DREYFUS NEW YORK TAX EXEMPT FUNDS
COMBINED PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FOR
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
SEPTEMBER 30, 1993
As Revised February 4, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus New York Tax Exempt Money Market Fund (the "Money Market Fund"),
Dreyfus New York Tax Exempt Intermediate Bond Fund (the "Intermediate Bond
Fund"), and Dreyfus New York Tax Exempt Bond Fund, Inc. (the "Bond
Fund")(collectively, the "Funds"), dated September 30, 1993, as it may be
revised from time to time. To obtain a copy of the Prospectus, please write
to the Funds at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or call the following numbers:
Outside New York State -- Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5200
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of each
Fund's shares.
Each Fund is a separate entity with a separate portfolio. The
operations and investment results of one Fund are unrelated to those of each
other Fund. This combined Statement of Additional Information has been
prepared for your convenience to provide you the opportunity to consider three
investment choices in one document.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . B-2
Management of the Funds. . . . . . . . . . . . . . . . . . . B-12
Management Agreements. . . . . . . . . . . . . . . . . . . . . . . B-16
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . B-18
Service Plan and Shareholder Services Plans. . . . . . . . . . . . B-19
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . B-20
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . B-23
Determination of Net Asset Value . . . . . . . . . . . . . . . . . B-25
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . B-26
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . B-27
Performance Information. . . . . . . . . . . . . . . . . . . . . . B-28
Information About the Funds. . . . . . . . . . . . . . . . . . . . B-30
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-30
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-47
Financial Statements and Reports of Independent Auditors
Money Market Fund. . . . . . . . . . . . . . . . . . . . . . . . . B-55
Intermediate Bond Fund . . . . . . . . . . . . . . . . . . . . . . B-63
Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-74
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "Description of the Funds."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended May 31, 1993, computed on a
monthly basis for each Fund, was as follows:
<TABLE>
<CAPTION>
Moody's Standard & Fitch
Investors Poor's Investors Percentage of Value
Service, Inc. Corporation Service, Inc. Money Intermediate
("Moody's") or ("S&P") or ("Fitch") Market Fund Bond Fund Bond Fund
<S> <S> <S> <C> <C>
Aaa AAA AAA 1.0% 9.2% 16.8%
Aa AA AA N/A 27.8% 32.3%
A A A N/A 24.6% 27.3%
Baa BBB BBB N/A 30.9% 19.1%
VMIG1/MIG1 SP-1y F-1 91.4% 0.5% 2.2%
MIG2 SP-2 F-2 N/A 0.0% 0.0%
P-1 A-1 F-1 N/A 2.6% 0.5%
Not Rated Not Rated Not Rated 7.60% 4.4% 1.8%
______ _______ _______
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other public purposes for which Municipal
Obligations may be issued include refunding outstanding obligations, obtaining
funds for general operating expenses and lending such funds to other public
institutions and facilities. In addition, certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds to provide for the construction, equipment, repair or improvement of
privately operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, industrial, port or parking
facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity, or sewage or solid waste
disposal; the interest paid on such obligations may be exempt from Federal
income tax, although current tax laws place substantial limitations on the
size of such issues. Such obligations are considered to be Municipal
Obligations if the interest paid thereon qualifies as exempt from Federal
income tax in the opinion of bond counsel to the issuer. There are, of
course, variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations normally having stated maturities in excess of one year, but which
permit the holder to demand payment of principal at any time or at specified
intervals. The issuer of such obligations normally has a corresponding right,
after a given period, to prepay in its discretion the outstanding principal
amount of the obligation plus accrued interest upon a specified number of
days' notice to the holders thereof. The interest rate on a floating
rate demand obligation is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is adjusted.
The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation, and rating of the issue. The imposition
of a Fund's management fee, as well as other operating expenses, including
fees paid under a Service Plan or Shareholder Services Plans, will have the
effect of reducing the yield to investors in that Fund.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
normally 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 Money Market Fund will seek to
minimize these risks by investing only in those lease obligations that (1) are
rated in one of the two highest rating categories for debt obligations by at
least two nationally recognized statistical rating organizations (or one
rating organization if the lease obligation was rated only by one such
organization); or (2) if unrated, are purchased principally from the issuer or
domestic banks or other responsible third parties, in each case only if the
seller shall have entered into an agreement with the Money Market Fund
providing that the seller or other responsible third party will either
remarket or repurchase the lease obligation within a short period after demand
by the Fund. The Longer Term Funds each will seek to minimize these risks by
not investing more than 15% of its total assets in lease obligations that
contain "non-appropriation" clauses, and by investing only in those "non-
appropriation" lease obligations where (1) the nature of the leased equipment
or property is such that its ownership or use is essential to a governmental
function of the municipality, (2) the lease payments will commence
amortization of principal at an early date resulting in an average
life of seven years or less for the lease obligation, (3) appropriate
covenants will be obtained from the municipal obligor prohibiting the
substitution or purchase of similar equipment if lease payments are not
appropriated, (4) the lease obligor has maintained good market acceptability
in the past, (5) the investment is of a size that will be attractive
to institutional investors, and (6) the underlying leased equipment has
elements of portability and/or use that enhance its marketability in the event
foreclosure on the underlying equipment is ever required. The Staff of the
Securities and Exchange Commission currently considers certain lease
obligations to be illiquid. Accordingly, not more than 15% (10% in the case
of the Money Market Fund) of the value of a Fund's net assets will be invested
in lease obligations that are illiquid and in other illiquid securities.
The Money Market Fund will not purchase tender option bonds unless (a)
the demand feature applicable thereto is exercisable by the Fund within 13
months of the date of such purchase upon no more than 30 days' notice and
thereafter is exercisable by the Fund no less frequently than annually upon no
more than 30 days' notice and (b) at the time of such purchase, the Manager
reasonably expects (i) based upon its assessment of current and historical
interest rate trends, that prevailing short-term tax exempt rates will
not exceed the stated interest rate on the underlying Municipal Obligations at
the time of the next tender fee adjustment and (ii) that the circumstances
which might entitle the grantor of a tender option to terminate the tender
option would not occur prior to the time of the next tender opportunity. At
the time of each tender opportunity, the Fund will exercise the tender option
with respect to any tender option bonds unless the Manager reasonably expects,
(x) based upon its assessment of current and historical interest rate trends,
that prevailing short-term tax exempt rates will not exceed the stated
interest rate on the underlying Municipal Obligations at the time of the next
tender fee adjustment, and (y) that the circumstances which entitle the
grantor of a tender option to terminate the tender option would not occur
prior to the time of the next tender opportunity. The Fund will exercise the
tender feature with respect to tender option bonds, or otherwise dispose
of its tender option bonds, prior to the time the tender option is scheduled
to expire pursuant to the terms of the agreement under which the tender option
is granted. The Money Market Fund otherwise will comply with the provisions
of Rule 2a-7 in connection with the purchase of tender option bonds,
including, without limitation, the requisite determination by the Money Market
Fund's Board of Trustees that the tender option bonds in question meet the
quality standards described in Rule 2a-7, which, in the case of a tender
option bond subject to a conditional demand feature, would include a
determination that the security has received both the required short-term and
long-term quality rating or is determined to be of comparable quality. In the
event of a default of the Municipal Obligation underlying a tender option
bond, or the termination of the tender option agreement, the Money Market Fund
would look to the maturity date of the underlying security for purposes of
compliance with Rule 2a-7 and, if its remaining maturity was greater than 13
months, the Fund would sell the security as soon as would be practicable.
Each Fund will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option 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 such Fund. Based on the tender option bond agreement, each
Fund expects to be able to value the tender option bond at par; however, the
value of the instrument will be monitored to assure that it is valued at fair
value.
Ratings of Municipal Obligations. If, subsequent to being purchased by
the Money Market Fund, (a) an issue of rated Municipal Obligations ceases to
be rated in the highest rating category by at least two rating organizations
(or one rating organization if the instrument was rated by only one
organization), or the Money Market Fund's Board determines that it is no
longer of comparable quality; or (b) the Manager becomes aware that any
portfolio security not so highly rated or any unrated security has been given
a rating by any rating organization below the rating organization's second
highest rating category, the Money Market Fund's Board will reassess promptly
whether such security presents minimal credit risk and will cause the Fund to
take such action as it determines is in the best interest of the Fund and its
shareholders, provided that the reassessment required by clause (b) is not
required if the portfolio security is disposed of or matures within five
business days of the Manager becoming aware of the new rating and the
Fund's Board is subsequently notified of the Manager's actions. Subsequent to
being purchased by the Longer Term Funds, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the
minimum required for purchase by such Funds. Neither event will require the
sale of such Municipal Obligations by a Longer Term Fund, but the Manager will
consider such event in determining whether the Fund should continue to hold
the Municipal Obligations.
To the extent the ratings by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or their
rating systems, the Funds 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
Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and are not
absolute standards of quality. Although these ratings may be an initial
criterion for selection of portfolio investments, the Manager also will
evaluate these securities and the creditworthiness of the issuers of such
securities.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury Bonds
generally have initial maturities of greater than ten years. Some obligations
issued or guaranteed by U.S. Government agencies and instrumentalities, for
example, Government National Mortgage Association pass-through certificates,
are supported by the full faith and credit of the U.S. Treasury; others, such
as those of the Federal Home Loan Banks, by the right of the issuer to borrow
from the Treasury; others, such as those issued by the Federal National
Mortgage Association, by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others,
such as those issued by the Student Loan Marketing Association, only by the
credit of the agency or instrumentality. These securities bear fixed,
floating or variable rates of interest. Interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While the
U.S. Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will
always do so, since it is not so obligated by law. The Fund will invest in
such securities only when it is satisfied that the credit risk with respect to
the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally are
limited to London branches of domestic banks that have total assets in excess
of one billion dollars. Time deposits which may be held by the Fund will not
benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Repurchase agreements involve the acquisition by a Fund of an
underlying debt instrument subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price, usually
not more than one week after its purchase. The Fund's custodian or sub-
custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement.
Repurchase agreements are considered by the Staff of the Securities and
Exchange Commission to be loans by the Fund that enters into them. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement, a
Fund will enter into repurchase agreements only with domestic banks with total
assets in excess of one billion dollars or primary government securities
dealers reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which that Fund may invest, and will require that
additional securities be deposited with it if the value of the securities
purchased should decrease below resale price. The Manager will monitor on an
ongoing basis the value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by the Fund in
connection with the sale of the securities if the seller does not repurchase
them in accordance with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or limited. Each
Fund will consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements.
Risk Factors
Lower Rated Bonds. This section applies only to the Longer Term Funds.
Lower rated bonds as described herein are not eligible investments for the
Money Market Fund. Each Longer Term Fund is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P or Fitch. Such bonds, though
higher yielding, are characterized by risk. See in the Prospectus "Investment
Objective and Management Policies--Risk Factors--Lower Rated Bonds" for a
discussion of certain risks and "Appendix B" for a general description of
Moody's, S&P and Fitch ratings of Municipal Obligations. Although ratings may
be useful in evaluating the safety of interest and principal payments, they do
not evaluate the market value risk of these bonds. Each Fund will rely on the
Manager's judgment, analysis and experience in evaluating the creditworthiness
of an issuer. In this evaluation, the Manager will take into consideration,
among other things, the issuer's financial resources, its sensitivity to
economic conditions and trends, the quality of the issuer's management and
regulatory matters. It also is possible that a rating agency might not timely
change the rating on a particular issue to reflect subsequent events. As
stated above, once the rating of a bond in a Fund's portfolio has been
changed, the Manager will consider all circumstances deemed relevant
in determining whether the Fund should continue to hold the bond.
Investors should be aware that the market values of many of these bonds
tend to be more sensitive to economic conditions than are higher rated
securities. These bonds are considered by Moody's, S&P and Fitch, on balance,
as predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation and generally
will involve more credit risk than securities in the higher rating categories.
Because there is no established retail secondary market for many of
these securities, each 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 a Fund's ability to dispose of particular issues when necessary to meet
its 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 a
Fund to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of these securities. In such cases,
judgment may play a greater role in valuation because less reliable, objective
data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could severely disrupt the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities
to repay principal and pay interest thereon and increase the incidence of
default of such securities.
Each Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. Neither
Fund has any arrangements with the Distributor or any other persons concerning
the acquisition of such securities, and the Manager will review carefully the
credit and other characteristics pertinent to such new issues. Lower rated
zero coupon securities, in which each Fund may invest up to 5% of its
respective total assets, involve special consideration. The credit risk
factors pertaining to lower rated securities also apply to lower rated zero
coupon bonds. Such zero coupon bonds carry an additional risk in that, unlike
bonds which pay interest throughout the period to maturity, a 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."
Investing in New York Municipal Obligations. Each investor should
consider carefully the special risks inherent in the investment in New York
Municipal Obligations by each Fund. These risks result from the financial
condition of New York State and certain of its public bodies and
municipalities, including New York City. Beginning in early 1975, New York
State, New York City and other State entities faced serious financial
difficulties which jeopardized the credit standing and impaired the borrowing
abilities of such entities and contributed to high interest rates on, and
lower market prices for, debt obligations issued by them. A recurrence of
such financial difficulties or a failure of certain financial recovery
programs could result in defaults or declines in the market values of various
New York Municipal Obligations in which the Fund may invest. If there should
be a default or other financial crisis relating to New York State, New York
City, a State or City agency, or a State municipality, the market value and
marketability of outstanding New York Municipal Obligations in the Fund's
portfolio and the interest income to the Fund could be adversely affected.
Moreover, the effects of actual or proposed changes in Federal and State tax
laws, as well as the significant slowdown in the New York regional economy,
have added substantial uncertainty to estimates of the State's tax revenues,
which, in part, caused the State to overestimate its General Fund tax
receipts in the 1992 fiscal year by $575 million. The 1992 fiscal year was
the fourth consecutive year in which the State incurred a cash-basis operating
deficit in the General Fund and issued deficit notes. There can be no
assurance that New York will not face substantial potential budget gaps in
future years. To address any potential budgeting imbalance, New York may need
to take significant action to align recurring receipts and disbursements in
future fiscal years. In 1990, S&P and Moody's lowered their ratings of
the State's general obligation debt from AA- to A and from A1 to A,
respectively, and short-term notes from SP-1+ to SP-1 and from MIG-1 to MIG-2,
respectively. In January 1992, Moody's lowered from A to Baa1 the ratings on
certain appropriation-backed debt of New York State and its agencies. New
York State's general obligation, state guaranteed and New York State Local
Government Assistance Corporation bonds continue to be rated A by Moody's. In
addition, in January 1992, S&P lowered from A to A- the ratings of New York
State general obligation bonds and stated that it continues to assess the
ratings outlook as negative. The ratings of various agency debt, state moral
obligations, contractual obligations, lease purchase obligations and state
guarantees also were lowered. In February 1991, Moody's lowered its rating on
New York City's general obligation bonds from A to Baa1. The rating changes
reflect the rating agencies' concerns about the financial condition of New
York State and City, the heavy debt load of the State and City, and economic
uncertainties in the region. Investors should review "Appendix A" which more
fully sets forth these and other risk factors. Investment Restriction.
Money Market Fund. The Money Market Fund has adopted the following
investment restrictions as fundamental policies which cannot be changed
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940 (the "Act")) of the Money Market Fund's outstanding voting
shares. The Money Market Fund may not:
1. Purchase securities other than Municipal Obligations and
Taxable Investments as those terms are defined above and in the
Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 10% of the value of the
Fund's total assets (including the amount borrowed) based on
the lesser of cost or market, less liabilities (not including
the amount borrowed) at the time the borrowing is made. While
borrowings of the Money Market Fund exceed 5% of the value of
the Money Market Fund's total assets, it will not make any
additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 10% of the value of its total assets,
but only to secure borrowings for temporary or emergency
purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that the
Money Market 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.
6. Purchase securities subject to restrictions on disposition
under the Securities Act of 1933 (so called "restricted
securities"). The Money Market Fund may not enter into
repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are
not readily marketable (which securities would include
participation interests that are not subject to the demand
feature described in the Prospectus) and floating and variable
rate demand obligations as to which it cannot exercise the
demand feature as described in the Prospectus on less than
seven days' notice), if, in the aggregate, more than 10% of its
net assets would be so invested. The Money Market Fund may not
invest in time deposits maturing in more than seven days, and
time deposits maturing from two business days through seven
calendar days may not exceed 10% of its net assets.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests, but this shall not prevent the Fund from investing
in Municipal Obligations secured by real estate or interests
therein.
8. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements
referred to above and in the Prospectus.
9. 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, securities issued by domestic
banks and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
10. Purchase more than 10% of the voting securities of any issuer
or invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or
acquisition of assets.
Intermediate Bond Fund and Bond Fund. Each Longer Term Fund has
adopted investment restrictions numbered 1 through 7 as fundamental policies
which cannot be changed, as to a Fund, without approval by the holders of a
majority of such Fund's outstanding voting shares. Investment restrictions
numbered 8 through 12 are non-fundamental policies and may be changed, as to a
Longer Term Fund, by vote of a majority of such Fund's Board members at any
time. Neither Longer Term Fund may:
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,
securities issued by domestic banks and obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities.
2. Borrow money, except from banks for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the
value of the Fund's total assets (including the amount
borrowed) based on the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time
the borrowing is made. While borrowings exceed 5% of the
value of the Fund's total assets, the Fund will not make any
additional investments. For purposes of this investment
restriction, the entry into options, forward contracts,
futures contracts, including those relating to indexes, and
options on futures contracts or indexes 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
indexes, and options on futures contracts or indexes.
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 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 take margin deposits in connection with
transactions in options, forward contracts, futures
contracts, including those relating to indexes, and
options on futures contracts or indexes.
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
Prospectus.
9. Invest in securities of other investment companies, except
to the extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to the extent necessary to secure borrowings
for temporary or emergency purposes and to the extent
related to the deposit of assets in escrow in connection
with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or
variation margin arrangements with respect to options,
futures contracts, including those related to indexes, and
options on futures contracts or indexes.
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 Prospectus, and floating and
variable rate demand obligations as to which the Fund cannot
exercise the demand feature as described in the 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.
All Funds - For purposes of Investment Restriction No. 9 with respect
to the Money Market Fund, and Investment Restriction No. 1 with respect to the
Longer Term Funds, 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.
Each Fund may make commitments more restrictive than the respective
restrictions listed above so as to permit the sale of such Fund's shares in
certain states. Should any Fund determine that a commitment is no longer in
the best interest of such Fund and its shareholders, it reserves the right to
revoke the commitment by terminating the sale of its shares in the state
involved.
MANAGEMENT OF THE FUNDS
Trustees and officers of the Money Market Fund and Intermediate Bond
Fund, and Directors and officers of the Bond Fund, together with information
as to their principal business occupations during at least the last five
years, are shown below. Each Trustee/Director who is deemed to be an
"interested person" of the Funds, as defined in the Act, is indicated by an
asterisk.
Trustees/Directors and Officers of the Funds. Each person listed below serves
as a Trustee of the Money Market Fund and the Intermediate Bond Fund, and as a
Director of the Bond Fund.
SAMUEL CHASE, Trustee/Director. Since 1982, President of Samuel Chase &
Company, Ltd., and from 1983 to December 1989, Chairman of Chase,
Brown & Blaxall, Inc., economic consulting firms. His address is
4410 Massachusetts Avenue, N.W., Suite 408 Washington, D.C. 20016.
JONI EVANS, Trustee/Director. Senior Vice President of William Morris. From
September 1987 to May 1993, Executive Vice President of Random House
Inc. and, from January 1991 to May 1993, President and Publisher of
Turtle Bay Books; from January 1987 to December 1990, Publisher of
Random House-Adult Trade Division; from September 1985 to September
1987, President of Simon and Schuster - Trade Division. Her address
is 1350 Avenue of the Americas, New York, New York 10019.
LAWRENCE M. GREENE, Trustee/Director. Legal Consultant to and director of the
Manager, Executive Vice President and a director of the Distributor
and an officer, director or trustee of other investment companies
advised or administered by the Manager. His address is 200 Park
Avenue, New York, New York 10166.
ARNOLD S. HIATT, Trustee/Director. Chairman of the Stride Rite Charitable
Foundation. From 1969 to June 1992, Chairman of Board, President and
Chief Executive Officer of The Stride Rite Corporation, a multi-
divisional footwear manufacturing and retailing company. He is also
a Director of the Cabot Corporation. His address is 400 Atlantic
Avenue, Boston, Massachusetts 02110.
DAVID J. MAHONEY, Trustee/Director. President of David Mahoney Ventures since
1983. From 1968 to 1983, he was Chairman and Chief Executive Officer
of Norton Simon, Inc., a producer of consumer products and services.
Mr. Mahoney is also a director of National Health Laboratories, Inc.,
and a director and member of the Executive Committee of NYNEX
Corporation. His address is 745 Fifth Street, Suite 700, New York,
New York 10151.
RICHARD J. MOYNIHAN, Trustee/Director, President and Investment Officer. An
employee of the Manager and an officer, director or trustee of other
investment companies advised or administered by the Manager. His
address is 200 Park Avenue, New York, New York 10166.
BURTON N. WALLACK, Trustee/Director. President and co-owner of Wallack
Management Company, a real estate management company managing real
estate in the New York City area. His address is 18 East 64th
Street, Suite 3D, New York, New York 10021.
The "non-interested" Board members are also trustees of Dreyfus
Massachusetts Municipal Money Market Fund, Dreyfus Massachusetts Tax Exempt
Bond Fund, Dreyfus Pennsylvania Municipal Money Market Fund, and directors of
Dreyfus BASIC Municipal Money Market Fund, Inc., Dreyfus California Tax Exempt
Bond Fund, Inc., Dreyfus Connecticut Municipal Money Market Fund, Inc.,
Dreyfus GNMA Fund, Inc., Dreyfus Intermediate Municipal Bond Fund, Inc.,
Dreyfus Michigan Municipal Money Market Fund, Inc., Dreyfus New Jersey
Municipal Money Market Fund, Inc. and Dreyfus Ohio Municipal Money Market
Fund, Inc.
For so long as the Service Plan of the Intermediate Bond Fund, or the
Shareholder Services Plan of the Money Market Fund or Bond Fund, respectively,
described in the section captioned "Service Plan and Shareholder Services
Plans" remains in effect, the Board members of such Fund who are not
"interested persons" of (as defined in the Act) will be selected and nominated
by the Board members who are not "interested persons" of such Fund.
The Funds do not pay any remuneration to their respective officers
and Board members, other than fees and expenses to those Board members who are
not officers, directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager. For each Fund's fiscal year ended May 31,
1993, such amounts for all such Board members as a group totalled $12,607,
$17,195 and $30,983 for the Money Market Fund, Intermediate Bond Fund and Bond
Fund, respectively.
Ordinarily, there will be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Under the Act, shareholders of record of not less than two-thirds
of the Fund's outstanding shares may remove a Trustee through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. Under the Money Market and Intermediate Bond Fund's Agreement and
Declaration of Trust and under the Bond Fund's By-Laws, the Board members are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Trustee when requested in writing to do so by
the shareholders of record of not less than 10% of the Fund's outstanding
shares.
Officers of the Funds Not Listed Above - Each of the persons listed below
serves in the stated capacity for each Fund.
A. PAUL DISDIER, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of the
Manager, Secretary of the Distributor and an officer or director of
other investment companies advised or administered by the Manager.
JEFFREY N. NACHMAN, Vice President - Financial. Vice President-Mutual Fund
Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by the
Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
GREGORY S. GRUBER, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
ROBERT I. FRENKEL, Assistant Secretary. Senior Assistant General Counsel of
the Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the Manager,
the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer is 200 Park Avenue, New York, New York
10166.
The Board members and officers of each Fund, as a group, owned less
than 1% of such Fund's shares outstanding on July 1, 1993.
The following persons are also officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive Officer;
Julian M. Smerling, Vice Chairman of the Board of Directors; Joseph S.
DiMartino, President, Chief Operating Officer and a director; Alan M. Eisner,
Vice President and Chief Financial Officer; David W. Burke, Vice President and
Chief Administrative Officer; Robert F. Dubuss, Vice President; Elie M.
Genadry, Vice President--Institutional Sales; Peter A. Santoriello, Vice
President; Robert H. Schmidt, Vice President; Philip L. Toia, Vice President--
Fixed-Income Research; Katherine C. Wickham, Assistant Vice President; Maurice
Bendrihem, Controller; and Mandell L. Berman, Alvin E. Friedman, Lawrence M.
Greene, Abigail Q. McCarthy and David B. Truman, directors.
MANAGEMENT AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Management of the
Funds."
The Manager provides management services pursuant to separate
Management Agreements (respectively, the "Agreement") with each Fund. As to
each Fund, its Agreement is subject to annual approval by (i) such Fund's
Board, or (ii) vote of a majority (as defined in the Act) of its outstanding
voting securities, provided that in either event the continuance of the
Agreement also is approved by a majority of such Fund's Board members who are
not "interested persons" (as defined in the Act) of the Fund or of the
Manager, by vote cast in person at a meeting called for the purpose of voting
on such approval. The Money Market Fund's Agreement is dated May 20, 1987, was
last approved by shareholders at a meeting of shareholders held on December
14, 1988 and was last approved by the Fund's Board, including a majority of
the Trustees who are not "interested persons" of any party to the Agreement,
at a meeting held on March 31, 1993. The Intermediate Bond Fund's Agreement
is dated May 20, 1987, was approved by shareholders at the meeting of
shareholders held on January 25, 1989 and was last approved by the Fund's
Board, including a majority of the Trustees who are not "interested persons"
of any party to the Agreement, at a meeting held on March 31, 1993.
The Bond Fund's Agreement is dated June 15, 1983, was approved by shareholders
at a meeting of shareholders held on September 18, 1984 and was last approved
by the Fund's Board, including a majority of the Directors who are not
"interested persons" of any party to the Agreement, at a meeting held on March
31, 1993. As to each Fund, its Agreement is terminable without penalty, on 60
days' notice, by such Fund's Board or by vote of the holders of a majority of
its shares, or, upon not less than 90 days' notice, by the Manager. Each
Agreement will terminate automatically, as to the relevant Fund, in the
event of its assignment (as defined in the Act).
The Manager manages each 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 each Fund with Investment Officers who are authorized by its Board to
execute purchases and sales of securities. Each Fund's Investment Officers
are A. Paul Disdier, Karen M. Hand, Stephen C. Kris, Richard J. Moynihan, Jill
C. Shaffro, L. Lawrence Troutman, Samuel J. Weinstock and Monica S. Wieboldt.
The Manager also maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research services for
each Fund as well as for other funds advised by the Manager. All purchases
and sales are reported for the respective Board's review at the meeting
subsequent to such transactions.
All expenses incurred in the operation of a Fund are borne by that
Fund, except to the extent specifically assumed by the Manager. The expenses
borne by each Fund include: taxes, interest, brokerage fees and commissions,
if any, fees of Trustees/Directors who are not officers, directors, employees
or holders of 5% or more of the outstanding voting securities of the Manager,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor services
including, without limitation, telephone and personnel expenses, costs of
shareholders' reports and meetings, costs of preparing and printing
prospectuses and statements of additional information, and any extraordinary
expenses. Pursuant to the Service Plan of the Intermediate Bond Fund, such
Fund bears expenses for advertising, marketing and distributing the Fund's
shares and servicing shareholder accounts and bears the cost of preparing and
printing prospectuses and statements of additional information and costs
associated with implementing and operating such plan. Pursuant to separate
Shareholder Services Plans, the Money Market Fund and Bond Fund bear certain
allocated expenses for shareholder servicing. See "Service Plan and
Shareholder Services Plans."
The Manager pays the salaries of all officers and employees employed
by both it and a Fund, maintains office facilities, and furnishes statistical
and research data, clerical help, accounting, data processing, bookkeeping and
internal auditing and certain other required services. The Manager also may
make such advertising and promotional expenditures, using its own resources,
as it from time to time deems appropriate.
As compensation on the Manager's services, the Money Market Fund has
agreed to pay the Manager a monthly management fee at the annual rate of .50
of 1% of the value of the Fund's average daily net assets. As compensation
for the Manager's services, each Longer Term Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .60 of 1% of the value
of its average daily net assets. All fees and expenses for each Fund are
accrued daily and deducted before the declaration of dividends to investors.
Set forth below are the total amounts paid by each Fund to the Manager for
each of the last three fiscal years of the Funds:
<TABLE>
Amount Paid by Amount Paid
Fiscal Year Money Market by Intermediate Amount Paid by
Ended May 31, Fund Bond Fund Bond Fund
<S> <C> <C> <C>
1993 $ 1,984,999 $ 1,058,358* $11,974,650
1992 $ 2,246,273 $ 598,388* $10,970,576
1991 $ 2,608,167 $ 161,794* $10,024,893
</TABLE>
* Reflects the reduction in management fees of $350,689, $449,295, and
$246,586 in 1993, 1992 and 1991, respectively, pursuant to undertakings by the
Manager then in effect.
The Manager has agreed that if, in any fiscal year, a Fund's
aggregate expenses, 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 such Fund's average net assets for the fiscal year, such Fund may
deduct from the payment to be made to the Manager under the Agreement, or the
Manager will bear, the 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 by a Fund is not
subject to reduction as the value of such Fund's net assets increase.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as each Fund's distributor
pursuant to separate agreements, each of which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus Family
of Funds and for certain other investment companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on
any business day that The Shareholder Services Group, Inc., each Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange ar open. Such purchases will be credited to the
shareholder's particular Fund account on the Transfer Agent's next business
day. To qualify to use the Dreyfus TeleTransfer Privilege, the initial
payment for purchase of Fund shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the Account
Application or Optional Services Form on file. If the proceeds of a
particular redemption are to be wired to an account at any other bank, the
request must be in writing and signature-guaranteed. See "Redemption of
Shares--Dreyfus TeleTransfer Privilege."
Using Federal Funds. The following information is applicable only to
shares of the Money Market Fund. The Transfer Agent or the Money Market Fund
may attempt to notify the investor upon receipt of checks drawn on banks that
are not members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means of
transmitting the money. If the investor is a customer of a securities dealer
("Selected Dealer") and his order to purchase Money Market Fund shares is paid
for other than in Federal Funds, the Selected Dealer, acting on behalf of its
customer, will complete the conversion into, or itself advance, Federal
Funds generally on the business day following receipt of the customer order.
The order is effective only when so converted and received by the Transfer
Agent. An order for the purchase of Money Market Fund shares placed by an
investor with sufficient Federal Funds or cash balance in his brokerage
account with a Selected Dealer will become effective on the day that the
order, including Federal Funds, is received by the Transfer Agent.
Reopening an Account. An investor may reopen an account in any of
the Funds 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 AND SHAREHOLDER SERVICES PLANS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Service Plan and
Shareholder Services Plans."
The Intermediate Bond Fund has adopted a Service Plan pursuant to
Rule 12b-1 under the Act and the Money Market Fund and Bond Fund have adopted
separate Shareholder Services Plans. In some states, banks or other financial
institutions effecting transactions in a Fund's shares may be required to
register as dealers pursuant to state law.
Service Plan (Intermediate Bond Fund only) - Rule l2b-1 (the "Rule")
adopted by the Securities and Exchange Commission under the 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. Because some or all of the fees paid for advertising or marketing the
Intermediate Bond Fund's shares, and fees paid to certain financial
institutions. Selected Dealers and other industry professionals
(collectively, "Service Agents"), in some cases, could be deemed to be payment
of distribution expenses, the Intermediate Bond Fund's Board of Trustees has
adopted such a plan (the "Service Plan"). The Intermediate Bond Fund's Board
of Trustees believes that there is a reasonable likelihood that the Service
Plan adopted will benefit the Fund and its shareholders.
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 Intermediate Bond Fund's Board of Trustees 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 Board of Trustees, and by the Trustees
who are not "interested persons" (as defined in the 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 Trustees cast in person at a meeting called for the
purpose of voting on the Service Plan. The Service Plan was so
approved most recently at a meeting held on March 31, 1993. The Service Plan
is terminable at any time by vote of a majority of the Intermediate Bond
Fund's Trustees 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 the holders of a majority of such
Fund's shares. Any service agreement is terminable without penalty, at any
time, by such vote of the Trustees or, upon not more than 60 days' written
notice to the Service Agent, by vote of the holders of a majority of
Intermediate Bond Fund's the shares, or, upon 15 days' notice, by the
Distributor. A service agreement will terminate automatically in the event of
its assignment (as defined in the Act).
For the fiscal year ended May 31, 1993, $605,719 was paid by the
Intermediate Bond Fund pursuant to its Plan, which amount represented
expenditures related to advertising, marketing, and distributing the Fund's
shares, servicing Fund shareholders, and for printing the Fund's individual
prospectuses and statements of additional information.
Shareholder Services Plans. (Money Market Fund and Bond Fund only).
The Money Market Fund and the Bond Fund each have adopted a separate
Shareholder Services Plan, pursuant to which each Fund reimburses the
Distributor for certain allocated expenses for the provision of certain
services to such Fund's shareholders.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the respective Fund's Board for its review. In addition, the
Shareholder Services Plan provides that it may not be amended without approval
of the Board, and by the Board members who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of the Shareholder Services Plan or in any
agreements entered into in connection with the Shareholder Services Plan, by
vote cast in person at a meeting called for the purpose of considering such
amendments. The Shareholder Services Plan is subject to annual approval by
such vote of the Board members cast in person at a meeting called for the
purpose of voting on the Shareholder Services Plan. Each Shareholder Services
Plan was so approved on July 14, 1993. The Shareholder Services Plan is
terminable at any time by vote of a majority of the Board members who are not
"interested persons" and who have no direct or indirect financial interest in
the operation of the Shareholder Services Plan or in any agreements entered
into in connection with the Shareholder Services Plan.
Prior Rule 12b-1 Plan. On July 14, 1993, the Money Market Fund
terminated its then existing Rule 12b-1 plan, which provided for payments to
be made for the printing and distributing of prospectuses and for implementing
and operating such plan. For the fiscal year ended May 31, 1993, the Money
Market Fund paid $10,767, pursuant to such plan, for costs of preparing and
distributing its separate prospectuses and statements of additional
information, and costs associated with implementing and operating such plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Redeem
Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record. The
Account Application or later written request must be manually signed by the
registered owner(s). Checks may be made payable to the order of any person in
an amount of $500 or more. When a Check is presented to the Transfer Agent
for payment, the Transfer Agent, as the investor's agent, will cause the Fund
to redeem a sufficient number of full or fractional shares in the investor's
account to cover the amount of the Check. Dividends are earned until the
Check clears. After clearance, a copy of the Check will be returned to the
investor. Investors generally will be subject to the same rules and
regulations that apply to checking accounts, although election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient funds.
Checks should not be used to close an account.
Redemption by Wire or Telephone. By using this Privilege, the
investor authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, or, a representative of the investor's Service Agent, and reasonably
believed by the Transfer Agent to be genuine. Ordinarily, the Fund will
initiate payment for shares redeemed pursuant to the Privilege on the next
business day after receipt by the Transfer Agent of a redemption request in
proper form. Redemption proceeds will be transferred by Federal Reserve wire
only to the commercial bank account specified by the investor on the Account
Application or Optional Services Form. Redemption proceeds, if wired, must be
in the amount of $1,000 or more and will be wired to the investor's account at
the bank of record designated in the investor's file at the Transfer Agent, if
the investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees ordinarily
are imposed by such bank and usually are borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Holders of jointly registered Fund or bank accounts may redeem by wire
only up to $50,000 within any 30-day period. Proceeds of less than
$1,000 will be paid by check and mailed to the investor's address.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
_________________ ________________
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To qualify to use this 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 the Optional
Services Form. If the proceeds of a particular redemption are to be wired to
an account with any other bank, the request must be in writing and signature-
guaranteed.
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 "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a wire
redemption will be effected as a Dreyfus TeleTransfer transaction through the
Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Shares--Dreyfus
TeleTransfer Privilege."
Share Certificates; Signature. Any certificate 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
concerning signature-guarantees, please call one of the telephone numbers
listed on the cover.
Redemption Commitment. Each 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
in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In such
event, the securities would be valued in the same manner as the Fund's
portfolio is valued. If the recipient sold such securities, brokerage charges
would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the respective markets each Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of such 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 respective Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Shareholder
Services."
Exchange Privilege. Shares of other funds purchased by exchange will
be purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales
load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales load,
and additional shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein as "Purchased
Shares") may be exchanged for shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the maximum sales load that
could have been imposed in connection with the Purchased Shares (at the time
the Purchased
Shares were acquired), without giving effect to any reduced
loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and their
account number.
To use this Privilege, the investor, or the investor's Service Agent
acting on the investor's behalf, must give exchange instructions to the
Transfer Agent in writing, by wire or by telephone. Telephone exchanges may
be made only if the appropriat "YES" box has been checked on the Account
Application, or a separate signed Optional Services Form is on file with the
Transfer Agent. By using this Privilege, the investor authorizes
the Transfer Agent to act on telephonic, telegraphic or written exchange
instructions from any person representing himself or herself to be the
investor, or, a representative of the investor's Service Agent, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or number of telephone
exchanges permitted. Shares issued in certificate form are not eligible for
telephone exchanges.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made. For
Dreyfus-sponsored Keogh Plans, IRAs and SEP-IRAs with only one participant,
the minimum initial investment is $750. To exchange shares held in Corporate
Plans, 403(b)(7) Plans and SEP-IRAs with more than one participant, the
minimum initial investment is $100 if the plan has at least $2,500 invested
among the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value of
at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange permits an
investor to purchase, in exchange for shares of a Fund, shares of another fund
in the Dreyfus Family of Funds. This Privilege is available only for existing
accounts. Shares will be exchanged on the basis of relative net asset value
as described above under "Exchange Privilege." Enrollment in or modification
or cancellation of this Privilege is effective three business days following
notification by the investor. An investor will be notified if his account
falls below the amount designated to be exchanged under this Privilege. An
investor's account will fall to zero unless additional investments are made in
excess of the designated amount prior to the next Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and from
regular accounts to IRA accounts, but not from IRA accounts to regular
accounts. With respect to all other retirement accounts, exchanges may be
made only among those accounts.
The Exchange Privilege and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Optional Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. Each Fund reserves the right to reject any exchange request
in whole or in part. The Exchange Privilege or Auto-Exchange Privilege may be
modified or terminated at any time by a Fund upon notice to its shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield
on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be
depleted. An Automatic Withdrawal Plan may be established by completing the
appropriate application available from the Distributor. There is a service
charge of $.50 for each withdrawal check. Automatic Withdrawal may be
terminated at any time by the investor, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through the
Automatic Withdrawal Plan.
Dreyfus Dividend Sweep Privilege. Dreyfus Dividend Sweep Privilege
allows investors to invest on the payment date their dividends or dividends
and capital gain distributions, if any, from a Fund in shares of other
eligible funds in the Dreyfus Family of Funds of which the investor is a
shareholder. Shares of other funds purchased pursuant to the Privilege will
be purchased on the basis of relative net asset value per share as
follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are offered without a
sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales load,
and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales load
may be invested in shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load applicable to
the Offered Shares exceeds the maximum sales load charged by the fund from
which dividends or distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in shares
of other funds that impose a contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon the redemption of such shares.
This Privilege is available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy Shares."
Amortized Cost Pricing. The information contained in this section is
applicable only to the Money Market Fund. The valuation of the Money Market
Fund's portfolio securities is based upon their amortized cost, which does not
take into account unrealized capital gains or losses. This involves valuing
an instrument at its cost, and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the Fund
would receive if it sold the instrument.
The Money Market Fund's Board of Trustees has established, as a
particular responsibility within the overall duty of care owed to the Money
Market Fund's investors, procedures reasonably designed to stabilize the
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Money Market Fund's portfolio
holdings by the Board of Trustees, at such intervals as it deems appropriate,
to determine whether the Money Market Fund's net asset value calculated by
using available market quotations or market equivalents deviates from $1.00
per share based on amortized cost. Market quotations and market equivalents
used in such review are obtained from an independent pricing service (the
"Service") approved by the Board of Trustees. The Service values the Money
Market Fund's investments based on methods which include consideration of:
yields or prices of municipal bonds of comparable quality, coupon, maturity
and type; indications of values from dealers; and general market conditions.
The Service also may employ electronic data processing techniques and/or a
matrix system to determine valuations.
The extent of any deviation between the Money Market Fund's net asset
value based upon available market quotations or market equivalents and $1.00
per share based on amortized cost will be examined by the Board of Trustees.
If such deviation exceeds 1/2 of 1%, the Board of Trustees promptly will
consider what action, if any, will be initiated. In the event the Board of
Trustees determines that a deviation exists which may result in material
dilution or other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations or market equivalents.
Valuation of Portfolio Securities. The information contained in this
section is applicable only to the Longer Term Funds. The investments of each
Longer Term Fund are valued each business day by an independent pricing
service (the "Service") approved by such 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 relevant Fund's Board. As to each Fund, expenses and fees, including
the management fees (reduced by the expense limitation, if any) and fees
pursuant to the Service Plan or Shareholder Services Plan, as the case may be,
are accrued daily and are taken into account for the purpose of determining
the net asset values of such Fund's shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually
no brokerage commissions, as such, are paid by any 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 any Fund to date.
Transactions are allocated to various dealers by the Investment
Officers of the Fund in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price. Subject
to that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager to supplement
its own research and analysis with the views and information of other
securities firms.
Research services furnished by brokers through which a 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 each Fund. Although it is not possible to place a dollar value on
these services, it is the opinion of the Manager that the receipt and study of
such services should not reduce the overall expenses of its research
department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Dividends,
Distributions and Taxes." This information applies to the Longer Term Funds
only.
The Internal Revenue Code of 1986, as amended, provides that if a
shareholder has not held his Fund's shares for more than six months (or such
shorter period as the Internal Revenue Service may prescribe by regulation)
and has received an exempt-interest dividend with respect to such shares, any
loss incurred on the sale of such shares will be disallowed to the extent of
the exempt-interest dividend received. In addition, any dividend or
distribution paid shortly after an investor's purchase may have the effect of
reducing the net asset value of his shares below the cost of his investment.
Such a distribution would be a return on investment in an economic sense
although taxable as stated in "Dividends, Distributions and Taxes" in the
Prospectus.
Investment by the Longer Term Funds in securities issued at a
discount or providing for deferred interest or for payment of interest in the
form of additional obligations could, under special tax rules, affect the
amount, timing and character of distributions to shareholders. For example, a
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 that case, the Fund may have to dispose of securities
which it might otherwise have continued to hold in order to generate cash to
satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Performance
Information."
Money Market Fund. For the seven-day period ended May 31, 1993, the
Money Market Fund's yield was 1.96% and its effective yield was 1.98%. The
Money Market Fund's yield is computed in accordance with a standardized method
which involves determining the net change in the value of a hypothetical pre-
existing Fund account having a balance of one share at the beginning of a
seven calendar day period for which yield is to be quoted, dividing the net
change by the value of the account at the beginning of the period to obtain
the base period return, and annualizing the results (i.e., multiplying the
base period return by 365/7). The net change in the value of the account
reflects the value of additional shares purchased with dividends declared on
the original share and any such additional shares and fees that may be charged
to shareholder accounts, in proportion to the length of the base period and
the Fund's average account size, but does not include realized gains and
losses or unrealized appreciation and depreciation. Effective yield is
computed by adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7, and subtracting
1 from the result.
Based upon a combined 1993 Federal, New York State and New York City
personal income tax rate of 39.32%, the Money Market Fund's tax equivalent
yield for the seven-day period ended May 31, 1992 was 3.23%.
Longer Term Funds. The Intermediate Bond Fund's yield for the 30-day
period ended May 31, 1993 was 4.52%. The Intermediate Bond Fund's yield
reflects the absorption of certain Fund expenses by the Manager and/or a
waiver of a portion of the management fee during such period, without which
the Intermediate Bond Fund's 30-day yield for the period ended May 31, 1993
would have been 4.41%. The Bond Fund's yield for the 30-day period ended May
31, 1993 was 4.72%. See "Management of the Funds" in the Prospectus. Current
yield for a Longer Term Fund is computed pursuant to a formula which operates
as follows: the amount of a Fund's expenses accrued for a 30-day period (net
of reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by it during the
period. That result is then divided by the product of: (a) the average daily
number of shares outstanding during the period that were entitled to receive
dividends, and (b) the net asset value per share on the last day of the period
less any undistributed earned income per share reasonably expected to be
declared as a dividend shortly thereafter. The quotient is then added to 1,
and that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
Based upon a combined 1993 Federal, New York State and New York City
personal income tax rate of 39.32%, the Intermediate Bond Fund's tax
equivalent yield for the 30-day period ended May 31, 1993 was 7.45% and the
Bond Fund's tax equivalent yield was 7.78%. Without the expense absorption
and management fee waiver then in effect, the Intermediate Bond Fund's tax
equivalent yield for the 30-day period ended May 31, 1993 would have been
7.27%. See "Management of the Funds" in the Prospectus.
The Intermediate Bond Fund's average annual total return for the one-
and five-year periods ended May 31, 1993 and for the period since the Fund's
inception (June 12, 1987) to May 31, 1993, was 11.22%, 9.09% and 8.35%,
respectively. Without the aforesaid expense absorptions then in effect,
returns would have been lower. The Bond Fund's average annual total return
for the one- and five-year periods ended May 31, 1993 and for the period since
the Fund's inception (July 26, 1983) to May 31, 1993 was 12.63%, 9.72% and
10.13%, 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 Intermediate Bond Fund's total return for the period June 12,
1987 (date of inception) to May 31, 1993 was 61.44%. The Bond Fund's total
return for the period July 26, 1983 (date of inception) to May 31, 1993 was
158.66%. 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.
All Funds. 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 yields noted
above represent the application of the highest Federal, New York State and New
York City marginal personal income tax rates presently in effect. For Federal
income tax purposes, a 31% tax rate has been used. For New York State and New
York City personal income tax purposes, tax rates of 7.875% and 4.46%,
respectively, have been used. The tax equivalent figure, however, does not
reflect the potential effect of local (including, but not limited to, county,
district or city) taxes, including applicable surcharges. In addition, there
may be pending legislation which could affect such stated tax rates or yield.
Each investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant tax
equivalent yield.
Yields will fluctuate and are not necessarily representative of
future results. Each investor should remember that yield is a function of
the type and quality of the instruments in the portfolio, portfolio maturity
and operating expenses. An investor's principal in the Fund is not
guaranteed. See "Determination of Net Asset Value" for a discussion of the
manner in which the Fund's price per share is determined.
From time to time, each Fund may use hypothetical tax equivalent
yields or charts in their advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not indicative of the
Fund's past or future performance.
From time to time, advertising materials for a Fund may refer to or
discuss then-current or past economic conditions, developments, and/or events,
and actual or proposed tax legislation. From time to time, advertising
materials of a Fund also may refer to statistical or other information
concerning trends relating to investment companies, as compiled by industry
associations such as the Investment Company Institute. From time to time,
advertising materials for the Longer Term Funds also may refer to Morningstar
ratings and related analyses supporting the rating.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Each Fund share is of one class and has equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights and
are freely transferable.
Each Fund sends an annual and semi-annual financial statements to all
its respective shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, acts as custodian of each Fund's investments. The Shareholder Services
Group, Inc., a subsidiary of First Data Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is each Fund's transfer and dividend
disbursing agent. Neither The Bank of New York nor The Shareholder Services
Group, Inc. has any part in determining the investment policies of any Fund or
which securities are to be purchased or sold by a Fund.
Stroock & Stroock & Lavan, Seven Hanover Square, New York, New York
10004-2696, as counsel for each 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 Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of each Fund.
APPENDIX A
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain
of its public bodies (the "Agencies") and municipalities, particularly New
York City (the "City"), could effect the market values and marketability of
New York Municipal Obligations which may be held by the Fund. The following
information constitutes only a brief summary, does not purport to be a
complete description, and is based on information drawn from official
statements relating to securities offerings of the State, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") available as
of the date of this Statement of Additional Information. While the Fund has
not independently verified such information, it has no reason to believe that
such information is not correct in all material respects.
The 1990-91 fiscal year was the third consecutive year in which the
State incurred a cash-basis operating deficit in its General Fund and issued
deficit notes. The slowdown in the New York and regional economy proved to be
greater than anticipated in the 1990-91 fiscal year, contributing to
substantial reductions in actual tax receipts from amounts projected by the
State in the 1990-91 State Financial Plan. Overall, the 1990-91 State
Financial Plan as formulated in May 1990 overestimated actual tax receipts in
the 1990-91 fiscal year by $1.72 billion. Approximately $1.044 billion of the
shortfall was attributable to an overestimate of personal income tax receipts,
$440 million was attributable to an overestimate of sales and use tax receipts
and approximately $124 million was attributable to an overestimate of business
tax receipts. Total General Fund receipts, including Transfers from Other
Funds, were $1.958 billion below the May 1990 projection. During the 1990-91
fiscal year, the State implemented actions that yielded net spending
reductions of $876 million. After implementing these measures, the State
incurred a cash-basis operating deficit in the General Fund of $1.081 billion,
which was financed through the public issuance of $1.082 billion in tax and
revenue anticipation notes in early 1991.
In 1990, S&P and Moody's lowered their ratings of the State's general
obligation debt from AA- to A and A-1 to A, respectively. In addition, S&P
and Moody's lowered their ratings in 1990 on New York's short-term notes from
SP-1+ to SP-1 and from MIG-1 to MIG-2, respectively. The State's A-1+ rated
commercial paper and variously rated moral obligation, lease purchase,
guarantee and contractual obligation debt at that time remained on S&P
CreditWatch with negative implications. In February 1991, Moody's
lowered its rating on the City's general obligation bonds from A to Baa1. In
April 1991, S&P downgraded New York City's municipal notes from SP-1 to SP-2.
The rating changes reflect the rating agencies' concerns about the financial
condition of New York State and City, the heavy debt load of the State and
City, and economic uncertainties in the region.
(1) The State, Agencies and Other Municipalities. During the
mid-1970s, some of the Agencies and municipalities (in
particular, the City) faced extraordinary financial
difficulties, which affected the State's own financial
condition. These events, including a default on short-term
notes issued by the New York State Urban Development
Corporation ("UDC") in February 1975, which default was
cured shortly thereafter, and a continuation of the
financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by
some of its municipalities and Agencies. For a time, in
late 1975 and early 1976, these difficulties resulted in a
virtual closing of public credit markets for State and many
State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included the
adoption of a balanced budget on a cash basis (a deficit of $92 million that
actually resulted was financed by issuing notes that were paid during the
first quarter of the State's 1978 fiscal year). In addition, legislation was
enacted limiting the occurrence of additional so-called "moral obligation" and
certain other Agency debt, which legislation does not, however, apply to
MAC debt.
State Financial Results. The 1978 fiscal year saw an improvement in
the financial condition of the State, its Agencies and municipalities
generally, although certain municipalities (including the City) and certain
Agencies continued to face financial difficulties. The State adopted and
adhered to a balanced budget, with receipts and disbursements on a cash basis
of approximately $11.18 billion. For its 1979, 1980, 1981 and 1982 fiscal
years, the State achieved balanced budgets with receipts and disbursements
on a cash basis of $11.9 billion, $13.2 billion, $15.2 billion and $16.781
billion, respectively. During the 1982 fiscal year, the State had full access
to the public credit markets for its borrowing needs.
The State completed its fiscal years ended March 31, 1983, 1984, 1985
and 1986 with combined governmental funds operating deficits of $826 million,
$3.399 billion, $3.425 billion and $3.124 billion, respectively, determined in
accordance with generally accepted accounting principles ("GAAP").
During the fiscal years ended March 31, 1987, 1988, 1989 and 1990,
the State experienced significant unanticipated variations in the result of
the State Financial Plan, particularly with respect to revenue projections,
which it believes resulted principally from changes in taxpayer behavior
caused by the Federal Tax Reform Act of 1986 (the "Tax Reform Act"). The Tax
Reform Act substantially altered definitions of income and deductions in the
computation of taxable income and substantially lowered tax rates used
in the computation of Federal taxes. In 1987, the State enacted legislation
that conformed State law to most of those definitional changes and also
lowered tax rates. Those changes "broadened" the income tax base through such
devices as full inclusion of capital gains, restrictions on certain losses and
adjustments to income. Those changes in the Federal tax law are expected to
continue to influence taxpayer behavior during the next several years.
For State personal income taxes, the net effect of those changes is to make
estimates and forecasts of adjusted gross income less reliable than they had
been in the past and to add substantial uncertainty to estimates of State tax
liability based on such estimates and forecasts. In large part because of
these uncertainties, the State's Financial Plan overestimated General Fund tax
receipts in the 1988-89 and 1989-90 fiscal years by $1.9 billion and $1.6
billion, respectively.
During its 1988-89, 1989-90 and 1990-91 fiscal years, the State
incurred cash basis operating deficits in the General Fund of $529 million,
$775 million and $1.081 billion, respectively, prior to the issuance of short-
term tax and revenue anticipation notes owing to lower-than-projected
receipts, which it believes to have been principally the result of a
significant slowdown in the New York and regional economy and changes in
taxpayer behavior caused by the Tax Reform Act.
In its 1988-89 fiscal year, the State experienced a significant drop
in receipts as compared to projections contained in the State Financial Plan
formulated in April 1988. General Fund tax receipts were approximately $1.9
billion lower than projected in April 1988. After reflecting more than $1
billion in additional receipts and transfers resulting from deficit-reducing
actions during the course of the fiscal year, total General Fund receipts in
fiscal 1988-89 were $797 million below the original estimates.
General Fund tax receipts for 1989-90 were $1.615 billion lower than
amounts projected in April 1989. After more than $350 million in deficit
reduction measures taken during the fiscal year, consisting of additional non-
tax receipts and transfers described below, and increases in certain other
non-tax receipts, total General Fund receipts were $1.159 billion below the
April 1989 projections. The State also effected net spending reductions of
$384 million, which together with the deficit reduction measures resulted in
a cash basis operating deficit in the General Fund of $775 million, which was
financed through the issuance of tax and revenue anticipation notes. To
offset a portion of these shortfalls, the State took several nonrecurring
actions to increase receipts in its 1989-90 fiscal year. These actions
included the transfer of excess balances from several State funds, including
$230 million from the State Insurance Fund, $86 million from the Industry Fee
Transfer Account of the Hazardous Waste Remedial Fund and $34 million
from the Court Facilities Incentive Aid Fund.
The advent of a recession in the national and regional economies
during 1990-91, and other factors as described below, caused major downward
revisions to estimates of receipts in 1990-91. Total General Fund receipts
and transfers from other funds in the 1990-91 fiscal year were $28.6 billion,
a decline of $1.9 billion from projections made in the initial 1990-91
financial plan formulated May 23, 1990, immediately after adoption of
the 1990-91 budget. General Fund tax receipts were $27.4 billion, down $1.7
billion from projections made in May 1990. The State implemented a deficit-
reduction plan in December 1990, which had the effect of reducing the General
Fund cash-basis operating deficit to $1.081 billion. The State met the
deficit through two issuances of tax and revenue anticipation notes: a public
sale of $905 million on February 28, 1991 and a sale of $176.5 million to the
State's Short-Term Investment Pool on March 29, 1991.
Personal income tax receipts totalled $14.516 billion, a decline of
$1.044 billion from the $15.560 billion projected in the 1990-91 State
Financial Plan formulated in May 1990, primarily as a result of the recession.
User taxes and fees were down $509 million, as adjusted, from May
1990 projections to $7.702 billion.
Specific causes of the $509 million drop include lower growth in wage
income and nominal spending on consumer durables. Business taxes fell $124
million from the May 1990 projection to $4.017 billion. The major cause was a
drop of $114 million in collections from banks reflecting the continued poor
financial results of the banking industry. Other taxes totalled $1.199
billion, a reduction of $43 million from the May 1990 projections. Real
estate-based taxes were down $151 million to $410 million, primarily due to a
sharp drop in real estate transactions caused by the recession. Estate
and gift tax revenues were up $108 million to $789 million, resulting from a
larger number of settlements of extra-large estates.
Receipts and transfers from other funds to the General Fund increased
from $27.731 billion in its 1988-89 fiscal year to $28.914 billion in its
1989-90 fiscal year. During its 1990-91 fiscal year, however, General Fund
receipts and transfers fell to $28.592 billion. Similarly, disbursements and
transfers to other funds increased from $28.244 billion during the State's
1988-89 fiscal year to $29.229 billion in its 1989-90 fiscal year, but fell to
$28.898 billion in its 1990-91 fiscal year.
Borrowings by the State in the public credit markets during the 1988-
89 and 1989-90 fiscal years totalled $3.6 billion and $5.8 billion,
respectively. Of these amounts $2.6 billion and $3.9 billion, respectively,
were annual seasonal borrowings. In 1990-91, State borrowings in the public
credit markets in 1990-91 totalled $6.0 billion, including annual seasonal
borrowings of $4.1 billion. In addition, $905 million in tax and revenue
anticipation notes maturing on December 30, 1991 were issued in February 1991
and a $176.5 million tax and revenue anticipation note, which matures January
17, 1992 was issued to the State's Short-Term Investment Pool on March 29,
1991. This note is callable at any time by the State. In addition, the State
issued $758.5 million of bonds and notes, exclusive of bonds issued to redeem
bond anticipation notes, during 1990-91 to finance capital projects. Based on
preliminary analyses made in June 1991, the Comptroller believes that the
operating deficit in the GAAP-basis General Fund for the 1990-91 fiscal year
could be approximately $500 million to $800 million, after reflecting
payments of $598 million to the Education Accumulation Revolving Account and
approximately $360 million in tax refunds on tax returns for the 1990 year and
after reflecting the $800 million benefit to General Fund operating results
resulting from the February 1991 sale of bonds. In the 1989-90 fiscal year
the State had an audited GAAP General Fund operating deficit of $673 million.
The 1991-92 State Financial Plan was formulated on June 10, 1991 only
after substantial disagreement between the Governor and the legislative
leaders over spending levels, revenue-raising measures and estimates of the
impact of legislative actions. In formulating the 1991-92 State Financial
Plan, the Governor stated that to ensure that the State's budget is balanced,
he had vetoed spending which the Legislature added to his proposed Executive
Budget without providing the necessary revenues.
The 1991-92 State Financial Plan is based on an economic projection
that the State will perform more poorly that the nation as a whole. Although
it projects that the national economy will begin to recover in the third
quarter of calendar 1991, the Division of the Budget expects that the State's
economy will take longer to recover, with modest growth resuming in the second
quarter of calendar 1992, after the close of the State's 1991-92 fiscal year.
Many uncertainties exist in forecasts of both the national and State
economies, including consumer attitudes toward spending, Federal financial and
monetary policies, and the state of the world economy, which could have an
adverse effect on the State.
The volatility of employment and income since 1987 in the finance,
insurance and real estate sector of the New York City economy and related
effects on other sectors has increased the uncertainty involved in estimating
personal income and business tax receipts and has contributed to errors in
estimates of revenue from the sales tax and the real estate-based taxes. The
1991-92 State Financial Plan assumes, among other things, a further slowdown
of the New York and regional economy, and its projection of receipts is based
in part upon that assumption. There can, however, be no assurance that the
State and regional economy will not experience weaker-than-predicted results
in the 1991-92 fiscal year with corresponding material and adverse effects on
the State's projections of receipts.
The principal operating fund of the State is the General Fund. It
receives all State income that is not required by law to be deposited in
another fund and, for 1991-92, includes approximately 92% of total State tax
receipts and many other revenues. After including transfers from Other Funds,
the 1991-92 General Fund shows a $38 million positive balance on a cash basis
with projected receipts of $30.557 billion, an increase of $1.965 billion
(6.9%) over total receipts (excluding the amount received from temporary
borrowing) in the 1990-91 fiscal year. The receipts amounts are before the
impoundment of receipts for repayment of the 1991 Deficit Notes of $1.081
billion in 1991-92 and exclude proceeds of $1.081 billion in 1991 deficit tax
and revenue anticipation notes of 1990-91. After including Transfers to Other
Funds, total General Fund disbursements in the 1991-92 fiscal year are
projected to be $29.394 billion, an increase of $496 million
(1.7%) over the total amount disbursed and transferred in the 1990-91 fiscal
year.
Taxes, which account for 98% of total available General Fund receipts
before the impoundment of $1.081 billion to redeem the 1991 deficit tax and
revenue anticipation notes, are projected to total $27.433 billion, up $1.315
billion (5%) from the amount collected during the 1990-91 fiscal year. Of the
increase in total taxes, approximately $687 million represents higher personal
income tax receipts, $42 million represents higher user taxes and fees
receipts, and $656 million represents greater receipts from business
taxes, while collections from other taxes are projected to decline $70
million.
The Special Revenue Funds, representing approximately 35% of 1991-92
State Financial Plan receipts, account for State receipts from specific
sources that are legally restricted in use to specified purposes and include
all moneys received from the Federal government. Total receipts in Special
Revenue Funds are projected at $17.885 billion, an increase of 17.1% from
fiscal year 1990-91. Total receipts consist of Federal grants ($13.232
billion), miscellaneous receipts ($3.909 billion) and dedicated taxes ($744
million).
Federal grants account for 74% of receipts in Special Revenue Funds
with approximately 86% of the Federal funds received by the State coming
through the Department of Health and Human Services Fund. Another 10% of
these Federal funds food and nutrition and preservation of the environment.
Miscellaneous receipts account 0 for 22% of receipts in Special Revenue Funds
and consist of fees and other charges, the proceeds of which are dedicated to
the support of specific programs. This category also includes the proceeds of
the State's lottery, which account for 23% of total miscellaneous receipts.
Tax revenues account for 4% of receipts in Special Revenue Funds and are
dedicated to the support of transit programs, including the MTA.
Disbursements from Special Revenue Funds are projected to be $19.016 billion,
an increase of $1.888 billion (11%) from fiscal year 1990-91. Grants to local
governments disbursed from this fund type are projected at $14.023 billion for
the 1991-92 fiscal year.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units and
Agencies in financing capital constructions. Capital Projects Funds are
estimated to account for 5.3% of total receipts and 7.3% of total
disbursements in the 1991-92 State Financial Plan.
Total receipts in Capital Projects Funds are projected at $2.745
billion, representing an increase of $970 million (55%) from fiscal 1990-91
receipts. Federal grants for capital projects, largely highway-related, are
projected to account for 34% of the total receipts in Capital Projects Funds
in the State's 1991-92 fiscal year. The preponderance of Federal grants (70%)
received in Capital Projects Funds represent Federal support for highway
programs, with the balance supporting various environmental, recreation and
public protection programs. Total disbursements for capital projects are
projected to be $3.778 billion, an increase of $647 million (21%) from fiscal
1990-91. Of total disbursements from Capital Projects Funds, approximately
50% is for various transportation purposes, including highways and mass
transportation facilities; 7% is for programs of the Department of
Correctional Services and other public protection activities; 18% is for
environmental and recreational programs; 5% is for educational programs; 11%
is for health and mental hygiene facilities; and 7% is for housing and
economic development programs. The balance is for the maintenance of State
office facilities and various other capital programs.
The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Total receipts in Debt Service
Funds are projected to reach $2.099 billion, representing a decrease of $743
million (26%) from fiscal 1990-91 receipts. The decrease is mainly
attributable to the reclassification of SUNY tuition from debt service funds
receipts to special revenue funds receipts. Total disbursements from Debt
Service Funds for debt service, lease-purchase and contractual-obligation
financing commitments are projected to be $1.532 billion or $512 million more
than in fiscal 1990-91. Disbursements from Debt Service Funds include $1.198
billion in debt service payments on full faith and credit debt and lease-
purchase and contractual-obligation financing commitments largely supported by
the General Fund.
The State anticipates that its borrowings for capital purposes will
consist of approximately $766 million in general obligation bonds and $140
million in new commercial paper issuances for new capital projects. In
addition, it is anticipated that the State will issue $70 million of its bonds
for the purpose of redeeming outstanding commercial paper bond anticipation
notes. The State also anticipates the issuance of approximately $25 million
in bonds for the purpose of redeeming outstanding bond anticipation notes.
The projections of the State regarding its borrowings for the 1991-92
fiscal year may change if actual receipts fall short of State projections or
if other circumstances require. The Legislature has authorized the issuance
of up to $105 million in certificates of participation for equipment purchases
and real property purposes during the State's 1991-92 fiscal year.
The Governor presented a summary financial plan prepared on a GAAP
basis together with the Executive Budget for the 1991-92 fiscal year. That
plan included an operating surplus on a GAAP basis for the General Fund. The
Governor also is required to prepare a summary financial plan for the four
governmental funds on a GAAP basis for the 1991-92 fiscal year as soon as
practicable after the formulation of the 1991-92 State Financial Plan. Based
upon the cash-basis 1991-92 State Financial Plan, the Division of the Budget
expects that the 1991-92 State Financial Plan will show a surplus on a GAAP
basis.
State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by non-binding
statutory provisions for State appropriations to maintain various debt service
reserve funds established for such bonds (commonly referred to as "moral
obligation" provisions).
At September 30, 1990, there were 17 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies, was $52.1 billion as of September 30,
1990, of which approximately $10.2 billion was moral obligation debt and
approximately $10.7 billion was financed under lease purchase or contractual
obligation financing arrangements. Debt service on the outstanding Agency
obligations normally is paid out of revenues generated by the Agencies'
projects or programs, but in recent years the State has provided special
financial assistance, in some cases on a recurring basis, to certain Agencies
for operating and other expenses and for debt service pursuant to moral
obligation indebtedness provisions or otherwise. Additional assistance is
expected to continue to be required in future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to meet
their obligations could result in a default by one or more of such Agencies.
If a default were to occur, it would likely have a significant effect on
the marketability of obligations of the State and the Agencies. These
Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and nursing
home development and other programs. In general, HFA depends upon mortgagors
in the housing programs it finances to generate sufficient funds from rental
income, subsidies and other payments to meet their respective mortgage
repayment obligations to HFA, which provide the principal source of funds for
the payment of debt service on HFA bonds, as well as to meet operating and
maintenance costs of the projects financed. From January 1, 1976 through
March 31, 1987, the State was called upon to appropriate a total of $162.8
million to make up deficiencies in the debt service reserve funds of HFA
pursuant to moral obligation provisions. The State has not been called upon
to make such payments since the 1986-87 fiscal year and no payments are
anticipated during the 1992 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable to
make full payments on their mortgage loans. Through a subsidiary, UDC is
currently attempting to increase its rate of collection by accelerating its
program of foreclosures and by entering into settlement agreements.
UDC has been, and will remain, dependent upon the State for appropriations to
meet its operating expenses. The State also has appropriated money to assist
in the curing of a default by UDC on notes which did not contain the State's
moral obligation provision.
The Metropolitan Transportation Authority (the "MTA") oversees New
York City's subway and bus lines by its affiliates, the New York City Transit
Authority and the Manhattan and Bronx Surface Transit Operating Authority
(collectively, the "TA"). Through MTA's subsidiaries, the Long Island Rail
Road Company, the Metro-North Commuter Railroad Company and the Metropolitan
Suburban Bus Authority, the MTA operates certain commuter rail and bus lines
in the New York metropolitan area. In addition, the Staten Island Rapid
Transit Authority, an MTA subsidiary, operates a rapid transit line on Staten
Island. Through its affiliated agency, the Triborough Bridge and
Tunnel Authority (the "TBTA"), the MTA operates certain toll bridges and
tunnels. Because fare revenues are not sufficient to finance the mass transit
portion of these operations, the MTA has depended and will continue to depend
for operating support upon a system of State, local government and TBTA
support and, to the extent available, Federal operating assistance, including
loans, grants and operating subsidies.
For its fiscal year ended December 31, 1990, the MTA's unaudited
results show operating budgets balanced on a cash basis, reflecting
substantial assistance from the State and a 15 cent fare increase that became
effective on January 1, 1990. Over the past several years the State has
enacted several taxes--including a surcharge on the profits of banks,
insurance corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the MTA
and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA.
For 1991, the MTA's 1990-92 financial plan projected a balanced
budget for the commuter railroads, but a budget gap for the TA of
approximately $70 million, which it proposed be closed by governmental
assistance, revenue enhancements, expense decreases and, to the extent these
are insufficient to close the gap, by a fare increase to take effect
by mid-year 1991.
On June 17, 1991, TA officials announced that the TA's projected gap
for its 1991 fiscal year could reach up to $223 million, primarily as a result
of continued declines in ridership, further deterioration in revenues from
real estate taxes and proposed decreases in State and City aid to the TA. The
TA proposes to close the projected 1991 fiscal year gap by expenditure
reductions (some of which may require legislation), refundings of
outstanding bonds and implementation of a new capital reimbursement procedure
for the TA, among other things. TA officials project that the 1991 gap would
be closed if those actions are successfully implemented.
For 1992, the MTA's financial plan projects a $375 million budget gap
for the TA, before giving effect to the recurring value of any actions taken
to close the 1991 budget gap but after giving effect to certain assumptions,
such as a 1991-92 labor settlement with net wage increases of 1.5% annually.
MTA officials have recently stated, however, that the TA's gap for 1992 has
grown to more that $500 million. For 1992, the plan also projects a $116
million budget gap for the commuter railroads. Should any of the assumptions
used in arriving at its projections prove incorrect, the MTA could incur
greater deficits and, therefore, would be required to seek additional State
assistance, increase fares, or take other actions.
The Office of the State Deputy Comptroller for New York City (the
"OSDC"), within the officer of the State Comptroller, released a report on
January 23, 1991, reviewing the MTA Financial Plan as it relates to the TA.
The report found that shortcomings in the gap closing program are likely to
result in the imposition of a fare increase. It also noted that further
deterioration in the regional economy may cause additional shortfalls.
A subway fire on December 28, 1990, which caused fatalities and many
injuries, may give rise to substantial claims for damages against both the TA
and the City.
Because the MTA has a calendar fiscal year, factors affecting the
MTA's 1990 fiscal year could affect the 1990-91 State Financial Plan.
In 1981, the State Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan for the capital program
designed to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabili-tate facilities and equipment, and also
granted certain additional bonding authorization therefore.
As required by the legislation, MTA submitted, and has received
approval by the MTA Capital Program Review Board ("CPRB") of a 1987-91 Capital
Program, as amended by CPRB in March 1991, totalling $8.486 billion. The TA
portion of the MTA 1987-91 Capital Program totals $6.531 billion, which
includes as a funding source $355 million related to the proposed sale of the
New York Coliseum. However, lawsuits challenging the sale are pending. If
the Coliseum site is not developed as planned, the TA and the commuter
railroads may have to defer certain capital projects or seek other
funding sources.
In March 1991, the MTA issued a draft 1992-96 Capital Program
proposal with projected total spending of $11.5 billion of which the TA
portion is $8.3 billion. Currently, the MTA has identified $6 billion in
potential funding sources, leaving a funding gap of $5.5 billion. The MTA
expects to submit its formal proposal to the CPRB in October 1991. If the MTA
capital program is delayed because of funding shortfalls or other factors,
ridership and fare revenues may decline. A loss of fare revenues, among
other things, could impair the MTA's ability to meet its operating expenses
without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad powers
and responsibilities with respect to the government, finances and welfare of
these political subdivisions, especially in education and social services. In
recent years the State has been called upon to provide added financial
assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's 1991-92 fiscal year and thereafter. The 1992-92 State
Financial Plan includes a significant reduction in State aid to localities in
such programs as revenue sharing and aid to education from projected base-line
growth in such programs. It is expected that such reductions will result in
the need for localities to reduce their spending or increase their revenues.
The potential impact on the State of such actions by localities is not
included in the projections of the State receipts and disbursements in the
State's 1991-92 fiscal year.
The counties and other localities on Long Island could be affected by
problems relating to the Long Island Lighting Company ("LILCO"), the investor-
owned utility which supplies gas service and substantially all electric
service in Nassau and Suffolk counties and a small portion of Queens County in
the City. LILCO faces serious cash-flow and other financial difficulties
attributable to, among other things, construction problems on this 809-
megawatt Shoreham Nuclear Power Facility ("Shoreham"), the cash-flow problems
for carrying debt service on that facility, certain litigation and certain
problems in obtaining a Federal operating license for Shoreham.
In February 1989, the Governor and LILCO reached an agreement
pursuant to which LILCO would sell Shoreham to the New York Power Authority
for $1 (which would then decommission Shoreham) in return for a schedule of
rate increases which have since been approved by the State Public Service
Commission (the "PSC"). The agreement has been approved by the New York Power
Authority, the Long Island Power Authority (which had been established in 1986
by the State with the power to acquire LILCO) and LILCO's shareholders,
although various actions have been initiated to challenge its implementation.
The agreement and PSC approved rate increases have enabled LILCO to reenter
the public credit markets. It is difficult to predict the ultimate fiscal and
economic impact on the State or on local governments on Long Island of any
litigation to which LILCO is or may become a party, or of any bankruptcy by or
takeover of LILCO.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1989, the total indebtedness of all
localities in the State was approximately $23.4 billion, of which $11.4
billion was debt of the City (excluding $7.5 billion in MAC debt). A small
portion (approximately $56.6 million) of this indebtedness represents
borrowing to finance budgetary deficits and was issued pursuant to enabling
State legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than the City authorized by State law to finance deficits during the period
that such deficit financing is outstanding. Fifteen localities had
outstanding indebtedness for deficit financing at the close of their
fiscal year ending 1989.
Certain proposed Federal expenditure reductions would reduce, or in
some cases eliminate, Federal funding of some local programs and accordingly
might impose substantial increased expenditure requirements on affected
localities. If the State, the City or any of the Agencies were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued
by localities within the State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. The longer-
range problems of declining city population, increasing expenditures and other
economic trends could adversely affect localities and require increasing State
assistance in the future.
Because of significant fiscal difficulties experienced from time to
time by the City of Yonkers, a Financial Control Board was created by the
State in 1984 to oversee Yonkers' fiscal affairs. Future actions taken by the
Governor or the State Legislature to assist Yonkers in this crisis could
result in the allocation of State resources in amounts that cannot yet be
determined.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the State's
Medicaid rates and regulations, including reimbursements to providers of
mandatory and optional Medicaid services; (iii) the care and housing provided
for individuals released from State mental health facilities; (iv)
contamination in the Love Canal area of Niagara Falls; (v) the use by the
State of certain casualty insurance reserve funds; (vi) educational
accommodations for learning-disabled students at a State University; (vii)
alleged employment discrimination by the State and its agencies; (viii) a
challenge to the State's practice of reimbursing certain Office of Mental
Hygiene patient-care expenses with clients' Social Security benefits; (ix) the
treatment provided at several State mental hygiene facilities; (x) a challenge
to the methods by which the State reimburses localities for the administrative
costs of food stamp programs; (xi) challenges to the methods by which the
State computes its aid to localities and to school districts; (xii) a
challenge to the State's possession of certain funds taken pursuant to the
State's Abandoned Property law; (xiii) alleged responsibility of State
officials to assist in remedying racial segregation in the City of Yonkers;
(xiv) an action, in which the State is a third party defendant, for
injunctive or other appropriate relief, concerning liability for the
maintenance of stone groins constructed along certain areas of Long Island's
shoreline; (xv) actions challenging the constitutionality of legislation
enacted during the 1990 legislative session which changed the actuarial
funding methods for determining contributions to State employee retirement
systems; (xvi) actions challenging legislation enacted in 1990 which requires
the withholding of certain amounts of pay from State employees until their
separation from State employment; (xvii) a challenge to the adequacy of care
available for persons who abuse drugs; and (xviii) an action against State and
City officials alleging that the present level of shelter allowance for public
assistance recipients is inadequate under statutory standards to maintain
proper housing.
Final adverse decisions in such cases could require extraordinary
appropriations or expenditure reductions or both, and might have a material,
adverse effect upon the financial condition of the State and various of its
Agencies and municipal subdivisions.
(2) New York City. In the mid-1970s, the City had large
accumulated past deficits and until recently was not able to
generate sufficient tax and other ongoing revenues to cover
expenses in each fiscal year. However, the City's operating
results for the fiscal year ending June 30, 1990 were
balanced in accordance with GAAP, the ninth consecutive year
in which the City achieved balanced operating results in
accordance with GAAP. The City's ability to maintain
balanced operating results in future years is subject
to numerous contingencies and future developments.
The City's economy, whose rate of growth slowed substantially over
the past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and increases in
social services costs, and has been required to take actions to close
substantial budget gaps in order to maintain balanced budgets in accordance
with the Financial Plan. Since the stock market crash, the City's tax
revenues have been below expected levels, and the revised local employment
data available since January 1989 have confirmed that the City's economy has
been severely affected by the stock market crash, and that the impact of
layoffs in the finance, insurance and real estate sector is greater
than had been believed earlier.
In 1975, the City became unable to market its securities and entered
a period of extraordinary financial difficulties. In response to this crisis,
the State also enacted the New York State Financial Emergency Act for the City
of New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's financial
affairs and facilitate its return to the public credit markets. The State
also established the OSDC to assist the Control Board in exercising its
powers and responsibilities. On June 30, 1986, the Control Board's powers of
approval over the City Financial Plan were suspended pursuant to the Emergency
Act. However, the Control Board, MAC and OSDC continue to exercise various
monitoring functions relating to the City's financial condition. The City
prepares and operates under a four-year financial plan which is submitted
annually to the Control Board for review and which the City periodically
updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1990 show a General Fund surplus reported in
accordance with GAAP, after taking into account actions in each of those years
which in effect prepaid certain City costs, averaging $450 million per year,
in the next fiscal year. The City has eliminated the cumulative deficit in
its net General Fund position. In addition, the City's financial
statements for the 1990 fiscal year received an unqualified opinion from the
City's independent auditors, the eighth consecutive year the City has received
such an opinion.
The City released its audited operating results for the 1990 fiscal
year on October 31, 1990, reporting revenues of $25.937 billion and
expenditures of $25.932 billion, on a GAAP basis, as of June 30, 1990. The
GAAP surplus was achieved despite a significant decline in revenues, chiefly
non-property tax collections, during the fiscal year resulting from a downturn
in local economic growth. The City compensated for these revenue shortages by
implementing certain expenditure reduction measures.
On July 11, 1990, the City submitted to the Control Board a four-year
financial plan for its 1991 through 1994 fiscal years. The 1991-1994
Financial Plan projected a balanced budget in fiscal year 1991, based on
revenues of $27.922 billion, and budget gaps of $970 million in fiscal year
1992, $811 million in fiscal year 1993 and $872 million in fiscal year 1994,
which were projected to be eliminated through a combination of City, State and
Federal actions.
On October 1, 1990, the City reached a labor agreement with the
United Federation of Teachers (the "UFT") providing for a one-year increase in
wages and salaries of 5.5% and other benefits.
On December 20, 1990, the Bureau of Labor Statistics, in its annual
year-end report on regional employment, reported expected losses in the City
of 47,000 private-sector jobs in 1990, or a net loss of 35,700 jobs after
factoring in the increase in government employment.
On January 3, 1991, the City's Director of the Budget stated that he
estimated the budget gap for the City's 1991 fiscal year at $500 million.
On May 17, 1991, the City submitted to the Control Board its most
recent modification to the Financial Plan for the 1991 fiscal year. The 1991
modification projects a balanced budget, based on revenues of $27.973 billion,
and assumes the implementation of a variety of actions required to be taken
prior to June 30, 1991 that would provide increases in revenues and reductions
in expenditures totaling $265 million to maintain this budget balance.
On June 4, 1991, OSDC issued a report on the 1991 modification. The
report projects further declines in tax revenues over the remainder of the
fiscal year that would offset the Financial Plan's remaining $40 million
general reserve. The report noted that just a slight percentage variance in
non-property tax collections from the amounts forecast over the remainder of
the 1991 fiscal year could translate into a large revenue surplus or
shortfall, and that each of the last three fiscal years has ended with revenue
shortfalls. The report further notes that the City was able to absorb these
shortfalls and maintain budget balance because spending did not reach planned
levels. However, the City has already counted on this lower spending for
fiscal year 1991, thus leaving the City without its customary year-end
financial cushion. The report also identified other actions the City
could take to maintain balance in the 1991 fiscal year, but noted that such
actions could exacerbate the already formidable budget problems projected for
the 1992 fiscal year.
On June 19, 1991, the staff of the Control Board issued its report on
the City's May 17 modification to the Financial Plan. The report stated that
the City has a remaining gap in fiscal year 1991 of about $47 million. Noting
that only two weeks remained in the fiscal year, the report stated that some
options available to the City to close the remaining gap still await
implementation and that uncertainties continued to exist that could enlarge
the gap further. The report further noted that certain actions taken by
the City to close its 1991 budget gap were short-term and non-recurrent and
concluded that such actions only make future imbalance worse and balance
harder to achieve.
The City submitted to the Control Board a new Financial Plan for its
fiscal years 1992 through 1995 on May 15, 1991. The 1992-95 Financial Plan is
based on the Mayor's Executive Budget released on May 10, 1991, which sets
forth a program to eliminate a potential budget gap of $3.5 billion in the
1992 fiscal year. After implementation of this program, which includes
service reductions of almost $1.5 billion, tax increases of almost $1 billion,
productivity initiatives of $500 million and other City and State actions of
$500 million, the 1992-95 Financial Plan projects a balanced budget in the
1992 fiscal year, based on revenues of $28.718 billion. The Executive Budget
is subject to approval by the City Counsel, and certain revenue-raising
initiatives contained in the Executive Budget are subject to approval by the
State Legislature. The City has announced that the 1991-92 State Financial
Plan contains approximately $328 million less in aid from the State than the
City had anticipated. The 1992-95 Financial Plan projects remaining budget
gaps of $883 million in fiscal year 1993, $1.370 billion in fiscal year
1994 and $1.166 billion in fiscal year 1995, which are proposed to be
eliminated through a combination of City and State actions.
On June 6, 1991, the City Counsel issued a report on the Mayor's
proposed 1992 budget. The City Council stated it would approve no more than
$170 million of the Mayor's proposed $646 million increase in real property
taxes; opposed $400 million of the Mayor's proposed service reductions while
proposing $276 million in alternative expenditure reductions; called for $350
million in labor-cost savings; and called for non-recurring revenue increases
of $225 million from financing actions, including MAC debt refinancings. On
June 15, 1991, the Mayor and the City Counsel announced that they would seek
approval from the State Legislature of a $335 million increase in the City
personal income tax.
On June 17, 1991, OSDC issued a report on the 1992-95 Financial Plan.
The report noted that as a consequence of increases in the City's workforce,
questionable budget-relief devices that aggravated the City's financial
problems in the long term, a severe recession, and new labor contracts slated
to cost more than $1 billion over fiscal years 1991 and 1992, the City is
confronting its worst fiscal crisis since 1975. The report found that the
budget gap for the 1992 fiscal year could be $325 million higher than
projected in the 1992-95 Financial Plan, primarily because of higher costs for
personal services and debt service. In addition, the report indicated that
attainment of a number of the gap-closing actions planned for the 1992 fiscal
year, such as $250 million in additional assistance from the State and $200
million in savings from the Board of Education, is highly uncertain. The
report also noted that the City Council's opposition to over $800 million of
the tax increases and service reductions proposed in the 1992-95 Financial
Plan and the Mayor's rejection of many of the City Council's alternative
proposals could result in a delayed budget adoption for the 1992 fiscal year
beyond the start of such year. The report warned that such an event could
possibly lead to a lowering of the City's credit rating and a reimposition of
a control period by the Control Board. The staff of the Control Board also is
reviewing the 1992-95 Financial Plan and is expected to issue a report on its
review results.
Estimates of the City's revenues and expenditures are based on
numerous assumptions and subject to many uncertainties. If expected Federal
or State aid is not forthcoming, if unforeseen developments in the economy
significantly reduce revenues derived from economically sensitive taxes or
necessitate increased expenditures for public assistance, or if other
uncertainties materialize that reduce expected revenues or increase
projected expenditures, then, to avoid operating deficits, the City may be
required to implement additional actions, including increases in taxes and
reductions in essential City services, that could weaken the City's economy
and tax base. The City also might seek additional assistance from the State.
The City requires certain amounts of financing for seasonal and
capital spending purposes. Since 1982, the City has satisfied all of its
seasonal financing needs with sales of short-term notes in the public credit
markets. In its 1991 fiscal year, the City has issued $3.65 billion of notes
to meet its seasonal financing needs.
The City's capital financing program projects long-term financing
requirements of approximately $18.4 billion for the City's fiscal years 1991
through 1994, primarily for the construction and rehabilitation of the City's
infrastructure and other fixed assets. The major capital requirements include
capital expenditures for the City's water supply system, sewage and waste
disposal systems, roads, bridges, mass transit, schools and housing.
The City's program assumes the successful sale of its general obligation bonds
and increasing market access in each year for water and sewer revenue bonds to
be issued by a public authority. On October 9, 1990, S&P placed the City's
outstanding general obligation bonds on "CreditWatch" with negative
implications.
(3) State Economic Trends. Over the long-term, the State and
the City also face serious potential economic problems. The
City accounts for approximately 40% of the State's
population and personal income, and the City's financial
health affects the State in numerous ways. The State has
long been one of the wealthiest states in the nation.
For decades, however, the State economy has grown more
slowly than that of the nation as a whole, resulting in the
gradual erosion of its relative economic affluence. The
causes of this relative decline are varied and complex, in
many cases involving national and international developments
beyond the State's control. In recent years, the State's
economic position has improved in a manner consistent with
that of the Northeast as a whole.
Part of the reason for the long-term relative decline in the State's
economy has been attributed to the combined State and local tax burden, which
is among the highest in the United States. The existence of this tax burden
limits the State's ability to impose higher taxes in the event of future
financial difficulties. Recently, the State has been relatively successful in
bringing the rate of growth in the public sector in the State into line with
the slower expansion in the private economy.
The burdens of State and local taxation, in combination with many
other causes of regional economic dislocation, may have contributed to the
decision of businesses and individuals to relocate outside, or not locate
within, the State. In 1987, the State enacted a major personal income tax
reduction and reform program and also reduced the tax rate on corporation
income. In addition, the State has provided various tax incentives to
encourage business relocation and expansion. While no sustained reversal of
the erosion of the State's economic position relative to the nation as a whole
has been projected, the actions to date, in combination with other causes of
regional economic change, have slowed these trends.
APPENDIX B
Description of S&P and Moody's 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 of 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
Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB
Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of 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 designation to show relative standing
within the major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+)
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 which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the 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.
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 probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds, and D represents the lowest
potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months, or in 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.
Dreyfus
New York
Tax Exempt
Money Market Fund
Annual Report
May 31, 1993
[DREYFUS LION]
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER
Dear Shareholder:
We are pleased to provide you with this annual report for the Dreyfus New
York Tax Exempt Money Market Fund. For the period ended May 31, 1993, the yield
provided by your Fund was 1.86%. After taking into account the effect of
compounding, the effective yield was 1.87%.* Dividends of approximately $.02 per
share paid during the period were exempt from Federal, New York State and New
York City income taxes.** Throughout the period, your Fund continued to provide
an attractive after-tax return relative to its short-term taxable alternatives
for the New York investor.
At our last reporting, investor concerns involved the future course of
interest rates and the overall direction of the economy as the market attempted
to gauge the impact of the new Administration's proposals. While both economic
and credit demand growth have been modest, recent economic indicators have taken
some of the steam out of the post-election market. The lack of improvement in
the jobless rate and the most recent CPI and PPI numbers, along with the wider
than expected trade deficit data, hint that economic growth may be more anemic
than expected. While these numbers have resulted in some market volatility, we
do not believe they signal a strong inflationary trend that will result in any
immediate tightening action by the Federal Reserve Board.
In fact, we expect that we will see heightened demand for short-term
municipals in mid-summer as various note issues mature and create a scarcity of
investment choices. This dearth of supply tends to last through late July and
early August, when issuers return to the market with their summer financings. In
past summers, these market "technicals" have resulted in a period of lower rates
followed by an opportunity for selective buying as rates move up in response to
the increase in supply. In this environment, we expect that short-term
municipals will continue to remain attractive relative to taxable alternatives
on an after-tax basis. It is apparent that this value would only increase with
the introduction of the higher tax brackets proposed by the Clinton
Administration.
We have provided a current Statement of Investments and recent financial
statements for your review and look forward to serving your investment needs in
the future. Very truly yours,
Richard J. Moynihan
President
June 16, 1993
New York, N.Y.
*Effective yield is based upon dividends declared daily and reinvested monthly.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
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DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS MAY 31, 1993
<TABLE>
- -------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------------ ------------
<S> <C> <C>
TAX EXEMPT INVESTMENTS--100.0%
NEW YORK--94.7%
Broome County Industrial Development Agency, IDR, Refunding, VRDN
(Bing Realty Project) 2.85% (LOC; Meridian Bank Corp.) (a,b)....................... $ 1,500,000 $ 1,500,000
Erie County, RAN 3.95%, 7/29/93 (LOC; Union Bank of Switzerland) (b)................. 2,500,000 2,503,274
Fulton County Industrial Development Agency, Revenue, VRDN
(SLM Action Sports Project) 3% (LOC; Royal Bank of Canada) (a,b)................... 1,300,000 1,300,000
Half Hallow Hills Central School District, Huntington and Babylon, TAN
3.50%, 6/25/93..................................................................... 12,000,000 12,003,061
Town of Islip Industrial Development Agency, IDR, VRDN (Radiation Dynamics Project)
3.375%, Series A (LOC; Sumitomo Bank) (a,b)........................................ 5,900,000 5,900,000
Metropolitan Transport Authority, Commuter Facilities Revenue, VRDN
2.80% (LOC: Bank of Tokyo, Industrial Bank of Japan, Mitsubishi Bank,
Morgan Bank, National Westminster Bank and Sumitomo Bank) (a,b).................... 35,000,000 35,000,000
Monroe County, BAN 3.75%, 6/11/93.................................................... 11,350,000 11,352,032
Monroe County Industrial Development Agency, IDR, VRDN (ENBI Corp.)
2.85% (LOC; ABN-Amro Bank) (a,b)................................................... 4,700,000 4,700,000
City of New York, VRDN:
GO Notes 3.05%, Series C-5 (LOC; Sumitomo Bank) (a,b).............................. 13,500,000 13,500,000
Trust Cultural Resource Revenue (Solomon R. Guggenheim)
2.80%, Series B (LOC; Swiss Bank Corp.) (a,b).................................... 2,700,000 2,700,000
New York City Housing Development Corp., Mortgage Revenue, VRDN:
(Park Gate Towers Project) 2.60% (LOC; Citibank) (a,b)............................. 685,000 685,000
(Residential East 17th Street) 3.25%, Series A (LOC; Chemical Bank) (a,b).......... 9,500,000 9,500,000
(Stroheim and Romann Project) 2.375% (LOC; Westdeutsche Landesbank Girozentrale)
(a,b)............................................................................ 5,700,000 5,700,000
New York City Industrial Development Agency, VRDN:
Civil Facilities Revenue (Mercy College Project)
2.65% (LOC; The Bank of New York) (a,b).......................................... 2,200,000 2,200,000
IDR (La Guardia Association Project) 2.55% (LOC; Banque Indosuez) (a,b)............ 13,700,000 13,700,000
New York City Municipal Water Finance Authority, Water and Sewer Systems Revenue
VRDN 2.85%, Series C (Insured; FGIC) (a)........................................... 5,000,000 5,000,000
New York State, TRAN 2.75%, 12/31/93................................................. 15,000,000 15,050,104
New York State Dormitory Authority, Revenues, VRDN (Cornell University Project)
2.80%, Series B (Liquidity Agreement; Morgan Guaranty Trust) (a)................... 9,700,000 9,700,000
New York State Energy, Research and Development Authority, PCR:
Bonds:
(LILCO Project) 2.50%, Series A, 3/1/94 (LOC; Deutsche Bank) (b)................. 3,600,000 3,600,000
(New York State Electric and Gas):
2.90%, Series D, 12/1/93 (LOC; Union Bank of Switzerland) (b).................. 10,400,000 10,400,000
2.75%, Series 85A, 3/1/94 (LOC; Union Bank of Switzerland) (b)................. 6,570,000 6,570,000
2.50%, Series 85A, 3/15/94 (LOC; Morgan Guaranty Trust) (b).................... 7,650,000 7,650,000
VRDN:
(Central Hudson Gas and Electric Project)
2.85%, Series A (LOC; Bankers Trust) (a,b)..................................... 2,600,000 2,600,000
</TABLE>
<TABLE>
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DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
- ------------------------------------------------------------------------------------- PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
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<S> <C> <C>
NEW YORK (CONTINUED)
New York State Energy Research and Development Authority, PCR (continued):
VRDN (continued):
(Niagara Mohawk Project):
2.85%, Series A (LOC; Morgan Guaranty Trust) (a,b)............................. $ 9,600,000 $ 9,600,000
3.20%, Series C (LOC; Canadian Imperial Bank of Commerce) (a,b)................ 8,400,000 8,400,000
3.25%, Series B (LOC; Westpac Banking Corp.) (a,b)............................. 3,500,000 3,500,000
3.30%, Series A (LOC; Toronto Dominion Bank) (a,b)............................. 3,000,000 3,000,000
New York State Housing Finance Agency, Revenue, VRDN:
(Liberty View Apartment Housing Project) 2.50% (LOC; Chemical Bank) (a,b).......... 4,000,000 4,000,000
Multi-Family Housing 2.80%, Series A (a)........................................... 3,100,000 3,100,000
(Normandie Court II Project) 2.75%, Series A (LOC; Bankers Trust) (a,b)............ 8,500,000 8,500,000
New York State Job Development Authority, VRDN:
2.35%, Series A1 Thru A9 (LOC; Sumitomo Bank) (a,b)................................ 1,075,000 1,075,000
2.35%, Series C1 Thru C30 (LOC; Sumitomo Bank) (a,b)............................... 5,755,000 5,755,000
2.35%, Series C1 Thru C34 (LOC; Sumitomo Bank) (a,b)............................... 75,000 75,000
2.35%, Series D1 Thru D16 (LOC; Sumitomo Bank) (a,b)............................... 845,000 845,000
2.35%, Series E1 Thru E55 (LOC; Sumitomo Bank) (a,b)............................... 2,125,000 2,125,000
2.35%, Series F1 Thru F17 (LOC; Sumitomo Bank) (a,b)............................... 1,130,000 1,130,000
New York State Local Government Assistance Corp., VRDN 2.75%, Series 93A
(LOC: Credit Suisse, Swiss Bank Corp. and Union Bank of Switzerland) (a,b)......... 12,000,000 12,000,000
New York State Medical Care Facilities Finance Agency, Revenue, VRDN:
(Childrens Hospital Buffalo Project) 2.60% (LOC; Barclays Bank) (a,b).............. 4,900,000 4,900,000
(Lenox Hill Hospital) 2.40%, Series A (LOC; Chemical Bank) (a,b)................... 2,800,000 2,800,000
(Pooled Equipment Loan Program) 2.60% (LOC; Chemical Bank) (a,b)................... 48,600,000 48,600,000
New York State Mortgage Agency, Revenue (Homeowner Mortgage)
3.15%, Series 30-C, 7/1/93 (Time Investment Contract; Societe Generale)............ 8,000,000 8,000,000
Onondaga County Industrial Development Agency, IDR, VRDN (Edgecomb Metals Projects)
3.125% (LOC; Banque Nationale de Paris) (a,b)...................................... 3,100,000 3,100,000
Orange County Industrial Development Agency, IDR, VRDN (Minolta Advance Technology
Projects) 3.375% (LOC; Sanwa Bank) (a,b)........................................... 5,900,000 5,900,000
Rochester County, BAN 2.26%, 3/14/94................................................. 18,645,000 18,652,032
Rockland County, RAN 2.75%, 4/8/94................................................... 5,000,000 5,012,406
Suffolk County, TAN 2.70%, 8/16/93 (LOC: Industrial Bank of Japan and
Mitsubishi Bank) (b)............................................................... 14,900,000 14,910,187
- -------------------------------------------------------------------------------------
U.S. RELATED--5.3%
Commonwealth of Puerto Rico, TRAN:
3.25%, Series A, 7/30/93........................................................... 5,000,000 5,004,320
3.50%, Series A, 7/30/93........................................................... 10,000,000 10,020,098
Commonwealth of Puerto Rico Government Development Bank, Refunding, VRDN
2.65% (LOC: Credit Suisse and Sumitomo Bank) (a,b)................................. 5,000,000 5,000,000
------------
TOTAL INVESTMENTS (cost $377,817,514).............................................. $377,817,514
------------
------------
</TABLE>
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DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
BAN Bond Anticipation Notes PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Corporation RAN Revenue Anticipation Notes
GO General Obligation TAN Tax Anticipation Notes
IDR Industrial Development Revenue TRAN Tax and Revenue Anticipation Notes
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------------- ------------------------ ----------------------- -------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 92.9%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) .8
Not Rated (f) Not Rated (f) Not Rated (f) 6.3
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At May 31, 1993, 72.38% of the Fund's net
assets are backed by letters of credit issued by domestic banks,
foreign banks and brokerage firms, of which Chemical Bank
17.08% of the Fund's net assets.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) P1 and A1 are the highest ratings assigned tax-exempt commercial paper by
Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond ratings of
the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard & Poor's
have been determined by the Fund's Board of Trustees to be of comparable
quality to those rated securities in which the Fund may invest.
See notes to financial statements.
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value--Note 1(a).......................................... $377,817,514
Interest receivable..................................................................... 2,453,835
Prepaid expenses........................................................................ 90,902
------------
380,362,251
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 162,364
Due to Custodian........................................................................ 268,914
Accrued expenses........................................................................ 115,048 546,326
---------- ------------
NET ASSETS................................................................................ $379,815,925
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $379,831,999
Accumulated net realized (loss) on investments.......................................... (16,074)
------------
NET ASSETS at value applicable to 379,831,999 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................................... $379,815,925
------------
------------
NET ASSETS VALUE, offering and redemption price per share
($379,815,925 / 379,831,999 shares)..................................................... $1.00
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 10,044,556
EXPENSES:
Management fee--Note 2(a)............................................................. $1,984,999
Shareholder servicing costs--Note 2(b)................................................ 519,954
Professional fees..................................................................... 57,283
Custodian fees........................................................................ 41,522
Prospectus and shareholders' reports--Note 2(b)....................................... 23,591
Trustees' fees and expenses--Note 2(c)................................................ 12,607
Registration fees..................................................................... 4,328
Miscellaneous......................................................................... 15,586
----------
TOTAL EXPENSES.................................................................... 2,659,870
------------
INVESTMENT INCOME--NET............................................................ 7,384,686
REALIZED AND UNREALIZED GAIN ON INVESTMENTS--Note 1(b):
Net realized gain on investments........................................................ $ 28,042
Net unrealized (depreciation) on investments............................................ (5,944)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 22,098
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 7,406,784
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................................ $ 14,487,296 $ 7,384,686
Net realized gain on investments...................................................... 2,781 28,042
Net unrealized appreciation (depreciation) on investments for the year................ 5,944 (5,944)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 14,496,021 7,406,784
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net................................................................ (14,487,296) (7,384,686)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold......................................................... 441,961,019 410,571,260
Dividends reinvested.................................................................. 13,370,593 6,866,949
Cost of shares redeemed............................................................... (514,617,564) (456,407,532)
------------ ------------
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...................... (59,285,952) (38,969,323)
------------ ------------
TOTAL (DECREASE) IN NET ASSETS.................................................... (59,277,227) (38,947,225)
NET ASSETS:
Beginning of year..................................................................... 478,040,377 418,763,150
------------ ------------
End of year........................................................................... $418,763,150 $379,815,925
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information has
been derived from information provided in the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
- ----------------------------------------------------------- -------------------------------------------------------------
PER SHARE DATA: 1989 1990 1991 1992 1993
------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....................... $1.0002 $1.0001 $.9999 $.9999 $ .9999
------- ------- ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Investment income--net................................... .0498 .0522 .0458 .0321 .0186
Net realized and unrealized gain (loss) on investments... (.0001) (.0002) -- -- .0001
------- ------- ------ ------ -------
TOTAL INCOME FROM INVESTMENT OPERATIONS................ .0497 .0520 .0458 .0321 .0187
------- ------- ------ ------ -------
DISTRIBUTIONS;
Dividends from investment income--net.................... (.0498) (.0522) (.0458) (.0321) (.0186)
------- ------- ------ ------ -------
Net asset value, end of year............................. $1.0001 $ .9999 $.9999 $.9999 $1.0000
------- ------- ------ ------ -------
------- ------- ------ ------ -------
- -----------------------------------------------------------
TOTAL INVESTMENT RETURN 5.10% 5.35% 4.68% 3.26% 1.87%
- -----------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... .58% .64% .61% .64% .67%
Ratio of net investment income to average net assets..... 5.00% 5.21% 4.59% 3.22% 1.86%
Decrease reflected in above expense ratios due to
undertakings by the Manager............................ .03% -- -- -- --
Net Assets, end of year (000's Omitted).................. $444,491 $539,472 $478,040 $418,763 $379,816
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act") as
a non-diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the distributor of the Fund's shares, which
are sold to the public without a sales load. The Distributor is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager").
It is the Fund's policy to maintain a continuous net asset value per share
of $1.00; the Fund has adopted certain investment, portfolio valuation and
dividend and distribution policies to enable it to do so.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Trustees to represent the fair value
of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Interest income, adjusted for amortization
of premiums and, when appropriate, discounts on investments, is earned from
settlement date and recognized on the accrual basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, it is
the policy of the Fund not to distribute such gain.
(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 provisions available to certain investment
companies, as defined in applicable sections of the Internal Revenue Code, and
to make distributions of income and net realized capital gain sufficient to
relieve it from all, or substantially all, Federal income taxes.
The Fund has an unused capital loss carryover of approximately $16,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to May 31, 1993. If not applied,
$15,000 expires in fiscal 1998 and $1,000 expires in fiscal 1999.
At May 31, 1993, 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).
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .50 of 1% of the average daily
value of the Fund's net assets and is payable monthly. The Agreement provides
for an expense reimbursement from the Manager should the Fund's aggregate
expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed 1 1/2% of the average
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
value of the Fund's net assets for any full fiscal year. There was no expense
reimbursement for the year ended May 31, 1993.
(B) The Fund has adopted a Service Plan, (the "Plan") pursuant to which the
Fund will 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 Fund's average daily net assets for any full
fiscal year. During the year ended May 31, 1993, the Fund was charged $10,767
pursuant to the Plan.
During the year ended May 31, 1993, the Fund was charged an aggregate of
$190,871 by the Manager and the Distributor for certain shareholder servicing
costs.
(C) Certain officers and trustees of the Fund are "affiliated persons," as
defined in the Act, of the Manager and/ or the Distributor. Each trustee who is
not an "affiliated person" receives an annual fee of $1,500 and an attendance
fee of $250 per meeting.
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Money Market Fund, including the statement of
investments, as of May 31, 1993, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1993 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 New York Tax Exempt Money Market Fund at May 31, 1993, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
New York, New York
July 12, 1993
<PAGE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended May 31,
1993 as "exempt-interest dividends" (not subject to regular Federal and, for
individuals who are New York residents, New York State and New York City
personal income taxes).
<PAGE>
[DREYFUS LOGO]
DREYFUS NEW YORK TAX EXEMPT
MONEY MARKET FUND
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A.
- -------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--95.7% AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
NEW YORK--86.9%
<S> <S> <C> <C>
Albany County, GO, Refunding 5%, 10/1/2004 (Insured; FGIC)........................... $ 2,800,000 $ 2,787,820
Albany Industrial Development Agency, LR
(New York State Department of Health Building Project) 6.75%, 10/1/1995............ 390,000 397,238
Albany Parking Authority, Parking Revenue Refunding:
6.50%, 11/1/2004................................................................... 1,000,000 1,045,540
6.70%, 11/1/2006................................................................... 1,000,000 1,044,250
Board Cooperative Educational Services, COP
(Greenport Vocational Facility Project) 7.50%, 10/1/1996........................... 675,000 707,501
Buffalo Municipal Water Finance Authority, Water System Revenue
5.50%, 7/1/2005 (Insured; FSA)..................................................... 3,200,000 3,250,656
Development Authority of the North Country, Solid Waste Management System Revenue:
6.30%, 7/1/1999.................................................................... 1,070,000 1,099,157
6.40%, 7/1/2000.................................................................... 1,135,000 1,166,190
County of Franklin Industrial Development Agency, LR
(County Correctional Facility Project) 6.375%, 11/1/2002........................... 2,950,000 3,092,102
Metropolitan Transportation Authority:
Service Contract Commuter Facilities
7.375%, 7/1/2008................................................................. 1,000,000 1,165,420
Service Contract Transit Facilities:
7.25%, 7/1/1998.................................................................. 3,050,000 3,355,213
6.80%, 7/1/2004.................................................................. 1,850,000 2,028,321
6.90%, 7/1/2006.................................................................. 3,615,000 3,961,859
Transit Facilities Revenue:
4.70%, 7/1/2001 (Insured; AMBAC)................................................. 5,000,000 4,946,700
5.30%, 7/1/2006 (Insured; AMBAC)................................................. 5,000,000 4,962,400
6.30%, 7/1/2006.................................................................. 3,145,000 3,216,108
Trust Tax Exempt Inverse Variable Certificate
6.893%, 6/30/2002 (a,b).......................................................... 10,000,000 9,662,500
Nassau County, Refunding (Combined Sewer Districts)
5.30%, 7/1/2006 (Insured; MBIA).................................................... 4,860,000 4,859,708
New York City:
7%, 2/1/1999....................................................................... 2,250,000 2,422,778
6.25%, 8/1/2002 (Insured; AMBAC)................................................... 950,000 1,034,256
7.50%, 8/15/2002................................................................... 290,000 337,925
7.50%, 8/15/2002................................................................... 1,210,000 1,331,496
5.75%, 8/1/2003.................................................................... 3,990,000 4,007,636
7.75%, 3/15/2004................................................................... 1,000,000 1,133,330
7.75%, 8/15/2004................................................................... 1,000,000 1,148,840
6.375%, 8/1/2005................................................................... 3,670,000 3,775,916
7%, 2/1/2006....................................................................... 3,500,000 3,800,230
6%, 5/15/2007...................................................................... 5,000,000 4,974,150
New York City Health and Hospital Corp., Revenue 6%, 2/15/2005....................... 2,000,000 2,005,880
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Environmental Facilities Corp.:
PCR
(State Water Revolving Fund):
7.30%, 6/15/2001............................................................... $ 4,000,000 $ 4,607,440
6.30%, 6/15/2002............................................................... 3,000,000 3,233,370
6.20%, 3/15/2004............................................................... 1,700,000 1,841,865
6.30%, 3/15/2005............................................................... 1,800,000 1,956,150
6.60%, 6/15/2005............................................................... 3,120,000 3,385,200
7.20%, 6/15/2006............................................................... 3,000,000 3,317,010
Special Obligation:
(Riverbank State Park) 7.10%, 4/1/2002........................................... 1,130,000 1,239,158
(State Park Infrastructure) 5.75%, 3/15/2008..................................... 2,475,000 2,486,113
New York State Housing Finance Agency:
Revenue:
(Refunding-Health Facilities - New York City):
7.40%, 5/1/1994................................................................ 1,000,000 1,033,190
7.90%, 11/1/1999............................................................... 2,250,000 2,503,282
(Suffolk-Help) 8%, 11/1/2001..................................................... 2,920,000 3,074,526
(State University Construction) 7%, 5/1/1996....................................... 1,000,000 1,086,300
(Urban Rent) 5.90%, 11/1/2003...................................................... 4,330,000 4,370,615
New York State Local Government Assistance Corp.:
6.70%, 4/1/2000.................................................................... 2,490,000 2,753,716
6.75%, 4/1/2002.................................................................... 2,500,000 2,896,075
New York State Medical Care Facilities Finance Agency, Revenue,
Hospital and Nursing Home:
(Catholic Medical Center) 7.60%, 8/15/1999 (Insured; FHA)........................ 1,000,000 1,088,970
5.875%, 2/15/2008 (Insured; FHA)................................................. 2,215,000 2,264,505
New York State Mortgage Agency, Revenue (Homeowner Mortgage):
5.85%, 10/1/1999................................................................... 1,075,000 1,112,238
6.05%, 10/1/2000................................................................... 1,150,000 1,196,127
6.15%, 10/1/2001................................................................... 1,225,000 1,273,424
7.25%, 10/1/2007................................................................... 2,495,000 2,607,225
New York State Power Authority,
General Purpose Revenue:
6.50%, 1/1/2004.................................................................. 2,735,000 2,994,360
Refunding:
5.90%, 1/1/2002................................................................ 3,625,000 3,863,380
6.25%, 1/1/2004................................................................ 2,000,000 2,172,520
New York State Thruway Authority:
(Emergency Highway Reconditioning and Preservation)
6%, 1/1/2002..................................................................... 2,000,000 2,129,540
Service Contract Revenue (Local Highway and Bridge):
6.80%, 1/1/2000.................................................................. 2,420,000 2,611,011
7%, 1/1/2002..................................................................... 5,000,000 5,440,450
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York City Housing Development Corp., Insured MFMR
(Sheridan Manor Apartments) 7.20%, 10/1/1999....................................... $ 945,000 $ 984,170
New York City Industrial Development Agency, Revenue:
Civic Facility
(YMCA of Greater New York Project) 7.25%, 8/1/1999............................... 2,300,000 2,372,082
Industrial Development:
8%, Series I, 11/16/1998 (LOC; Algemene Bank Nederland) (c)...................... 765,000 787,950
8%, Series J, 11/16/1998 (LOC; Algemene Bank Nederland) (c)...................... 1,315,000 1,367,298
7.625%, 11/1/1999 (LOC; Algemene Bank Nederland) (c)............................. 1,655,000 1,807,624
(Plaza Packaging Corp. Project)
7.65%, 12/1/2009 (LOC; Barclays Bank of New York) (c).......................... 960,000 1,042,742
New York City Municipal Water Finance Authority, Water and Sewer System Revenue:
5.55%, 6/15/2001................................................................... 1,500,000 1,531,140
6.60%, 6/15/2002................................................................... 3,000,000 3,237,630
New York State:
5.625%, 6/15/1999.................................................................. 5,000,000 5,219,450
6.75%, 11/15/2000.................................................................. 2,000,000 2,226,260
COP:
6.50%, 9/1/1996.................................................................. 2,840,000 3,023,152
(Commissioner of General Services Executive Department):
5.15%, 2/1/1998................................................................ 600,000 610,452
5.15%, 8/1/1998................................................................ 1,500,000 1,526,805
New York State Bridge Authority, Bridge Revenue:
6.75%, 1/1/1997.................................................................... 1,200,000 1,298,052
6.90%, 1/1/1999.................................................................... 1,250,000 1,357,950
New York State Dormitory Authority, Revenue:
(Capital District Chapter-Wildwood School) 6.625%, 7/1/1998........................ 850,000 908,531
City University:
7.25%, 7/1/2002.................................................................. 2,250,000 2,479,320
Refunding:
6.90%, 7/1/1997................................................................ 1,050,000 1,134,231
6.25%, 7/1/2003................................................................ 4,225,000 4,421,336
6.35%, 7/1/2004................................................................ 2,500,000 2,633,575
6.45%, 7/1/2005................................................................ 1,500,000 1,590,780
Judicial Facility Lease, Future Income Growth Security
(Suffolk County Issue) 9%, 10/15/2001............................................ 3,880,000 4,353,321
Rensselaer Polytechnic:
6.10%, 7/1/1999 (Insured; FGIC).................................................. 1,500,000 1,609,215
4.90%, 7/1/2004 (Insured; MBIA).................................................. 1,700,000 1,667,139
State University Educational Facilities:
7%, 5/15/2000.................................................................... 3,000,000 3,262,710
5.50%, 5/15/2005................................................................. 3,500,000 3,427,165
6.10%, 5/15/2005................................................................. 2,630,000 2,651,093
7.625%, 5/15/2005................................................................ 3,000,000 3,500,250
Union College 5.60%, 7/1/2004 (Insured; FGIC)...................................... 1,400,000 1,441,888
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Urban Development Corp.:
Project Revenue (Cornell Center for Theory and Simulation Science and
Engineering Grant) 5.90%, 1/1/2007............................................... $ 2,735,000 $ 2,747,499
Revenue, Refunding (Correctional Facilities) 5.625%, 1/1/2007...................... 4,835,000 4,743,619
City of Niagara Falls:
5.70%, 6/15/2000................................................................... 1,000,000 1,042,310
5.85%, 6/15/2001................................................................... 1,475,000 1,540,785
6%, 6/15/2002...................................................................... 1,250,000 1,316,875
Niagara Falls Bridge Commission, Toll Revenue
6.30%, 10/1/2006 (Insured; FGIC)................................................... 1,020,000 1,096,112
Oneida-Herkimer Solid Waste Management Authority, Solid Waste System Revenue
6.60%, 4/1/2004.................................................................... 1,150,000 1,203,739
Onondaga County Industrial Development Agency, PCR, Refunding
(Anheuser-Busch Co. Inc. Project) 6.625%, 8/1/2006................................. 4,000,000 4,342,960
Oswego County 6.60%, 6/15/2004....................................................... 1,000,000 1,086,670
Port Authority of New York and New Jersey:
(Consolidated Bonds 73rd Series) 6.75%, 10/15/2006................................. 2,000,000 2,156,380
(Consolidated Bonds 79th Series) 5.80%, 7/15/2003.................................. 4,620,000 4,884,264
Rensselaer Industrial Development Agency, IDR, (Albany International Corp.)
7.55%, 6/1/2007 (LOC; Norstar Bank) (c)............................................ 2,000,000 2,298,020
Rochester 5.70%, 8/15/2005 (Insured; AMBAC).......................................... 1,170,000 1,236,398
Suffolk County Industrial Development Agency, IDR, (Metavac Inc. Facilities)
7.25%, 12/1/1999 (LOC; Bank of Tokyo) (c).......................................... 2,180,000 2,287,191
Suffolk County Water Authority, Waterworks Revenue Refunding :
5.10%, 6/1/2004 (Insured; MBIA).................................................... 4,500,000 4,451,445
5.10%, 6/1/2005 (Insured; MBIA).................................................... 5,445,000 5,391,966
Syracuse:
COP
(Syracuse Hancock International Airport):
6.50%, 1/1/2004................................................................ 1,045,000 1,124,483
6.60%, 1/1/2005................................................................ 1,105,000 1,169,665
6.70%, 1/1/2007................................................................ 1,210,000 1,283,386
Public Improvement:
5.70%, 6/15/2004................................................................. 1,850,000 1,934,823
5.70%, 6/15/2005................................................................. 1,830,000 1,901,407
Triborough Bridge and Tunnel Authority:
(Convention Center Project) 7.25%, 1/1/1999........................................ 2,750,000 2,989,745
General Purpose Revenue:
6.80%, 1/1/2002.................................................................. 2,815,000 3,172,139
7.30%, 1/1/2002.................................................................. 1,000,000 1,152,790
5.625%, 1/1/2004................................................................. 3,100,000 3,221,427
5.75%, 1/1/2005.................................................................. 2,480,000 2,590,856
6%, 1/1/2006..................................................................... 3,250,000 3,391,505
Revenue
6.70%, 1/1/2003.................................................................. 3,000,000 3,385,470
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
U.S. RELATED--8.8%
Guam Airport Authority, Revenue 6.40%, 10/1/2005..................................... $ 4,000,000 $ 4,137,080
Puerto Rico Electric Power Authority, Power Revenue 6%, 7/1/2002..................... 2,500,000 2,592,200
Puerto Rico Municipal Finance Agency:
5.70%, 7/1/2003.................................................................... 7,810,000 7,940,505
5.80%, 7/1/2004.................................................................... 1,875,000 1,911,169
5.875%, 7/1/2007................................................................... 2,670,000 2,676,568
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project):
7.875%, 10/1/1997.................................................................. 2,285,000 2,479,294
8.10%, 10/1/2005................................................................... 1,175,000 1,293,287
Virgin Islands Public Finance Authority, Revenue, Refunding
Matching Fund Loan Notes:
6.80%, 10/1/2000................................................................. 1,500,000 1,589,520
6.90%, 10/1/2001................................................................. 1,000,000 1,067,530
Virgin Islands Water and Power Authority, Electric System Revenue
6.90%, 7/1/1996.................................................................... 2,595,000 2,766,140
------------
TOTAL MUNICIPAL BONDS
(cost $292,684,047)................................................................ $308,329,413
------------
------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--4.3%
New York:
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue, VRDN
<S> <C> <C>
2.85% (Insured; FGIC) (d).......................................................... 7,000,000 7,000,000
New York State Energy Research and Development Authority,
PCR,VRDN (Niagara Mohawk Power Corp.)
3.25% (LOC; Westpac Banking Corp.) (c,d)........................................... 6,800,000 6,800,000
------------
TOTAL SHORT-TERM TAX EXEMPT INVESTMENTS
(cost $13,800,000)................................................................. $ 13,800,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $306,484,047)................................................................ $322,129,413
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<CAPTION>
<C> <S> <C> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue
FSA Financial Security Association PCR Pollution Control Revenue
GO General Obligation VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ---------- ------------------ ------------------ -------------------
<S> <S> <S> <C>
AAA Aaa AAA 17.0%
AA Aa AA 20.0
A A A 25.7
BBB Baa BBB 29.7
F1 P1 A1 4.3
Not Rated Not Rated Not Rated 3.3
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security -- the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 1993,
these securities amounted to $9,662,500 or 3.0% of net assets.
(c) Secured by letters of credit.
(d) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest rates.
(e) Fitch currently provides creditworthiness information for a limited amount
of investments.
(f) At May 31, 1993, the Fund had $93,147,718 (29.3% of net assets) invested in
securities whose payment of principal and interest is dependent upon
revenues generated from transportation projects.
See notes to financial statements.
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1993
<TABLE>
<CAPTION>
ASSETS:
Investments in securities, at value
<S> <C> <C>
(cost $306,484,047)--see statement................................................... $322,129,413
Cash................................................................................... 1,594,940
Interest receivable.................................................................... 5,994,235
Receivable for shares of Beneficial Interest sold...................................... 46,110
Prepaid expenses....................................................................... 17,330
------------
329,782,028
LIABILITIES:
Due to The Dreyfus Corporation......................................................... $ 188,271
Payable for investment securities purchased............................................ 11,270,820
Payable for shares of Beneficial Interest redeemed..................................... 68,014
Accrued expenses and other liabilities................................................. 116,134 11,643,239
----------- ------------
NET ASSETS............................................................................... $318,138,789
------------
------------
REPRESENTED BY:
Paid-in capital........................................................................ $301,661,190
Accumulated undistributed investment income-net........................................ 130,336
Accumulated undistributed net realized gain on investments............................. 701,897
Accumulated net unrealized appreciation on investments--Note 3......................... 15,645,366
------------
NET ASSETS at value applicable to 17,620,437 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized)................................................................... $318,138,789
------------
------------
NET ASSET VALUE, offering and redemption price per share
($318,138,789 / 17,620,437 shares)..................................................... $18.06
------
------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1993
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME........................................................................ $ 14,323,871
EXPENSES:
Management fee--Note 2(a)............................................................ $ 1,409,047
Shareholder servicing costs--Note 2(b)............................................... 730,019
Professional fees.................................................................... 55,517
Prospectus and shareholders' reports--Note 2(b)...................................... 43,092
Registration fees.................................................................... 42,648
Custodian fees....................................................................... 26,902
Trustees' fees and expenses--Note 2(c)............................................... 17,195
Miscellaneous........................................................................ 22,419
-----------
2,346,839
Less--reduction in management fee due to undertaking--Note 2(a)...................... 350,689
-----------
TOTAL EXPENSES................................................................... 1,996,150
------------
INVESTMENT INCOME--NET........................................................... 12,327,721
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................................... $ 1,562,756
Net unrealized appreciation on investments............................................. 9,793,046
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................. 11,355,802
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 23,683,523
------------
------------
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
------------------------------
1992 1993
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income--net................................................................ $ 8,384,330 $ 12,327,721
Net realized gain on investments...................................................... 1,004,217 1,562,756
Net unrealized appreciation on investments for the year............................... 3,774,983 9,793,046
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 13,163,530 23,683,523
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................................ (8,332,335) (12,249,380)
Net realized gain on investments...................................................... (693,308) (1,361,992)
------------ ------------
TOTAL DIVIDENDS..................................................................... (9,025,643) (13,611,372)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold......................................................... 103,679,511 221,713,611
Dividends reinvested.................................................................. 7,665,515 11,520,173
Cost of shares redeemed............................................................... (54,515,867) (99,002,497)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 56,829,159 134,231,287
------------ ------------
TOTAL INCREASE IN NET ASSETS...................................................... 60,967,046 144,303,438
NET ASSETS:
Beginning of year..................................................................... 112,868,305 173,835,351
------------ ------------
End of year (including undistributed investment income--net: $51,995
in 1992 and $130,336 in 1993)....................................................... $173,835,351 $318,138,789
------------ ------------
------------ ------------
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................................... 6,109,045 12,439,795
Shares issued for dividends reinvested................................................ 450,897 648,502
Shares redeemed....................................................................... (3,210,707) (5,562,573)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING.................................................. 3,349,235 7,525,724
------------ ------------
------------ ------------
See notes to financial statements.
</TABLE>
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
Reference is made to page 2 of the Fund's Prospectus dated September 30,
1994.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act") as
a non-diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the distributor of the Fund's shares, which
are sold to the public without a sales load. The Distributor is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices in the judgment of the Service
are readily available and are representative of the bid side of the market 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, when appropriate, discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, if any,
it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the provisions available to certain investment
companies, as defined in applicable sections of the Internal Revenue Code, and
to make distributions of income and net realized capital gain sufficient to
relieve it from all, or substantially all, Federal income taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .60 of 1% of the average daily
value of the Fund's net assets and is payable monthly. The Agreement provides
for an expense reimbursement from the Manager should the Fund's aggregate
expenses, exclusive of taxes, brokerage, interest on borrowings, and
extraordinary expenses, exceed 1 1/2% of the average value of the Fund's net
assets for any full fiscal year. During the year ended May 31, 1993, the Manager
had undertaken to reduce the management fee paid, or reimburse such excess
expenses of the Fund, to the extent that the Fund's aggregate expenses
(excluding certain expenses as described above) exceeded an annual rate of .85
of
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1% of the Fund's average daily net assets. The reduction in Management fee,
pursuant to the undertaking, amounted to $350,689 for the year ended May 31,
1993.
The Manager has currently undertaken through September 30, 1993 or until
such time as the net assets of the Fund exceed $375 million, regardless of
whether they remain at that level, to reduce the management fee paid by, or
reimburse such excess expenses of the Fund, to the extent that the Fund's
aggregate expenses (excluding certain expenses as described above) exceed an
annual rate of .85 of 1% of the average daily value of the Fund's net assets.
The undertaking may be modified by the Manager from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the Agreement.
(B) The Fund has adopted a Service Plan (the "Plan") pursuant to which the
Fund pays the Distributor, at an annual rate of .25 of 1% of the value of the
Fund's average daily net assets, for costs and expenses in connection with
advertising, marketing and distributing the Fund's shares and for servicing
shareholder accounts. The Distributor may make payments to one or more Service
Agents (a securities dealer, financial institution, or other industry
professional) based on the value of the Fund's shares owned by clients of the
Service Agent. 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
Fund's average daily net assets for any full fiscal year. During the year ended
May 31, 1993, $605,719 was chargeable to the Fund pursuant to the Plan.
(C) Certain officers and trustees of the Fund are "affiliated persons," as
defined in the Act, of the Manager and/ or the Distributor. Each trustee who is
not an "affiliated person" receives an annual fee of $2,500 and an attendance
fee of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $271,164,238 and
$133,531,636, respectively, for the year ended May 31, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
At May 31, 1993, accumulated net unrealized appreciation on investments was
$15,645,366, consisting of $16,812,615 gross unrealized appreciation and
$1,167,249 gross unrealized depreciation.
At May 31, 1993, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Intermediate Bond Fund, including the statement of
investments, as of May 31, 1993, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1993 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus New York Tax Exempt Intermediate Bond Fund at May 31, 1993, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the indicated years, in conformity with generally accepted accounting
principles.
Ernst & Young
New York, New York
July 8, 1993
- --------------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended May 31,
1993 as "exempt-interest dividends" (not subject to regular Federal and, for
individuals who are New York residents, New York State and New York City
personal income taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends (if any)
and capital gain distributions (if any) paid for the 1993 calendar year on Form
1099-DIV which will be mailed early in 1994.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS--94.2% AMOUNT VALUE
- ---------------------- -------------- --------------
<S> <C> <C>
NEW YORK--86.0%
- ------------------------------------------------
Allegany County Industrial Development Agency,
Solid Waste Disposal Facility Revenue
(Atlantic Richfield Co. Facility) 6.625%,
9/1/2016....................................... $ 3,000,000 $ 3,131,520
Cohoes Industrial Development Agency, IDR
(Norlite Corp. Project)
6.75%, 5/1/2009(LOC; Dresdner Bank)(a)......... 5,000,000 5,276,450
Housing Corp., Revenue 9%, 11/1/2017............ 13,250,000 15,155,615
Metropolitan Transportation Authority:
Service Contract:
Commuter Facilities 5.75%, 7/1/2013........... 8,825,000 8,545,424
Transit Facilities 7.125%, 7/1/2009........... 5,000,000 5,555,950
Transport Facilities 5.75%, 7/1/2015.......... 7,500,000 7,294,125
Transit Facilities Revenue:
9.125%, 7/1/2004.............................. 7,230,000 8,182,119
6%, 7/1/2014 (Insured; FGIC).................. 9,500,000 9,460,385
7.904%, 7/1/2022 (Insured; FGIC)(b,c)......... 12,000,000 11,415,000
Monroe County Industrial Development Agency,
Revenue (Genesee Hospital Civic Facility)
7%, 11/1/2018.................................. 6,900,000 7,445,169
Municipal Assistance Corp. for the City of New
York 7.30%, 7/1/2008........................... 6,000,000 6,846,240
Nassau County Industrial Development Agency,
IDR (Hofstra University Project) 8.25%,
7/1/2003....................................... 3,000,000 3,534,990
New York City:
7.875%, 8/1/2000............................... 3,000,000 3,410,640
7.50%, 2/1/2003................................ 3,500,000 3,994,690
7.50%, 2/1/2006................................ 10,000,000 11,193,800
8.25%, 6/1/2006................................ 2,750,000 3,333,852
6%, 8/1/2006................................... 5,000,000 4,996,150
6%, 5/15/2007.................................. 15,000,000 14,922,450
6.50%, 8/1/2007................................ 10,350,000 10,642,077
7.50%, 3/15/2009............................... 2,500,000 2,775,975
7%, 10/1/2009.................................. 9,270,000 10,018,460
7.50%, 3/15/2010............................... 10,000,000 11,103,900
7%, 10/1/2010.................................. 3,955,000 4,250,874
6.25%, 8/1/2011 (Insured; FSA)................. 8,000,000 8,386,080
6.50%, 12/1/2012............................... 7,250,000 7,390,505
7.20%, 2/1/2013................................ 30,000,000 32,784,300
7.20%, 2/1/2014................................ 10,000,000 10,921,000
7%, 6/1/2015................................... 6,100,000 6,514,556
7%, 8/1/2016................................... 4,200,000 4,507,944
7.50%, 2/1/2017................................ 7,000,000 7,784,980
7%, 2/1/2019................................... 2,000,000 2,142,040
7.50%, 8/1/2021................................ 5,000,000 5,581,250
New York City Health and Hospital Corp., Revenue
6%, 2/15/2005.................................. 8,000,000 8,023,520
New York City Industrial Development Agency,
Special Facility Revenue
(American Airlines Inc. Project) 8%, 7/1/2020.. 4,600,000 4,974,486
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue:
7%, 6/15/2009.................................. 19,175,000 21,056,259
7%, 6/15/2015.................................. 16,400,000 17,947,504
6.75%, 6/15/2017............................... 29,290,000 30,951,622
6%, 6/15/2019.................................. 2,000,000 2,006,940
</TABLE>
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
- --------------------------- -------------- --------------
<S> <C> <C>
NEW YORK (CONTINUED)
- ---------------------------------------------------
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue (continued):
7.75%, 6/15/2020.................................. $ 11,750,000 $ 14,288,000
6.50%, 6/15/2021(Insured; AMBAC).................. 30,000,000 31,257,600
6.375%, 6/15/2022................................. 29,800,000 30,643,340
Refunding:
6%, 6/15/2017.................................... 29,100,000 29,262,087
5.50%, 6/15/2020................................. 10,500,000 9,894,780
State of New York:
COP:
Commissioner General Services of the Executive
Department 6.90%, 3/1/1998...................... 2,030,000 2,174,475
Commissioner Office of Mental Health 8.30%,
9/1/2012........................................ 4,000,000 4,535,720
Refunding 6.125%, 11/15/2011...................... 11,630,000 11,972,387
New York State Dormitory Authority, Revenues:
(City University Systems):
7.875%, 7/1/2007................................. 5,000,000 5,836,450
8.125%, 7/1/2007................................. 10,000,000 11,574,200
6.375%, 7/1/2008................................. 5,625,000 5,856,694
7%, 7/1/2009..................................... 8,500,000 9,506,655
7.50%, 7/1/2010 (Insured; FGIC).................. 5,000,000 6,193,900
10%, 7/1/2013.................................... 5,750,000 5,930,607
10.875%, 7/1/2014................................ 24,500,000 26,927,950
10%, 7/1/2015.................................... 5,570,000 6,399,763
8.125%, 7/1/2017................................. 2,950,000 3,450,171
Refunding 8.20%, 7/1/2012........................ 5,250,000 6,093,990
(Cornell University) 7.375%, 7/1/2030............. 11,785,000 13,520,105
Judicial Facilities Lease (Suffolk County Issue)
9.50%, 4/15/2014................................. 4,500,000 5,281,200
(Metropolitan Museum of Art) 9.20%, 7/1/2015...... 17,000,000 19,299,420
(New York Medical College) 6.875%, 7/1/2021
(Insured; Asset Guaranty)........................ 19,310,000 20,988,425
(Park Ridge Housing Inc. Project) 7.85%, 2/1/2029. 7,720,000 8,686,081
(Rochester General Hospital) 8.75%, 2/1/2025
(Insured; FHA)................................... 4,645,000 5,138,578
(Rochester Institute of Technology) 9.375%,
7/1/2003 (Collateralized; GNMA).................. 6,365,000 6,532,081
(State University):
7.60%, 7/1/2018.................................. 3,000,000 3,373,410
Educational Facilities:
7%, 5/15/2000.................................... 7,010,000 8,037,806
7.375%, 5/15/2000................................ 10,155,000 11,867,641
7.25%, 5/15/2002................................. 16,065,000 19,020,799
7.25%, 5/15/2008................................. 11,590,000 13,159,750
5.875%, 5/15/2011................................ 25,000,000 25,005,500
7.50%, 5/15/2011................................. 3,750,000 4,420,237
6.25%, 5/15/2017................................. 6,000,000 6,118,860
7%, 5/15/2018.................................... 9,050,000 9,950,203
7.25%, 5/15/2018................................. 2,055,000 2,322,561
Refunding:
7.375%, 5/15/2014............................... 12,945,000 14,678,465
7%, 5/15/2016................................... 17,240,000 19,060,027
New York State Energy Research and Development
Authority:
Electric Facilities Revenue:
(Consolidated Edison Co. Project):
9%, 8/15/2020.................................... 12,630,000 14,064,894
7.375%, 7/1/2024................................. 7,000,000 7,635,040
7.50%, 7/1/2025.................................. 8,000,000 8,897,440
6.75%, 1/15/2027................................. 8,015,000 8,454,142
</TABLE>
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
- --------------------------- -------------- --------------
<S> <C> <C>
NEW YORK (CONTINUED)
- ------------------------------------------------
New York State Energy Research and Development
Authority (continued):
(Long Island Lighting Co. Project):
7.15%, 6/1/2020............................... $ 15,000,000 $ 16,246,650
6.90%, 8/1/2022............................... 11,975,000 12,759,123
Facilities Revenue (Consolidated Edison Co.
Project):
6.375%, 12/1/2027............................. 23,715,000 24,606,447
8.639%, 3/15/2028 (b,c)....................... 16,300,000 16,340,750
Gas Facilities Revenue (Brooklyn Union Gas Co.
Project) 8.75%, 7/1/2015...................... 19,750,000 21,892,282
PCR (Orange and Rockland Utilities, Inc.
Project) 9%, 8/1/2015......................... 2,000,000 2,226,100
New York State Environmental Facilities Corp.:
Research Recovery Revenue (Huntington Project)
7.50%, 10/1/2012.............................. 13,615,000 14,556,069
Riverbank State Park Special Obligation 7.375%,
4/1/2022...................................... 5,500,000 6,168,085
State Water Pollution Control Revolving Fund
Revenue
(New York City Municipal Water Finance
Authority Project):
6.875%, 6/15/2010............................. 21,340,000 23,738,616
7.25%, 6/15/2010.............................. 16,065,000 18,317,313
7.50%, 3/15/2011.............................. 1,000,000 1,135,050
7%, 6/15/2012................................. 21,660,000 24,345,624
7.50%, 6/15/2012.............................. 20,700,000 23,792,994
6.50%, 6/15/2014.............................. 16,680,000 17,873,955
New York State Housing Finance Agency, Revenue:
(Adult Care) 7.85%, 2/15/2030 (Insured; FHA)... 2,070,000 2,374,745
Insured Multi-family Mortgage:
6.95%, 8/15/2012.............................. 1,300,000 1,357,473
7%, 8/15/2022................................. 4,500,000 4,738,815
Multi-family Housing Second Mortgage 6.95%,
8/15/2024..................................... 3,000,000 3,144,840
Service Contract Obligation:
5.875%, 3/15/2011............................. 7,945,000 7,945,238
7.375%, 9/15/2021............................. 6,500,000 7,604,610
6.30%, 3/15/2022.............................. 7,000,000 7,116,200
(State University Construction) 8.30%,
5/1/2018...................................... 5,220,000 6,218,795
New York State Local Government Assistance
Corp.:
7.50%, 4/1/2001................................ 9,000,000 10,774,260
7%, 4/1/2005................................... 4,300,000 4,770,807
7%, 4/1/2011................................... 2,500,000 2,788,600
6%, 4/1/2018................................... 36,295,000 36,927,985
6.25%, 4/1/2021................................ 14,360,000 14,838,188
Refunding 5.625%, 4/1/2013..................... 10,970,000 10,833,423
New York State Medical Care Facilities Finance
Agency, Revenue:
Hospital and Nursing Home Insured Mortgage:
6.45%, 2/15/2009 (Insured; FHA)............... 6,870,000 7,358,801
6.35%, 2/15/2012 (Insured; FHA)............... 15,000,000 15,770,850
6.85%, 2/15/2012 (Insured; FHA)............... 6,000,000 6,558,900
6.25%, 8/15/2012 (Insured; FHA)............... 5,425,000 5,696,413
6.30%, 8/15/2023 (Insured; FHA)............... 6,500,000 6,750,380
7.45%, 8/15/2031 (Insured; FHA)............... 4,250,000 4,807,940
6.875%, 2/15/2032 (Insured; FHA).............. 5,000,000 5,441,750
Hospital and Nursing Home Mortgage (St.
Vincent's Hospital)
8%, 2/15/2027 (Insured; FHA).................. 2,500,000 2,823,125
Insured Hospital Mortgage:
9.50%, 1/15/2024 (Insured; FHA)............... 3,190,000 3,375,435
10.125%, 1/15/2024 (Insured; FHA)............. 5,000,000 5,286,800
(Catholic Medical Center) 8.30%, 2/15/2022
(Insured; FHA)............................... 14,000,000 15,765,400
(Good Samaritan Hospital) 8%, 11/1/2013....... 1,500,000 1,675,290
(Hospital and Nursing Home Project) 10%,
11/1/2006.................................... 5,035,000 5,365,346
</TABLE>
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
- --------------------------- -------------- --------------
<S> <C> <C>
NEW YORK (CONTINUED)
- -----------------------------------------------
New York State Medical Care Facilities Finance
Agency, Revenue (continued):
(Kingston Hospital) 8.875%, 11/15/2017....... $ 7,160,000 $ 8,154,238
(Mount Sinai Hospital Project) 8.875%,
1/15/2026 (Insured; FHA).................... 26,500,000 30,524,290
Insured Long Term Health Care 6.45%, 11/1/2010
(Insured; FHA)............................... 11,660,000 12,455,912
Mental Health Services Facilities Improvement
6.50%, 2/15/2019............................. 7,500,000 7,781,100
Mortgage (Saint Luke's Hospital) 7.45%,
2/15/2029 (Insured; FHA)..................... 17,250,000 19,481,460
New York State Mortgage Agency, Revenue
Mortgage:
Homeowner:
7.375%, 10/1/2011............................ 13,470,000 14,149,023
6.45%, 10/1/2020............................. 19,800,000 20,436,768
6.65%, 4/1/2022.............................. 10,000,000 10,302,400
Homeownership:
8.05%, 4/1/2016.............................. 1,590,000 1,704,639
7.50%, 10/1/2017............................. 7,500,000 7,887,450
7.85%, 4/1/2022.............................. 5,000,000 5,369,950
New York State Power Authority, General
Purpose:
6.625%, 1/1/2012.............................. 5,690,000 6,223,324
6.75%, 1/1/2018............................... 11,270,000 12,334,677
6.50%, 1/1/2019............................... 15,500,000 16,756,430
6.25%, 1/1/2023............................... 10,165,000 10,571,397
New York State Township Authority, Service
Contract Revenue (Local Highway and Bridge):
7.25%, 1/1/2010............................... 13,000,000 14,598,480
6%, 4/1/2010.................................. 5,980,000 5,997,940
New York State Urban Development Corp.,
Revenue:
7.50%, 4/1/2020............................... 11,645,000 13,178,530
(Cornell Center Project) 6%, 1/1/2014......... 4,500,000 4,465,980
(Correctional Capital Facilities) 6.50%,
1/1/2021..................................... 4,900,000 5,032,006
(Correctional Facilities) 5.625%, 1/1/2007.... 12,100,000 11,871,310
Onondaga County Industrial Development Agency,
IDR (Weyerhaeuser Project) 9%, 10/1/2007...... 1,000,000 1,315,760
Port Authority of New York and New Jersey:
(Consolidated Bond 53rd Series) 8.70%,
7/15/2020.................................... 20,500,000 23,080,335
(Consolidated Bond 76th Series) 6.50%,
11/1/2026.................................... 20,005,000 21,367,140
(Consolidated Bond 77th Series) 6.25%,
1/15/2027.................................... 17,500,000 18,145,050
(Consolidated Bond 85th Series) 5.375%,
3/1/2028..................................... 22,700,000 21,953,170
Triborough Bridge and Tunnel Authority:
(Convention Center Project) 7.25%, 1/1/2010... 17,500,000 19,948,950
Revenues:
7.375%, 1/1/2016............................. 8,280,000 9,665,244
7%, 1/1/2020................................. 13,550,000 15,546,457
7%, 1/1/2021................................. 11,000,000 12,582,570
General Purpose:
6%, 1/1/2012................................. 7,400,000 7,791,386
6%, 1/1/2014................................. 6,375,000 6,511,744
6.50%, 1/1/2015.............................. 13,525,000 14,921,862
5.50%, 1/1/2017.............................. 67,475,000 66,073,544
6.50%, 1/1/2019.............................. 18,545,000 19,650,653
6.125%, 1/1/2021............................. 15,060,000 16,163,296
Special Obligation Refunding 7.10%, 1/1/2010.. 8,000,000 9,091,760
United Nations Development Corp., Senior Lien
Refunding 6%, 7/1/2026........................ 10,500,000 10,607,100
</TABLE>
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
- --------------------------- -------------- --------------
<S> <C> <C>
U.S. RELATED--8.2%
- ------------------------------------------------
Commonwealth of Puerto Rico, Public Improvement:
7.70%, 7/1/2008................................ $ 3,000,000 $ 3,430,800
5.85%, 7/1/2011................................ 6,980,000 7,062,783
7.75%, 7/1/2017................................ 4,850,000 5,697,926
6.80%, 7/1/2021................................ 23,140,000 25,219,823
Guam Airport Authority, Revenue:
6.40%, 10/1/2005............................... 6,690,000 6,919,266
6.60%, 10/1/2010............................... 4,000,000 4,220,280
6.70%, 10/1/2023............................... 12,200,000 12,977,262
Puerto Rico Aqueduct and Sewer Authority,
Revenue 10.25%, 7/1/2009....................... 13,750,000 19,726,025
Puerto Rico Electric Power Authority:
Power Revenue 9.125%, 7/1/2015................. 9,200,000 10,507,320
Refunding:
6.10%, 7/1/2003............................... 5,000,000 5,170,400
8.375%, 7/1/2007.............................. 4,950,000 5,686,659
8.40%, 7/1/2015............................... 6,700,000 7,703,325
Puerto Rico Highway Authority, Highway Revenue
8.125%, 7/1/2013............................... 6,750,000 8,096,423
Puerto Rico Housing Finance Corp.:
MFMR:
7.50%, 10/1/2015 (LOC; Government Development
Bank Puerto Rico)(a)......................... 6,515,000 6,873,911
7.50%, 4/1/2022 (LOC; Government Development
Bank Puerto Rico)(a)......................... 5,260,000 5,636,616
Section 8 (Grand Bahia Project) 10%, 6/1/2024
(Insured; FHA)................................ 1,410,000 1,453,174
SFMR 9.911%, 8/4/2025(b)....................... 3,000,000 3,191,250
Puerto Rico Municipal Finance Agency 5.875%,
7/1/2005....................................... 5,900,000 6,015,876
Puerto Rico Public Building Authority, Public
Education and Health Facilities
6.875%, 7/1/2012 (Guaranteed; Commonwealth of
Puerto Rico).................................. 11,000,000 12,054,790
Virgin Islands Public Finance Authority,
Revenue Refunding Matching Fund Loan Note
7.25%, 10/1/2018............................... 10,900,000 12,007,004
--------------
TOTAL MUNICIPAL BONDS (cost $1,787,787,512)..... $1,956,223,980
==============
SHORT TERM TAX EXEMPT INVESTMENTS--5.8%
- ------------------------------------------------
New York City, VDRN:
2.75% (Insured; FGIC)(LOC; Financial Guaranty
Co.)(a,d)..................................... $ 19,100,000 $ 19,100,000
2.80% (Insured; FGIC)(d)....................... 12,600,000 12,600,000
3.05% (SBPA; Sumitomo Bank Ltd.)(d)............ 3,000,000 3,000,000
New York City Housing Development Corp., Special
Obligation Revenue VRDN
(East 96th Street Project) 2.70% (Insured;
FGIC, LOC; Mitsubishi Bank)(a,d)............... 33,000,000 33,000,000
New York City Municipal Water Finance Agency,
Water and Sewer Revenue VRDN
2.85% (Insured FGIC)(d)........................ 4,500,000 4,500,000
New York State Energy Research and Development
Authority, PCR VRDN:
(Niagara Mohawk Power) 2.75% (LOC; Long Term
Credit Bank of Japan)(a,d).................... 5,200,000 5,200,000
(Niagara Mohawk Power Corp.):
3.25% (LOC; Westpac Banking Corp.)(a,d)....... 10,000,000 10,000,000
3.20% (LOC; Canadian Imperial Bank)(a,d)...... 8,000,000 8,000,000
(Niagara Power Corp. Project) 2.85% (LOC;
Morgan Guaranty Trust Co.)(a,d)............... 5,500,000 5,500,000
New York State Housing Finance Agency, Revenue
VRDN
(Normadine Court II) 2.75% (LOC; Bankers Trust
Co.)(a,d)..................................... 2,900,000 2,900,000
New York State Job Development Authority:
3.05% (SBPA; The Fuji Bank Ltd.)(d)............ 3,000,000 3,000,000
(Harlem International Trade Center) 3.05%
(SBPA; Mitsubishi Bank)(d).................... 14,435,000 14,435,000
--------------
TOTAL SHORT TERM INVESTMENTS (cost
$121,235,000).................................. $ 121,235,000
==============
TOTAL INVESTMENTS 100.0% (cost $1,909,022,512).. $2,077,458,980
==============
</TABLE>
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<TABLE>
<C> <C> <C> <S>
AMBAC American Municipal Bond Assurance IDR Industrial Development
Corporation Revenue
COP Certificate of Participation LOC Letter of Credit
MFMR Multi-Family Mortgage
FGIC Financial Guaranty Insurance Corporation Revenue
PCR Pollution Control
FHA Federal Housing Administration Revenue
SBPA Standby Bond Purchase
FSA Financial Security Association Agreement
SFMR Single Family Mortgage
GNMA Government National Mortgage Association Revenue
VRDN Variable Rate Demand
Notes
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
FITCH (E) MOODY'S STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- OR ------- OR ----------------- -------------------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 11.0%
AA Aa AA 32.0
A A A 29.5
BBB Baa BBB 20.1
F1 MIG1 SP1 4.4
F1 P1 A1 1.4
Not Rated Not Rated Not Rated 1.6
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(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. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At May
31, 1993, these securities amounted to $27,755,750 or 1.3% of net
assets.
(d) The interest rate, which is subject to change, is based upon bank
prime rates or an index of market interest rates.
(e) Fitch currently provides creditworthiness information for a limited
amount of investments.
See notes to financial statements.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost
$1,909,022,512)--see statement.................. $2,077,458,980
Cash............................................. 3,134,072
Interest receivable.............................. 42,687,563
Receivable for investment securities sold........ 2,165,710
Receivable for Common Stock sold................. 179,148
Prepaid expenses................................. 147,578
--------------
2,125,773,051
LIABILITIES:
Due to The Dreyfus Corporation................... $ 1,061,495
Payable for investment securities purchased...... 25,161,291
Payable for Common Stock redeemed................ 1,109,393
Accrued expenses................................. 187,713 27,519,892
----------- --------------
NET ASSETS........................................ $2,098,253,159
==============
REPRESENTED BY:
Paid-in capital.................................. $1,896,245,957
Accumulated undistributed investment income--net. 958,173
Accumulated undistributed net realized gain on
investments..................................... 32,612,561
Accumulated net unrealized appreciation on
investments--Note 3............................. 168,436,468
--------------
NET ASSETS at value applicable to 130,619,935
shares outstanding
(300 million shares of $.01 par value Common
Stock authorized) $2,098,253,159
==============
NET ASSET VALUE, offering and redemption price per
share
($2,098,253,159 / 130,619,935 shares)............ $16.06
==============
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1993
INVESTMENT INCOME:
INTEREST INCOME.................................. $ 134,368,317
EXPENSES:
Management fee--Note 2(a)....................... $11,974,650
Shareholder servicing costs--Note 2(a).......... 1,630,112
Custodian fees.................................. 131,463
Prospectus and shareholders' reports............ 107,479
Professional fees............................... 106,680
Directors' fees and expenses--Note 2(b)......... 30,983
Registration fees............................... 15,772
Miscellaneous................................... 6,167
-----------
TOTAL EXPENSES.................................. 14,003,306
--------------
INVESTMENT INCOME--NET.......................... 120,365,011
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3......... $73,289,223
Net unrealized appreciation on investments....... 47,728,817
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. 121,018,040
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $ 241,383,051
==============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------
1992 1993
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net........................ $ 122,289,914 $ 120,365,011
Net realized gain on investments.............. 35,336,022 73,289,223
Net unrealized appreciation on investments for
the year..................................... 20,390,063 47,728,817
-------------- --------------
Net Increase In Net Assets Resulting From
Operations.................................. 178,015,999 241,383,051
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net........................ (121,623,727) (120,073,025)
Net realized gain on investments.............. -- (28,272,823)
-------------- --------------
Total Dividends.............................. (121,623,727) (148,345,848)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold................. 747,177,141 945,524,694
Dividends reinvested.......................... 89,390,738 110,444,189
Cost of shares redeemed....................... (747,305,435) (948,741,406)
-------------- --------------
Increase In Net Assets From Capital Stock
Transactions................................ 89,262,444 107,227,477
-------------- --------------
Total Increase In Net Assets................. 145,654,716 200,264,680
NET ASSETS:
Beginning of year............................. 1,752,333,763 1,897,988,479
-------------- --------------
End of year (including undistributed
investment income--net; $666,187 in 1992 and
$958,173 in 1993)............................ $1,897,988,479 $2,098,253,159
============== ==============
SHARES SHARES
-------------- --------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold................................... 49,212,665 60,164,762
Shares issued for dividends reinvested........ 5,893,031 7,045,202
Share redeemed................................ (49,189,379) (60,179,400)
-------------- --------------
Net Increase In Shares Outstanding........... 5,916,317 7,030,564
============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Fund's Prospectus dated September 30, 1993.
See notes to financial statements.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus
Service Corporation ("Distributor") acts as the exclusive distributor of
the Fund's shares, which are sold to the public without a sales charge.
The Distributor is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager").
(a) Portfolio valuation: The Fund's investments are valued each
business day by an independent pricing service ("Service") approved by
the Board of Directors. Investments for which quoted bid prices in the
judgment of the Service are readily available and are representative of
the bid side of the market 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, when
appropriate, discounts on investments, is earned from settlement date and
recognized on the accrual basis. Securities purchased or sold on a when-
issued or delayed-delivery basis may be settled a month or more after the
trade date.
The Fund follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect the
ability of issuers within the state to pay interest on, or repay
principal of, municipal obligations held by the Fund.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income--net. Such dividends are paid
monthly. Dividends from net realized capital gain are normally declared
and paid annually, but the Fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset
by capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(d) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax
exempt dividends, by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of income and net realized
capital gain sufficient to relieve it from all, or substantially all,
Federal income taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the
average daily value of the Fund's net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should
the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage commissions and extraordinary expenses, exceed 1
1/2% of the average value of the Fund's net assets for any full fiscal
year. There was no expense reimbursement for the year ended May 31, 1993.
During the year ended May 31, 1993, the Fund was charged an aggregate
of $688,902 by the Manager and the Distributor for certain shareholder
servicing costs.
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(b) Certain officers and directors of the Fund are "affiliated
persons," as defined in the Act, of the Manager and/or the Distributor.
Each director who is not an "affiliated person" receives an annual fee of
$4,500 and an attendance fee of $500 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $1,892,588,330 and
$1,791,273,852, respectively, for the year ended May 31, 1993, and
consisted entirely of municipal bonds and short-term tax exempt
investments.
At May 31, 1993, accumulated net unrealized appreciation on investments
was $168,436,468, consisting of $169,408,137 gross unrealized
appreciation and $971,669 gross unrealized depreciation.
At May 31, 1993, 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).
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Bond Fund, Inc., including the statement of
investments, as of May 31, 1993, and the related statement of operations
for the year then ended, the statement of changes in net assets for each
of the two years in the period then ended, and financial highlights for
each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of May 31, 1993 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Tax Exempt Bond Fund, Inc. at May 31, 1993,
the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
ERNST & YOUNG
New York, New York
July 12, 1993
<PAGE>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income--net during the fiscal year ended
May 31, 1993 as "exempt-interest dividends" (not subject to regular
Federal and, for individuals who are New York residents, New York State
and New York City personal income taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends
(if any) and capital gain distributions (if any) paid for the 1993
calendar year on Form 1099-DIV which will be mailed early in 1994.
