 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 Series or Acquiring Fund to sell certain of
these bonds or could result in lower prices than those used in calculating the
Series' or Acquiring Fund's net asset value.
Although the objective of the Acquiring Fund and Series is to generate
income exempt from Federal and New Jersey State income taxes, interest from some
of their holdings may be subject to the Federal alternative minimum tax.
The Acquiring Fund and Series, at times, may invest in certain
derivatives, such as options, that may produce taxable income. The Series also
may engage in futures transactions. Derivatives can be illiquid and highly
volatile.
See "Main Risks" in the relevant prospectus for a more complete
description of investment risks.
SALES CHARGES. Shares of the Acquiring Fund are offered at net asset
value without a sales charge (load). An initial sales charge is imposed at the
time of purchase of Class A shares of the Series and a CDSC is imposed at the
time of redemption of Class B and Class C shares of the Series. In addition,
Series Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year after purchase
are subject to a CDSC. The Acquiring Fund charges a 1.00% redemption fee when
shareholders sell shares owned for less than 30 days. See "Account Policies
- -Share Class Charges" and "Account Policies--Buying Shares--Class A Shares" in
the Series' Prospectus for a discussion of the initial sales charges on Class A
shares of the Series and "Account Policies--Selling Shares-Contingent Deferred
Sales Charge" for a discussion of the CDSC imposed on Class B and Class C shares
of the Series. See "Account Policies - Buying Shares" in the Acquiring Fund's
Prospectus for a discussion on buying shares of the Acquiring Fund and
"Redemption Procedures" below for a discussion on the Acquiring Fund's
redemption fee.
FEES AND EXPENSES. The following information concerning fees and
expenses of the Series and Acquiring Fund is derived from information set forth
under the caption "Expenses" in the relevant Prospectus. The fees and expenses
set forth below are for the fiscal year ended April 30, 2000 for the Series and
December 31, 2000 for the Acquiring Fund. The fees and expenses of the Series
were subject to an undertaking by Dreyfus, in effect from July 29, 1999 to April
30, 2000, to reduce its management fee or pay certain other expenses to the
extent the Series' aggregate expenses, excluding 12b-1 distribution fees and
certain other expenses exceeded an annual rate of 0.77% of the Series' average
daily net assets. This undertaking was voluntary and has since been withdrawn by
Dreyfus. The fees and expenses of the Acquiring Fund were subject to an
undertaking by Dreyfus, in effect for the Acquiring Fund's fiscal year ended
December 31, 2000, to reduce its management fee or pay certain other expenses to
the extent the Acquiring Fund's aggregate expenses, exclusive of certain
expenses, exceeded 0.85% of the Acquiring Fund's average daily net assets. This
undertaking is being continued voluntarily by Dreyfus and can be withdrawn by
Dreyfus at any time, after giving Acquiring Fund shareholders 90 days' notice.
The "Pro Forma After Exchange" operating expenses information is based on the
net assets of the Acquiring Fund as of December 31, 2000, as adjusted showing
the effect of the Exchange had it occurred on such date. The Acquiring Fund has
agreed to pay a higher rate of management fee than the Series, but its overall
expense ratio is, and has historically been, lower than that of the Series.
Annual fund operating expenses are paid out of fund assets, so their effect is
reflected in the respective share price.
ANNUAL FUND
OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
(percentage of average daily net assets):
Pro Forma
After
Series Acquiring Exchange
Class A Fund Acquiring Fund
Management fees .55% .60% .60%
Rule 12b-1 fee None .25% .25%
Shareholder services fee .25% None None
Other expenses .52% .10% .10%
Total annual fund operating expenses 1.32% .95% .95%
- -------------------------------------------------------------------------------------------------------------------
Pro Forma
After
Series Acquiring Exchange
Class B Fund Acquiring Fund
Management fees .55% .60% .60%
Rule 12b-1 fee .50% .25% .25%
Shareholder services fee .25% None None
Other expenses .52% .10% .10%
Total annual fund operating expenses 1.82% .95% .95%
- -------------------------------------------------------------------------------------------------------------------
Pro Forma
After
Series Acquiring Exchange
Class C Fund Acquiring Fund
Management fees .55% .60% .60%
Rule 12b-1 fee .75% .25% .25%
Shareholder services fee .25% None None
Other expenses .49% .10% .10%
Total annual fund operating expenses 2.04% .95% .95%
- -------------------------------------------------------------------------------------------------------------------
EXAMPLE
This example shows what you could pay in expenses over time. It uses
the same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses.
Because actual return and expenses will be different, the example is for
comparison only.
Pro Forma
After
Exchange
Series Acquiring Fund Acquiring Fund
Class A Class B Class C
SHARES SHARES* SHARES*
------ ------ ------
1 Year $578 $585/ $185 $307/ $97 $97
$207
3 Years $849 $873/ $573 $640/ $303 $303
$640
5 Years $1,141 $1,185/ $985 $1,098/ $525 $525
$1,098
10 Years $1,969 $1,887**/ $369/ $1,166 $1,166
$1,887** $369
- -------------------------------------------------------------------------------------------------------------------
* With redemption/without redemption.
** Assumes conversion of Class B to Class A at end of sixth year following the
date of purchase.
PAST PERFORMANCE. The bar chart and table below show some of the risks
of investing in the Acquiring Fund. The bar chart shows the changes in the
Acquiring Fund's performance from year to year. The table compares the Acquiring
Fund's average annual total return to that of the Lehman Brothers Municipal Bond
Index, a widely recognized, unmanaged non-New Jersey-specific municipal bond
total return performance benchmark. The chart and table assume reinvestment of
dividends and distributions. For performance information of the Series, see the
Series' Prospectus under the caption of "New Jersey Series -- Past Performance."
Of course, past performance is no guarantee of future results.
ACQUIRING FUND YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
11.95% 8.77% 12.97% -6.02% 15.29% 3.43% 8.84% 5.82% -4.24% 11.37%
-----------------------------------------------------------------------------------
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Best Quarter: Q1 '95 +5.88%
Worst Quarter: Q1 '94 -5.28%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/00
1 Year 5 Years 10 Years
Acquiring Fund 11.37% 4.91% 6.59%
Lehman Brothers Municipal 11.68% 5.84% 7.32%
Bond Index
INVESTMENT ADVISER. The investment adviser for the Acquiring Fund and
Series is Dreyfus, located at 200 Park Avenue, New York, New York 10166. Founded
in 1947, Dreyfus manages more than $154 billion in over 190 mutual fund
portfolios. Dreyfus is the primary mutual fund business of Mellon Financial
Corporation, a global financial services company with approximately $2.8
trillion of assets under management, administration or custody, including
approximately $540 billion under management. Mellon provides wealth management,
global investment services and a comprehensive array of banking services for
individuals, businesses and institutions. Mellon is headquartered in Pittsburgh,
Pennsylvania.
PRIMARY PORTFOLIO MANAGER. The primary portfolio manager for the
Series and Acquiring Fund is W. Michael Petty; he has held each position since
August 1997, and has been employed by Dreyfus since June 1997. Prior to joining
Dreyfus, Mr. Petty was vice president and portfolio manager of municipal bond
funds at Merrill Lynch Asset Management, Inc. since 1992.
BOARD MEMBERS. Other than Joseph S. DiMartino, who is Chairman of the
Board of the Acquiring Fund and Trust, the Acquiring Fund and Trust have
different Board members. For a description of the Board members, see the
relevant Statement of Additional Information under the caption "Management of
the Fund."
CAPITALIZATION. The Acquiring Fund is authorized to issue one class of
shares. The Series shares are classified into three classes--Class A, Class B
and Class C. The following table sets forth, as of December 31, 2000, (1) the
capitalization of each class of the Series' shares, (2) the capitalization of
the Acquiring Fund's shares and (3) the pro forma capitalization of the
Acquiring Fund's shares, as adjusted showing the effect of the Exchange had it
occurred on such date.
Pro Forma
After
Series Series Series Acquiring Fund Exchange
Class A Class B Class C Acquiring Fund
Total net assets $6,031,829 $7,661,836 $473,384 $522,759,048 $536,926,097
Net asset value per
share $12.41 $12.40 $12.42 $12.86 $12.86
Shares outstanding
486,066 617,656 38,104 40,650,458 41,751,878
- -------------------------------------------------------------------------------------------------------------------
As of December 31, 2000, the Series had aggregate total net assets of
approximately $14,167,049.
PURCHASE PROCEDURES. The purchase procedures of the Series and
Acquiring Fund are substantially similar, but differ in that the Series shares
are primarily offered to persons investing through a third party, such as a
bank, broker-dealer or financial adviser. Each share class of the Series has its
own fee structure. See "Sales Charges" above and "Account Policies - Buying
Shares" in the Series' Prospectus for a description of the sales charges and
CDSCs imposed on Series shares. The Acquiring Fund's shares are offered to the
public at net asset value per share. See "Account Policies - Buying Shares" in
the Acquiring Fund's Prospectus.
RULE 12B-1 PLAN. Class B shares and Class C shares of the Series are
subject to a Rule 12b-1 plan in which the Series pays the distributor to finance
the sale and distribution of Class B and Class C shares at the annual rate of
0.50% and 0.75% of the average daily net assets of Class B and Class C,
respectively. Class A shares of the Series are not subject to a Rule 12b-1 plan,
but, together with Class B and Class C shares, are subject to a Shareholder
Services Plan described below. The Acquiring Fund also has adopted a Rule 12b-1
plan in which the Acquiring Fund pays an annual fee to the distributor for
distributing the Acquiring Fund shares, servicing shareholder accounts and
advertising and marketing relating to the Acquiring Fund at the annual rate of
0.25% of the Acquiring Fund's average daily net assets. Because this fee is paid
on an ongoing basis out of the assets attributable to Class B and Class C of the
Series and Acquiring Fund shares, over time it increases the cost of an
investment in such shares and may cost investors more than paying other types of
sales charges. See "Distribution Plan and Shareholder Services
Plan--Distribution Plan" in the Series' Statement of Additional Information for
a discussion of the Series' Rule 12b-1 plan, with respect to Class B and C
shares, and "Service Plan" in the Acquiring Fund's Statement of Additional
Information for a discussion of the Acquiring Fund's Rule 12b-1 plan.
SHAREHOLDER SERVICES PLAN. Class A shares, Class B shares and Class C
shares of the Series are subject to a Shareholder Services Plan, pursuant to
which the Series pays the distributor an annual fee of 0.25% of the Series'
average daily net assets for providing personal services and/or maintaining
shareholder accounts. The Acquiring Fund has not adopted a Shareholder Services
Plan, but has adopted a Rule 12b-1 plan described above. See "Distribution Plan
and Shareholder Services Plan--Shareholder Services Plan" in the Series'
Statement of Additional Information for a discussion of its Shareholder Services
Plan.
REDEMPTION PROCEDURES. The redemption procedures of the Series and
Acquiring Fund are substantially similar, but differ in that the Acquiring Fund
currently charges a 1.00% redemption fee on shares sold within 30 days of their
purchase. This redemption fee is deducted from the proceeds of such redemptions
and retained by the Acquiring Fund. The redemption fee is not charged upon the
redemption of shares purchased through omnibus accounts, nor is it used to pay
fees imposed for various Acquiring Fund services. This redemption fee will apply
to Acquiring Fund shares distributed to Series shareholders as a result of the
Reorganization (excluding omnibus accounts), but the 30 day period will be
reduced by the number of days such shareholders have held their Series shares.
Other than the CDSCs discussed above, the Series does not impose any charge or
fee upon redemption of shares. In addition, the Series does not offer the wire
redemption privilege described below.
DISTRIBUTIONS. The dividend and distributions policies of the Series
and Acquiring Fund are identical. See "Distributions and Taxes" in the relevant
Prospectus for a discussion of such policies.
SHAREHOLDER SERVICES. The shareholder services offered by the Series
and Acquiring Fund are substantially similar, with the following exceptions:
o CHECKWRITING PRIVILEGE - The Series only offers the checkwriting
privilege to investors in Class A shares, whereas the Acquiring
Fund offers the checkwriting privilege to all investors. If you
presently have the checkwriting privilege as a Series Class A
investor, upon becoming an Acquiring Fund shareholder as a result
of the Exchange, you will automatically have the checkwriting
privilege. If you presently do not have the checkwriting
privilege but would like to have it after the Exchange occurs,
you will need to fill out a separate signed Shareholder Services
Form once the new account in the Acquiring Fund has been
established.
o WIRE REDEMPTION PRIVILEGE - The Series does not offer the Wire
Redemption Privilege, whereas the Acquiring Fund does. The Wire
Redemption Privilege allows a shareholder of the Acquiring Fund
to have redemption proceeds transferred by Federal Reserve wire
to a commercial bank account specified on the account application
or Shareholder Services Form, or to a correspondent bank if the
shareholder's bank is not a member of the Federal Reserve System.
This privilege will not be established automatically after the
Exchange. If you would like to have it after the Exchange occurs,
you will need to fill out a separate Shareholder Services Form
once the new account in the Acquiring Fund has been established.
See "How to Redeem Shares - Wire Redemption Privilege" in the
Acquiring Fund's Statement of Additional Information for further
details about this privilege.
See "Services for Fund Investors" in the Series Prospectus or Acquiring Fund
Prospectus, respectively, for a further discussion of the shareholder services
offered.
CERTAIN ORGANIZATIONAL DIFFERENCES BETWEEN THE ACQUIRING FUND AND
SERIES. The Series is a series of the Trust which is a Massachusetts business
trust, and the rights of its shareholders are governed by the Trust's Agreement
and Declaration of Trust (the "Trust Agreement"), and Bylaws and applicable
Massachusetts law. The Acquiring Fund is a Maryland corporation, and the rights
of its shareholders are governed by its Articles of Incorporation (the
"Charter"), Bylaws and the Maryland General Corporation Law (the "Maryland
Code"). Certain relevant differences between the two forms of organization are
summarized below.
SHAREHOLDER MEETINGS AND VOTING RIGHTS. Generally, neither the
Acquiring Fund nor Series is required to hold annual meetings of its
shareholders. The relevant Board is required to call a special meeting of
shareholders for the purpose of removing a Board member when requested in
writing to do so by the holders of at least 10% of its outstanding shares
entitled to vote. Moreover, the Board will call a meeting of shareholders for
the purpose of electing Board members if any time less than a majority of the
Board members then holding office have been elected by the shareholders.
Shares of the Trust and Acquiring Fund are entitled to one vote for
each full share held and a proportionate fractional vote for each fractional
share held. On any matter submitted to a vote of shareholders, all shares of the
Trust and Acquiring Fund then entitled to vote will be voted in the aggregate as
a single class. The Trust Agreement provides that 30% of the shares entitled to
vote shall constitute a quorum for the transaction of business at a
shareholders' meeting. The Aquiring Fund's Charter provides that 33 1/3% of the
shares entitled to vote shall constitute a quorum for the transaction of
business at a stockholders meeting. Matters requiring a larger vote by law or
under the organizational documents for the Trust or Acquiring Fund are not
affected by such quorum requirements.
SHAREHOLDER LIABILITY. Under Maryland law, Acquiring Fund stockholders
have no personal liability as such for the Fund's acts or obligations.
Under Massachusetts law, shareholders of a Massachusetts business
trust, under certain circumstances, could be held personally liable for the
obligations of the business trust. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Series and requires that
notice of such disclaimer be given in every note, bond, contract or other
undertaking issued or entered into by or on behalf of the Series, or the Trust's
Trustees. The Trust Agreement provides for indemnification out of the Series'
property of all losses and expenses of any shareholder held personally liable
for the obligations of the Series solely by reason of his being or having been a
Series shareholder and not because of his acts or omissions or some other
reason. Thus, the Trust considers the risk of a Series shareholder incurring
financial loss on account of shareholder liability to be remote since it is
limited to circumstances in which a disclaimer is inoperative or the Series
itself would be unable to meet is obligations. The Trust Agreement also provides
that the Trust, upon request, will assume the defense of any claim made against
any shareholder for any act or obligation of the Series and satisfy any judgment
thereon.
LIABILITY AND INDEMNIFICATION OF BOARD MEMBERS. Under the Acquiring
Fund's Charter and By-Laws and Maryland law, subject to the 1940 Act, a Director
or officer of the Acquiring Fund is not liable to the Fund or its stockholders
for monetary damages except to the extent he or she receives an improper
personal benefit or his or her action or failure to act was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated.
In addition, a Director is entitled to indemnification against judgments,
penalties, fines, settlements and reasonable expenses unless his act or omission
was material to the cause of action and was committed in bad faith or was the
result of active and deliberate dishonesty or the individual received an
improper personal benefit (or, in a criminal case, had reasonable cause to
believe that his act or omission was unlawful). Indemnification may be made
against amounts recovered by settlement of suits brought by or in the right of
the Acquiring Fund except where the individual is adjudged liable to the
Acquiring Fund. The termination of a civil proceeding by judgment, order or
settlement does not create a presumption that the requisite standard of conduct
was not met. A Director or officer is entitled to advances of expenses in the
course of litigation if (i) such Director or officer undertakes to repay such
sums if indemnification is ultimately denied and provides acceptable security,
(ii) the Acquiring Fund is insured against losses arising from the advances, or
(iii) the disinterested non-party directors or independent legal counsel
determine there is a reason to believe the Director or officer ultimately will
be found to be entitled to indemnification. Officers, employees and agents may
be indemnified to the same extent as Directors and to such further extent as is
consistent with law.
If these provisions of Maryland law are amended, the Directors and
officers will be entitled to limited liability and to indemnification to the
fullest extent of Maryland law as amended. No amendment or repeal of the
provisions of the Charter relating to limited liability and indemnification will
apply to any event, omission or proceeding which precedes the amendment or
repeal.
Under the Trust's Trust Agreement and By-Laws, subject to the 1940
Act, a Trustee is entitled to indemnification against all liability and expenses
reasonably incurred by him in connection with the defense or disposition of any
threatened or actual proceeding by reason of his being or having been a Trustee,
unless such Trustee is adjudicated to have acted with bad faith, willful
misfeasance, gross negligence or in reckless disregard of his duties. Officers,
employees and agents of the Series may be indemnified to the same extent as
Trustees.
Under the 1940 Act, a director or trustee may not be protected against
liability to a fund and its security holders to which he or she would otherwise
be subject as a result of his or her willful misfeasance, bad faith or gross
negligence in the performance of his or her duties, or by reason of reckless
disregard of his or her obligations and duties.
* * * * * * * * *
The foregoing is only a summary of certain differences between the
Acquiring Fund, the Acquiring Fund's Charter, By-Laws and Maryland law, and the
Series, the Trust's Trust Agreement, By-Laws and Massachusetts law. It is not a
complete list of differences, but only of material differences. Shareholders
desiring copies of the Acquiring Fund's Charter and By-Laws or the Trust's Trust
Agreement and By-Laws should write to the relevant fund at 200 Park Avenue, New
York, New York 10166, Attention: Legal Department.
REASONS FOR THE EXCHANGE
The Boards of Trustees of the Trust and the Acquiring Fund have
concluded that the Exchange is in the best interests of the respective
shareholders of the Series and Acquiring Fund. The Trust's Board believes that
the Exchange will permit Series shareholders to pursue substantially similar
investment goals in a larger fund without diluting shareholders' interests. The
Series has been unable to attract sufficient assets to operate efficiently as a
separate series of the Trust without significant expense subsidization which
Dreyfus discontinued after April 30, 2000. As of December 31, 2000, the Series
had assets under management of approximately $14,167,049. The expense ratio of
the Acquiring Fund is lower than that of each class of the Series. By combining
the Series with the Acquiring Fund, which has larger aggregate net assets,
Series shareholders should obtain the benefits of economies of scale, which may
result in a lower overall expense ratio (as compared to the expense ratio of the
Series) through the spreading of fixed costs of fund operations over a larger
asset base.
In determining whether to recommend approval of the Exchange, each
Board considered the following factors, among others: (1) the compatibility of
the Series' and the Acquiring Fund's investment objective, management policies
and investment restrictions, as well as shareholder services offered by the
Series and Acquiring Fund; (2) the terms and conditions of the Exchange and
whether the Exchange would result in dilution of shareholder interests; (3)
expense ratios and information regarding the fees and expenses of the Series and
Acquiring Fund, as well as the expense ratios of similar funds and the estimated
expense ratio of the combined fund; (4) the tax consequences of the Exchange;
and (5) the estimated costs to be incurred by the Series and the Acquiring Fund
as a result of the Exchange. The Board noted that although the rate of
management fee payable to Dreyfus by the Acquiring Fund was higher than that
payable by the Series, the overall expense ratio of the Acquiring Fund is, and
has historically been, lower than that of the Series. In addition, the Trust's
Board considered the Series' inability to attract sufficient assets to operate
efficiently without significant expense subsidization and Dreyfus's
discontinuation of such subsidization.
INFORMATION ABOUT THE EXCHANGE
PLAN OF EXCHANGE. The following summary of the Plan is qualified in
its entirety by reference to the form of Plan attached to this Prospectus/Proxy
Statement as Exhibit A. The Plan provides that the Acquiring Fund will acquire
all of the assets of the Series in exchange for Acquiring Fund shares and the
assumption by the Acquiring Fund of the Series' stated liabilities on May 9,
2001 or such later date as may be agreed upon by the parties (the "Closing
Date"). The number of Acquiring Fund shares to be issued to the Series will be
determined on the basis of the relative net asset values per share and aggregate
net assets of the Acquiring Fund and the Series, computed on the Closing Date as
of the close of trading on the floor of the New York Stock Exchange (currently
at 4:00 p.m., New York time). Portfolio securities of the Series and the
Acquiring Fund will be valued in accordance with the valuation practices of the
Acquiring Fund, which are described under the caption "Account Policies-Buying
Shares" in the Acquiring Fund Prospectus and under the caption "Determination of
Net Asset Value" in the Acquiring Fund Statement of Additional Information.
Prior to the Closing Date, the Series will declare a dividend or
dividends which, together with all previous such dividends, will have the effect
of distributing to Series' shareholders all of the Series' previously
undistributed investment company taxable income, if any, for the fiscal period
ending on or prior to the Closing Date (computed without regard to any deduction
for dividends paid), its net exempt interest income for the fiscal period ending
on or prior to the Closing Date, and all of its previously undistributed net
capital gain realized in the fiscal period ending on or prior to the Closing
Date (after reduction for any capital loss carry forward).
As conveniently as practicable after the Closing Date, the Series will
liquidate and distribute pro rata to its Class A, Class B and Class C
shareholders of record, as of the close of business on the Closing Date,
Acquiring Fund shares received by it in the Exchange. Such liquidation and
distribution will be accomplished by establishing accounts on the share records
of the Acquiring Fund in the name of each Series shareholder, each account
representing the respective pro rata number of Acquiring Fund shares due to the
shareholder. After such distribution, the Series will be terminated as a series
of the Trust. After the Closing Date, any outstanding certificates representing
Series shares will represent Acquiring Fund shares distributed to the record
holders of the Series. Upon presentation to the transfer agent of the Acquiring
Fund, Series share certificates will be exchanged for appropriate Acquiring Fund
share certificates. Certificates for Acquiring Fund shares will be issued only
upon the investor's written request.
The Plan may be amended at any time prior to the Closing Date. The
Trust will provide Series shareholders with information describing any material
amendment to the Plan prior to shareholder consideration. The obligations of the
Series and Acquiring Fund under the Plan are subject to various conditions,
including approval by Series shareholders holding the requisite number of Series
shares and the continuing accuracy of various representations and warranties of
the Series and the Acquiring Fund being confirmed by the respective parties.
The total expenses of the Exchange are expected to be approximately
$40,000, which will be borne pro rata according to the aggregate net assets of
the Acquiring Fund and Series on the date of the Exchange.
If the Exchange is not approved by Series shareholders, the Trust's
Board will consider other appropriate courses of action, including liquidating
the Series.
TEMPORARY SUSPENSION OF CERTAIN OF THE SERIES' INVESTMENT
RESTRICTIONS. Since certain of the Series' existing investment restrictions
could preclude the Series from consummating the Exchange in the manner
contemplated in the Plan, Series shareholders are requested to authorize the
temporary suspension of certain investment restrictions which restrict the
Series' ability to (i) purchase securities other than municipal obligations and
taxable investments (as defined in the Series' Statement of Additional
Information) and (ii) invest more than 25% of its total assets in the securities
of issuers in any single industry, as well as the temporary suspension of any
other investment restriction of the Series to the extent necessary to permit the
consummation of the Exchange. The temporary suspension of the Series' investment
restrictions will not affect the investment restrictions of the Acquiring Fund.
A vote in favor of the Proposal is deemed to be a vote in favor of the temporary
suspension.
FEDERAL INCOME TAX CONSEQUENCES. The exchange of the Series' assets
for Acquiring Fund shares is intended to qualify for Federal income tax purposes
as a tax-free reorganization under Section 368(a) of the Code. As a condition to
the closing of the Exchange, the Acquiring Fund and Series will receive the
opinion of Stroock & Stroock & Lavan LLP, counsel to the Acquiring Fund and the
Series, to the effect that, on the basis of the existing provisions of the Code,
Treasury regulations issued thereunder, current administrative regulations and
pronouncements and court decisions, and certain facts, assumptions and
representations, for Federal income tax purposes: (1) the transfer of all of the
Series' assets in exchange for Acquiring Fund shares and the assumption by the
Acquiring Fund of the Series' liabilities will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code with respect to the
Series; (2) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the Series' assets solely in exchange for Acquiring Fund shares and
the assumption by the Acquiring Fund of liabilities of the Series; (3) no gain
or loss will be recognized by the Series upon the transfer of its assets to the
Acquiring Fund in exchange for Acquiring Fund shares and the assumption by the
Acquiring Fund of the Series' liabilities or upon the distribution (whether
actual or constructive) of Acquiring Fund shares to Series shareholders in
exchange for their Series shares; (4) no gain or loss will be recognized by
Series shareholders upon the exchange of Series shares for Acquiring Fund
Shares; (5) the aggregate tax basis for Acquiring Fund shares received by each
Series shareholder pursuant to the Exchange will be the same as the aggregate
tax basis for Series shares held by such shareholder immediately prior to the
Exchange, and the holding period of Acquiring Fund shares to be received by
Series shareholder will include the period during which Series shares
surrendered in exchange therefor were held by such shareholder (provided Series
shares were held as capital assets on the date of the Exchange); and (6) the tax
basis of Series assets acquired by the Acquiring Fund will be the same as the
tax basis of such assets to the Series immediately prior to the Exchange, and
the holding period of Series assets in the hands of the Acquiring Fund will
include the period during which those assets were held by the Series.
NEITHER THE SERIES NOR THE ACQUIRING FUND HAS SOUGHT A TAX RULING FROM
THE INTERNAL REVENUE SERVICE ("IRS"). THE OPINION OF COUNSEL IS NOT BINDING ON
THE IRS NOR DOES IT PRECLUDE THE IRS FROM ADOPTING A CONTRARY POSITION. Series
shareholders should consult their tax advisers regarding the effect, if any, of
the proposed Exchange in light of their individual circumstances. Since the
foregoing discussion relates only to the Federal income tax consequences of the
Exchange, Series shareholders also should consult their tax advisers as to state
and local tax consequences, if any, of the Exchange.
REQUIRED VOTE AND BOARD'S RECOMMENDATION
The Trust's Board has approved the Plan and the Exchange and has
determined that (i) participation in the Exchange is in the best interests of
the Series and its shareholders and (ii) the interests of shareholders of the
Series will not be diluted as a result of the Exchange. The affirmative vote of
a majority of the Series' shares outstanding and entitled to vote is required to
approve the Plan and the Exchange.
THE TRUST'S BOARD, INCLUDING THE "NON-INTERESTED"
BOARD MEMBERS, RECOMMENDS THAT THE SERIES'
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PLAN
AND THE EXCHANGE.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND AND THE SERIES
Information about the Acquiring Fund is incorporated by reference into
this Prospectus/Proxy Statement from the Acquiring Fund Prospectus forming a
part of its Registration Statement on Form N-1A (File No. 33-19655). Information
about the Series is incorporated by reference into this Prospectus/Proxy
Statement from the Series' Prospectus forming a part of the Trust's Registration
Statement on Form N-1A (File No. 33-10238).
The Acquiring Fund and Series are subject to the requirements of the
1940 Act, and file reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the
Acquiring Fund or Series may be inspected and copied at the Public Reference
Facilities of the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the Northeast regional office of the Commission at 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material also
can be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates.
VOTING INFORMATION
In addition to the use of the mails, proxies may be solicited
personally or by telephone, and the Series may pay persons holding Series shares
in their names or those of their nominees for their expenses in sending
soliciting materials to their principals. Authorizations to execute proxies may
be obtained by telephonic or electronically transmitted instructions in
accordance with procedures designed to authenticate the shareholder's identity.
In all cases where a telephonic proxy is solicited, the shareholder will be
asked to provide his or her address, social security number (in the case of an
individual) or taxpayer identification number (in the case of a non-individual)
and the number of shares owned and to confirm that the shareholder has received
the Prospectus/Proxy Statement and proxy card in the mail. Within 72 hours of
receiving a shareholder's telephonic or electronically transmitted voting
instructions, a confirmation will be sent to the shareholder to ensure that the
vote has been taken in accordance with the shareholder's instructions and to
provide a telephone number to call immediately if the shareholder's instructions
are not correctly reflected in the confirmation. Any shareholder giving a proxy
may revoke it at any time before it is exercised by submitting to the Series a
written notice of revocation or a subsequently executed proxy or by attending
the Meeting and voting in person.
If a proxy is properly executed and returned accompanied by
instructions to withhold authority to vote, represents a broker "non-vote" (that
is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
Series shares on a particular matter with respect to which the broker or nominee
does not have discretionary power) or is marked with an abstention
(collectively, "abstentions"), the Series shares represented thereby will be
considered to be present at a Meeting for purposes of determining the existence
of a quorum for the transaction of business. Abstentions will have the effect of
a "no" vote for the purpose of obtaining requisite approval for the Proposal.
If a quorum is not present at the Meeting, or if a quorum is present
but sufficient votes to approve the Proposal are not received, the persons named
as proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the nature of the Proposal, the percentage
of votes actually cast, the percentage of negative votes actually cast, the
nature of any further solicitation and the information to be provided to Series
shareholders with respect to the reasons for the solicitation. Any adjournment
will require the affirmative vote of a majority of those shares affected by the
adjournment that are represented at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote "FOR" the Proposal in favor of such adjournment, and
will vote those proxies required to be voted "AGAINST" the Proposal against any
adjournment. A quorum is constituted with respect to the Series by the presence
in person or by proxy of the holders of more than 30% of the outstanding Series
shares entitled to vote at the Meeting.
The votes of the Acquiring Fund's shareholders are not being solicited
since their approval or consent is not necessary for the Exchange.
As of January, 18, 2001, the following were known by the Trust to own
of record 5% or more of the outstanding voting shares of the indicated Class of
the Series:
NAME AND ADDRESS PERCENTAGE OUTSTANDING
Before Exchange After Exchange
Series Shares Acquiring Fund Shares
CLASS A 6.2442% .0697%
- -------
J.J.B. Hilliard, W.L.L. Lyons, Inc. Class A Shares Shares
Bernard Stern & Rhoda Stern
501 S. 4th Street
Louisville, KY 40202
CLASS B 14.6885% .2148%
- -------
Merrill Lynch Pierce Fenner & Smith, Inc. Class B Shares Shares
For the sole benefit of its customers
Attn: Fund Administration
4800 Deer Lake East Floor 3
Jacksonville, FL 32246
CLASS C 34.0655% .0301%
- -------
PaineWebber for the benefit of Class C Shares Shares
Richard Salzman Trustee
Salzman Retained Annuity
U/A/D -03/20/91
1000 Floral Avenue N
Union, NJ 07083
Merrill Lynch Pierce Fenner & Smith, Inc. 30.5196% .0270%
For the sole benefit of its customers Class C Shares Shares
Attn: Fund Administration
4800 Deer Lake East Floor 3
Jacksonville, FL 32246
PaineWebber for the benefit of 28.8067% .0255%
Eleanor Beaumont Class C Shares Shares
119 Blackburn Road
Summit, NJ 07901
As of January 18, 2001, no shareholders were known by the Acquiring
Fund to own of record 5% or more of the outstanding voting shares of the
Acquiring Fund.
As of January 18, 2001, Directors and officers of the Acquiring Fund,
as a group, owned less than 1% of the Acquiring Fund's outstanding shares. As of
January 18, 2001, Trustees and officers of the Trust, as a group, owned less
than 1% of the Series' outstanding shares.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of the Series for the fiscal year
ended April 30, 2000 and the audited financial statements of the Acquiring Fund
for the fiscal year ended December 31, 2000, have been incorporated in this
Prospectus/Proxy Statement by reference in reliance upon the authority of the
reports given by Ernst & Young LLP, the Acquiring Fund's and Series' independent
auditors, as experts in accounting and auditing. In addition, the unaudited
financial statements of the Series for the semi-annual period ended October 31,
2000 also have been incorporated herein by reference.
OTHER MATTERS
The Trust's Trustees are not aware of any other matters which may come
before the Meeting. However, should any such matters properly come before the
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the Trust, in care of Dreyfus Transfer, Inc., Attention:
Dreyfus Premier State Municipal Bond Fund, P.O. Box 9671, Providence, Rhode
Island 02940-9671, whether other persons are the beneficial owners of Series
shares for which proxies are being solicited from you, and, if so, the number of
copies of the Prospectus/Proxy Statement and other soliciting material you wish
to receive in order to supply copies to the beneficial owners of Series shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE.
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated January 23, 2001 (the
"Agreement"), between DREYFUS PREMIER STATE MUNICIPAL BOND FUND (the "Trust"), a
Massachusetts business trust, on behalf of its NEW JERSEY SERIES (the "Series"),
and DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC. (the "Acquiring Fund"), a
Maryland corporation.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Series in exchange solely for shares of common stock, par value
$.001 per share, of the Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by the Acquiring Fund of certain liabilities of the Series and the
distribution, after the Closing Date hereinafter referred to, of the Acquiring
Fund Shares to the shareholders of the Series in liquidation of the Series as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Series is a non-diversified series of the Trust, a
registered open-end management investment company, and the Acquiring Fund is a
registered, non-diversified, open-end management investment company, and the
Series owns securities which are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, both the Acquiring Fund and the Series are authorized to
issue their respective shares of common stock and beneficial interest;
WHEREAS, the Board of the Acquiring Fund has determined that the
exchange of all of the assets of the Series and certain liabilities of the
Series for Acquiring Fund Shares and the assumption of such liabilities is in
the best interests of the Acquiring Fund's shareholders and that the interests
of the Acquiring Fund's existing shareholders would not be diluted as a result
of this transaction; and
WHEREAS, the Board of the Trust has determined that the exchange of
all of the assets and certain of the liabilities of the Series for Acquiring
Fund Shares and the assumption of such liabilities is in the best interests of
the Series' shareholders and that the interests of the Series' existing
shareholders would not be diluted as a result of this transaction:
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE SERIES IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF SERIES LIABILITIES AND LIQUIDATION
OF THE SERIES.
1.1 Subject to the terms and conditions contained herein, the Series
agrees to assign, transfer and convey to the Acquiring Fund all of the assets of
the Series, including all securities and cash (subject to liabilities), and the
Acquiring Fund agrees in exchange therefor (i) to deliver to the Series the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
determined as set forth in paragraph 2.3; and (ii) to assume certain liabilities
of the Series, as set forth in paragraph 1.2. Such transactions shall take place
at the closing (the "Closing") on the closing date (the "Closing Date") provided
for in paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund
Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the Series'
account on the books of the Acquiring Fund and shall deliver a confirmation
thereof to the Series.
1.2 The Series will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date. The Acquiring Fund shall assume all
liabilities, expenses, costs, charges and reserves reflected on an unaudited
statement of assets and liabilities of the Series prepared by The Dreyfus
Corporation, as of the Valuation Date (as defined in paragraph 2.1), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. The Acquiring Fund shall assume only those
liabilities of the Series reflected in that unaudited statement of assets and
liabilities and shall not assume any other liabilities, whether absolute or
contingent.
1.3 Delivery of the assets of the Series to be transferred shall be
made on the Closing Date and shall be delivered to The Bank of New York, 100
Church Street, New York, New York 10286, the Acquiring Fund's custodian (the
"Custodian"), for the account of the Acquiring Fund, with all securities not in
bearer or book-entry form duly endorsed, or accompanied by duly executed
separate assignments or stock powers, in proper form for transfer, with
signatures guaranteed, and with all necessary stock transfer stamps, sufficient
to transfer good and marketable title thereto (including all accrued interest
and dividends and rights pertaining thereto) to the Custodian for the account of
the Acquiring Fund free and clear of all liens, encumbrances, rights,
restrictions and claims. All cash delivered shall be in the form of immediately
available funds payable to the order of the Custodian for the account of the
Acquiring Fund.
1.4 The Series will pay or cause to be paid to the Acquiring Fund any
interest received on or after the Closing Date with respect to assets
transferred to the Acquiring Fund hereunder. The Series will transfer to the
Acquiring Fund any distributions, rights or other assets received by the Series
after the Closing Date as distributions on or with respect to the securities
transferred. Such assets shall be deemed included in assets transferred to the
Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Series will liquidate and distribute pro rata to the
Series' Class A, Class B and Class C shareholders of record, determined as of
the close of business on the Closing Date (the "Series Shareholders"), Acquiring
Fund Shares received by the Series pursuant to paragraph 1.1. Such liquidation
and distribution will be accomplished by the transfer of the applicable
Acquiring Fund Shares then credited to the account of the Series on the books of
the Acquiring Fund to open accounts on the share records of the Acquiring Fund
in the names of the Series Shareholders and representing the respective pro rata
number of the applicable Acquiring Fund Shares due such shareholders. All issued
and outstanding shares of the Series simultaneously will be canceled on the
books of the Series.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued
in the manner described in the Acquiring Fund's current prospectus and statement
of additional information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquiring Fund shares
on the books of the Series as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.
1.8 Any reporting responsibility of the Series is and shall remain the
responsibility of the Series up to and including the Closing Date and such later
date on which the Series' existence is terminated.
2. VALUATION.
2.1 The value of the Series' assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as of the close of
trading on the floor of the New York Stock Exchange (currently, 4:00 p.m., New
York time), except that options and futures contracts will be valued 15 minutes
after the close of trading on the floor of the New York Stock Exchange, on the
Closing Date (such time and date being hereinafter called the "Valuation Date"),
using the valuation procedures set forth in the Acquiring Fund's Articles of
Incorporation, as amended (the "Charter") and then-current prospectus or
statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net
asset value per share computed as of the Valuation Date, using the valuation
procedures set forth in the Acquiring Fund's Charter and then-current prospectus
or statement of additional information.
2.3 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Series' net assets shall be
determined by dividing the value of the net assets attributable to each Class of
the Series determined using the same valuation procedures referred to in
paragraph 2.1 by the net asset value of one Acquiring Fund Share determined in
accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the
regular practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be May 9, 2001, or such later date as the
parties may mutually agree. All acts taking place at the Closing shall be deemed
to take place simultaneously as of the close of business on the Closing Date
unless otherwise provided. The Closing shall be held at 10:00 a.m., New York
time, at the offices of The Dreyfus Corporation, 200 Park Avenue, New York, New
York, or such other time and/or place as the parties may mutually agree.
3.2 The Custodian shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Series' portfolio securities, cash and
any other assets have been delivered in proper form to the Acquiring Fund within
two business days prior to or on the Closing Date; and (b) all necessary taxes
including all applicable stock transfer stamps have been paid, or provision for
payment shall have been made, in conjunction with the delivery of portfolio
securities.
3.3 If on the Valuation Date (a) the New York Stock Exchange or
another primary trading market for portfolio securities of the Acquiring Fund or
the Series shall be closed to trading or trading thereon shall be restricted, or
(b) trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Series is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.4 The transfer agent for the Series shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of the Series Shareholders and the number and percentage ownership
of outstanding Class A, Class B and Class C Series shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Trust, or provide evidence satisfactory
to the Series that such Acquiring Fund Shares have been credited to the Series'
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, receipts or other
documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust, on behalf of the Series, represents and warrants to the
Acquiring Fund as follows:
(a) The Series is a series of the Trust, a business trust duly
organized and validly existing under the laws of The Commonwealth of
Massachusetts, and has power to own all of its properties and assets and to
carry out its obligations under this Agreement.
(b) The Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, management investment company, of
which the Series is a duly established and designated separate, non-diversified
series, and such registration has not been revoked or rescinded and is in full
force and effect.
(c) The Series is not, and the execution, delivery and performance of
this Agreement will not result, in material violation of the Trust's Agreement
and Declaration of Trust, as amended (the "Trust Agreement"), or Bylaws or of
any agreement, indenture, instrument, contract, lease or other undertaking to
which the Trust, on behalf of the Series, is a party or by which the Series is
bound.
(d) The Series has no material contracts or other commitments
outstanding (other than this Agreement) which will be terminated with liability
to it on or prior to the Closing Date.
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to its knowledge
threatened against the Series or any of its properties or assets which, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Series knows of no facts which
might form the basis for the institution of such proceedings, and is not a party
to or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated.
(f) The Statements of Assets and Liabilities of the Series for the
three fiscal years ended April 30, 2000, the nine month period ended April 30,
1997, and the two fiscal years ended July 31, 1996 have been audited by Ernst &
Young LLP, independent auditors, and are in accordance with generally accepted
accounting principles, consistently applied, and such statements (copies of
which have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Series as of such dates, and there are no known contingent
liabilities of the Series as of such dates not disclosed therein.
(g) Since April 30, 2000, there has not been any material adverse
change in the Series' financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or any incurrence by
the Series of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed on the statement of assets and
liabilities referred to in Section 1.2 hereof.
(h) At the Closing Date, all Federal and other tax returns and reports
of the Series required by law to have been filed by such dates shall have been
filed, and all Federal and other taxes shall have been paid so far as due, or
provision shall have been made for the payment thereof, and to the best of the
Trust's knowledge no such return is currently under audit and no assessment has
been asserted with respect to such returns.
(i) For each fiscal year of its operation, the Series has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company.
(j) All issued and outstanding shares of the Series are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Series. All of the issued and outstanding shares of the
Series will, at the time of Closing, be held by the persons and in the amounts
set forth in the records of the transfer agent as provided in paragraph 3.4. The
Series does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Series shares, nor is there outstanding any
security convertible into any of the Series shares.
(k) On the Closing Date, the Series will have full right, power and
authority to sell, assign, transfer and deliver the assets to be transferred by
it hereunder.
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Trust's Board and, subject to the approval of shareholders of
the Series, this Agreement will constitute the valid and legally binding
obligation of the Series, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and to general principles of
equity and the discretion of the court (regardless of whether the enforceability
is considered in a proceeding in equity or at law).
(m) The proxy statement of the Series (the "Proxy Statement") included
in the Registration Statement referred to in paragraph 5.5 (other than
information therein that has been furnished by the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any 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, in
light of the circumstances under which such statements were made, not materially
misleading.
4.2 The Acquiring Fund represents and warrants as follows:
(a) The Acquiring Fund is a corporation duly organized and validly
existing under the laws of the State of Maryland and has power to carry on its
business as it is now being conducted and to carry out its obligations under
this Agreement.
(b) The Acquiring Fund is registered under the 1940 Act as an
open-end, diversified management investment company, and such registration has
not been revoked or rescinded and is in full force and effect.
(c) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act and the rules and regulations of the Securities and Exchange Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of the
Acquiring Fund's Charter or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Acquiring Fund is a party or
by which it is bound.
(e) No litigation or administrative proceeding or investigation of or
before any court or governmental body is currently pending or to its knowledge
threatened against the Acquiring Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Acquiring Fund knows of no facts
which might form the basis for the institution of such proceedings, and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions contemplated herein.
(f) The Statements of Assets and Liabilities of the Acquiring Fund for
the five fiscal years ended December 31, 2000 have been audited by Ernst & Young
LLP, independent auditors, and are in accordance with generally accepted
accounting principles, consistently applied, and such statements (copies of
which have been furnished to the Series) fairly reflect the financial condition
of the Acquiring Fund as of such dates.
(g) Since December 31, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as disclosed on the
statement of assets and liabilities referred to in Section 4.2(f) hereof.
(h) At the Closing Date, all Federal and other tax returns and reports
of the Acquiring Fund required by law then to be filed shall have been filed,
and all Federal and other taxes shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof.
(i) For each fiscal year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action, if
any, on the part of the Acquiring Fund's Board and shareholders, and this
Agreement will constitute the valid and legally binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and to general principles of equity and
the discretion of the court (regardless of whether the enforceability is
considered in a proceeding in equity or at law).
(l) The Proxy Statement included in the Registration Statement (only
insofar as it relates to the Acquiring Fund and is based on information
furnished by the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any 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, in light of the circumstances under
which such statements were made, not materially misleading.
5. COVENANTS OF THE ACQUIRING FUND AND THE SERIES.
5.1 The Acquiring Fund and the Series each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include payment of
customary dividends and distributions.
5.2 The Trust will call a meeting of Series shareholders to consider
and act upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund
and the Series will each take, or cause to be taken, all action, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Series shall furnish the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Series for Federal income tax purposes which will be
carried over to the Acquiring Fund as a result of Section 381 of the Code and
which will be certified by the Trust's President or its Vice President and
Treasurer.
5.5 The Trust will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus"),
which will include the Proxy Statement referred to in paragraph 4.1(m), all to
be included in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended, and the 1940 Act in connection with the
meeting of the Series shareholders to consider approval of this Agreement and
the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Series of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Trust on behalf of the
Series contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date.
6.2 The Series shall have delivered to the Acquiring Fund a statement
of the Series' assets and liabilities, together with a list of the Series'
portfolio securities showing the tax basis of such securities by lot and the
holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Trust.
6.3 The Trust shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by the Trust's President or Vice
President and its Treasurer, in form and substance satisfactory to the Acquiring
Fund, to the effect that the representations and warranties of the Trust made in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SERIES.
The obligations of the Series to consummate the transactions provided
for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquiring Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Series on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer, in form and substance reasonably satisfactory to
the Series, to the effect that the representations and warranties of the
Acquiring Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
AND THE SERIES.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Series or the Acquiring Fund, the other party
to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Series in accordance with the provisions of the Trust's Trust Agreement.
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Securities and Exchange Commission and of state Blue Sky and securities
authorities) deemed necessary by the Acquiring Fund or the Series to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Series, provided that either party
hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Series shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Series Shareholders all of the Series' investment company taxable income
for all taxable years or periods ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid); the excess of its
interest income excludable from gross income under Section 103(a) of the Code
over its disallowed deductions under Sections 265 and 171(a)(2) of the Code, for
all taxable years or periods ending on or prior to the Closing Date; and all of
its net capital gain realized in all taxable years or periods ending on or prior
to the Closing Date (after reduction for any capital loss carry forward).
8.6 The parties shall have received an opinion of Stroock & Stroock &
Lavan LLP substantially to the effect that for Federal income tax purposes:
(a) The transfer of all or substantially all of the Series'
assets in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of certain identified
liabilities of the Series will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code; (b)
No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Series solely in
exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of certain identified liabilities of the
Series; (c) No gain or loss will be recognized by the Series
upon the transfer of the Series' assets to the Acquiring
Fund in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of certain identified
liabilities of the Series or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to
Series Shareholders in exchange for their shares of the
Series; (d) No gain or loss will be recognized by the Series
Shareholders upon the exchange of their Series shares for
the Acquiring Fund Shares; (e) The aggregate tax basis for
the Acquiring Fund Shares received by each of the Series
Shareholders pursuant to the Reorganization will be the same
as the aggregate tax basis of the Series shares held by such
shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received
by each Series Shareholder will include the period during
which the Series shares exchanged therefor were held by such
shareholder (provided the Series shares were held as capital
assets on the date of the Reorganization); and (f) The tax
basis of the Series assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the
Series immediately prior to the Reorganization, and the
holding period of the assets of the Series in the hands of
the Acquiring Fund will include the period during which
those assets were held by the Series.
No opinion will be expressed as to the effect of the Reorganization on
(i) the Series or the Acquiring Fund with respect to any asset as to which any
unrealized gain or loss is required to be recognized for Federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a mark-to-market system of accounting, and (ii) any shareholder
of the Series that is required to recognize unrealized gains and losses for
Federal income tax purposes under a mark-to-market system of accounting.
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transaction contemplated hereby may be
terminated and abandoned by resolution of the Board of the Trust or of the
Acquiring Fund, as the case may be, at any time prior to the Closing Date (and
notwithstanding any shareholder vote) if circumstances should develop that, in
the opinion of either of Board, make proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the transaction contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this Agreement
shall become void and have no effect, without any liability on the part of any
party hereto or the Board members, officers or shareholders of the Acquiring
Fund or of the Trust, as the case may be, in respect of this Agreement, except
that the parties shall bear the aggregate expenses of the transaction
contemplated hereby in proportion to their respective net assets as of the date
this Agreement is terminated or the exchange contemplated hereby is abandoned.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions
may be waived by the Board of the Acquiring Fund or of the Trust if, in the
judgment of either, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the shareholders of the Acquiring Fund
or of the Series, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided
for herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and merges
and supersedes all prior discussions, agreements and understandings of every
kind and nature between them relating to the subject matter hereof. Neither
party shall be bound by any condition, definition, warranty or representation,
other than as set forth or provided in this Agreement or as may be, on or
subsequent to the date hereof, set forth in a writing signed by the party to be
bound thereby.
11.3 This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York, without giving effect to principles
of conflict of laws; provided, however, that the due authorization, execution
and delivery of this Agreement by the Series and the Acquiring Fund shall be
governed and construed in accordance with the internal laws of The Commonwealth
of Massachusetts and the State of Maryland, respectively, without giving effect
to principles of conflict of laws.
11.4 This Agreement may be executed in counterparts, each of which,
when executed and delivered, shall be deemed to be an original.
11.5 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
11.6 The names "Dreyfus Premier State Municipal Bond Fund" and
"Trustees of Dreyfus Premier State Municipal Bond Fund" refer respectively to
the Trust and its Trustees, as trustees but not individually or personally,
acting from time to time under the Trust Agreement, a copy of which is on file
at the office of the Secretary of The Commonwealth of Massachusetts and at the
principal office of the Trust. The obligations of the Trust entered into in the
name or on behalf of the Series by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the Series' property, and all persons dealing with the
Series' class of shares of the Trust must look solely to the Series' property
belonging to such class for the enforcement of any claims against the Series.
11.7 Any references in this Agreement to actions taken, deliveries by
or to, representations and warranties made by or to, or obligations of, the
Series shall be deemed references to actions taken, deliveries by or to,
representations and warranties made by or to, or obligations of, the Trust on
behalf of the Series.
IN WITNESS WHEREOF, each of the Acquiring Fund and the Trust has
caused this Agreement and Plan of Reorganization to be executed and attested on
its behalf by its duly authorized representatives as of the date first above
written.
DREYFUS NEW JERSEY MUNICIPAL BOND
FUND, INC.
By: /S/STEPHEN E. CANTER
------------------------------
Stephen E. Canter,
President
ATTEST: /S/STEVEN F. NEWMAN
-----------------------------
Steven F. Newman,
Secretary
DREYFUS PREMIER STATE MUNICIPAL BOND
FUND, on behalf of its New Jersey
Series
By: /S/STEPHEN E. CANTER
---------------------------------
Stephen E. Canter,
President
ATTEST: /S/STEVEN F. NEWMAN
------------------------------
Steven F. Newman,
Secretary
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
NEW JERSEY SERIES
The undersigned shareholder of the New Jersey Series (the "Series") of
Dreyfus Premier State Municipal Bond Fund (the "Trust") hereby appoints James
Bitetto and Janette E. Farragher, and each of them, the attorneys and proxies of
the undersigned, with full power of substitution, to vote, as indicated herein,
all of the shares of beneficial interest of the Series standing in the name of
the undersigned at the close of business on March 6, 2001, at a Special Meeting
of Shareholders to be held at the offices of The Dreyfus Corporation, 200 Park
Avenue, 7th Floor, New York, New York 10166, at 10:00 a.m. on Tuesday, May 1,
2001, and at any and all adjournments thereof, with all of the powers the
undersigned would possess if then and there personally present and especially
(but without limiting the general authorization and power hereby given) to vote
as indicated on the proposal, as more fully described in the Prospectus/Proxy
Statement for the meeting.
Please mark boxes in blue or black ink.
1. To approve an Agreement and Plan of Reorganization between the
Series and Dreyfus New Jersey Municipal Bond Fund, Inc. (the
"Acquiring Fund"), providing for the transfer of all of the
assets of the Series, subject to its liabilities in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring
Fund of the Series' liabilities, and the pro rata distribution of
those shares to Series' shareholders and subsequent termination
of the Series.
FOR AGAINST ABSTAIN
|-| |-| |-|
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting, or any
adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE TRUST'S BOARD OF TRUSTEES AND WILL BE VOTED FOR
THE ABOVE PROPOSAL UNLESS OTHERWISE INDICATED.
Signature(s) should be exactly as name or names appearing on this
proxy. If shares are held jointly, each holder should sign. If
signing is by attorney, executor, administrator, trustee or
guardian, please give full title.
Dated: ____, 2001
-------------------------
Signature(s)
-------------------------
Signature(s)
Sign, Date and Return the Proxy Card
Promptly Using the Enclosed Envelope
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
March __, 2001
Acquisition of the Assets of
DREYFUS PREMIER MUNICIPAL BOND FUND
NEW JERSEY SERIES
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-645-6561
By and in Exchange for Shares of
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
1-800-645-6561
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus/Proxy
Statement dated March __, 2001, relating specifically to the proposed transfer
of all of the assets and liabilities of the New Jersey Series of Dreyfus Premier
State Municipal Bond Fund (the "Series") in exchange for shares of Dreyfus New
Jersey Municipal Bond Fund, Inc. (the "Acquiring Fund"). The transfer is to
occur pursuant to an Agreement and Plan of Reorganization. This Statement of
Additional Information consists of this cover page and the following documents
attached hereto:
1. The Acquiring Fund's Statement of Additional Information dated May 1,
2000.
2. The Acquiring Fund's Annual Report for the fiscal year ended December
31, 2000.
3. The Series' Annual Report for the fiscal year ended April 30, 2000.
4. The Series' Semi-Annual Report for the six-month period ended October
31, 2000.
The Acquiring Fund's Statement of Additional Information and the financial
statements included in the Acquiring Fund's Annual Report, and the Series'
Annual Report and Semi-Annual Report are incorporated herein by reference. The
Prospectus/Proxy Statement dated March __, 2001 may be obtained by writing to
the Series or Acquiring Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
- ------------------------------------------------------------------------------
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
- -------------------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus New Jersey Municipal Bond Fund, Inc. (the "Fund"), dated May 1, 2000, as
it may be revised from time to time. To obtain a copy of the Fund's Prospectus,
please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
The Fund's most recent Annual Report and Semi-Annual Report to Shareholders
are separate documents supplied with this Statement of Additional Information,
and the financial statements, accompanying notes and report of independent
auditors appearing in the Annual Report are incorporated by reference into this
Statement of Additional Information.
TABLE OF CONTENTS
PAGE
Description of the Fund.................................................B-2
Management of the Fund..................................................B-14
Management Arrangements.................................................B-18
How to Buy Shares.......................................................B-21
Service Plan............................................................B-23
How to Redeem Shares....................................................B-24
Shareholder Services....................................................B-27
Determination of Net Asset Value........................................B-30
Dividends, Distributions and Taxes......................................B-31
Portfolio Transactions..................................................B-33
Performance Information.................................................B-34
Information About the Fund..............................................B-35
Counsel and Independent Auditors........................................B-37
Year 2000 Issues........................................................B-37
Appendix A..............................................................B-38
Appendix B..............................................................B-41
DESCRIPTION OF THE FUND
The Fund is a Maryland corporation formed on January 11, 1988. The
Fund is an open-end management investment company, known as a municipal bond
fund.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor") is the distributor of
the Fund's shares.
CERTAIN PORTFOLIO SECURITIES
The following information supplements and should be read in
conjunction with the Fund's Prospectus.
MUNICIPAL OBLIGATIONS. The Fund will invest primarily in debt
securities of the State of New Jersey, its political subdivisions, authorities
and corporations, and certain other specified securities, the interest from
which is, in the opinion of bond counsel to the issuer, exempt from Federal and
State of New Jersey personal income taxes (collectively, "New Jersey Municipal
Obligations"). To the extent acceptable, New Jersey Municipal Obligations are at
any time unavailable for investment by the Fund, the Fund will invest
temporarily in other debt securities the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal, but not State of New Jersey,
income tax. The Fund will invest at least 80% of the value of its net assets
(except when maintaining a temporary defensive position) in Municipal
Obligations. Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or multistate
agencies or authorities, the interest from which 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.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation and rating of the issue.
CERTAIN TAX EXEMPT OBLIGATIONS. The Fund may purchase floating and
variable rate demand notes and bonds, which are tax exempt obligations
ordinarily having stated maturities in excess of one year, but which permit the
holder to demand payment of principal at any time or at specified intervals.
Variable rate demand notes include master demand notes which are obligations
that permit the Fund to invest fluctuating amounts, at varying rates of
interest, pursuant to direct arrangements between the Fund, as lender, and the
borrower. These obligations permit daily changes in the amount borrowed. Because
these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be traded,
and there generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. Each obligation purchased
by the Fund will meet the quality criteria established for the purchase of
Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS. The Fund may purchase from
financial institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives the Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation interest bears to the
total principal amount of the Municipal Obligation. These instruments may have
fixed, floating or variable rates of interest. If the participation interest is
unrated, it will be backed by an irrevocable letter of credit or guarantee of a
bank that the Fund's Board has determined meets prescribed quality standards for
banks, or the payment obligation otherwise will be collateralized by U.S.
Government securities. For certain participation interests, the Fund will have
the right to demand payment, on not more than seven days' notice, for all or any
part of the Fund's participation interest in the Municipal Obligation, plus
accrued interest. As to these instruments, the Fund intends to exercise its
right to demand payment only upon a default under the terms of the Municipal
Obligation, as needed to provide liquidity to meet redemptions, or to maintain
or improve the quality of its investment portfolio.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease obligations do
not constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation ordinarily is backed
by the municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
The staff of the Securities and Exchange Commission currently considers certain
lease obligations to be illiquid. Determination as to the liquidity of such
securities is made in accordance with guidelines established by the Fund's
Board. Pursuant to such guidelines, the Board has directed the Manager to
monitor carefully the Fund's investment in such securities with particular
regard to: (1) the frequency of trades and quotes for the lease obligation; (2)
the number of dealers willing to purchase or sell the lease obligation and the
number of other potential buyers; (3) the willingness of dealers to undertake to
make a market in the lease obligation; (4) the nature of the marketplace trades,
including the time needed to dispose of the lease obligation, the method of
soliciting offers and the mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may deem
relevant. In addition, in evaluating the liquidity and credit quality of a lease
obligation that is unrated, the Fund's Board has directed the Manager to
consider: (a) whether the lease can be canceled; (b) what assurance there is
that the assets represented by the lease can be sold; (c) the strength of the
lessee's general credit (e.g., its debt, administrative, economic, and financial
characteristics); (d) the likelihood that the municipality will discontinue
appropriating funding for the leased property because the property is no longer
deemed essential to the operations of the municipality (e.g., the potential for
an "event of nonappropriation"); (e) the legal recourse in the event of failure
to appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. 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.
TENDER OPTION BONDS. The Fund may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest at
a fixed rate substantially higher than prevailing short-term tax exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to tender their
securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Obligation's fixed
coupon rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities, coupled
with the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax exempt rate. The
Manager, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal 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 Obligation and for other reasons.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the underlying
Municipal Obligations and that payment of any tender fees will not have the
effect of creating taxable income for the Fund. Based on the tender option bond
agreement, the Fund expects to be able to value the tender option bond at par;
however, the value of the instrument will be monitored to assure that it is
valued at fair value.
CUSTODIAL RECEIPTS. The Fund may purchase custodial receipts
representing the right to receive certain future principal and interest payments
on Municipal Obligations which underlie the custodial receipts. A number of
different arrangements are possible. In a typical custodial receipt arrangement,
an issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial receipts.
The two classes have different characteristics, but, in each case, payments on
the two classes are based on payments received on the underlying Municipal
Obligations. One class has the characteristics of a typical auction rate
security, where at specified intervals its interest rate is adjusted, and
ownership changes, based on an auction mechanism. This class's interest rate
generally is expected to be below the coupon rate of the underlying Municipal
Obligations and generally is at a level comparable to that of a Municipal
Obligation of similar quality and having a maturity equal to the period between
interest rate adjustments. The second class bears interest at a rate that
exceeds the interest rate typically borne by a security of comparable quality
and maturity; this rate also is adjusted, but in this case inversely to changes
in the rate of interest of the first class. In no event will the aggregate
interest paid with respect to the two classes exceed the interest paid by the
underlying Municipal Obligations. The value of the second class and similar
securities should be expected to fluctuate more than the value of a Municipal
Obligation of comparable quality and maturity and their purchase by the Fund
should increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund also
may purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a multi-class offering and the interest rate
on certain classes may be subject to a cap or floor.
STAND-BY COMMITMENTS. To the extent consistent with the requirements
for a "qualified investment fund" under the New Jersey gross income tax, the
Fund may acquire "stand-by commitments" with respect to Municipal Obligations
held in its portfolio. Under a stand-by commitment, the Fund obligates a broker,
dealer or bank to repurchase, at the Fund's option, specified securities at a
specified price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment, therefore, is subject to the
ability of the seller to make payment on demand. The Fund will acquire stand-by
commitments solely to facilitate its portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. The Fund may pay for
stand-by commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly decreasing
such security's yield to investors. Gains realized in connection with stand-by
commitments will be taxable. The Fund also may acquire call options on specific
Municipal Obligations. The Fund generally would purchase these call options to
protect the Fund from the issuer of the related Municipal Obligation redeeming,
or other holder of the call option from calling away, the Municipal Obligation
before maturity. The sale by the Fund of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income by
the Fund.
RATINGS OF MUNICIPAL OBLIGATIONS. The Fund will invest at least 80% of
the value of its net assets in Municipal Obligations which, in the case of
bonds, are rated no lower than Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P") or Fitch IBCA,
Inc. ("Fitch" and, together with Moody's and S&P, the "Rating Agencies"). The
Fund may invest up to 20% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by Moody's and
BBB by S&P and Fitch and as low as the lowest rating assigned by the Rating
Agencies. The Fund also may invest in securities which, while not rated, are
determined by the Manager to be of comparable quality to the rated securities in
which the Fund may invest; for purposes of the 80% requirement described in this
paragraph, such unrated securities will be considered to have the rating so
determined.
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended December 31,
1999, computed on a monthly basis, was as follows:
PERCENTAGE OF
FITCH or MOODY'S or S&P VALUE
---------- ------- --- -------
AAA Aaa AAA 61.4%
AA Aa AA 8.2
A A A 10.7
BBB Baa BBB 8.8
BB Ba BB 1.1
B B B .9
F-1+/F-1 VMIG1/MIG1, P-1 SP-1+/SP-1, A-1 2.3
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 securities in the following rating categories:
Aaa/AAA (.5%), A/A (3.0%) and Baa/BBB (3.1%).
Subsequent to its purchase by the Fund, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Fund. Neither event will require the sale of such
Municipal Obligations by the Fund, but the Manager will consider such event in
determining whether the Fund should continue to hold the Municipal Obligations.
To the extent that the ratings given by the Rating Agencies for Municipal
Obligations may change as a result of changes in such organizations or their
rating systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in the
Prospectus and this Statement of Additional Information. The ratings of the
Rating Agencies represent their opinions as to the quality of the Municipal
Obligations which they undertake to rate. It should be emphasized, however, that
ratings are relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of portfolio
investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
ZERO COUPON SECURITIES. The Fund may invest in zero coupon securities
which are debt securities issued or sold at a discount from their face value
which do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). The amount of
the discount varies depending on the time remaining until maturity or cash
payment date, prevailing interest rates, liquidity of the security and perceived
credit quality of the issuer. Zero coupon securities also may take the form of
debt securities that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interest in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically and are likely to respond to a greater degree to
changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities.
ILLIQUID SECURITIES. The Fund may invest up to 15% of the value of its
net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment objective.
These securities may include securities that are not readily marketable, such as
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.
TAXABLE INVESTMENTS. From time to time, on a temporary basis other
than for temporary defensive purposes (but not to exceed 20% of the value of the
Fund's net assets) or for temporary defensive purposes, the Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of: notes of
issuers having, at the time of purchase, a quality rating within the two highest
grades of a Rating Agency; obligations of the U.S. Government, its agencies or
instrumentalities; commercial paper rated not lower than P-2 by Moody's, A-2 by
S&P or F-2 by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of $1 billion 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 New Jersey
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 New Jersey personal income taxes. Under normal market conditions, the Fund
anticipates that not more than 5% of the value of its total assets will be
invested in any one category of Taxable Investments.
INVESTMENT TECHNIQUES
The following information supplements and should be read in
conjunction with the Fund's Prospectus. The Fund's use of certain of the
investment techniques described below may give rise to taxable income.
BORROWING MONEY. The Fund is permitted to borrow to the extent
permitted under the Investment Company Act of 1940, as amended (the "1940 Act"),
which permits an investment company to borrow in an amount up to 33-1/3% of the
value of its total assets. The Fund currently intends to borrow money only for
temporary or emergency (not leveraging) purposes, in an amount up to 15% of the
value of its total assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While such borrowings exceed 5% of the Fund's total
assets, the Fund will not make any additional investments.
LENDING PORTFOLIO SECURITIES. The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest or other distributions payable on
the loaned securities which affords the Fund an opportunity to earn interest on
the amount of the loan and on the loaned securities' collateral. Loans of
portfolio securities may not exceed 33-1/3% of the value of the Fund's total
assets, and the Fund will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. Such loans are terminable by the Fund at any time upon
specified notice. The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund. In connection with its securities lending transactions, the Fund may
return to the borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
DERIVATIVES. The Fund may invest in, or enter into, derivatives, which
may include options, for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular securities
or to increase potential income gain. Derivatives may provide a cheaper, quicker
or more specifically focused way for the Fund to invest than "traditional"
securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities. However, derivatives may entail investment
exposures that are greater than their cost would suggest, meaning that a small
investment in derivatives could have a large potential impact on the Fund's
performance.
If the Fund invests in derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Fund's return or
result in a loss. The Fund also could experience losses if its derivatives were
poorly correlated with its other investments, or if the Fund were unable to
liquidate its position because of an illiquid secondary market. The market for
many derivatives is, or suddenly can become, illiquid. Changes in liquidity may
result in significant, rapid and unpredictable changes in the prices for
derivatives.
When required by the Securities and Exchange Commission, the Fund will
segregate permissible liquid assets to cover its obligations relating to its
transaction in derivatives. To maintain this required cover, the Fund may have
to sell portfolio securities at disadvantageous prices or times since it may not
be possible to liquidate a derivative position at a reasonable price.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily variation margin system operated by the clearing agency
in order to reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
derivatives purchased on an exchange. By contrast, no clearing agency guarantees
over-the-counter derivatives. Therefore, each party to an over-the-counter
derivative bears the risk that the counterparty will default. Accordingly, the
Manager will consider the creditworthiness of counterparties to over-the-counter
derivatives in the same manner as it would review the credit quality of a
security to be purchased by the Fund. Over-the-counter derivatives are less
liquid than exchange-traded derivatives since the other party to the transaction
may be the only investor with sufficient understanding of the derivative to be
interested in bidding for it.
OPTIONS--IN GENERAL. The Fund may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call options with respect to Municipal
Obligations. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow, or other unforeseen events, at times have rendered
certain of the clearing facilities inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options.
Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent the
Manager's predictions are incorrect, the Fund may incur losses.
FUTURE DEVELOPMENTS. The Fund may take advantage of opportunities in
the area of options and any other derivatives which are not presently
contemplated for use by the Fund or which are not currently available but which
may be developed, to the extent such opportunities are both consistent with the
Fund's investment objective and legally permissible for the Fund. Before
entering into such transactions or making any such investment the Fund will
provide appropriate disclosure in its Prospectus or Statement of Additional
Information.
FORWARD COMMITMENTS. The Fund may purchase Municipal Obligations and
other securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate receivable
on a forward commitment or when-issued security are fixed when the Fund enters
into the commitment, but the Fund does not make payment until it receives
delivery from the counterparty. The Fund will commit to purchase such securities
only with the intention of actually acquiring the securities, but the Fund may
sell these securities before the settlement date if it is deemed advisable. The
Fund will segregate permissible liquid assets at least equal at all times to the
amount of the Fund's purchase commitments.
Municipal Obligations and other securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e. appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the level of
interest rates. Securities purchased on a forward commitment or when-issued
basis may expose the Fund to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a forward commitment or
when-issued basis can involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when the Fund is fully or almost fully invested
may result in greater potential fluctuation in the value of the Fund's net
assets and its net asset value per share.
INVESTMENT CONSIDERATIONS AND RISKS
INVESTING IN MUNICIPAL OBLIGATIONS. The Fund may invest more than 25%
of the value of its total assets in Municipal Obligations which are related in
such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for example,
securities the interest upon which is paid from revenues of similar types of
projects. As a result, the Fund may be subject to greater risk as compared to a
fund that does not follow this practice.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure might
prove difficult. In evaluating the credit quality of a municipal lease/purchase
obligation that is unrated, the Manager will consider, on an ongoing basis, a
number of factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.
Certain provisions in the Internal Revenue Code of 1986, as amended
(the "Code"), relating to the issuance of Municipal Obligations may reduce the
volume of Municipal Obligations qualifying for Federal tax exemption. One effect
of these provisions could be to increase the cost of the Municipal Obligations
available for purchase by the Fund and thus reduce available yield. Shareholders
should consult their tax advisers concerning the effect of these provisions on
an investment in the Fund. Proposals that may restrict or eliminate the income
tax exemption for interest on Municipal Obligations may be introduced in the
future. If any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Fund so as to adversely affect Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Fund would treat such security as a permissible
Taxable Investment within the applicable limits set forth herein.
INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS. Since the Fund is
concentrated in securities issued by New Jersey or entities within New Jersey,
an investment in the Fund may involve greater risk than investments in certain
other types of bond funds. You should consider carefully the special risks
inherent in the Fund's investment in New Jersey Municipal Obligations. You
should review "Appendix A" which sets forth these and other risk factors.
LOWER RATED BONDS. The Fund may invest up to 20% of the value of its
net assets in higher yielding (and, therefore, higher risk) debt securities such
as those rated Ba by Moody's or BB by S&P or Fitch or as low as the lowest
rating assigned by the Rating Agencies (commonly known as junk bonds). They may
be subject to certain risks with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated Municipal
Obligations. See "Appendix B" for a general description of the Rating Agencies'
ratings of Municipal Obligations. Although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the market
value risk of these bonds. The Fund will rely on the Manager's judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
You should be aware that the market values of many of these bonds tend
to be more sensitive to economic conditions than are higher rated securities and
will fluctuate over time. These bonds generally are considered by the Rating
Agencies to be, on balance, predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in the
higher rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold only
to a limited number of dealers or institutional investors. To the extent a
secondary trading market for these bonds does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a liquid
secondary market may have an adverse impact on market price and yield and the
Fund's ability to dispose of particular issues when necessary to meet the Fund's
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of valuing the Fund's
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession would disrupt severely the market for such
securities and may have an adverse impact on the value of such securities, and
could adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon which would increase the incidence of default
for such securities.
The Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. The Fund has
no arrangement with any person concerning the acquisition of such securities,
and the Manager will review carefully the credit and other characteristics
pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also
apply to lower rated zero coupon bonds and pay-in-kind bonds, in which the Fund
may invest up to 5% of its total assets. Zero coupon bonds and pay-in-kind bonds
carry an additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Fund will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Fund may obtain no return at all on its investment. See "Dividends,
Distributions and Taxes."
SIMULTANEOUS INVESTMENTS. Investment decisions for the Fund are made
independently from those of other investment companies advised by the Manager.
If, however, such other investment companies desire to invest in, or dispose of,
the same securities as the Fund, available investments or opportunities for
sales will be allocated equitably to each investment company. In some cases,
this procedure may adversely affect the size of the position obtained for or
disposed of by the Fund or the price paid or received by the Fund.
INVESTMENT RESTRICTIONS
The Fund's investment objective is a fundamental policy, which cannot
be changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, the Fund has adopted
investment restrictions numbered 1 through 7 as fundamental policies. Investment
restrictions numbered 8 through 12 are not fundamental policies and may be
changed by a vote of a majority of the Fund's Board members at any time. The
Fund may not:
1. 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.
2. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
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.
3. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from investing in
Municipal Obligations secured by real estate or interests therein, or prevent
the Fund from purchasing and selling options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
4. Underwrite the securities of other issuers, except that the 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.
5. 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.
6. Issue any senior security (as such term is defined in Section 18
(f) of the 1940 Act), except to the extent that the activities permitted in
Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise to a
senior security.
7. Sell securities short or purchase securities on margin, but the
Fund may make margin deposits in connection with transactions in options,
forward contracts, futures contracts, including those relating to indices, and
options on futures contracts or indices.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or as
otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the extent
related to the deposit of assets in escrow in connection with the purchase of
securities on a when-issued or delayed-delivery basis and collateral and initial
or variation margin arrangements with respect to options, forward contracts,
futures contracts, including those related to indices, and options on futures
contracts or indices.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid (which
securities could include 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. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry."
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Fund and
those companies that furnish services to the Fund. These companies are as
follows:
The Dreyfus Corporation.....................Investment Adviser
Dreyfus Service Corporation.................Distributor
Dreyfus Transfer, Inc.......................Transfer Agent
The Bank of New York........................Custodian
Board members and officers of the Fund, together with information as
to their principal business occupations during at least the last five years, are
shown below.
BOARD MEMBERS OF THE FUND
JOSEPH S. DiMARTINO, CHAIRMAN OF THE BOARD. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
a director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, Carlyle
Industries, Inc. (formerly, Belding Heminway, Inc.), a button packager
and distributor, Century Business Services, Inc. (formerly,
International Alliance Services Inc.), a provider of various
outsourcing functions for small and medium sized companies, and
QuikCAT.com, Inc., a private company engaged in the development of
high speed movement, routing, storage and encryption of data across
cable, wireless and all other modes of data transport. For more than
five years prior to January 1995, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of the Distributor. From
August 1994 until December 31, 1994, he was a director of Mellon
Financial Corporation. He is 56 years old and his address is 200 Park
Avenue, New York, New York 10166.
GORDON J. DAVIS, BOARD MEMBER. Since October 1994, senior partner with the
law firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September
1994, Mr. Davis was a senior partner with the law firm of Lord Day &
Lord, Barrett Smith. From 1978 to 1983, he was Commissioner of Parks
and Recreation for the City of New York. He also is a Director of
Consolidated Edison, a utility company, and Phoenix Home Life
Insurance Company and a member of various other corporate and
not-for-profit boards. He is 58 years old and his address is 241
Central Park West, New York, New York 10024.
DAVID P. FELDMAN, BOARD MEMBER. Director of several mutual funds in the 59
Wall Street Mutual Funds Group, and of the Jeffrey Company, a private
investment company. Mr. Feldman was employed by AT&T from July 1961 to
his retirement in April 1997, most recently serving as Chairman and
Chief Executive Officer of AT&T Investment Management Corporation. He
is 60 years old and his address is 466 Lexington Avenue, New York, New
York 10017.
LYNN MARTIN, BOARD MEMBER. Professor, J.L. Kellogg Graduate School of
Management, Northwestern University. During the Spring Semester 1993,
she was a Visiting Fellow at the Institute of Politics, Kennedy School
of Government, Harvard University. She also is an advisor to the
international accounting firm of Deloitte & Touche, LLP and chair of
its Council for the Advancement of Women. From January 1991 through
January 1993, Ms. Martin served as Secretary of the United States
Department of Labor. From 1981 to 1991, she served in the United
States House of Representatives as a Congresswoman from the State of
Illinois. She also is a Director of Harcourt General, Inc., SBC
Communications, Inc., Ryder System, Inc., The Proctor & Gamble Co., a
consumer company, and TRW, Inc., an aerospace and automotive equipment
company. She is 60 years old and her address is c/o Deloitte & Touche,
LLP, Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, Illinois
60601.
DANIEL ROSE, BOARD MEMBER. Chairman and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic-American Enterprise
Fund, which will make equity investments and loans, and provide
technical business assistance to new business concerns in the Baltic
states. He also is Chairman of the Housing Committee of the Real
Estate Board of New York, Inc. He is 70 years old and his address is
c/o Rose Associates, Inc., 200 Madison Avenue, New York, New York
10016.
PHILIP L. TOIA, BOARD MEMBER. Retired. Mr. Toia was employed by the Manager
from August 1986 through January 1997, most recently serving as Vice
Chairman, Administration and Operations. He is 67 years old and his
address is 715 Hideaway Circle West, Marco Island, Florida 34145.
SANDER VANOCUR, BOARD MEMBER. Since January 1992, President of Old Owl
Communications, a full-service communications firm. From May 1995 to
June 1996, he was a Professional in Residence at the Freedom Forum in
Arlington, VA; from January 1994 to May 1995, he served as Visiting
Professional Scholar at the Freedom Forum Amendment Center at
Vanderbilt University; and from November 1989 to November 1995, he was
a director of the Damon Runyon-Walter Winchell Cancer Research Fund.
From June 1977 to December 1991, he was a Senior Correspondent of ABC
News and, from October 1986 to December 1991, he was Anchor of the ABC
News program "Business World," a weekly business program on the ABC
television network. He is 72 years old and his address is 2626
Sycamore Canyon Road, Santa Barbara, CA 93108.
ANNE WEXLER, BOARD MEMBER. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She also is a
director of Wilshire Mutual Funds, Comcast Corporation, The New
England Electric System, and a member of the Council of Foreign
Relations and the National Park Foundation. She is 70 years old and
her address is c/o The Wexler Group, 1317 F Street, Suite 600, N.W.,
Washington, D.C. 20004.
REX WILDER, BOARD MEMBER. Financial Consultant. He is 79 years old and his
address is 290 Riverside Drive, New York, New York 10025.
The Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of compensation paid
to each Board member by the Fund and by all funds in the Dreyfus Family of Funds
for which such person was a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation*) during the year
ended December 31, 1999 is as follows:
Aggregate Total Compensation
Name of Board Compensation from from Fund and Fund
Member Fund** Complex Paid to Board Member
- --------------------- ------------------- ----------------------------
Joseph S. DiMartino $4,688 $642,177 (189)
Gordon J. Davis $3,750 $ 89,625 (30)
David P. Feldman $3,750 $118,875 (56)
Lynn Martin $3,750 $ 40,875 (15)
Eugene McCarthy+ $1,625 $ 18,813 (15)
Daniel Rose $3,750 $ 78,625 (31)
Philip L. Toia $3,750 $ 40,875 (15)
Sander Vanocur $3,750 $ 78,625 (31)
Anne Wexler $3,500 $ 59,125 (28)
Rex Wilder $3,500 $ 40,875 (15)
- --------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Fund, for which the Board
member serves.
** Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,568 for all Board members as a group.
+ Board member Emeritus since March 29, 1996.
OFFICERS OF THE FUND
STEPHEN E. CANTER, PRESIDENT. President, Chief Operating Officer, Chief
Investment Officer and a director of the Manager, and an officer of
other investment companies advised and administered by the Manager.
Mr. Canter also is a director or an Executive Committee Member of the
other investment management subsidiaries of Mellon Financial
Corporation, each of which is an affiliate of the Manager. He is 54
years old.
MARK N. JACOBS, VICE PRESIDENT. Vice President, General Counsel and
Secretary of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 54 years old.
JOSEPH CONNOLLY, VICE PRESIDENT AND TREASURER. Director - Mutual Fund
Accounting of the Manager, and an officer of other investment
companies advised and administered by the Manager. He is 42 years old.
MICHAEL A. ROSENBERG, SECRETARY. Associate General Counsel of the Manager, and
an officer of other investment companies advised and administered by
the Manager. He is 40 years old.
STEVEN F. NEWMAN, ASSISTANT SECRETARY. Associate General Counsel and
Assistant Secretary of the Manager, and an officer of other investment
companies advised and administered by the Manager. He is 50 years old.
GREGORY S. GRUBER, ASSISTANT TREASURER. Senior Accounting Manager - Municipal
Bond Funds of the Manager, and an officer of other investment
companies advised and administered by the Manager. He is 40 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on April 3, 2000.
MANAGEMENT ARRANGEMENTS
INVESTMENT ADVISER. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty-five largest bank holding companies in the United
States based on total assets.
The Manager provides management services pursuant to a Management
Agreement (the "Agreement") between the Fund and the Manager. The Agreement is
subject to annual approval by (i) the Fund's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided that in either event the continuance also is approved by a majority of
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund or the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Agreement is terminable without penalty,
on 60 days' notice, by the Fund's Board or by vote of the holders of a majority
of the Fund's outstanding voting shares, or, upon not less than 90 days' notice,
by the Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment Officer
and a director; Lawrence S. Kash, Vice Chairman; J. David Officer, Vice Chairman
and a director; Thomas F. Eggers, Vice Chairman--Institutional and a director;
Ronald P. O'Hanley III, Vice Chairman; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior Vice President; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Diane P. Durnin, Vice
President--Product Development; Patrice M. Kozlowski, Vice President--Corporate
Communications; Mary Beth Leibig, Vice President--Human Resources; Ray Van Cott,
Vice President--Information Systems; Theodore A. Schachar, Vice President--Tax;
Wendy Strutt, Vice President; Richard Terres, Vice President; William H.
Maresca, Controller; James Bitetto, Assistant Secretary; Steven F. Newman,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliot,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides the
Fund with portfolio managers who are authorized by the Fund's Board to execute
purchases and sales of securities. The Fund's portfolio managers are A. Paul
Disdier, Joseph Irace, Colleen Meehan, Richard J. Moynihan, W. Michael Petty,
Jill C. Shaffro, Scott Sprauer, Samuel J. Weinstock and Monica S. Wieboldt. The
Manager also maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research services for the
Fund and for other funds advised by the Manager.
The Manager's code of ethics (the "Code") subjects its employees'
personal securities transactions to various restrictions to ensure that such
trading does not disadvantage any Fund advised by the Manager. In that regard,
portfolio managers and other investment personnel of the Manager must preclear
and report their personal securities transactions and holdings, which are
reviewed for compliance with the Code, and are also subject to the oversight of
Mellon's Investment Ethics Committee. Portfolio managers and other investment
personnel of the Manager who comply with the Code's preclearance and disclosure
procedures and the requirements of the Committee, may be permitted to purchase,
sell or hold securities which also may be or are held in fund(s) they manage or
for which they otherwise provide investment advice.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not including
the management fee paid by the Fund. The Distributor may use part or all of such
payments to pay Service Agents (as defined below) in respect of these services.
The Manager also may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The expenses
borne by the Fund include: taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not officers, directors, employees or holders
of 5% or more of the outstanding voting securities of the Manager, Securities
and Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining corporate existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders' reports
and corporate meetings and any extraordinary expenses. Pursuant to the Fund's
Service Plan, the Fund bears expenses for advertising, marketing and
distributing the Fund's shares and servicing shareholder accounts, and also
bears the cost of preparing and printing prospectuses and statements of
additional information and costs associated with implementing and operating such
plan. See "Service Plan."
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of 0.60% of the value of
the Fund's average daily net assets. All fees and expenses are accrued daily and
deducted before payment of dividends to investors. The management fees payable
for the fiscal years ended December 31, 1997, 1998 and 1999 amounted to
$3,513,183, $3,596,481 and $3,472,134, respectively, which amounts were reduced
by $843,934, $265,764 and $266,399, respectively, pursuant to undertakings by
the Manager, resulting in a net fee of $2,669,249, $3,330,717 and $3,205,735 for
1997, 1998 and 1999, respectively.
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 1-1/2% of the
value of the Fund's average net assets for the fiscal year, the Fund may deduct
from the payment to be made to the Manager under the Agreement, or the Manager
will bear, such excess expense. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be, on a
monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
DISTRIBUTOR. The Distributor, a wholly-owned subsidiary of the Manager
located at 200 Park Avenue, New York, New York 10166, serves as the Fund's
distributor on a best efforts basis pursuant to an agreement with the Fund which
is renewable annually.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund, the
Transfer Agent arranges for the maintenance of shareholder account records for
the Fund, the handling of certain communications between shareholders and the
Fund and the payment of dividends and distributions payable by the Fund. For
these services, the Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for the Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
The Bank of New York (the "Custodian"), 100 Church Street, New York,
New York 10286, is the Fund's custodian. The Custodian has no part in
determining the investment policies of the Fund or which securities are to be
purchased or sold by the Fund. Under a custody agreement with the Fund, the
Custodian holds the Fund's securities and keeps all necessary accounts and
records. For its custody services, the Custodian receives a monthly fee based on
the market value of the Fund's assets held in custody and receives certain
securities transaction charges.
HOW TO BUY SHARES
GENERAL. Fund shares are sold through the Distributor or certain
financial institutions (which may include banks), securities dealers ("Selected
Dealers") and other industry professionals, such as investment advisers,
accountants and estate planning firms (collectively, "Service Agents") that have
entered into service agreements with the Distributor. Stock certificates are
issued only upon your written request. It is not recommended that the Fund be
used as a vehicle for Keogh, IRA or other qualified plans. No certificates are
issued for fractional shares. 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 Service Agent which maintains an omnibus account in the Fund and has
made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment must be
accompanied by the Account Application. For full-time or part-time employees of
the Manager or any of its affiliates or subsidiaries, directors of the Manager,
Board members of a fund advised by the Manager, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of the Manager or any
of its affiliates or subsidiaries who elect to have a portion of their pay
directly deposited into their Fund accounts, the minimum initial investment is
$50. The Fund reserves the right to vary the initial and subsequent investment
minimum requirements at any time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-AUTOMATIC Asset Builder(R), Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to
the Dreyfus Step Program described under "Shareholder Services." These services
enable you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in the
Fund's Prospectus and this Statement of Additional Information, and, to the
extent permitted by applicable regulatory authority, may charge their clients
direct fees. You should consult your Service Agent in this regard.
Shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form is received by the Transfer Agent
or other entity authorized to receive orders on behalf of the Fund. Net asset
value per share is determined as of the close of trading on the floor of the New
York Stock Exchange (currently 4:00 p.m., New York time) on each day the New
York Stock Exchange is open for business. For purposes of computing net asset
value per share, options will be valued 15 minutes after the close of trading on
the floor of the New York Stock Exchange. Net asset value per share is computed
by dividing the value of the Fund's net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding. The Fund's
investments are valued by an independent pricing service approved by the Fund's
Board and are valued at fair value as determined by the pricing service. The
pricing service's procedures are reviewed under the general supervision of the
Fund's Board. For further information regarding the methods employed in valuing
the Fund's investments, see "Determination of Net Asset Value."
DREYFUS TELETRANSFER PRIVILEGE. You may purchase shares by telephone
if you have checked the appropriate box and supplied the necessary information
on the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House ("ACH") member may be so designated.
Dreyfus TELETRANSFER purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any day that the Transfer Agent
and the New York Stock Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day following such purchase
order. Purchase orders made after 4:00 p.m., New York time, on any day the
Transfer Agent and the New York Stock Exchange are open for business, or orders
made on Saturday, Sunday or any Fund holiday (e.g., when the New York Stock
Exchange is not open for business), will be credited to the shareholder's Fund
account on the second bank business day following such purchase order. To
qualify to use the 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 on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular redemption
are to be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See "How to Redeem Shares--Dreyfus TELETRANSFER
Privilege."
REOPENING AN ACCOUNT. You may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
SERVICE PLAN
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the 1940 Act provides, among other things, that an investment
company may bear expenses of distributing its shares only pursuant to a plan
adopted in accordance with the Rule. The Fund's Board has adopted such a plan
(the "Service Plan"), pursuant to which the Fund pays the Distributor for
distributing the Fund's shares, servicing shareholder accounts ("Servicing") and
advertising and marketing relating to the Fund at an aggregate annual rate of
0.25% of the value of the Fund's average daily net assets. The Distributor may
pay one or more Service Agents a fee in respect of the Fund's shares owned by
shareholders with whom the Service Agent has a Servicing relationship or for
whom the Service Agent is the dealer or holder of record. The Distributor
determines the amount, if any, to be paid to Service Agents under the Service
Plan and the basis on which such payments are made. The Fund's Board believes
that there is a reasonable likelihood that the Service Plan will benefit the
Fund and its shareholders.
The Fund bears the costs of preparing and printing prospectuses and
statements of additional information used for regulatory purposes and for
distribution to existing shareholders. Under the Service Plan, the Fund is
permitted to bear (i) the costs of preparing, printing and distributing
prospectuses and statements of additional information used for other purposes
and (ii) the costs associated with implementing and operating the Service Plan
(such as costs of printing and mailing service agreements), the aggregate of
such amounts not to exceed in any fiscal year of the Fund the greater of
$100,000 or .005% of the value of the Fund's average daily net assets for such
fiscal year. Each item for which a payment may be made under the Service Plan
may constitute an expense of distributing Fund shares as the Securities and
Exchange Commission construes such term under the Rule.
A quarterly report of the amounts expended under the Service Plan, and
the purposes for which such expenditures were incurred, must be made to the
Fund's Board for its review. In addition, the Service Plan provides that it may
not be amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Service Plan without shareholder approval and that
other material amendments of the Service Plan must be approved by the Fund's
Board, and by the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager and have no direct or indirect
financial interest in the operation of the Service Plan or in the related
service agreements, by vote cast in person at a meeting called for the purpose
of considering such amendments. The Service Plan and the related service
agreements are subject to annual approval by such vote of the Board members cast
in person at a meeting called for the purpose of voting on the Service Plan. The
Service Plan is terminable at any time by vote of a majority of the Board
members who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Service Plan or in any of the related
service agreements or by vote of a majority of the Fund's shares.
From August 23, 1994 through March 21, 2000, Premier Mutual Fund
Services, Inc. ("Premier") acted as the Fund's distributor and received payments
under the Plan. For the fiscal year ended December 31, 1999, the Fund (i)
reimbursed Premier $95,957 for payments made to Service Agents for distributing
shares and Servicing, (ii) paid the Manager and its affiliates $1,350,765 for
advertising and marketing shares and Servicing, and (iii) paid $6,170 for
printing the Fund's prospectus and statement of additional information, as well
as implementing and operating the Service Plan.
HOW TO REDEEM SHARES
REDEMPTION FEE. The Fund will deduct a redemption fee equal to 1% of
the net asset value of Fund shares redeemed (including redemptions through the
use of the Fund Exchanges service) less than 30* days following the issuance of
such shares. The redemption fee will be deducted from the redemption proceeds
and retained by the Fund. For the fiscal year ended December 31, 1999, the Fund
retained $686 in redemption fees.
- ------------------
* Shares purchased before June 1,2000 must be held for at least 15 days to
avoid the redemption fee.
No redemption fee will be charged on the redemption or exchange of
shares (1) through the Fund's Check Redemption Privilege, Automatic Withdrawal
Plan, or Dreyfus Auto-Exchange Privilege, (2) through accounts that are
reflected on the records of the Transfer Agent as omnibus accounts approved by
the Distributor, (3) through accounts established by Service Agents approved by
the Distributor that utilize the National Securities Clearing Corporation's
networking system, or (4) acquired through the reinvestment of dividends or
distributions. The redemption fee may be waived, modified or terminated at any
time.
CHECKWRITING PRIVILEGE. The Fund provides Redemption Checks ("Checks")
automatically upon opening an account, unless you specifically refuse the
Checkwriting Privilege by checking the applicable "No" box on the Account
Application. The Checkwriting Privilege may be established for an existing
account by a separate signed Shareholder Services Form. Checks will be sent only
to the registered owner(s) of the account and only to the address of record. The
Account Application or Shareholder Services Form must be manually signed by the
registered owner(s). Checks may be made payable to the order of any person in an
amount of $500 or more. When a Check is presented to the Transfer Agent for
payment, the Transfer Agent, as your agent, will cause the Fund to redeem a
sufficient number of shares in your account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of the
Check will be returned to you. You generally will be subject to the same rules
and regulations that apply to checking accounts, although the election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will honor,
upon presentment, even if presented before the date of the Check, all postdated
Checks which are dated within six months of presentment for payment, if they are
otherwise in good order.
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Check upon your request or if the Transfer Agent cannot honor a
Check due to insufficient funds or other valid reason. If the amount of the
Check is greater than the value of the shares in your account, the Check will be
returned marked insufficient funds. Checks should not be used to close an
account.
The Checkwriting Privilege will be terminated immediately, without
notice, with respect to any account which is, or becomes, subject to backup
withholding on redemptions. Any Check written on an account which has become
subject to backup withholding on redemptions will not be honored by the Transfer
Agent.
WIRE REDEMPTION PRIVILEGE. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions from
any person representing himself or herself to be you and reasonably believed by
the Transfer Agent to be genuine. Ordinarily, the Fund will initiate payment for
shares redeemed pursuant to this Privilege on the next business day after
receipt by the Transfer Agent of a redemption request in proper form. Redemption
proceeds ($1,000 minimum) will be transferred by Federal Reserve wire only to
the commercial bank account specified by you on the Account Application or
Shareholder Services Form, or to a correspondent bank if your bank is not a
member of the Federal Reserve System. Fees ordinarily are imposed by such bank
and borne by the investor. Immediate notification by the correspondent bank to
your bank is necessary to avoid a delay in crediting the funds to your bank
account.
If you have access to telegraphic equipment, you may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
TRANSFER AGENT'S
TRANSMITTAL CODE ANSWER BACK SIGN
----------------- -------------------
144295 144295 TSSG PREP
If you do not have direct access to telegraphic equipment, you may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171,
toll free. You should advise the operator that the above transmittal code must
be used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent. This
request must be signed by each shareholder, with each signature guaranteed as
described below under "Stock Certificates; Signatures."
DREYFUS TELETRANSFER PRIVILEGE. You may request by telephone that
redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an ACH member may be designated. Holders of jointly registered Fund or
bank accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $500,000 within any 30-day period. You
should be aware that if you have selected the Dreyfus TELETRANSFER Privilege,
any request for a wire redemption will be effected as a Dreyfus TELETRANSFER
transaction through the ACH system unless more prompt transmittal specifically
is requested. Redemption proceeds will be on deposit in the your account at an
ACH member bank ordinarily two business days after receipt of the redemption
request. See "How to Buy Shares--Dreyfus TELETRANSFER Privilege."
REDEMPTION THROUGH A SELECTED DEALER. If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected Dealer. If
the Selected Dealer transmits the redemption request so that it is received by
the Transfer Agent prior to the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time), the redemption request will
be effective on that day. If a redemption request is received by the Transfer
Agent after the close of trading on the floor of the New York Stock Exchange,
the redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited to your
account with the Selected Dealer. See "How to Buy Shares" for a discussion of
additional conditions or fees that may be imposed upon redemption.
STOCK CERTIFICATES; SIGNATURES. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each holder of
a joint account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor, and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on the
cover.
REDEMPTION COMMITMENT. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Board reserves the right
to make payments in whole or in part in securities or other assets of the Fund
in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In such
event, the securities would be valued in the same manner as the Fund's portfolio
is valued. If the recipient sells such securities, brokerage charges might be
incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange Commission so that
disposal of the Fund's investments or determination of its net asset value is
not reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
FUND EXCHANGES. You may purchase, in exchange for shares of the Fund,
shares of certain other funds managed or administered by the Manager, to the
extent such shares are offered for sale in your state of residence. The Fund
will deduct a redemption fee equal to 1% of the net asset value of Fund shares
exchanged where the exchange is made less than 30 days after the issuance of
such shares. Shares of other funds purchased by exchange will be purchased on
the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds offered without a sales load will
be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), but if the sales load applicable to the
Offered Shares exceeds the maximum sales load that could have
been imposed in connection with the Purchased Shares (at the time
the Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you must notify the
Transfer Agent of your prior ownership of fund shares and your account number.
To request an exchange, you, or your Service Agent acting on your
behalf, must give exchange instructions to the Transfer Agent in writing or by
telephone. The ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this Privilege.
By using the Telephone Exchange Privilege, you authorize the Transfer Agent to
act on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be you, or
a representative of your Service Agent, and reasonably believed by the Transfer
Agent to be genuine. Telephone exchanges may be subject to limitations as to the
amount involved or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange. No fees currently are
charged shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules promulgated
by the Securities and Exchange Commission.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
DREYFUS AUTO-EXCHANGE PRIVILEGE. Dreyfus Auto-Exchange Privilege
permits you to purchase, in exchange for shares of the Fund, shares of another
fund in the Dreyfus Family of Funds of which you are a shareholder. This
Privilege is available only for existing accounts. Shares will be exchanged on
the basis of relative net asset value as described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. You will be notified
if your account falls below the amount designated to be exchanged under this
Privilege. In this case, your account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Auto-Exchange transaction. Shares held under IRA and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between IRA
accounts from regular accounts to IRA accounts, but not from IRA accounts to
regular accounts. With respect to all other retirement accounts, exchanges may
be made only among those accounts.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject any
exchange request in whole or in part. Shares may be exchanged only between
accounts having identical names and other identifying designations. The Fund
Exchanges service or the Dreyfus Auto-Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
DREYFUS-AUTOMATIC ASSET BUILDER(R). Dreyfus-AUTOMATIC Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per
transaction) at regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE. Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social Security,
or certain veterans', military or other payments from the U.S. Government
automatically deposited into your fund account. You may deposit as much of such
payments as you elect.
DREYFUS PAYROLL SAVINGS PLAN. Dreyfus Payroll Savings Plan permits you
to purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus account
electronically through the ACH system at each pay period. To establish a Dreyfus
Payroll Savings Plan account, you must file an authorization form with your
employer's payroll department. It is the sole responsibility of your employer to
arrange for transactions under the Dreyfus Payroll Savings Plan.
DREYFUS STEP PROGRAM. Dreyfus Step Program enables you to purchase
Fund shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC Asset Builder(R), Dreyfus Government Direct Deposit
Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program
account, you must supply the necessary information on the Account Application
and file the required authorization form(s) with the Transfer Agent. For more
information concerning this Program, or to request the necessary authorization
form(s), please call toll free 1-800-782-6620. You may terminate your
participation in this Program at any time by discontinuing your participation in
Dreyfus-AUTOMATIC Asset Builder, Dreyfus Government Direct Deposit Privilege or
Dreyfus Payroll Savings Plan, as the case may be, as provided under the terms of
such Privilege(s). The Fund may modify or terminate this Program at any time.
DREYFUS DIVIDEND OPTIONS. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from the Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of other funds purchased pursuant to this
privilege will be purchased on the basis of relative net asset value per share
as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with a
sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund that charges a sales
load may be invested in shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), but if the sales
load applicable to the Offered Shares exceeds the maximum sales
load charged by the fund from which dividends or distributions
are being swept (without giving effect to any reduced loads), the
difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
Dreyfus Dividend ACH permits you to transfer electronically dividends
or dividends and capital gain distributions, if any, from the Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a fee
for this service.
AUTOMATIC WITHDRAWAL PLAN. The Automatic Withdrawal Plan permits you
to request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. Withdrawal
payments are the proceeds from sales of Fund shares, not the yield on the
shares. If withdrawal payments exceed reinvested dividends and distributions,
your shares will be reduced and eventually may be depleted. Automatic Withdrawal
may be terminated at any time by you, the Fund or the Transfer Agent. Shares for
which certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
DETERMINATION OF NET ASSET VALUE
VALUATION OF PORTFOLIO SECURITIES. The Fund's investments are valued
each business day by an independent pricing service (the "Service") approved by
the Fund's Board. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of the
market, these investments are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for such
securities). Other investments (which constitute a majority of the portfolio
securities) are carried at fair value as determined by the Service, based on
methods which include consideration of: yields or prices of municipal bonds of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. The Service may employ electronic data
processing techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the Fund's officers under the general
supervision of the Fund's Board. Expenses and fees, including the management fee
(reduced by the expense limitation, if any) and fees pursuant to the Service
Plan, are accrued daily and are taken into account for the purpose of
determining the net asset value of Fund shares.
NEW YORK STOCK EXCHANGE CLOSINGS. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that the Fund has qualified for the fiscal year
ended December 31, 1999 as a "regulated investment company" under the Code. The
Fund intends to continue to so qualify if such qualification is in the best
interests of its shareholders. Such qualification relieves the Fund of any
liability for Federal income tax to the extent its earnings are distributed in
accordance with applicable provisions of the Code. If the Fund did not qualify
as a regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax.
The Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange is open for business. Fund shares begin
earning income dividends on the day following the date of purchase. 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. The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the next business day. If you redeem all shares in your account at
any time during the month, all dividends to which you are entitled will be paid
to you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of any
accrued dividends to which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account, such portion of
the accrued dividends will be paid to you along with the proceeds of the
redemption.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividend or distribution and all future dividends and distributions payable to
you in additional Fund shares at net asset value. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the aggregate net asset value of the shares
below the cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated under "Distributions
and Taxes" in the Prospectus. In addition, the Code provides that if a
shareholder holds Fund shares for six months or less and has received an
exempt-interest dividend with respect to such shares, any loss incurred on the
sale of such shares will be disallowed to the extent of the exempt-interest
dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gains or losses. However, all or a portion of any gains
realized from the sale or other disposition of certain market discount bonds
will be treated as ordinary income. In addition, all or a portion of the gain
realized from engaging in "conversion transactions" (generally including certain
transactions designed to convert ordinary income into capital gain) may be
treated as ordinary income.
Gain or loss, if any, realized by the Fund from certain 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 options as well as from closing transactions. In addition, any such
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 as described above.
Offsetting positions held by the Fund involving certain options
transactions may be considered, for tax purposes, to constitute "straddles."
"Straddles" are defined to include "offsetting positions" in actively traded
personal property. To the extent the straddle rules apply to positions
established by the Fund, losses realized by the Fund may be deferred to the
extent of unrealized gain in the offsetting position. In addition, short-term
capital loss on straddle positions may be recharacterized as long-term capital
loss, and long-term capital gains on straddle positions may be treated as
short-term capital gains or ordinary income. Certain of the straddle positions
held by the Fund may constitute "mixed straddles." The Fund may make one or more
elections with respect to the treatment of "mixed straddles," resulting in
different tax consequences. In certain circumstances, the provisions governing
the tax treatment of straddles override or modify certain of the provisions
discussed above.
The Fund intends to be a "qualified investment fund" within the
meaning of the New Jersey gross income tax. The primary criteria for
constituting a "qualified investment fund" are that (i) the Fund is an
investment company registered with the Securities and Exchange Commission, which
for the calendar year in which the dividends and distributions (if any) are
paid, has no investments other than interest-bearing obligations, obligations
issued at a discount, and cash and cash items, including receivables, and
financial options, futures and forward contracts, or other similar financial
instruments relating to interest-bearing obligations, obligations issued at a
discount or bond indexes related thereto and (ii) at the close of each quarter
of the taxable year, the Fund has not less than 80% of the aggregate principal
amount of all of its investments, excluding financial options, futures and
forward contracts, or other similar financial instruments, related to
interest-bearing obligations, obligations issued at a discount or bond indexes
related thereto, cash and cash items, which cash items shall include
receivables, in New Jersey Municipal Obligations, including obligations of
Puerto Rico, the Virgin Islands and other territories and possessions of the
United States and certain other specified securities exempt from Federal and New
Jersey income taxes. Additionally, a qualified investment fund must comply with
certain continuing reporting requirements.
If the Fund qualifies as a qualified investment fund and the Fund
complies with its reporting obligations, (a) dividends and distributions paid by
the Fund to a New Jersey resident individual shareholder will not be subject to
New Jersey gross income tax to the extent that the dividends and distributions
are attributable to income earned by the Fund as interest on or gain from New
Jersey Municipal Obligations, and (b) gain from the sale of Fund shares by a New
Jersey resident individual shareholder will not be subject to New Jersey gross
income tax. Shares of the Fund are not subject to property taxation by New
Jersey or its political subdivisions. To the extent that you are subject to
state and local taxes outside of New Jersey, dividends and distributions earned
by an investment in the Fund and gain from the sale of shares in the Fund may
represent taxable income.
If the Fund either (1) holds an appreciated financial position with
respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale, futures,
forward, or offsetting notional principal contract (collectively, a "Contract")
respecting the same or substantially identical property or (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as, or substantially identical to, the underlying property, the
Fund generally will be taxed as if the appreciated financial position were sold
at its fair market value on the date the Fund enters into the financial position
or acquires the property, respectively.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion in
order to maintain its qualification as a regulated investment company. In such
case, the Fund may have to dispose of securities which it might otherwise have
continued to hold in order to generate cash to satisfy these distribution
requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities are purchased from and sold to parties acting as
either principal or agent. Newly-issued securities ordinarily are purchased
directly from the issuer or from an underwriter; other purchases and sales
usually are placed with those dealers from which it appears that the best price
or execution will be obtained. Usually no brokerage commissions, as such, are
paid by the Fund for such purchases and sales, although the price paid usually
includes an undisclosed compensation to the dealer acting as agent. The prices
paid to underwriters of newly-issued securities usually include a concession
paid by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked price.
No brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and analysis
with the views and information of other securities firms and may be selected
based upon their sales of shares of the Fund or other funds advised by the
Manager or its affiliates.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by brokers
in connection with other funds the Manager advises may be used by the Manager in
advising the Fund. Although it is not possible to place a dollar value on these
services, it is the opinion of the Manager that the receipt and study of such
services should not reduce the overall expenses of its research department.
PERFORMANCE INFORMATION
The Fund's current yield for the 30-day period ended December 31, 1999
was 5.04%, which reflects the waiver of a portion of the management fee by the
Manager. Had a portion of the management fee not been waived, the Fund's current
yield for the 30-day period ended December 31, 1999 would have been 4.94%.
Current yield is computed pursuant to a formula which operates as follows: the
amount of the Fund's expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by the Fund during
the period. That result is then divided by the product of: (a) the average daily
number of shares outstanding during the period that were entitled to receive
dividends and distributions, and (b) the net asset value per share on the last
day of the period less any undistributed earned income per share reasonably
expected to be declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result by 2.
Based upon a combined 1999 Federal and State of New Jersey personal
income tax rate of 43.45%, the Fund's tax equivalent yield for the 30-day period
ended December 31, 1999 was 8.91%. Without the above-referenced waiver by the
Manager, the Fund's tax equivalent yield for the 30-day period ended December
31, 1999 would have been 8.74%. Tax equivalent yield is computed by dividing
that portion of the current yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that portion, if
any, of the yield of the Fund that is not tax exempt.
The tax equivalent yield quoted above represents the application of
the highest Federal and New Jersey State marginal personal income tax rates
presently in effect. For Federal income tax purposes, a 39.60% tax rate has been
used. For New Jersey income tax purposes, a 6.37% tax rate has been used. The
tax equivalent yield figure, however, does not include the potential effect of
any local (including, but not limited to, county, district or city) taxes,
including applicable surcharges. In addition, there may be pending legislation
which could affect such stated tax rates or yields. Each investor should consult
its tax adviser, and consider its own factual circumstances and applicable tax
laws, in order to ascertain the relevant tax equivalent yield.
The Fund's average annual total return for the 1, 5 and 10 year
periods ended December 31, 1999 was (4.24)%, 5.63% and 6.26%, respectively.
Average annual total return is calculated by determining the ending redeemable
value of an investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
The Fund's aggregate total return for the period November 6, 1987
(commencement of operations) through December 31, 1999 was 130.57%. 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 period), and dividing the result by the net asset value
per share at the beginning of the period.
From time to time, the Fund may use hypothetical equivalent yields or
charts in its advertising. These hypothetical yields or charts will be used for
illustrative purposes only and are not indicative of the Fund's past or future
performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from CDA Investment
Technologies, Inc., Lipper Analytical Services, Inc., Moody's Bond Survey Bond
Index, Lehman Brothers Municipal Bond Index, Morningstar, Inc. and other
industry publications. From time to time, advertising materials for the Fund may
refer to or discuss then-current or past economic conditions, developments
and/or events, actual or proposed tax legislation, or to statistical or other
information concerning trends relating to investment companies, as compiled by
industry associations such as the Investment Company Institute. Advertising
materials for the Fund also may refer to Morningstar ratings and related
analyses supporting such ratings.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio managers and may refer to, or
include commentary by a portfolio manager relating to investment strategy, asset
growth, current or past business, political, economic or financial conditions
and other matters of general interest to investors.
INFORMATION ABOUT THE FUND
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights and
are freely transferable.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office. Fund
shareholders may remove a Board member by the affirmative vote of a majority of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is following a market-timing strategy or is
otherwise engaging in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability of Fund Exchanges, or
reject in whole or part any purchase or exchange request, with respect to such
investor's account. Such investors also may be barred from purchasing other
funds in the Dreyfus Family of Funds. Generally, an investor who makes more than
four exchanges out of the Fund during any calendar year or who makes exchanges
that appear to coincide with a market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control will be
considered as one account for purposes of determining a pattern of excessive
trading. In addition, the Fund may refuse or restrict purchase or exchange
requests by any person or group if, in the judgment of the Fund's management,
the Fund would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the Fund receives or anticipates receiving simultaneous orders that may
significantly affect the Fund (e.g., amounts equal to 1% or more of the Fund's
total assets). If an exchange request is refused, the Fund will take no other
action with respect to the shares until it receives further instructions from
the investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if the
amount of the redemption request otherwise would be disruptive to efficient
portfolio management or would adversely affect the Fund. The Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange requests
based on their separate components -- redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Fund's next determined net asset value but the
purchase order would be effective only at the net asset value next determined
after the fund being purchased receives the proceeds of the redemption, which
may result in the purchase being delayed.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, has been selected as independent auditors of the Fund.
YEAR 2000 ISSUES
The Fund could be adversely affected if the computer systems used by
the Manager and the Fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000.
The Manager has taken steps designed to avoid year 2000-related
problems in its systems and to monitor the readiness of other service providers.
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.
APPENDIX A
RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS.
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State of New Jersey
and various local agencies available as of the date of this Statement of
Additional Information. While the Fund has not independently verified this
information, it has no reason to believe that such information is not correct in
all material respects.
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective commercial agriculture. New Jersey's principal manufacturing
industries produce chemicals, pharmaceutical, electrical equipment and
instruments, machinery, printing and food products. Other economic activities
include services, wholesale and retail trade, insurance, tourism, petroleum
refining and truck farming.
In its seventh year of expansion, New Jersey has benefited and will
continue to benefit from national growth. While the latest national indicators
show that economic growth strongly accelerated in the first quarter of 1998, the
inflation rate remained low. After a very robust economic growth of 5.5% in the
first quarter for 1998, inflation-adjusted gross domestic product slowed to 1.4%
in the second quarter. This second quarter pace is slower, but is positive and
more sustainable.
Business investment expenditures and consumer spending have increased
substantially in the nation as well as in the State. Capital and consumer
spending may continue to rise due to the sustained character of economic growth
and the interest-sensitive homebuilding industry may continue to provide
stimulus both nationally and in New Jersey. It is expected that the employment
and income growth that has and is taking place will lead to further growth in
consumer outlays. Reasons for continued optimism in New Jersey include
increasing employment levels and higher-than-national level of per capita
personal income. Also, several expansions of existing hotel-casinos and plans
for several new casinos in Atlantic City will mean additional job creation.
While growth is likely to be slower than in the nation, the advantages
afforded by its geographic location that have served New Jersey well for many
years will still be there. Structural changes that have been occurring for years
can be expected to continue, with job creation concentrated most heavily in the
service industries.
In July 1991, S&P lowered New Jersey's general obligation bond rating
from "AAA" to "AA+." As of June 30, 1997, S&P, Moody's and Fitch rate New
Jersey's long-term general obligations "AA+," "Aa1" and "AA+," respectively.
In 1998, New Jersey's employment growth of 2% drove employment to a
level of 3.82 million, more than 116,000 jobs above the 1989 pre-recession high.
Personal income grew 5.5%, better than the 5.3% growth in 1997. Real Gross State
Product increased 3.5% in 1998, the highest growth in 10 years. Employment
growth during 1997-1998 ranged between 1.7 and 2.4%. Construction jobs grew 4.6%
in 1998 continuing the 5% growth seen in 1997. Manufacturing jobs declined by
0.45% in 1998. In 1998, aggregate growth in the service sector remained at 3%
for the second straight year.
The revised estimate as shown in the Governor's fiscal year 2000
Budget forecasts Sales and Use Tax collections for fiscal year 1995 as $5.01
billion. The fiscal year 2000 estimate of $5.3 billion, is a 4.8% increase from
the fiscal year 1999 estimate.
The revised estimate as shown in the Governor's fiscal year 1999
Budget forecasts Gross Income Tax collections for fiscal year 1999 of $6.1
billion. The estimate for fiscal year 2000 as shown in the Governor's fiscal
year 2000 Budget of $6.5 billion, is a 6.8% increase from the fiscal year 1999
estimate.
The revised estimate as shown in the Governor's fiscal year 2000
Budget forecasts Corporation Business Tax collections for fiscal year 1999 of
$1.5 billion. Included in the Corporation Business Tax forecast is a reduction
in the Corporation Business Tax rate from 9.375% to 9.0% of net New Jersey
income as well as two policy changes enacted into law in 1995 which (i)
effective June 30, 1997, allow corporations with multi-state operations to
allocate income to New Jersey using a formula which double weights the sales
receipts factor to give a tax preference to corporations that have a higher
concentration of payroll and facilities in New Jersey and (ii) provide a 7.5%
rather than a 9% tax rate for corporations that have net income up to $100,000.
The fiscal year 2000 forecast as shown in the Governor's Fiscal 2000 Budget of
$1.6 billion, represents a 5.3% increase from the fiscal year 1999 estimate.
Should revenues be less than the amount anticipated in the budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent any
expenditure under any appropriation. There are additional means by which the
Governor may ensure that the State is operated efficiently and does not incur a
deficit. No supplemental appropriation may be enacted after adoption of an
appropriations act except where there are sufficient revenues on hand or
anticipated, as certified by the Governor, to meet such appropriation. In the
past when actual revenues have been less than the amount anticipated in the
budget, the Governor has exercised her plenary powers leading to, among other
actions, implementation of a hiring freeze for all State departments and the
discontinuation of programs for which appropriations were budgeted but not yet
spent.
The State appropriated approximately $17.158 billion and $18.363
billion for Fiscal 1998 and 1999, respectively. Of the $18.363 billion
appropriated in fiscal year 1999 from the General Fund, the Property Tax Relief
Fund, the Casino Control Fund, the Casino Revenue Fund and Gubernatorial
Elections Fund, $7.515 billion was appropriated for State aid to local
governments, $5.014 billion was appropriated for grants-in-aid (payments to
individuals or public or private agencies for benefits to which a recipient is
entitled by law or for the provision of service on behalf of the State), $4.667
billion for Direct State services, $501.1 million for debt service on State
general obligation bonds and $667.1 million for capital construction.
Should tax revenues be less than the amount anticipated in the Budget
for a fiscal year, the Governor may, pursuant to statutory authority, prevent
any expenditure under any appropriation. The appropriations for fiscal year 1998
and for fiscal year 1999 reflect the amounts contained in the Governor's fiscal
year 1999 Budget.
The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1996 through 1999 in the amounts
of $446.3 million, $446.9 million, $483.7 million and $501.1 million,
respectively. The Governor's fiscal year 2000 Budget for fiscal year 2000
includes an appropriation in the amount of $518.7 million for principal and
interest payments for general obligations bonds.
APPENDIX B
Description of S&P's, Moody's and Fitch ratings:
S&P
MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of debt
service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of debt
service. The difference between "A" and "BBB" rating is that the latter shows
more than one fundamental weakness, or one very substantial fundamental
weakness, whereas the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.
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 payments.
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 interest and repayment 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 (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
COMMERCIAL PAPER RATINGS
The designation A-1 by S&P 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. Capacity for timely payment on issues with an A-2
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 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 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 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 sometime in the future.
Baa
Bonds 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 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 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 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 rated Ca present obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C
Bonds 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.
Generally, Moody's provides either a generic rating or a rating with a
numerical modifier of 1 for bonds in each of the generic rating categories Aa,
A, Baa, Ba and B. Moody's also provides numerical modifiers of 2 and 3 in each
of these categories for bond issues in the health care, higher education and
other not-for-profit sectors; the modifier 1 indicates that the issue ranks in
the higher end of its generic rating category; the modifier 2 indicates that the
issue is in the mid-range of the generic category; and the modifier 3 indicates
that the issue is in the low end of the generic category.
MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize the
difference 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.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
COMMERCIAL PAPER RATINGS
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be evidenced
by leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will 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 reasonable
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 profitability 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 lowest 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 13-36 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.
[The Acquiring Fund's Annual Report will be provided to Series' shareholders
and will be filed by Amendment.]
Dreyfus
New Jersey Municipal
Bond Fund, Inc.
SEMIANNUAL REPORT June 30, 2000
(reg.tm)
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
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
13 Statement of Assets and Liabilities
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Financial Highlights
17 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus New Jersey Municipal Bond Fund, Inc.
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus New Jersey
Municipal Bond Fund, Inc., covering the six-month period from January 1, 2000
through June 30, 2000. 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, W. Michael Petty.
The U.S. economy grew rapidly over the past six months in an environment
characterized by high levels of consumer spending and low levels of
unemployment. Concerns that inflationary pressures might reemerge caused the
Federal Reserve Board to raise short-term interest rates three times during the
reporting period, for a total increase of 1.00 percentage points. These
interest-rate hikes contributed to a total interest-rate increase of 1.75
percentage points since late June 1999, before the current reporting period
began.
However, supply-and-demand factors unique to the municipal bond market helped
constrain price erosion. Because of robust economic growth, most municipalities
had little need to borrow during the reporting period, creating a reduced supply
of new issues. As a result, market rallies during the first quarter of 2000 and
June generally offset declines in April and May, leaving municipal bond averages
relatively unchanged during the reporting period.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus New Jersey Municipal Bond Fund, Inc.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF FUND PERFORMANCE
W. Michael Petty, Portfolio Manager
How did Dreyfus New Jersey Municipal Bond Fund, Inc. perform during the period?
For the six-month period ended June 30, 2000, the fund produced a 4.26% total
return.(1) In comparison, the Lipper New Jersey Municipal Debt Funds category
average provided a 3.84% total return for the same period.(2)
We attribute the fund's performance to our relatively defensive strategy. More
specifically, the fund was able to avoid the full brunt of the effects of rising
interest rates by maintaining a relatively short average duration (a measure of
sensitivity to changing interest rates) and receiving highly competitive prices
for the sale of securities through the secondary market by taking advantage of
strong demand from individual investors.
What is the fund's investment approach?
Our goal is to seek a high level of current income exempt from federal and New
Jersey personal income taxes as is consistent with the preservation of capital.
To achieve this objective, we employ two primary strategies. First, because New
Jersey issues relatively few municipal bonds, we begin by evaluating
supply-and-demand factors in the bond market. We look at such criteria as the
bond' s yield, price, age, creditworthiness of its issuer, insurance and any
provisions for early redemption. Under most circumstances, we look for
investment grade bonds that have 10-year call protection and that are selling at
a discount to face value.
Second, while we generally do not attempt to predict changes in interest rates,
we may tactically manage the fund' s average duration in anticipation of
temporary supply-and-demand changes. If we expect the supply of newly issued
bonds to increase, we may reduce the fund's average duration to make cash
available for the purchase of higher yielding securities. Conversely, if we
expect demand for municipal bonds to surge at a time when we anticipate little
issuance, we may increase the fund's average duration to maintain current yields
for as long as practical.
What other factors influenced the fund's performance?
The fund was influenced by changing market conditions and shifting investor
sentiment over the past six months. Although the first quarter of 2000
experienced an encouraging municipal bond market rally, April and May saw a more
difficult investment environment before a final rally in June. As a result,
performance on a total return basis was modestly positive over the full
six-month reporting period.
When the reporting period began on January 1, 2000, investors were relieved that
widespread Y2K-related concerns had proven largely unfounded. However, they soon
became worried that strong economic growth in U.S. and worldwide economies might
rekindle long-dormant inflationary pressures, especially given rising wages in a
tight job market. In an attempt to ease these pressures and forestall a
reacceleration of inflation, the Federal Reserve Board raised short-term
interest rates three times during the reporting period, causing most bond prices
to fall, including those of many of the fund's holdings.
However, interest-rate-related declines were offset by positive
supply-and-demand influences that were unique to the municipal bond market.
During the first half of 2000, issuance of municipal bonds nationally declined
sharply compared to the same period one year ago. This supply reduction,
combined with continued robust demand from individual investors, helped support
a rebound of municipal bond prices, from which the fund's holdings benefited.
The fund's performance also benefited from its relatively defensive posture
during those months in which the market declined. We maintained a modestly short
average duration when possible, focusing on investment grade bonds with strong
income characteristics. We also increased the fund's cash position to
approximately 5% of assets, which is higher than average.
What is the fund's current strategy?
Our current strategy is to seek the highest returns possible while reducing
volatility and protecting assets if interest rates rise further. Accordingly, we
have attempted to maintain the portfolio's modestly short average duration in an
attempt to protect our holdings from the brunt of potential price depreciation
and capture higher yields as they become available.
From a security selection perspective, we have reduced our holdings of discount
bonds, which have recently rebounded, and we have enlarged our holdings of
insured bonds with competitive yields. While our ability to find such
opportunities has been constrained by the small size of the New Jersey municipal
marketplace and by the reduced supply of newly issued bonds, our move to higher
yielding securities has helped to offset some of the price decline caused by
rising interest rates. We have also begun to put some of our cash reserves to
work by purchasing Puerto Rico bonds, the income from which is tax-exempt for
New Jersey residents.
July 17, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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-NEW JERSEY RESIDENTS, AND SOME INCOME MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF
ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND
EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT
MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN
ABSORBED, THE FUND'S RETURN WOULD HAVE BEEN LOWER.
(2) SOURCE: LIPPER INC.
The Fund
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
Principal
LONG-TERM MUNICIPAL INVESTMENTS--95.1% Amount($) Value ($)
- --------------------------------------------------------------------------------
NEW JERSEY--86.3%
Atlantic County Utilities Authority,
Solid Waste System Revenue:
7%, 3/1/2008 4,250,000 4,173,797
7.125%, 3/1/2016 6,650,000 6,462,470
Bayshore Regional Sewer Authority, Sewer Revenue
5.50%, 4/1/2012 (Insured; MBIA) 2,000,000 2,039,620
City of Camden:
Zero Coupon, 2/15/2010 (Insured; FSA) 2,500,000 1,500,475
Zero Coupon, 2/15/2012 (Insured; FSA) 4,585,000 2,438,761
Cherry Hill Township School District:
4.75%, 2/15/2018 (Insured; FSA) 1,250,000 1,124,737
4.75%, 2/15/2019 (Insured; FSA) 1,347,000 1,200,514
Clearview Regional High School District
5.375%, 8/1/2015 (Insured; FGIC) 3,625,000 3,647,185
Delaware River and Bay Authority, Revenue
5.25%, 1/1/2026 (Insured; FGIC) 5,000,000 4,702,600
East Orange:
Zero Coupon, 8/1/2010 (Insured; FSA) 4,240,000 2,507,833
Zero Coupon, 8/1/2011 (Insured; FSA) 2,500,000 1,394,575
East Orange Board of Education, COP, Lease Revenue:
Zero Coupon, 2/1/2015 (Insured; FSA) 1,420,000 623,337
Zero Coupon, 8/1/2016 (Insured; FSA) 1,425,000 569,387
Zero Coupon, 8/1/2019 (Insured; FSA) 1,000,000 326,280
Zero Coupon, 2/1/2021 (Insured; FSA) 2,845,000 843,286
Zero Coupon, 2/1/2026 (Insured; FSA) 1,845,000 403,003
Zero Coupon, 2/1/2028 (Insured; FSA) 2,845,000 550,138
Essex County Improvement Authority, Lease Revenue:
7%, 12/1/2020
(Prerefunded 12/1/2000) (Insured; AMBAC) 4,000,000(a) 4,123,280
(County Correctional Facility Project)
6%, 10/1/2025 (Insured; FGIC) 10,000,000 10,311,700
Evesham Township Board of Education, COP,
Lease Purchase Agreement 6.875%, 9/1/2011
(Prerefunded 9/1/2001) (Insured; FGIC) 3,050,000(a) 3,192,435
Gloucester Township Municipal Utilities Authority, Sewer
Revenue 5.65%, 3/1/2018 (Insured; AMBAC) 2,530,000 2,579,512
Hudson County Improvement Authority:
Facility Lease Revenue 7.42%, 12/1/2025
(Prerefunded 12/1/2002) (Insured; FGIC) 13,835,000(a,b,c) 15,184,189
MFHR (Conduit Financing - Observer Park Project)
6.90%, 6/1/2022 (Insured; FNMA) 4,190,000 4,312,348
Jersey City:
Zero Coupon, 5/15/2010 (Insured; FSA) 4,745,000 2,832,101
6%, 10/1/2008 (Insured; AMBAC) 2,490,000 2,662,532
Middlesex County Improvement Authority, Revenue
Utility System (Perth Amboy Project):
Zero Coupon 9/1/2020 (Insured; AMBAC) 5,000,000 1,549,050
Zero Coupon 9/1/2022 (Insured; AMBAC) 5,000,000 1,370,250
State of New Jersey:
6%, 7/15/2010 7,400,000 7,987,560
5%, 2/1/2014 4,940,000 4,776,634
New Jersey Economic Development Authority, Revenue:
(Community Mental Health Loan Program)
8.50%, 7/1/2017 6,885,000 7,564,274
(Department of Human Services):
6.10%, 7/1/2017 4,370,000 4,456,832
6.25%, 7/1/2024 890,000 912,286
District Heating and Cooling
(Trigen - Trenton District Energy Co. L.P. Project):
6.10%, 12/1/2004 2,815,000 2,816,436
6.20%, 12/1/2007 2,725,000 2,669,928
Economic Development:
(American Airlines Inc. Project)
7.10%, 11/1/2031 2,855,000 2,884,892
(Tevco Inc. Project)
8.125%, 10/1/2009 (LOC; Credit
Lyonnais) 2,500,000 2,577,375
(United Methodist Homes of New Jersey
Obligation)
5.50%, 7/1/2019 2,500,000 2,009,700
First Mortgage (The Evergreens)
9.25%, 10/1/2022 (Prerefunded 10/1/2002) 4,900,000(a) 5,444,390
Health, Hospital and Nursing Home:
First Mortgage (Cadbury Corp. Project)
5.50%, 7/1/2018 (Insured; ACA) 1,000,000 930,340
(Hillcrest Health Service):
Zero Coupon, 1/1/2012 (Insured; AMBAC) 1,000,000 540,260
Zero Coupon, 1/1/2013 (Insured; AMBAC) 1,000,000 507,140
Zero Coupon, 1/1/2015 (Insured; AMBAC) 3,250,000 1,449,630
Zero Coupon, 1/1/2017 (Insured; AMBAC) 5,000,000 1,954,050
Zero Coupon, 1/1/2018 (Insured; AMBAC) 2,500,000 915,125
Zero Coupon, 1/1/2020 (Insured; AMBAC) 6,500,000 2,093,260
Zero Coupon, 1/1/2022 (Insured; AMBAC) 6,000,000 1,709,520
Local or Guaranteed Housing,
First Mortgage (Fellowship Village):
5.50%, 1/1/2018 2,500,000 2,008,775
5.50%, 1/1/2025 3,000,000 2,296,200
New Jersey Economic Development Authority, Revenue (continued):
(Morris Hall / Saint Lawrence Inc. Project)
5.50%, 4/1/2027 (LOC; Corestates Bank) 3,500,000 3,278,100
Special Facilities (Continental Airlines
Inc. Project) 6.25%, 9/15/2019 10,000,000 9,183,400
State Lease:
(Bergen County Administration Complex)
4.75%, 11/15/2026 (Insured; MBIA) 10,025,000 8,629,319
(State Office Buildings Project):
6%, 6/15/2014 2,425,000 2,567,469
6%, 6/15/2018 6,535,000 6,862,665
Transportation Project Sublease
5%, 5/1/2018 (Insured; FSA) 4,115,000 3,809,996
Waste Paper Recycling (Marcal Paper Mills Inc. Project):
6.25%, 2/1/2009 6,605,000 6,561,341
8.50%, 2/1/2010 5,850,000 6,331,982
Water Facilities:
(American Water Co. Inc. Project) :
6.50%, 4/1/2022 (Insured; FGIC) 11,500,000 11,811,420
5.25%, 7/1/2038 (Insured; FGIC) 5,315,000 4,804,760
(Elizabeth Water Co. Project) 6.70%,
8/1/2021 3,965,000 4,104,568
New Jersey Educational Facilities Authority, Revenue:
(Institute for Advanced Study) 5%, 7/1/2028 2,310,000 2,070,291
(New Jersey City University)
4.75%, 7/1/2020 (Insured; AMBAC) 1,000,000 881,500
(Saint Peter's College Project):
5.375%, 7/1/2018 1,000,000 901,740
5.50%, 7/1/2027 1,750,000 1,542,713
(Seton Hall University Project):
7%, 7/1/2021 2,320,000 2,422,846
7%, 7/1/2021 (Prerefunded 7/1/2001) 1,180,000(a) 1,232,309
New Jersey Health Care Facilities Financing Authority,
Health, Hospital and Nursing Home Revenue:
(Burdette Tomlin Memorial Hospital):
5.50%, 7/1/2019 1,500,000 1,384,500
5.50% 7/1/2029 4,750,000 4,249,492
(Catholic Health East) 4.75%, 11/15/2021 2,000,000 1,706,320
(Centrastate Medical Center Obligated Group)
4.50%, 7/1/2028 (Insured: AMBAC) 10,890,000 8,737,374
(Kimball Medical Center)
8%, 7/1/2013 (Prerefunded 7/1/2000) 12,375,000(a) 12,623,738
(Meridian Health Systems Obligated Group)
5.25%, 7/1/2029 (Insured; FSA) 1,350,000 1,247,251
New Jersey Health Care Facilities Financing Authority,
Health, Hospital and Nursing Home Revenue (continued):
(Palisades Medical Center Obligated Group):
7.50%, 7/1/2006 635,000 656,838
7.50%, 7/1/2006 (Prerefunded 7/1/2002) 1,040,000(a) 1,101,984
5.20%, 7/1/2019 (Insured; ACA) 1,725,000 1,527,108
7.60%, 7/1/2021 950,000 983,278
7.60%, 7/1/2021 (Prerefunded 7/1/2002) 1,400,000(a) 1,502,676
5.25%, 7/1/2018 (Insured; ACA) 950,000 820,648
(Pascack Valley Hospital Association)
5.125%, 7/1/2028 4,050,000 2,836,134
(Raritan Bay Medical Center) 7.25%,
7/1/2014 11,400,000 10,660,368
(Saint Barnabas Health):
Zero Coupon, 7/1/2023 (Insured; MBIA) 5,000,000 1,273,500
5%, 7/1/2024 (Insured; MBIA) 5,755,000 5,138,524
(Saint Elizabeth Hospital Obligated Group):
6%, 7/1/2014 2,500,000 2,225,950
6%, 7/1/2020 3,000,000 2,590,230
New Jersey Higher Education Assistance Authority, Student
Loan Revenue:
5.30%, 6/1/2017 (Insured; AMBAC) 7,185,000 6,870,010
5.25%, 6/1/2018 (Insured; MBIA) 900,000 854,370
New Jersey Highway Authority, Revenue
(Garden State Parkway) 6%, 1/1/2019 2,000,000 2,110,880
New Jersey Housing and Mortgage Finance Agency, Revenue:
Home Buyer:
5.75%, 4/1/2018 (Insured; MBIA) 1,650,000 1,649,835
5.90%, 10/1/2029 (Insured; MBIA) 4,050,000 4,022,744
Multi-Family Housing:
5.65%, 5/1/2040 (Insured; AMBAC) 1,700,000 1,595,484
(Presidential Plaza at Newport Project)
7%, 5/1/2030 (Insured; FHA) 4,000,000 4,163,440
Rental Housing (Tiffany Manor) 6.75%, 11/1/2022 9,310,000 9,559,601
New Jersey Sports and Exposition Authority:
Convention Center Luxury Revenue
5%, 9/1/2019 (Insured; MBIA) 6,210,000 5,676,126
Recreational Revenue 4.50%, 3/1/2024 550,000 456,379
New Jersey Transit Corp., Lease Purchase Agreement, COP
(Raymond Plaza East Inc.)
6.50%, 10/1/2016 (Insured; FSA) 3,945,000 4,260,245
New Jersey Transportation Trust Fund Authority
(Transportation System):
7%, 6/15/2012 (Insured; MBIA) 6,000,000 6,967,140
5.75%, 6/15/2017 6,000,000 6,214,260
5.75%, 6/15/2018 6,000,000 6,186,960
5.75%, 6/15/2020 6,500,000 6,659,445
New Jersey Turnpike Authority, Turnpike Revenue:
6.50%, 1/1/2016 (Insured; MBIA) 14,665,000 16,301,907
5.375%, 1/1/2020 (Insured; MBIA) 4,550,000 4,421,554
North Jersey District Water Supply Commission,
Sewer Revenue (Wanaque South Project)
6%, 7/1/2019 (Insured; MBIA) 2,000,000 2,115,260
Ocean County Pollution Control Financing Authority, PCR
(Ciba Geigy Corp. Project) 6%, 5/1/2020 10,000,000 10,198,300
Port Authority of New York and New Jersey:
Port, Airport, and Marina Improvements Revenue:
(Consolidated Bond 116th Series)
4.25%, 10/1/2026 (Insured; AMBAC) 16,170,000 12,638,310
(Consolidated Bond 119th Series)
5.50%, 9/15/2016 (Insured; FGIC) 4,650,000 4,627,401
Special Obligation Revenue:
(U.S. Air LaGuardia Project) 9.125%,
12/1/2015 6,500,000 6,714,565
(JFK International Air Terminal):
6.25%, 12/1/2015 (Insured; MBIA) 5,000,000 5,437,950
5.75%, 12/1/2022 (Insured; MBIA) 12,870,000 12,813,115
South Jersey Transportation Authority, Revenue,
Port, Airport and Marina Lease (Raytheon
Aircraft Service Inc. Project) 6.15%, 1/1/2022 405,000 368,064
Union County Utilities Authority, Solid Waste Revenue
(Ogden Martin):
5.375%, 6/1/2019 (Insured; AMBAC) 2,300,000 2,189,761
5.375%, 6/1/2020 (Insured; AMBAC) 2,540,000 2,409,038
Western Monmouth Utilities Authority, Sewer Revenue
5.60%, 2/1/2014 (Insured; AMBAC) 2,190,000 2,225,412
West New York Municipal Utilities Authority,
Sewer Revenue 7.30%, 12/15/2017
(Prerefunded 12/15/2000) (Insured; FGIC) 6,250,000(a) 6,457,500
U.S. RELATED--8.8%
Guam Power Authority 5%, 10/1/2024 1,240,000 1,116,806
Commonwealth of Puerto Rico
5.65%, 7/1/2015 (Insured; MBIA) 2,000,000 2,091,880
Puerto Rico Highway and Transportation Authority,
Highway Revenue:
5.305%, 7/1/2007 11,100,000(b) 11,544,000
6.592%, 7/1/2009 2,950,000(b) 3,049,563
6.625%, 7/1/2018 (Prerefunded 7/1/2002) 13,000,000(a) 13,759,590
5%, 7/1/2036 8,000,000 6,951,360
Puerto Rico Public Buildings Authority, Revenue
5.25%, 7/1/2021 (Insured; FSA) 2,130,000 2,037,345
Virgin Islands Public Finance Authority, Revenues,
Gross Receipts Taxes Loan Note:
6.375%, 10/1/2019 2,000,000 2,016,520
6.50%, 10/1/2024 2,000,000 2,029,240
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $477,122,406) 480,153,694
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--4.3%
- --------------------------------------------------------------------------------
NEW JERSEY--2.7%
Port Authority of New York and New Jersey
Special Obligation Revenue, VRDN:
4.35% (SBPA; Morgan Guaranty Trust Co.) 4,000,000(d) 4,000,000
4.45% (SBPA; Bank of Nova Scotia) 2,000,000(d) 2,000,000
4.45% (SBPA; Landesbank Hessen-Thurgen) 1,200,000(d) 1,200,000
4.50% (SBPA; Bayerische Landesbank) 6,350,000(d) 6,350,000
U.S. RELATED--1.6%
Puerto Rico Highway and Transportation Authority,
Transportation Revenue, VRDN
4.25% (SBPA; Bank of Nova Scotia) 8,000,000(d) 8,000,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $21,550,000) 21,550,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $498,672,406) 99.4% 501,703,694
CASH AND RECEIVABLES (NET) .6% 3,000,249
NET ASSETS 100.0% 504,703,943
Summary of Abbreviations
ACA American Capital Access
AMBAC American Municipal Bond
Assurance Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance
Company
FHA Federal Housing Administration
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SBPA Standby Bond Purchase
Agreement
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- -------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 58.6
AA Aa AA 7.8
A A A 12.1
BBB Baa BBB 7.3
BB Ba BB 3.2
F1 Mig1 SP1 4.3
Not Rated(e) Not Rated(e) Not Rated(e) 6.7
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) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE
PERIODICALLY.
(C) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION,
NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT JUNE 30, 2000, THIS SECURITY
AMOUNTED TO $15,184,189 OR 3.0% OF NET ASSETS.
(D) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST--SUBJECT TO PERIODIC
CHANGE.
(E) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S,
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 498,672,406 501,703,694
Interest receivable 9,606,627
Receivable for investment securities sold 982,890
Prepaid expenses 6,134
512,299,345
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 356,254
Cash overdraft due to Custodian 2,985,513
Payable for investment securities purchased 4,060,156
Payable for shares of Common Stock redeemed 118,912
Accrued expenses 74,567
7,595,402
- --------------------------------------------------------------------------------
NET ASSETS ($) 504,703,943
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 508,097,933
Accumulated net realized gain (loss) on investments (6,425,278)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 3,031,288
- --------------------------------------------------------------------------------
NET ASSETS ($) 504,703,943
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(500 million shares of $.001 par value Common Stock authorized) 40,916,337
NET ASSET VALUE, offering and redemption price per share--Note 3(d) ($) 12.34
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 15,504,978
EXPENSES:
Management fee--Note 3(a) 1,514,731
Shareholder servicing costs--Note 3(b) 768,520
Custodian fees 26,346
Professional fees 23,576
Directors' fees and expenses--Note 3(c) 19,804
Prospectus and shareholders' reports--Note 3(b) 13,278
Registration fees 4,619
Loan commitment fees--Note 2 4,551
Miscellaneous 14,546
TOTAL EXPENSES 2,389,971
Less--reduction in management fee due to
undertaking--Note 3(a) (239,550)
NET EXPENSES 2,150,421
INVESTMENT INCOME--NET 13,354,557
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (1,703,428)
Net unrealized appreciation (depreciation) on investments 9,105,837
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 7,402,409
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 20,756,966
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 13,354,557 28,605,859
Net realized gain (loss) on investments (1,703,428) (4,627,594)
Net unrealized appreciation (depreciation)
on investments 9,105,837 (48,653,360)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 20,756,966 (24,675,095)
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (13,354,557) ( 28,605,859)
Net realized gain on investments -- (1,652,869)
TOTAL DIVIDENDS (13,354,557) (30,258,728)
- --------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 20,649,975 69,052,804
Dividends reinvested 9,540,319 22,112,337
Cost of shares redeemed (59,267,401) (116,240,542)
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL STOCK TRANSACTIONS (29,077,107) (25,075,401)
TOTAL INCREASE (DECREASE) IN NET ASSETS (21,674,698) (80,009,224)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 526,378,641 606,387,865
END OF PERIOD 504,703,943 526,378,641
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 1,697,622 5,305,991
Shares issued for dividends reinvested 783,478 1,724,972
Shares redeemed (4,876,398) (9,059,009)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (2,395,298) (2,028,046)
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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.
Six Months Ended Year Ended December 31,
June 30, 2000
(Unaudited) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 12.15 13.37 13.35 13.00 13.53 12.41
Investment Operations:
Investment income--net .32 .64 .65 .68 .72 .74
Net realized and unrealized
gain (loss) on investments .19 (1.18) .11 .44 (.30) 1.12
Total from Investment Operations .51 (.54) .76 1.12 .42 1.86
Distributions:
Dividends from investment
income--net (.32) (.64) (.65) (.68) (.72) (.74)
Dividends from net realized gain
on investments -- (.04) (.09) (.09) (.23) (.00)(a)
Total Distributions (.32) (.68) (.74) (.77) (.95) (.74)
Net asset value, end of period 12.34 12.15 13.37 13.35 13.00 13.53
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 8.54(b) (4.24) 5.82 8.84 3.43 15.29
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets .85(b) .89 .90 .80 .80 .80
Ratio of net investment income
to average net assets 5.28(b) 4.94 4.86 5.23 5.46 5.67
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation .09(b) .05 .04 .14 .14 .15
Portfolio Turnover Rate 12.27(c) 37.02 36.69 28.01 31.30 24.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 504,704 526,379 606,388 596,218 593,949 653,836
(A) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
(B) ANNUALIZED.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus New Jersey Municipal Bond Fund, Inc. (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
New Jersey 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, which is a wholly-owned
subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus
Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
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 are valued each business day
by an independent pricing service ("Service") approved by the fund's Board of
Directors. 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. Under the terms of the custody
agreement, the fund received net earnings credits of $13,319 during the period
ended June 30, 2000 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
from investment income-net on each business day. 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 of
1986, as amended (the "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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
The fund has an unused capital loss carryover of approximately $3,113,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accordance with generally accepted accounting
principles. If not applied, the carryover expires in fiscal 2007.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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 June
30, 2000, 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 has undertaken, until such
time as it gives shareholders at least 90 days' notice to the contrary, to
reduce the management fee paid by the fund, to the extent that the fund's
aggregate expense, exclusive of taxes, brokerage fees, interest on borrowings,
commitment fees and extraordinary expenses, exceed an annual rate of .85 of 1%
of the value of the fund's average daily net assets. The reduction in management
fee, pursuant to the undertaking, amounted to $239,550 during the period ended
June 30, 2000.
(b) Under the Service Plan (the "Plan") adopted pursuant to Rule 12b-1 under the
Act, the fund pays the distributor for distributing the fund's shares, servicing
shareholder accounts and for advertising and marketing relating to the fund. The
Plan provides for payments to be made at an annual aggregate rate of . 25 of 1%
of the value of the fund's average daily net assets. Prior to March 22, 2000,
Premier Mutual Fund Service, Inc., and not DSC, received payments under the Plan
for distributing fund shares and for servicing shareholders accounts. The
distributor determines the amounts, if any, to be paid to Service Agents under
the Plan and the basis on which such payments are made. The fees payable under
the Plan are payable without regard to actual expenses incurred. The Plan also
separately provides for the fund to bear the costs of preparing, printing and
distributing certain of the fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan, not
to exceed the greater of $100,000 or .005 of 1% of the value of the fund's
average daily net assets for any full fiscal year. During the period ended June
30, 2000, the fund was charged $633,553 pursuant to the Plan, of which $616,494
was paid to DSC.
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 June 30, 2000, the fund was charged $87,390 pursuant to the transfer
agency agreement.
(c) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective April 11, 2000, each
Board member who is not an "affiliated person" as defined in the Act receives an
annual fee of $30,000 and an attendance fee of $4,000 for each in person meeting
and $500 for telephone meetings. These fees are allocated among the funds in the
Fund Group. The Chairman of the Board receives an additional 25% of such
compensation. Prior to April 11, 2000, each Board member who was not an "
affiliated person" as defined in the Act received from the fund an annual fee of
$2,500 and an attendance fee of $250 per meeting. The Chairman of the Board
received an additional 25% of such compensation. Subject to the fund' s Emeritus
Program Guidelines, Emeritus Board members, if any, receive 50% of the fund's
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
(d) A 1% redemption fee is charged and retained by the fund on shares redeemed
within thirty days following the date of issuance, including redemptions made
through the use of the fund's exchange privilege. During the period ended June
30, 2000, redemption fees charged and retained by the fund amounted to $1,185.
Prior to June 1, 2000, this fee was chargeable within fifteen days following the
date of issuance of such shares.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended June 30, 2000, amounted to
$59,222,298 and $86,688,839, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$3,031,288, consisting of $14,789,643 gross unrealized appreciation and
$11,758,355 gross unrealized depreciation.
At June 30, 2000, 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).
The Fund
For More Information
Dreyfus New Jersey Municipal Bond Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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 info@dreyfus.com
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 750SA006
Dreyfus Premier State
Municipal Bond Fund,
New Jersey Series
ANNUAL REPORT April 30, 2000
(reg.tm)
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
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
15 Financial Highlights
18 Notes to Financial Statements
23 Report of Independent Auditors
24 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
State Municipal Bond Fund,
New Jersey Series
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier State Municipal
Bond Fund, New Jersey Series, covering the 12-month period from May 1, 1999
through April 30, 2000. 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, W. Michael Petty.
When the reporting period began, evidence had emerged that the U.S. economy was
growing strongly in an environment characterized by high levels of consumer
spending and low levels of unemployment. Concerns that inflationary pressures
might re-emerge caused the Federal Reserve Board to raise short-term interest
rates five times during the reporting period, for a total increase of 1.25
percentage points. While higher interest rates generally led to an erosion of
municipal bond prices during much of the reporting period, the tax-exempt bond
market showed renewed signs of strength during the first four months of 2000.
Municipal bonds were also influenced by supply-and-demand considerations. These
technical influences have caused the yields of tax-exempt bonds to rise to very
attractive levels compared to the after-tax yields of taxable bonds of
comparable maturity and credit quality, making tax-exempt bonds especially
attractive for investors in the higher federal and state income tax brackets.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier State Municipal Bond Fund, New Jersey
Series.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
May 15, 2000
DISUSSION OF FUND PERFORMANCE
W. Michael Petty, Portfolio Manager
How did Dreyfus Premier State Municipal Bond Fund, New Jersey Series, perform
during the period?
For the 12-month period ended April 30, 2000, the fund's Class A shares provided
a -4.96% total return, its Class B shares provided a -5.45% total return and its
Class C shares provided a -5.66% total return.(1) In comparison, the Lipper New
Jersey Municipal Debt Funds category average provided a -3.54% total return for
the same period.(2) We attribute the fund's negative absolute returns to a
rising interest-rate environment during the period, which caused most municipal
bond prices to decline.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and New Jersey tax-exempt income
as is practical without undue risk from a diversified portfolio of longer term
municipal bonds. To achieve this objective, we employ two primary strategies.
First, we evaluate supply-and-demand factors in the bond market that are
affected by the relatively few municipal bonds issued by New Jersey. Based on
that assessment, we select the individual New Jersey tax-exempt bonds that we
believe are most likely to provide the highest returns with the least risk. We
look at such criteria as the bond's yield, price, age, creditworthiness of its
issuer, insurance, and any provisions for early redemption. Under most
circumstances, we look for high yielding bonds that have 10-year call protection
and that are selling at a discount to face value.
Second, while we do not attempt to predict changes in interest rates, we may
tactically manage the fund's average duration -- a measure of sensitivity to
changes in interest rates -- in anticipation of temporary supply-and-demand
changes. If we expect the supply of newly issued bonds to increase, we may
reduce the fund's average duration to make cash available for the purchase of
higher yielding securities.
Conversely, if we expect demand for municipal bonds to surge at a time when we
anticipate little issuance, we may increase the fund's average duration to
maintain current yields for as long as practical. At other times, we try to
maintain a neutral average duration consistent with other New Jersey municipal
bond funds.
What other factors influenced the fund's performance?
Although the fund's performance was hurt by a difficult investment environment
during the final two months of 1999, the first four months of 2000 generally
provided better market conditions and a market rally. This rally helped offset
most -- but not all -- of the decline in the first eight months of the reporting
period.
When the reporting period began on May 1, 1999, investors had become concerned
that strong economic growth might rekindle long-dormant inflationary pressures,
especially from rising wages in a tight job market. In an attempt to ease these
pressures and forestall a reacceleration of inflation, the Federal Reserve Board
raised short-term interest rates five times during the reporting period, causing
most bond prices to fall, for a total increase of 1.25 percentage points since
mid-1999.
Municipal bond prices also fell during November and December, because of adverse
supply-and-demand influences. For a variety of reasons, institutional investors
such as insurance companies and mutual funds participated less in the tax-exempt
market. Despite strong demand from individual investors, the absence of
institutional buyers helped reduce overall demand and drove municipal bond
prices down. During the first quarter of 2000, however, issuance of municipal
bonds nationally declined approximately 20% compared to the same period in 1999.
This supply reduction, combined with robust demand from individual investors,
helped support a rebound of municipal bond prices.
What is the fund's current strategy?
Our current strategy is to maintain as high a level of income as practical while
reducing volatility and protecting assets in a rising interest-rate environment.
Accordingly, we have modestly reduced the portfolio's average duration in an
attempt to protect our holdings from the brunt of potential price depreciation
and capture higher yields as they become available
From a security selection perspective, we have reduced our holdings of discount
bonds and we have enlarged our holdings of insured bonds with competitive
yields. While our ability to find such opportunities has been constrained by the
small size of the New Jersey municipal marketplace and by the reduced supply of
newly issued bonds, our move to higher yielding securities has helped offset
some of the price decline caused by rising interest rates.
May 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE
CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE
IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE
CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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-NEW JERSEY
RESIDENTS AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX
(AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier State
Municipal Bond Fund, New Jersey Series Class A shares and Class B shares and the
Lehman Brothers Municipal Bond Index
((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
ON MARCH 31, 1997, THE NEW JERSEY SERIES COMMENCED OPERATIONS THROUGH A TRANSFER
OF ASSETS FROM THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND FUND. THE
FINANCIAL DATA PROVIDED ABOVE PRIOR TO SUCH DATE IS FOR THE NEW JERSEY SERIES OF
PREMIER INSURED MUNICIPAL BOND FUND.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE CLASS A SHARES
AND CLASS B SHARES OF DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY
SERIES (THE "FUND") ON 5/4/94 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. FOR
COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/94 IS USED AS THE BEGINNING
VALUE ON 5/4/94. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED.
PERFORMANCE FOR CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF BOTH CLASS A
AND CLASS B SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES.
THE FUND INVESTS PRIMARILY IN NEW JERSEY MUNICIPAL SECURITIES AND ITS
PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM INITIAL SALES
CHARGE ON CLASS A SHARES AND THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE ON
CLASS B SHARES AND ALL OTHER APPLICABLE FEES AND EXPENSES. THE INDEX IS NOT
LIMITED TO INVESTMENTS PRINCIPALLY IN NEW JERSEY MUNICIPAL OBLIGATIONS AND DOES
NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE
FUND, IS AN UNMANAGED TOTAL RETURN PERFORMANCE BENCHMARK FOR THE LONG-TERM,
INVESTMENT-GRADE, GEOGRAPHICALLY UNRESTRICTED TAX-EXEMPT BOND MARKET, CALCULATED
BY USING MUNICIPAL BONDS SELECTED TO BE REPRESENTATIVE OF THE MUNICIPAL MARKET
OVERALL. THESE FACTORS CAN CONTRIBUTE TO THE INDEX POTENTIALLY OUTPERFORMING OR
UNDERPERFORMING THE FUND. FURTHER INFORMATION RELATING TO FUND PERFORMANCE,
INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL
HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
Average Annual Total Returns AS OF 4/30/00
Inception From
Date((+)) 1 Year 5 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (4.5%) 5/4/94 (9.24)% 3.22% 3.72%
WITHOUT SALES CHARGE 5/4/94 (4.96)% 4.17% 4.52%
CLASS B SHARES
WITH REDEMPTION((+)(+)) 5/4/94 (9.03)% 3.33% 3.87%
WITHOUT REDEMPTION 5/4/94 (5.45)% 3.65% 4.00%
CLASS C SHARES
WITH REDEMPTION((+)(+)(+)) 12/4/95 (6.55)% -- 2.04%
WITHOUT REDEMPTION 12/4/95 (5.66)% -- 2.04%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) ON MARCH 31, 1997, THE NEW JERSEY SERIES COMMENCED OPERATIONS THROUGH A
TRANSFER OF ASSETS FROM THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND
FUND. THE FINANCIAL DATA PROVIDED ABOVE PRIOR TO SUCH DATE IS FOR THE NEW JERSEY
SERIES OF PREMIER INSURED MUNICIPAL BOND FUND.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4%
AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO
CLASS A SHARES .
((+)(+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
1% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund
STATEMENT OF INVESTMENTS
April 30, 2000
STATEMENT OF INVESTMENTS
Principal
LONG-TERM MUNICIPAL INVESTMENTS--85.1% Amount($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--75.8%
Camden County Improvement Authority, Revenue (Health
Care Redevelopment Project--Cooper Health System
(Obligation Group)
5.875%, 2/15/2015 100,000 74,042
Carteret Board of Education, COP
6%, 1/15/2024 (Insured; MBIA) 440,000 451,317
Mercer County Improvement Authority, Revenue
(County Courthouse Project) 5.75%, 11/1/2017 500,000 504,920
New Jersey Economic Development Authority, Revenue
(Educational Testing Service) 4.75%, 5/15/2025
(Insured; MBIA) 900,000 756,657
First Mortgage:
(The Evergreens):
6%, 10/1/2017 650,000 559,663
6%, 10/1/2022 700,000 584,500
(Fellowship Village) 5.50%, 1/1/2018 450,000 364,874
Special Facility (Continental Airlines Inc. Project)
6.25%, 9/15/2019 1,320,000 1,228,920
State Lease (State Office Buildings Projects):
6.125%, 6/15/2018 (Insured; AMBAC) 1,000,000 1,037,510
(Department of Human Services) 6.25%, 7/1/2024 1,000,000 1,006,250
Water Facilities:
(New Jersey American Water Co. Inc. Project)
6.50%, 4/1/2022 (Insured; FGIC) 500,000 510,785
New Jersey Health Care Facilities Financing
Authority, Revenue:
(Burdette Tomlin Memorial Hospital) 5.50%, 7/1/2019 500,000 450,905
(General Hospital Center at Passaic) 6.75%, 7/1/2019
(Insured; FSA) 550,000 613,954
(Saint Barnabas) Zero Coupon, 7/1/2023 (Insured; MBIA) 1,000,000 241,560
(Saint Elizabeth Hospital Obligation Group)
6%, 7/1/2020 75,000 61,674
(Virtua Health Issue) 4.50%, 7/1/2028 (Insured; FSA) 250,000 194,527
New Jersey Highway Authority, Garden State Parkway
General Revenue
6%, 1/1/2019 640,000 669,126
New Jersey Turnpike Authority, Turnpike Revenue
6.50%, 1/1/2016 220,000 240,000
South Jersey Transportation Authority, LR
(Raytheon Aircraft Service Inc. Project)
6.15%, 1/1/2022 500,000 456,255
West Orange Board of Education, COP
6%, 10/1/2024 (Insured; MBIA) 500,000 509,705
U.S. RELATED--9.3%
Puerto Rico Housing Bank and Finance Agency, SFMR
6.25%, 4/1/2029 (Insured; GNMA) 285,000 285,442
Virgin Islands Public Finance Authority, Gross Receipts
Taxes Lien Note
Gross Receipts Taxes Lien Note 6.50%, 10/1/2024 1,000,000 1,007,550
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $12,439,652) 11,810,136
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--13.0%
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Economic Development Authority, VRDN:
EDR (El Dorado Terminal) 6% 400,000(a) 400,000
Natural Gas Facilities Revenue (NUI Corp. Project)
(Insured; AMBAC) 5.75% 400,000(a) 400,000
Water Facilities Revenue (United Water New
Jersey Inc. Project)
(Insured; AMBAC) 5.95% 400,000(a) 400,000
Port Authority of New York and New Jersey,
Special Obligation Revenue, VRDN
(Versatile Structure Obligation):
6.10% 500,000(a) 500,000
6% 100,000(a) 100,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $1,800,000) 1,800,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $14,239,652) 98.1% 13,610,136
CASH AND RECEIVABLES (NET) 1.9% 261,706
NET ASSETS 100.0% 13,871,842
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
COP Certificate of Participation
EDR Economic Development
Revenue
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
LR Lease Revenue
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 38.8
AA Aa AA 3.7
A A A 12.5
BBB Baa BBB 13.9
BB Ba BB 9.0
B B B .5
F1 MIG1/P1 SP1/A1 13.2
Not Rated(b) Not Rated(b) Not Rated(b) 8.4
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
(B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE
RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 14,239,652 13,610,136
Cash 88,121
Interest receivable 179,762
Prepaid expenses 7,046
13,885,065
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 7,856
Accrued expenses 5,367
13,223
- --------------------------------------------------------------------------------
NET ASSETS ($) 13,871,842
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 14,992,972
Accumulated net realized gain (loss) on investments (491,614)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (629,516)
- --------------------------------------------------------------------------------
NET ASSETS ($) 13,871,842
NET ASSET VALUE PER SHARE
Class A Class B Class C
- --------------------------------------------------------------------------------------------------------
Net Assets ($) 4,945,887 8,488,204 437,751
Shares Outstanding 421,328 723,308 37,249
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 11.74 11.74 11.75
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended April 30, 2000
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 890,000
EXPENSES:
Management fee--Note 3(a) 85,582
Shareholder servicing costs--Note 3(c) 55,079
Distribution fees--Note 3(b) 53,568
Registration fees 18,813
Prospectus and shareholders' reports 14,958
Auditing fees 14,017
Custodian fees 3,165
Legal fees 485
Trustees' fees and expenses--Note 3(d) 285
Loan commitment fees--Note 2 156
Miscellaneous 12,433
TOTAL EXPENSES 258,541
Less--reduction in management fee due to
undertaking--Note 3(a) (65,782)
NET EXPENSES 192,759
INVESTMENT INCOME--NET 697,241
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (491,965)
Net unrealized appreciation (depreciation) on investments (1,130,979)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,622,944)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (925,703)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended April 30,
---------------------------------
2000 1999
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 697,241 642,885
Net realized gain (loss) on investments (491,965) 231,591
Net unrealized appreciation (depreciation)
on investments (1,130,979) (73,816)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (925,703) 800,660
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (242,137) (212,301)
Class B shares (443,125) (424,424)
Class C shares (11,979) (6,160)
Net realized gain on investments:
Class A shares (64,561) (32,649)
Class B shares (135,112) (72,679)
Class C shares (2,550) (1,052)
TOTAL DIVIDENDS (899,464) (749,265)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 1,037,158 1,206,947
Class B shares 975,090 2,694,789
Class C shares 422,771 254,987
Dividends reinvested:
Class A shares 191,033 155,326
Class B shares 369,450 318,957
Class C shares 8,141 5,677
Cost of shares redeemed:
Class A shares (893,433) (648,145)
Class B shares (3,261,000) (1,962,099)
Class C shares (307,408) (28,097)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (1,458,198) 1,998,342
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,283,365) 2,049,737
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 17,155,207 15,105,470
END OF PERIOD 13,871,842 17,155,207
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended April 30,
-------------------------------
2000 1999
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(A)
Shares sold 85,133 90,729
Shares issued for dividends reinvested 15,905 11,685
Shares redeemed (73,722) (49,056)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 27,316 53,358
- --------------------------------------------------------------------------------
CLASS B(A)
Shares sold 80,244 203,083
Shares issued for dividends reinvested 30,723 24,002
Shares redeemed (272,697) (147,804)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (161,730) 79,281
- --------------------------------------------------------------------------------
CLASS C
Shares sold 36,111 19,197
Shares issued for dividends reinvested 663 428
Shares redeemed (26,027) (2,111)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 10,747 17,514
(A) DURING THE PERIOD ENDED APRIL 30, 2000, 11,326 CLASS B SHARES REPRESENTING
$134,440 WERE AUTOMATICALLY CONVERTED TO 11,330 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Nine
Months
Ended
Year Ended April 30, April 30, Year Ended July 31,
CLASS A SHARES 2000 1999 1998 1997(a) 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 13.14 13.08 12.63 12.79 12.71 12.58
Investment Operations:
Investment income-net .59 .57 .61 .42 .59 .71
Net realized and unrealized gain (loss)
on investments (1.24) .15 .56 (.02) .08 .13
Total from Investment Operations (.65) .72 1.17 .40 .67 .84
Distributions:
Dividends from investment income-net (.59) (.57) (.61) (.42) (.59) (.71)
Dividends from net realized gain
on investments (.16) (.09) (.11) (.14) -- --
Total Distributions (.75) (.66) (.72) (.56) (.59) (.71)
Net asset value, end of period 11.74 13.14 13.08 12.63 12.79 12.71
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) (4.96) 5.52 9.48 4.25(c) 5.31 7.01
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .88 1.08 1.02 1.20(c) 1.14 .10
Ratio of net investment income
to average net assets 4.84 4.28 4.73 4.39(c) 4.55 5.60
Decrease reflected in above expense
ratios due to undertakings by The
Dreyfus Corporation .44 -- .03 .10(c) .08 1.35
Portfolio Turnover Rate 120.61 64.40 50.78 110.12(d) 28.14 43.48
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 4,946 5,179 4,454 4,837 5,212 4,981
(A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Nine
Months
Ended
Year Ended April 30, April 30, Year Ended July 31,
CLASS B SHARES 2000 1999 1998 1997(a) 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 13.14 13.07 12.63 12.79 12.71 12.58
Investment Operations:
Investment income-net .53 .50 .55 .37 .52 .65
Net realized and unrealized gain (loss)
on investments (1.24) .16 .55 (.02) .08 .13
Total from Investment Operations (.71) .66 1.10 .35 .60 .78
Distributions:
Dividends from investment income-net (.53) (.50) (.55) (.37) (.52) (.65)
Dividends from net realized gain
on investments (.16) (.09) (.11) (.14) -- --
Total Distributions (.69) (.59) (.66) (.51) (.52) (.65)
Net asset value, end of period 11.74 13.14 13.07 12.63 12.79 12.71
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) (5.45) 5.08 8.85 3.74(c) 4.79 6.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.40 1.58 1.53 1.69(c) 1.63 .61
Ratio of net investment income
to average net assets 4.32 3.78 4.20 3.88(c) 4.04 5.00
Decrease reflected in above expense
ratios due to undertakings by The
Dreyfus Corporation .42 -- .03 .09(c) .08 1.29
Portfolio Turnover Rate 120.61 64.40 50.78 110.12(d) 28.14 43.48
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 8,488 11,628 10,533 8,680 8,910 6,852
(A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Nine Months Year
Ended Ended
Year Ended April 30, April 30, July 31,
CLASS C SHARES 2000 1999 1998 1997(a) 1996(b)
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 13.15 13.09 12.64 12.78 13.21
Investment Operations:
Investment income--net .50 .46 .50 .35 .32
Net realized and unrealized gain (loss)
on investments (1.24) .15 .56 -- (.43)
Total from Investment Operations (.74) .61 1.06 .35 (.11)
Distributions:
Dividends from investment income--net (.50) (.46) (.50) (.35) (.32)
Dividends from net realized gain
on investments (.16) (.09) (.11) (.14) --
Total Distributions (.66) (.55) (.61) (.49) (.32)
Net asset value, end of period 11.75 13.15 13.09 12.64 12.78
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) (5.66) 4.67 8.55 3.72(d) (1.21)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA ($):
Ratio of expenses to average net assets 1.63 1.88 1.91 1.97(d) 1.95(d)
Ratio of net investment income
to average net assets 4.05 3.42 3.65 3.62(d) 3.68(d)
Decrease reflected in above expense
ratios due to undertakings by The
Dreyfus Corporation .41 -- .06 .76(d) .02(d)
Portfolio Turnover Rate 120.61 64.40 50.78 110.12(e) 28.14
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 438 349 118 1 6
(A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30.
(B) FROM DECEMBER 4, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996.
(C) EXCLUSIVE OF SALES CHARGE.
(D) ANNUALIZED.
(E) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company, and operates as a series company
currently offering thirteen series, including the New Jersey Series (the "fund")
. The fund' s investment objective is to maximize current income exempt from
Federal and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned
subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund
is authorized to issue an unlimited number of $.001 par value shares in the
following classes of shares: Class A, Class B and Class C shares. Class A shares
are subject to a sales charge imposed at the time of purchase, Class B shares
are subject to a contingent deferred sales charge ("CDSC") imposed on Class B
share redemptions made within six years of purchase (five years for shareholders
beneficially owning Class B shares on November 30, 1996) and Class C shares are
subject to a CDSC imposed on Class C shares redeemed within one year of
purchase. Class B shares automatically convert to Class A shares after six
years. Other differences between the classes include the services offered to and
the expenses borne by each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations of each
series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
The 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 transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Under the terms of the custody
agreement, the fund received net earnings credits of $654 during the period
ended April 30, 2000 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, 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.
The fund has an unused capital loss carryover of approximately $367,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 2000. This amount
is calculated based on Federal income tax regulations which may differ from
financial reporting in accordance with generally accepted accounting principles.
If not applied, the carryover expires in fiscal 2008.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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 April
30, 2000, 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 .55 of 1% of the value of the fund's average
daily net assets and is payable monthly. The Manager had undertaken from July
29, 1999 to April 30, 2000, to reduce the management fee paid by the fund, to
the extent that the fund' s aggregate expenses, excluding 12b-1 distribution
fees, taxes, brokerage fees, commitment fees, interest on borrowings and
extraordinary expenses, exceeded an annual rate of .77 of 1% of the value of the
fund' s average daily net assets. The reduction in management fee, pursuant to
the undertaking, amounted to $65,782 during the period ended April 30, 2000.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, Class B and Class C shares pay the distributor for distributing
their shares at an annual rate of .50 of 1% of the value of the average daily
net assets of Class B shares and .75 of 1% of the value of the average daily net
assets of Class C shares. During the period ended April 30, 2000, Class B and
Class C shares were charged $51,350 and $2,218, respectively, pursuant to the
Plan, of which $4,781 and $258 for Class B and Class C shares, respectively,
were paid to DSC.
(C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay
the distributor at an annual rate of .25 of 1% of the value of their average
daily net assets for the provision of certain services. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. The distributor may make payments to Service Agents (a securities
dealer, financial institution or other industry professional) in respect of
these services. The distributor determines the amounts to be paid to Service
Agents. During the period ended April 30, 2000, Class A, Class B and Class C
shares were charged $12,487, $25,675 and $739, respectively, pursuant to the
Shareholder Services Plan, of which $1,351, $2,391 and $86 for Class A, Class B
and Class C shares, respectively, were paid to DSC.
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 April 30, 2000, the fund was charged $7,336 pursuant to the transfer
agency agreement.
(D) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective April 13, 2000, each
Board member receives an annual fee of $50,000 and a fee of $6,500 for each
meeting held in person and $500 for telephone meetings. These fees are allocated
among the funds in the Fund Group. The Chairman of the Board receives an
additional 25% of such compensation. Prior to April 13, 2000, each Board member
who was not an "affiliated person" as defined in the Act received from the Trust
an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman
of the Board received an additional 25% of such compensation. Subject to the
fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any,
receive 50% of the Trust's annual retainer fee and per meeting fee paid at the
time the Board member achieved emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended April 30, 2000, amounted to
$17,840,324 and $21,139,986, respectively.
At April 30, 2000, accumulated net unrealized depreciation on investments was
$629,516, consisting of $95,462 gross unrealized appreciation and $724,978 gross
unrealized depreciation.
At April 30, 2000, 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).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund,
New Jersey Series
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus Premier State Municipal Bond Fund, New
Jersey Series (one of the Funds constituting the Dreyfus Premier State Municipal
Bond Fund) as of April 30, 2000, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund' s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 2000 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier State Municipal Bond Fund, New Jersey Series at April 30, 2000,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with accounting
principles generally accepted in the United States.
New York, New York
June 9, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended April 30, 2000:
- --all the dividends paid from investment income--net are "exempt-interest
dividends" (not subject to regular Federal and, for individuals who are New
Jersey residents, New Jersey personal income taxes), and
- --the fund hereby designates $.1329 per share as a long-term capital gain
distribution of the $.1568 per share paid on December 8, 1999.
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 2000 calendar year on Form 1099-DIV which
will be mailed by January 31, 2001.
For More Information
Dreyfus Premier State Municipal Bond Fund, New Jersey
Series
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call your financial representative
or 1-800-554-4611
BY MAIL Write to:
The Dreyfus Premier Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(c) 2000 Dreyfus Service Corporation 380AR004
================================================================================
Dreyfus Premier State
Municipal Bond Fund,
New Jersey Series
SEMIANNUAL REPORT October 31, 2000
(reg.tm)
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
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
13 Financial Highlights
16 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier
State Municipal Bond Fund,
New Jersey Series
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier State
Municipal Bond Fund, New Jersey Series, covering the six-month period from May
1, 2000 through October 31, 2000. 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, W. Michael Petty.
Despite some modest fluctuations because of changing economic conditions,
municipal bond prices generally rose modestly over the six-month reporting
period. Most sectors of the municipal bond market also benefited from slowing
economic growth as well. Additionally, the moderating effects of the Federal
Reserve Board' s (the "Fed") interest-rate hikes during the first half of 2000
helped the Fed to achieve its goal of slowing the U.S. economy. Other factors
such as higher energy prices and a weak euro also served to slow economic
growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their long-term averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent recently, the relative
stability and income potential of municipal bonds can make them an attractive
investment as part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620
Thank you for investing in Dreyfus Premier State Municipal Bond Fund, New Jersey
Series.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
November 15, 2000
DISCUSSION OF FUND PERFORMANCE
W. Michael Petty, Portfolio Manager
How did Dreyfus Premier State Municipal Bond Fund, New Jersey Series perform
during the period?
For the six-month period ended October 31, 2000, the fund's Class A shares
provided a 5.48% total return, its Class B shares provided a 5.22% total return
and its Class C shares provided a 5.10% total return.(1) In comparison, the
Lipper New Jersey Municipal Debt Funds category average provided a 5.29% total
return for the same period.(2)
We attribute the fund' s performance to a relatively strong investment
environment for municipal bonds, which was driven over the past six months
primarily by signs of an economic slowdown in the U.S., as well as positive
supply-and-demand factors affecting municipal bonds throughout the nation.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and New Jersey state tax-exempt
income as is practical without undue risk from a diversified portfolio of
municipal bonds. To achieve this objective, we employ two primary strategies.
First, we evaluate supply-and-demand factors in the bond market that are
affected by the relatively few municipal bonds issued by New Jersey. Based on
that assessment, we select the individual New Jersey tax-exempt bonds that we
believe are most likely to provide the highest returns with the least risk. We
look at such criteria as the bond's yield, price, age, creditworthiness of its
issuer, insurance, and any provisions for early redemption. Under most
circumstances, we look for high yielding bonds that have 10-year call protection
and that are selling at a discount to face value.
Second, while we do not attempt to predict changes in interest rates, we may
tactically manage the fund' s average duration -- a measure of sensitivity to
changes in interest rates -- in anticipation of temporary supply-and-demand
changes. If we expect the supply of newly issued bonds to increase, we may
reduce the fund's average duration to make cash available for the purchase of
higher yielding securities. Conversely, if we expect demand for municipal bonds
to surge at a time when we anticipate little issuance, we may increase the
fund's average duration to maintain current yields for as long as practical. At
other times, we try to maintain a "neutral" average duration consistent with
other New Jersey municipal bond funds.
What other factors influenced the fund's performance?
The fund was positively influenced by favorable economic and market conditions.
When the reporting period began on May 1, 2000, the U.S. and New Jersey
economies continued to grow strongly, raising concerns that long-dormant
inflationary pressures might reemerge. In response, the Federal Reserve Board
(the "Fed" ) raised short-term interest rates once during the reporting period.
However, signs soon emerged that the Fed's previous rate hikes were having the
desired effect of slowing the economy. Fewer housing starts, moderating growth
and little change in the core inflation rate suggested that the Fed's
restrictive monetary policies could be near an end.
In addition, New Jersey and its municipalities enjoyed higher revenues during
the reporting period. The state's strong economy curtailed its need to borrow
and resulted in a reduced supply of securities compared to the same period in
1999. When supply falls and demand rises or remains steady, prices of existing
bonds generally tend to move higher.
Accordingly, we became less cautious as the investment climate improved. Our
defensive position early in the reporting period -- which emphasized
income-oriented bonds selling at a slight premium to face value -- held back the
fund' s performance when the market rally began. But as it became more apparent
that the economy was slowing, we shifted assets to longer term bonds selling at
a slight discount to their face value. This slightly more aggressive positioning
enabled the fund to participate more fully in the market rally.
What is the fund's current strategy?
Because we believe that slower economic growth, fewer inflation concerns and
potentially lower interest rates may benefit the municipal bond market, we have
recently put some cash to work in modestly aggressive bonds that have, in our
opinion, good liquidity characteristics. On the other hand, we have avoided
market sectors, such as hospitals, that we believe are likely to remain
relatively illiquid. Accordingly, we have maintained our modestly aggressive
security selection strategy. However, because of the lack of new supply,
investment opportunities in the New Jersey marketplace have been relatively
limited.
November 15, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN
THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES
CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES.
HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD 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-NEW JERSEY RESIDENTS, AND SOME INCOME MAY BE
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS.
CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER INC.
The Fund
October 31, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
Principal
LONG-TERM MUNICIPAL INVESTMENTS--90.4% Amount($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--80.9%
Bergen County Housing Development Corp., Revenue
(Mortgage--Park Ridge) 5.95%, 7/1/2025 (Insured; MBIA) 500,000 500,555
Bordentown Sewer Authority, Revenue
5.375%, 12/1/2020 (Insured; FGIC) 880,000 873,550
Camden County Improvement Authority, Revenue
(Health Care Redevelopment Project--Cooper
Health System Obligation Group)
5.875%, 2/15/2015 100,000 73,552
Carteret Board of Education COP
6%, 1/15/2024 (Insured; MBIA) 440,000 463,822
Higher Education Student Assistance Authority,
Student Loan Revenue
6.125%, 6/1/2017 (Insured; MBIA) 600,000 627,546
Mercer County Improvement Authority, Revenue
(County Courthouse Project) 5.75%, 11/1/2017 500,000 517,570
New Jersey Economic Development Authority, Revenue
First Mortgage
(The Evergreens):
6%, 10/1/2017 650,000 562,386
6%, 10/1/2022 700,000 591,787
(Fellowship Village) 5.50%, 1/1/2018 450,000 370,633
Special Facility (Continental Airlines Inc. Project)
6.25%, 9/15/2019 500,000 469,950
State Lease (State Office Buildings Projects)
6.125%, 6/15/2018 (Insured; AMBAC) 1,000,000 1,070,440
(Department of Human Services) 6.25%, 7/1/2024 500,000 523,370
Water Facilities
(New Jersey American Water Co. Inc. Project)
6.50%, 4/1/2022 (Insured; FGIC) 500,000 516,545
New Jersey Health Care Facilities Financing Authority, Revenue:
(Burdette Tomlin Memorial Hospital) 5.50%, 7/1/2019 150,000 142,359
(General Hospital Center at Passaic) 6.75%, 7/1/2019
(Insured; FSA) 550,000 630,317
(Saint Barnabas) Zero Coupon, 7/1/2023 (Insured; MBIA) 1,000,000 273,940
(Society of the Valley Hospital) 5.375%,
7/1/2025.(Insured; AMBAC) 500,000 487,950
New Jersey Highway Authority, Garden State Parkway
General Revenue
6%, 1/1/2019 640,000 685,971
New Jersey Turnpike Authority, Turnpike Revenue
6.50%, 1/1/2016 220,000 247,089
Rahway, COP 5.625%, 2/15/2020 (Insured; MBIA) 600,000 612,636
South Jersey Transportation Authority, LR
(Raytheon Aircraft Service Inc. Project) 6.15%, 1/1/2022 500,000 460,865
West Orange Board of Education COP
6%, 10/1/2024 (Insured; MBIA) 500,000 526,450
U.S. RELATED--9.5%
Puerto Rico Housing Bank and Finance Agency, SFMR
6.25%, 4/1/2029 (Insured GNMA) 280,000 284,558
Virgin Islands Public Finance Authority Gross Receipts
Taxes Lien Note
Gross Receipts Taxes Lien Note 6.50%, 10/1/2024 1,000,000 1,034,300
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $12,673,921) 12,548,141
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--9.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey,
Special Obligation Revenue, VRDN
(Versatile Structure Obligation) 4.60%
(cost $1,300,000) 1,300,000(a) 1,300,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $13,973,921) 99.8% 13,848,141
CASH AND RECEIVABLES (NET) .2% 26,493
NET ASSETS 100.0% 13,874,634
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
LR Lease Revenue
MBIA Municipal Bond Investors Assurance
Insurance Corporation
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 54.6
AA Aa AA 3.7
A A A 6.6
BBB Baa BBB 13.5
BB Ba BB 3.4
B B B .5
F1 MIG1/P1 SP1/A1 9.3
Not Rated (b) Not Rated (b) Not Rated(b) 8.4
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE-SUBJECT TO PERIODIC
CHANGE.
(B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE
RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 13,973,921 13,848,141
Cash 339,177
Interest receivable 182,844
Prepaid expenses 6,327
14,376,489
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 12,556
Payable for investment securities purchased 489,299
501,855
- --------------------------------------------------------------------------------
NET ASSETS ($) 13,874,634
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 14,593,269
Accumulated net realized gain (loss) on investments (592,855)
Accumulated net unrealized appreciation (depreciation) on investments--Note
4 (125,780)
- --------------------------------------------------------------------------------
NET ASSETS ($) 13,874,634
NET ASSET VALUE PER SHARE
Class A Class B Class C
- --------------------------------------------------------------------------------
Net Assets ($) 5,635,575 7,779,336 459,723
Shares Outstanding 465,757 643,120 37,951
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 12.10 12.10 12.11
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended October 31, 2000 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 402,761
EXPENSES:
Management fee--Note 3(a) 37,665
Shareholder servicing costs--Note 3(c) 24,080
Distribution fees--Note 3(b) 21,541
Prospectus and shareholders' reports 8,378
Registration fees 6,680
Professional fees 4,633
Custodian fees 1,083
Trustees' fees and expenses--Note 3(d) 426
Loan commitment fees--Note 2 47
Miscellaneous 2,893
TOTAL EXPENSES 107,426
INVESTMENT INCOME--NET 295,335
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 4 ($):
Net realized gain (loss) on investments (101,241)
Net unrealized appreciation (depreciation) on investments 503,736
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 402,495
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 697,830
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
October 31, 2000 Year Ended
(Unaudited) April 30, 2000
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 295,335 697,241
Net realized gain (loss) on investments (101,241) (491,965)
Net unrealized appreciation (depreciation)
on investments 503,736 (1,130,979)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 697,830 (925,703)
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (122,640) (242,137)
Class B shares (163,890) (443,125)
Class C shares (8,805) (11,979)
Net realized gain on investments:
Class A shares -- (64,561)
Class B shares -- (135,112)
Class C shares -- (2,550)
TOTAL DIVIDENDS (295,335) (899,464)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 942,782 1,037,158
Class B shares 631,147 975,090
Class C shares 6,840 422,771
Dividends reinvested:
Class A shares 66,326 191,033
Class B shares 94,881 369,450
Class C shares 5,922 8,141
Cost of shares redeemed:
Class A shares (478,901) (893,433)
Class B shares (1,664,365) (3,261,000)
Class C shares (4,335) (307,408)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (399,703) (1,458,198)
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,792 (3,283,365)
- -------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 13,871,842 17,155,207
END OF PERIOD 13,874,634 13,871,842
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Six Months Ended
October 31, 2000 Year Ended
(Unaudited) April 30, 2000
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (A)
Shares sold 79,312 85,133
Shares issued for dividends reinvested 5,551 15,905
Shares redeemed (40,434) (73,722)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 44,429 27,316
- -------------------------------------------------------------------------------
CLASS B( A)
Shares sold 52,814 80,244
Shares issued for dividends reinvested 7,945 30,723
Shares redeemed (140,947) (272,697)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (80,188) (161,730)
- -------------------------------------------------------------------------------
CLASS C
Shares sold 568 36,111
Shares issued for dividends reinvested 495 663
Shares redeemed (361) (26,027)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 702 10,747
(A) DURING THE PERIOD ENDED OCTOBER 31, 2000 61,334 CLASS B SHARES REPRESENTING
$729,971 WERE AUTOMATICALLY CONVERTED TO 61,341 CLASS A SHARES AND DURING
THE PERIOD ENDED APRIL 30, 2000, 11,326 CLASS B SHARES REPRESENTING
$134,440 WERE AUTOMATICALLY CONVERTED TO 11,330 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except porfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming You had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
Six Months Nine
Ended Months
October 31, Ended Year Ended
2000 Year Ended April 30, April 30, July 31,
CLASS A SHARES (Unaudited) 2000 1999 1998 1997(a) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 11.74 13.14 13.08 12.63 12.79 12.71 12.58
Investment Operations:
Investment income--net .28 .59 .57 .61 .42 .59 .71
Net realized and unrealized gain
(loss) on investments .36 (1.24) .15 .56 (.02) .08 .13
Total from Investment Operations .64 (.65) .72 1.17 .40 .67 .84
Distributions:
Dividends from investment
income--net (.28) (.59) (.57) (.61) (.42) (59) (.71)
Dividends from net realized gain
on investments -- (.16) (.09) (.11) (.14) -- --
Total Distributions (.28) (.75) (.66) (.72) (.56) (59) (.71)
Net asset value, end of period 12.10 11.74 13.14 13.08 12.63 12.79 12.71
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 10.87(c) (4.96) 5.52 9.48 4.25(c) 5.31 7.01
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 1.26(c) .88 1.08 1.02 1.20(c) 1.14 .10
Ratio of net investment income
to average net assets 4.62(c) 4.84 4.28 4.73 4.39(c) 4.55 5.60
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- .44 -- .03 .10(c) .08 1.35
Portfolio Turnover Rate 32.10(d) 120.61 64.40 50.78 110.12(d) 28.14 43.48
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 5,636 4,946 5,179 4,454 4,837 5,212 4,981
PER SHARE DATA ($):
Net asset value, beginning of period 11.74 13.14 13.07 12.63 12.79 12.71 12.58
Investment Operations:
Investment income--net .25 .53 .50 .55 .37 .52 .65
Net realized and unrealized gain (loss)
on investments .36 (1.24) .16 .55 (.02) .08 .13
Total from Investment Operations .61 (.71) .66 1.10 .35 .60 .78
Distributions:
Dividends from investment income--net (.25) (.53) (.50) (.55) (.37) (.52) (.65)
Dividends from net realized gain
on investments -- (.16) (.09) (.11) (.14) -- --
Total Distributions (.25) (.69) (.59) (.66) (.51) (.52) (.65)
Net asset value, end of period 12.10 11.74 13.14 13.07 12.63 12.79 12.71
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 10.35(c) (5.45) 5.08 8.85 3.74(c) 4.79 6.48
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average
net assets 1.75(c) 1.40 1.58 1.53 1.69(c) 1.63 .61
Ratio of net investment income
to average net assets 4.13(c) 4.32 3.78 4.20 3.88(c) 4.04 5.00
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- .42 -- .03 .09(c) .08 1.29
Portfolio Turnover Rate 32.10(d) 120.61 64.40 50.78 110.12(d) 28.14 43.48
Net Assets, end of period
($ x 1,000) 7,779 8,488 11,628 10,533 8,680 8,910 6,852
(A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Nine Months Year
Six Months Ended Ended Ended
October 31, 2000 Year Ended April 30, April 30, July 31,
CLASS C SHARES (Unaudited) 2000 1999 1998 1997(a) 1996(b)
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 11.75 13.15 13.09 12.64 12.78 13.21
Investment Operations:
Investment income--net .23 .50 .46 .50 .35 .32
Net realized and unrealized gain (loss)
on investments .36 (1.24) .15 .56 -- (.43)
Total from Investment Operations .59 (.74) .61 1.06 .35 (.11)
Distributions:
Dividends from investment income-net (.23) (.50) (.46) (.50) (.35) (.32)
Dividends from net realized gain
on investments -- (.16) (.09) (.11) (.14) --
Total Distributions (.23) (.66) (.55) (.61) (.49) (.32)
Net asset value, end of period 12.11 11.75 13.15 13.09 12.64 12.78
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) 10.12(d) (5.66) 4.67 8.55 3.72(d) (1.21)(d
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.97(d) 1.63 1.88 1.91 1.97(d) 1.95(d)
Ratio of net investment income
to average net assets 3.90(d) 4.05 3.42 3.65 3.62(d) 3.68(d
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- .41 -- .06 .76(d) .02(d)
Portfolio Turnover Rate 32.10(e) 120.61 64.40 50.78 110.12(e) 28.14
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x1,000) 460 438 349 118 1 6
(A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30.
(B) FROM DECEMBER 4, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996
(C) EXCLUSIVE OF SALES CHARGE.
(D) ANNUALIZED.
(E) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company, and operates as a series company
currently offering thirteen series, including the New Jersey Series (the "fund")
. The fund' s investment objective is to maximize current income exempt from
Federal and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned
subsidiary of Mellon Financial Corporation.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of
the Manager, is the distributor of the fund's shares. The fund is authorized to
issue an unlimited number of $.001 par value shares of Beneficial Interest in
the following classes of shares: Class A, Class B and Class C shares. Class A
shares are subject to a sales charge imposed at the time of purchase, Class B
shares are subject to a contingent deferred sales charge ("CDSC") imposed on
Class B share redemptions made within six years of purchase (five years for
shareholders beneficially owning Class B shares on November 30, 1996) and Class
C shares are subject to a CDSC imposed on Class C shares redeemed within one
year of purchase. Class B shares automatically convert to Class A shares after
six years. Other differences between the classes include the services offered to
and the expenses borne by each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations of each
fund. Expenses directly attributable to each series are charged to that series'
operations; expenses which are applicable to all series are allocated among them
on a pro rata basis.
The fund' s financial statements are prepared in accordance with accounting
principles generally accepted in the United States, 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 transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date. Under the terms of the custody
agreement, the fund received net earnings credits of $1,481 during the period
ended October 31, 2000 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, if any, are normally declared and paid annually,
but the Series may make distributions on a more frequent basis to comply with
the distribution requirements of the Internal Revenue Code of 1986, as amended
(the "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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
The fund has an unused capital loss carryover of approximately $367,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 2000. This amount
is calculated based on Federal income tax regulations which may differ from
financial reporting in accordance with generally accepted accounting principles.
If not applied, the carryover expires in fiscal 2008.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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
October 31, 2000, 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 .55 of 1% of the value of the fund's average
daily net assets and is payable monthly.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, Class B and Class C shares pay the Distributor for distributing
their shares at an annual rate of .50 of 1% of the value of the average daily
net assets of Class B shares and .75 of 1% of the value of the average daily net
assets of Class C shares. During the period ended October 31, 2000, Class B and
Class C shares were charged $19,848 and $1,693, respectively, pursuant to the
Distribution Plan.
(C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay
the Distributor at an annual rate of .25 of 1% of the value of their average
daily net assets for the provision of certain services. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents (a securities
dealer, financial institution or other industry professional) in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. During the period ended October 31, 2000, Class A, Class B and Class C
shares were charged $6,632, $9,924 and $565, respectively, pursuant to the
Shareholder Services Plan.
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 October 31, 2000, the fund was charged $4,433 pursuant to the transfer
agency agreement.
(D) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not
an "affiliated person" as defined in the Act receives an annual fee of $50,000
and an attendance fee of $6,500 for each meeting attended and $500 for telephone
meetings. These fees are allocated among the funds in the Fund Group. The
Chairman of the Board receives an additional 25% of such compensation. Subject
to the fund's Emeritus Program Guidelines, Emeritus Board members, if any,
receive 50% of the Trust's annual retainer fee and per meeting fee paid at the
time the Board member achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended October 31, 2000, amounted to
$4,217,831 and $3,884,800, respectively.
At October 31, 2000, accumulated net unrealized depreciation on investments was
$125,780, consisting of $285,749 gross unrealized appreciation and $411,529
gross unrealized depreciation.
At October 31, 2000, 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).
For More Information
Dreyfus Premier State Municipal Bond Fund, New Jersey
Series
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent & Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to:
The Dreyfus Premier Family of Funds
144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 2000 Dreyfus Service Corporation 380SA0010
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
PART C
OTHER INFORMATION
Item 15. Indemnification.
The response to this item is incorporated by reference to Item 25 of Part C
of Post-Effective Amendment No. 17 to the Registrant's Registration Statement on
Form N-1A, filed on May 1, 2000.
Item 16. Exhibits - All references are to Post-Effective Amendments to the
Registrant's Registration Statement on Form N-1A (File No.
33-19655) (the "Registration Statement") unless otherwise noted.
(1) Articles of Incorporation. Incorporated by reference to Post-Effective
Amendment No. 10.
(2) By-Laws. Incorporated by reference to Post-Effective Amendment No. 17.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization.*
(5) Not Applicable.
(6) Management Agreement between the Registrant and The Dreyfus
Corporation. Incorporated by reference to Post-Effective Amendment
No. 8.
(7) Distribution Agreement between the Registrant and Dreyfus Service
Corporation. Incorporated by reference to Post-Effective Amendment No.
17.
(8) Not Applicable.
(9) Amended and Restated Custody Agreement between the Registrant and The
Bank of New York, Incorporated by reference to Post-Effective
Amendment No. 10.
(10) Rule 12b-1 Plan. Incorporated by reference to Post-Effective Amendment
No. 17.
(11)(a) Opinion of counsel. Incorporated by reference to Post-Effective
Amendment No. 10.
(11)(b) Consent of counsel.
(12) Opinion and consent of counsel regarding tax matter.**
(13) Not Applicable.
(14) Consent of Independent Auditors.
(15) Not Applicable.
(16) Powers of Attorney. Incorporated by reference to Post-Effective
Amendment No. 17 and to the Signature Page hereof.
(17)(a) Form of Proxy.*
(17)(b) Registrant's Prospectus dated May 1, 2000.
(17)(c) Dreyfus Premier State Municipal Bond Fund's Prospectus and
Statement of Additional Information dated September 1, 2000, as
revised January 19, 2001.
* Filed herewith as part of the Prospectus/Proxy Statement.
** To be filed by Post-Effective Amendment.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, as amended, the reoffering prospectus will
contain the information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment shall be deemed
to be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by post-effective amendment
the final opinion of counsel regarding tax matters within a reasonable
period of time after receiving such opinion.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant, in the City of New York, State of New
York, on the 31st day of January, 2001.
DREYFUS NEW JERSEY MUNICIPAL BOND FUND, INC.
(Registrant)
By: /s/Stephen E. Canter
---------------------------------
Stephen E. Canter, President
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Mark N. Jacobs, Steven F. Newman, Michael A.
Rosenberg, John B. Hammalian, James Bitetto and Jeff Prusnofsky, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to this Registration
Statement (including post-effective amendments and amendments thereto), and to
file the same, with al 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 substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1993, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Stephen E. Canter President January 31, 2001
- ------------------------ (Principal Executive
Stephen E. Canter Officer)
/s/ Joseph W. Connolly Vice President and January 31, 2001
- ------------------------ Treasurer (Principal
Joseph W. Connolly Financial and Accounting
Officer)
/s/Joseph S. DiMartino Chairman of the Board January 31, 2001
- ------------------------
Joseph S. DiMartino
/s/ Gordon J. Davis Director January 31, 2001
- ------------------------
Gordon J. Davis
/s/ David P. Feldman Director January 31, 2001
- ------------------------
David P. Feldman
/s/ Lynn Martin Director January 31, 2001
- -------------------------
Lynn Martin
/s/ Daniel Rose Director January 31, 2001
- -------------------------
Daniel Rose
/s/ Philip L. Toia Director January 31, 2001
- -------------------------
Philip L. Toia
/s/ Sander Vanocur Director January 31, 2001
- -------------------------
Sander Vanocur
/s/ Anne Wexler Director January 31, 2001
- -------------------------
Anne Wexler
/s/ Rex Wildes Director January 31, 2001
- -------------------------
Rex Wildes
EXHIBIT INDEX
Exhibit 11(b) Consent of Counsel
Exhibit 14 Consent of Independent Auditors
Exhibit 17(a) Registrant's Prospectus dated May 1, 2000.
Exhibit 17(b) Dreyfus Premier State Municipal Bond Fund's Prospectus and
Statement of Additional Information dated September 1, 2000, as revised January
19, 2001.