File Nos. 33-14295
811-5161
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 10 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 10 [ X ]
(Check appropriate box or boxes.)
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on October 1, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its
beneficial interests under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for the fiscal year ended May 31, 1996 was filed on or about July 25,
1996.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 4
3 Condensed Financial Information 4
4 General Description of Registrant 7
5 Management of the Fund 12
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 23
7 Purchase of Securities Being Offered 13
8 Redemption or Repurchase 18
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-14
15 Control Persons and Principal B-17
Holders of Securities
16 Investment Advisory and Other B-18
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-29
18 Capital Stock and Other Securities B-27
19 Purchase, Redemption and Pricing B-30, B-23
of Securities Being Offered B-28
20 Tax Status *
21 Underwriters B-20
22 Calculations of Performance Data B-31
23 Financial Statements B-55
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-10
30 Location of Accounts and Records C-13
31 Management Services C-13
32 Undertakings C-13
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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COMBINED PROSPECTUS OCTOBER 1, 1996
DREYFUS NEW YORK TAX EXEMPT FUNDS
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Each of Dreyfus New York Tax Exempt Money Market Fund, Dreyfus New
York Tax Exempt Intermediate Bond Fund and Dreyfus New York Tax Exempt Bond
Fund, Inc. (each, a "Fund" and collectively, the "Funds") is an open-end,
non-diversified, management investment company, known as a mutual fund. The
investment objective of each Fund is to provide you with as high a level of
current income exempt from Federal, New York State and New York City income
taxes as is consistent with the preservation of capital and, for the money
market fund only, the maintenance of liquidity. Each Fund pursues its
objective by investing in a portfolio of New York Municipal Obligations. The
Funds differ in average portfolio maturity and quality, which in turn affects
their level of income and degree of share price fluctuation.
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND (the "MONEY MARKET FUND") is a
money market fund that seeks to maintain a stable share price of $1.00. AN
INVESTMENT IN THE MONEY MARKET FUND iS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SINCE THE MONEY
MARKET FUND MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS ASSETS IN A SINGLE
ISSUER, AN INVESTMENT IN THE FUND MAY INVOLVE GREATER RISK THAN INVESTMENTS
IN CERTAIN OTHER TYPES OF MONEY MARKET FUNDS.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND (the "INTERMEDIATE BOND
FUND") seeks to provide you with a higher level of tax-free income than the
Money Market Fund, and greater price stability than the Bond Fund. The
dollar-weighted average maturity of its portfolio ranges between three and
ten years.
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC. (the "BOND FUND") seeks to
provide you with a higher level of tax-free income than the Intermediate Bond
Fund. Its price per share should be expected to fluctuate more than the
Intermediate Bond Fund's price per share. Its portfolio investments are not
limited by maturity.
EACH FUND IS A SEPARATE ENTITY WITH A SEPARATE PORTFOLIO. THE
OPERATIONS AND RESULTS OF ONE FUND ARE UNRELATED TO THOSE OF EACH OTHER FUND.
THIS COMBINED PROSPECTUS HAS BEEN PREPARED FOR YOUR CONVENIENCE TO PROVIDE
YOU THE OPPORTUNITY TO CONSIDER THREE INVESTMENT CHOICES IN ONE DOCUMENT.
You can invest, reinvest or redeem shares at any time without charge
or penalty imposed by your Fund.
Each Fund provides free redemption checks, which you can use in
amounts of $500 or more for cash or to pay bills. You continue to earn income
on the amount of the check until it clears. You can purchase or redeem shares
by telephone using Dreyfus TELETRANSFER.
The Dreyfus Corporation professionally manages each Fund's portfolio.
This Prospectus sets forth concisely information about each Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated October 1, 1996, which
may be revised from time to time, provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Securities and Exchange Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Funds. For a free copy of the Statement of
Additional Information, write to the Funds at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-645-6561. When telephoning, ask
for Operator 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE NET
ASSET VALUE OF BOND MUTUAL FUNDS WILL FLUCTUATE FROM TIME TO TIME.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
ANNUAL FUND OPERATING EXPENSES..... 4
CONDENSED FINANCIAL INFORMATION.... 4
PERFORMANCE INFORMATION............ 6
DESCRIPTION OF THE FUNDS........... 7
MANAGEMENT OF THE FUNDS............ 12
HOW TO BUY SHARES.................. 13
SHAREHOLDER SERVICES............... 16
HOW TO REDEEM SHARES............... 18
SERVICE PLAN AND SHAREHOLDER SERVICES PLANS 21
DIVIDENDS, DISTRIBUTIONS AND TAXES 21
GENERAL INFORMATION................ 23
APPENDIX........................... 25
Page 2
[This Page Intentionally Left Blank]
Page 3
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE> Money Interm.
Market Bond Bond
Fund Fund Fund
-------- -------- -------
<S> <C> <C> <C>
Management Fees......................................................... .50% .60% .60%
12b-1 Fees (distribution and servicing)................................. None .25% None
Other Expenses ......................................................... .14% .11% .11%
Total Fund Operating Expenses........................................... .64% .96% .71%
EXAMPLE:
You would pay the following expenses on a $1,000 investment in each Fund,
assuming (1) 5% annual return and (2) redemption at the end of each period:
Money Interm.
Market Bond Bond
Fund Fund Fund
-------- -------- -------
1 YEAR ................................................................. $ 7 $ 10 $ 7
3 YEARS ................................................................ $ 20 $ 31 $ 23
5 YEARS ................................................................ $ 36 $ 53 $ 40
10 YEARS ............................................................... $ 80 $118 $ 88
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by a Fund, the payment of which will reduce
investors' annual returns. Long-term investors in the INTERMEDIATE BOND FUND
could pay more in 12b-1 fees than the economic equivalent of paying a
front-end sales charge. The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may be in
effect. Certain Service Agents (as defined below) may charge their clients
directly for effecting transactions in Fund shares; such fees are not
reflected in the foregoing table. See "Management of the Funds" and, as
applicable, "Service Plan and Shareholder Services Plans."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by Ernst &
Young LLP, each Fund's independent auditors, whose reports thereon appear in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
Page 4
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND -- 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 the MONEY MARKET FUND'S
financial statements.
<TABLE>
Year Ended May 31,
--------------------------------------------------------------------------------
1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations;
Investment income-net .042 .050 .052 .046 .032 .019 .017 .027 .030
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions;
Dividends from investment income-net (.042) (.050) (.052) (.046) (.032) (.019) (.017) (.027) (.030)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 4.38%(2) 5.10% 5.35% 4.68% 3.26% 1.87% 1.69% 2.76% 3.05%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .24%(2) .58% .64% .61% .64% .67% .68% .68% .64%
Ratio of net investment income
to average net assets 4.32%(2) 5.00% 5.21% 4.59% 3.22% 1.86% 1.68% 2.71% 3.00%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation .43%(2) .03% -- -- -- -- -- -- --
Net Assets, end of year (000's omitted) $385,931 $444,491 $539,472 $478,040 $418,763 $379,816 $343,964 $317,840 $298,768
(1)From June 9, 1987 (commencement of operations) to May 31, 1988.
(2)Annualized basis.
</TABLE>
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND FUND -- 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 the INTERMEDIATE BOND FUND'S
financial statements.
<TABLE>
Year Ended May 31,
----------------------------------------------------------------------------------------------
1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
PER SHARE DATA:
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.50 $16.19 $16.53 $16.41 $16.73 $17.22 $18.06 $17.71 $18.05
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income-net....... 1.02 1.10 1.11 1.07 1.01 .94 .88 .86 .85
Net realized and unrealized gain
(loss) on investments (.31) .34 (.12) .38 .57 .94 (.31) .34 (.22)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations. .71 1.44 .99 1.45 1.58 1.88 .57 1.20 .63
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income-net (1.02) (1.10) (1.11) (1.07) (1.01) (.93) (.89) (.86) (.85)
Dividends from net realized gain
on investments -- -- -- (.06) (.08) (.11) (.03) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS........... (1.02) (1.10) (1.11) (1.13) (1.09) (1.04) (.92) (.86) (.85)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year... $16.19 $16.53 $16.41 $16.73 $17.22 $18.06 $17.71 $18.05 $17.83
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.............. 4.63%(2) 9.25% 6.19% 9.13% 9.72% 11.22% 3.11% 7.04% 3.52%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets -- .24% .30% .60% .85% .85% .89% .96% .84%
Ratio of net investment
income to average
net assets 6.58%(2) 6.80% 6.75% 6.48% 5.95% 5.25% 4.81% 4.91% 4.69%
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation (limited to the expense
limitation provision of the
Management Agreement) 1.50%(2) 1.10% .84% .44% .18% .15% .08% -- .12%
Portfolio Turnover Rate........ 1.47%(3) 6.99% 37.97% 56.43% 28.51% 17.05% 20.19% 29.78% 47.48%
Net Assets, end of year
(000's omitted) $25,073 $57,918 $93,572 $112,868 $173,835 $318,139 $392,143 $359,199 $365,148
(1)From June 12, 1987 (commencement of operations) to May 31, 1988.
(2)Annualized basis.
(3)Not annualized.
</TABLE>
Page 5
FINANCIAL HIGHLIGHTS
BOND FUND -- Contained below is per share operating performance data for a
share of Common Stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the BOND FUND'S financial statements.
<TABLE>
Year Ended May 31,
---------------------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
PER SHARE DATA:
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $15.05 $14.73 $14.41 $14.92 $14.65 $14.89 $15.36 $16.06 $15.06 $15.19
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income-net.. 1.10 1.08 1.08 1.06 1.04 1.01 .95 .88 .84 .79
Net realized and
unrealized gain
(loss) on investments.. (.32) (.32) .51 (.27) .24 .47 .92 (.62) .23 (.51)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations.......... .78 .76 1.59 .79 1.28 1.48 1.87 .26 1.07 .28
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income-net (1.10) (1.08) (1.08) (1.06) (1.04) (1.01) (.95) (.89) (.84) (.79)
Dividends from net realized
gain on investments.... -- -- -- -- -- -- (.22) (.37) (.08) (.04)
Dividends in excess of
net realized gain
on investments.... -- -- -- -- -- -- -- -- (.02) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.... (1.10) (1.08) (1.08) (1.06) (1.04) (1.01) (1.17) (1.26) (.94) (.83)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year $14.73 $14.41 $14.92 $14.65 $14.89 $15.36 $16.06 $15.06 $15.19 $14.64
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 4.99% 5.44% 11.39% 5.43% 9.06% 10.23% 12.63% 1.42% 7.55% 1.84%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets .71% .72% .69% .70% .70% .69% .70% .71% .72% .71%
Ratio of net investment
income to average
net assets..... 7.04% 7.41% 7.34% 7.12% 7.08% 6.69% 6.03% 5.49% 5.70% 5.24%
Portfolio Turnover
Rate 37.54% 56.96% 37.83% 31.22% 26.19% 40.05% 51.20% 35.66% 49.03% 81.93%
Net Assets, end of year
(000's omitted) $1,537,449 $1,463,109 $1,643,808 $1,681,206 $1,752,334 $1,897,988 $2,098,253 $1,941,233 $1,879,197 $1,698,678
</TABLE>
INTERMEDIATE BOND FUND AND BOND FUND ONLY -- Further information about the
performance of each of the INTERMEDIATE BOND FUND and BOND FUND (collectively,
the "LONGER TERM FUNDS") is contained in such Fund's respective annual report,
each of which may be obtained without charge by writing to the address or
calling the number set forth on the cover page of this Prospectus.
PERFORMANCE INFORMATION
MONEY MARKET FUND -- From time to time, the MONEY MARKET FUND advertises its
yield and effective yield. Both yield figures are based on historical earnings
and are not intended to indicate future performance. It can be expected that
these yields will fluctuate substantially. The yield of the MONEY MARKET FUND
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is
then annualized. That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period
and is shown as a percentage of the investment. The effective yield is
calculated similarly, but, when annualized, the income earned by an investment
in the Fund is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment. The Fund's yield and effective yield may reflect absorbed
expenses pursuant to any undertakings that may be in effect. See "Management
of the Funds."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield as described above.
Yield information is useful in reviewing the MONEY MARKET FUND'S
performance, but because yields will fluctuate, under certain conditions such
information may not provide a basis for comparison
Page 6
with domestic bank deposits, other investments which pay a fixed yield for a
stated period of time, or other investment companies which may use a different
method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm Beach, Fla.
33408, IBC Money Fund Reporttrademark, Morningstar, Inc. and other industry
publications.
INTERMEDIATE BOND FUND AND BOND FUND -- For purposes of advertising,
performance of the LONGER TERM FUNDS may be calculated on several bases,
including current yield, tax equivalent yield, average annual total return
and/or total return.
Current yield of a LONGER TERM FUND refers to its annualized net
investment income per share over a 30-day period, expressed as a percentage of
the net asset value per share at the end of the period. For purposes of
calculating current yield, the amount of net investment income per share
during that 30-day period, computed in accordance with regulatory
requirements, is compounded by assuming it is reinvested at a constant rate
over a six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the first
six months, provides an "annualized" yield for an entire one-year period.
Calculations of a LONGER TERM FUND'S current yield may reflect absorbed
expenses pursuant to any undertakings that may be in effect. See "Management
of the Funds."
Tax equivalent yield is also calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return for each LONGER TERM FUND is calculated
pursuant to a standardized formula which assumes that an investment in such
Fund was purchased with an initial payment of $1,000 and that the investment
was redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The return
is expressed as a percentage rate which, if applied on a compounded annual
basis, would result in the redeemable value of the investment at the end of
the period. Advertisements of a LONGER TERM FUND'S performance will include
its average annual total return for one, five and ten year periods, or for
shorter time periods depending upon the length of time during which it has
operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Comparative performance information may be used from time to time in
advertising or marketing shares of the LONGER TERM FUNDS, including data from
CDA Investment Technologies, Inc., Lipper Analytical Services, Inc., Moody's
Bond Survey Bond Index, Lehman Brothers Municipal Bond Index, Morningstar,
Inc. and other industry publications.
ALL FUNDS -- Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVE
The investment objective of each Fund is to provide you with as high
a level of current income exempt from Federal, New York State and New York
City income taxes as is consistent with the preservation of capital and, for
the MONEY MARKET FUND only, the maintenance of liquidity. Each Fund
Page 7
invests primarily in the debt securities of the State of New York, its
political subdivisions, authorities and corporations, the interest from which
is, in the opinion of bond counsel to the issuer, exempt from Federal, New
York State and New York City income taxes (collectively, "New York Municipal
Obligations"). To the extent acceptable New York Municipal Obligations are at
any time unavailable for investment by any Fund, such Fund will invest
temporarily in other debt securities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal, but not New York
State and New York City, income tax. The MONEY MARKET FUND invests primarily
in high-quality, short-term instruments. These securities may not earn as
high a level of current income as long-term or lower quality securities which
generally have less liquidity, greater market risk and more fluctuation in
market value. The dollar-weighted average maturity of the INTERMEDIATE BOND
FUND'S portfolio ranges between three and ten years. The BOND FUND invests
without regard to maturity. Each Fund's investment objective cannot be
changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of its
outstanding voting shares. There can be no assurance that a Fund's investment
objective will be achieved.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development bonds
issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds or notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that generally
do not carry the pledge of the credit of the issuing municipality, but
generally are guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities.
Municipal Obligations bear fixed, floating or variable rates of interest. The
LONGER TERM FUNDS may purchase Municipal Obligations with interest rates that
are determined by formulas under which the rate will change directly or
inversely to changes in interest rates or an index, or multiples thereof, in
many cases subject to a maximum and minimum. Certain Municipal Obligations
purchased by the LONGER TERM FUNDS are subject to redemption at a date
earlier than their stated maturity pursuant to call options, which may be
separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES
It is a fundamental policy of each Fund that it will invest at least
80% of the value of its respective net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. Additionally, each
LONGER TERM FUND will invest at least 65% of the value of its net assets
(except when maintaining a temporary defensive position) in bonds, debentures
and other debt instruments. Generally, at least 65% of the value of each
Fund's net assets will be invested in New York Municipal Obligations and the
remainder may be invested in securities that are not New York Municipal
Obligations and therefore may be subject to New York State and New York City
income taxes. See "Investment Considerations and Risks_Investing in New York
Municipal Obligations" below, and "Dividends, Distributions and Taxes."
MONEY MARKET FUND -- The MONEY MARKET FUND seeks to maintain a net
asset value of $1.00 per share for purchases and redemptions. To do so, the
MONEY MARKET FUND uses the amortized cost
Page 8
method of valuing its securities pursuant to Rule 2a-7 under the 1940 Act,
which Rule includes various maturity, quality and diversification
requirements, certain of which are summarized as follows. In accordance with
Rule 2a-7, the MONEY MARKET FUND will maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less and invest only in U.S. dollar
denominated securities determined in accordance with procedures established
by the Fund's Board to present minimal credit risks and which 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 instrument was rated only by one such organization) or,
if unrated, are of comparable quality as determined in accordance with
procedures established by its Board. The nationally recognized statistical
rating organizations currently rating investments of the type the Fund may
purchase are Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P") and Fitch Investors Service, L.P. ("Fitch") and their
rating criteria are described in "Appendix B" to the Statement of Additional
Information. For further information regarding the amortized cost method of
valuing securities, see "Determination of Net Asset Value" in the Statement of
Additional Information. There can be no assurance that the MONEY MARKET FUND
will be able to maintain a stable net asset value of $1.00 per share.
INTERMEDIATE BOND FUND AND BOND FUND -- At least 80% of the value of
each LONGER TERM FUND'S net assets must consist of Municipal Obligations
which, in the case of bonds, are rated no lower than Baa by Moody's or BBB by
S&P or Fitch. Each LONGER TERM FUND may invest up to 20% of the value of its
net assets in Municipal Obligations which, in the case of bonds, are rated
lower than Baa by Moody's and BBB by S&P and Fitch and as low as the lowest
rating assigned by Moody's, S&P or Fitch. Each LONGER TERM FUND may invest in
short-term Municipal Obligations which are rated in the two highest rating
categories by Moody's, S&P or Fitch. See "Appendix B" in the Statement of
Additional Information. Municipal Obligations rated BBB by S&P or Fitch or
Baa by Moody's are considered investment grade obligations; those rated BBB
by S&P and Fitch are regarded as having an adequate capacity to pay principal
and interest, while those rated Baa by Moody's are considered medium grade
obligations which lack outstanding investment characteristics and have
speculative characteristics. Investments rated Ba or lower by Moody's and BB
or lower by S&P and Fitch ordinarily provide higher yields but involve
greater risk because of their speculative characteristics. Although there is
no current intention of doing so, each LONGER TERM FUND may invest in
Municipal Obligations rated C by Moody's or D by S&P or Fitch, which is the
lowest rating assigned by such rating organizations and indicates that the
Municipal Obligation is in default and interest and/or repayment of principal
is in arrears. See "Investment Considerations and Risks_Lower Rated Bonds"
below for a further discussion of certain risks. Each LONGER TERM FUND also
may invest in securities which, while not rated, are determined by The
Dreyfus Corporation to be of comparable quality to the rated securities in
which such LONGER TERM FUND may invest; for purposes of the 80% requirement
described above, such unrated securities shall be deemed to have the rating
so determined. Each LONGER TERM FUND also may invest in Taxable Investments
of the quality described below under "Appendix--Certain Portfolio
Securities--Taxable Investments."
The annual portfolio turnover rate for each LONGER TERM FUND is not
expected to exceed 100%. The LONGER TERM FUNDS may engage in various
investment techniques, such as options and futures transactions and lending
portfolio securities. Use of certain of these techniques may give rise to
taxable income. For a discussion of the investment techniques and their
related risks, see "Investment Considerations and Risks," "Appendix --
Investment Techniques" and "Dividends, Distributions and Taxes" and
"Investment Objective and Management Policies -- Management Policies" in the
Statement of Additional Information.
Page 9
ALL FUNDS -- From time to time, a Fund may invest more than 25% of
the value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code of
1986, as amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company may be treated as such a preference item to shareholders. No Fund
will invest more than 20% of the value of its net assets in Municipal
Obligations the interest from which gives rise to a preference item for the
purpose of the alternative minimum tax and, except for temporary defensive
purposes, in other investments subject to Federal income tax.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments which
promise a stable stream of income, the prices of such securities are
inversely affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. Certain securities that may be
purchased by a LONGER TERM FUND, such as those with interest rates that
fluctuate directly or indirectly based on multiples of a stated index, are
designed to be highly sensitive to changes in interest rates and can subject
the holders thereof to extreme reductions of yield and possibly loss of
principal. The values of fixed-income securities also may be affected by
changes in the credit rating or financial condition of the issuing entities.
Once the rating of a LONGER TERM FUND portfolio security has been changed,
the Fund will consider all circumstances deemed relevant in determining
whether to continue to hold the security. The MONEY MARKET FUND seeks to
maintain a stable $1.00 share price, while the net asset value of each LONGER
TERM FUND generally will not be stable and should fluctuate based upon
changes in the value of its respective portfolio securities. Securities in
which the LONGER TERM FUNDS invest may earn a higher level of current income
than certain shorter-term or higher quality securities which generally have
greater liquidity, less market risk and less fluctuation in market value.
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS -- You should consider carefully
the special risks inherent in investing in New York Municipal Obligations.
These risks result from the financial condition of New York State, certain of
its public bodies and municipalities, and 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 each 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 a Fund's portfolio and the interest income to the Fund could be adversely
affected. Moreover, the national recession and the significant slowdown in
the New York and regional economies in the early 1990s added substantial
uncertainty to estimates of the State's tax revenues, which, in part, caused
the State to incur cash-basis operating deficits in the General Fund and
issue deficit notes during the fiscal periods 1989 through 1992. The State's
financial operations have improved, however, during recent fiscal years. For
its fiscal periods 1993 through 1996, the State recorded balanced budgets on
a cash basis, with substantial fund balances in the General Fund in fiscal
1992-93 and 1993-94 and smaller fund balances in fiscal 1994-95 and 1995-96.
There can be no assurance that New York will not face substantial potential
budget gaps in future years. In January 1992, Moody's lowered from A to Baa1
the ratings on certain appropriation-backed debt of New York State and its
agencies. The State's general
Page 10
obligation, state guaranteed and New York State Local Government Assistance
Corporation bonds continued to be rated A by Moody's. In January 1992, S&P
lowered from A to A- its ratings of New York State general obligation bonds
and stated that it continued to assess the ratings outlook as negative. The
ratings of various agency debt, state moral obligations, contractual
obligations, lease purchase obligations and state guarantees also were
lowered. In February 1991, Moody's lowered its rating on New York City's
general obligation bonds from A to Baa1 and in July 1995, S&P lowered its
rating on such bonds from A- to BBB+. The rating changes reflected the rating
agencies' concerns about the financial condition of New York State and City,
the heavy debt load of the State and City, and economic uncertainties in the
region. You should obtain and review a copy of the Statement of Additional
Information which more fully sets forth these and other risk factors attendant
to an investment in each of the Funds.
INVESTING IN MUNICIPAL OBLIGATIONS -- Each Fund may invest more than 25% of
the value of its total assets in Municipal Obligations which are related in
such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for
example, securities the interest upon which is paid from revenues of similar
types of projects. As a result, each Fund may be subject to greater risk as
compared to funds that do not follow this practice.
Certain municipal lease/purchase obligations in which a Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for the
leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Funds and
thus reduce the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in a
Fund. Proposals that may restrict or eliminate the income tax exemption for
interest on Municipal Obligations may be introduced in the future. If any
such proposal were enacted that would reduce the availability of Municipal
Obligations for investment by a Fund so as to adversely affect its
shareholders, such Fund would reevaluate its investment objective and
policies and submit possible changes in its structure to shareholders for
their consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable, the Funds would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
ZERO COUPON SECURITIES -- Each LONGER TERM FUND may invest in zero coupon
securities and pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds). Federal income tax law requires the holder of
a zero coupon security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and avoid
liability for Federal income taxes, each LONGER TERM FUND may be required to
distribute such income accrued with respect to these securities and may have
to dispose of portfolio securities under disadvantageous circumstances in
order to generate cash to satisfy these distribution requirements.
LOWER RATED BONDS _ Each LONGER TERM FUND may invest up to 20% of the value
of its net assets in higher yielding (and, therefore, higher risk) debt
securities, such as those rated Ba by Moody's or BB by S&P or Fitch or as low
as the lowest rating assigned by Moody's, S&P or Fitch (commonly known as
junk bonds). They may be subject to certain risks with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. The retail secondary market for
Page 11
these bonds may be less liquid than that of higher rated bonds; adverse market
conditions could make it difficult at times for the Fund to sell certain
securities or could result in lower prices than those used in calculating the
Fund's net asset value. See "Appendix _ Certain Portfolio Securities _
Ratings."
USE OF DERIVATIVES -- Each LONGER TERM FUND may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying asset,
index or interest rate. The Derivatives each LONGER TERM FUND may use include
options and futures. While Derivatives can be used effectively in furtherance
of the Fund's investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, can decrease the
liquidity of the Fund's portfolio and make more difficult the accurate
pricing of the Fund's portfolio. See "Appendix -- Investment Techniques --
Use of Derivatives" below, and "Investment Objective and Management Policies
- -- Management Policies -- Derivatives"in the Statement of Additional
Information.
NON-DIVERSIFIED STATUS -- The classification of each Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of each Fund's assets may be invested in the
securities of a limited number of issuers, the Fund's portfolio may be more
sensitive to changes in the market value of a single issuer. However, to meet
Federal tax requirements, at the close of each quarter the Fund may not have
more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested
in any one issuer. These limitations do not apply to U.S. Government
securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for each Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or
received by the Fund.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the investment
adviser to each Fund. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of August 31, 1996, The Dreyfus Corporation
managed or administered approximately $81 billion in assets for more than
1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the affairs of each Fund under a separate Management Agreement
with each Fund, subject to the authority of the Fund's Board, in accordance
with Massachusetts law, with respect to the MONEY MARKET FUND and INTERMEDIATE
BOND FUND, or Maryland law, with respect to the BOND FUND. The primary
portfolio manager of the INTERMEDIATE BOND FUND and BOND FUND is Monica S.
Wieboldt. She has held that position since May 1987 for the INTERMEDIATE BOND
FUND and since May 1985 for the BOND FUND and has been employed by The
Dreyfus Corporation since November 1983. Each of these Fund's other portfolio
managers are identified in the Statement of Additional Information. The
Dreyfus Corporation also provides research services for each Fund and for
other funds advised by The Dreyfus Corporation through a professional staff
of portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$220 billion in assets as of June 30, 1996, including approximately $83
billion in proprietary mutual fund assets. As of June 30, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $876 billion in assets,
including approximately $57 billion in mutual fund assets.
Under the terms of the respective Management Agreement, the MONEY
MARKET FUND and each LONGER TERM FUND have agreed to pay The Dreyfus
Corporation a monthly fee at the annual rate of .50 of 1% and .60 of 1%,
respectively, of the value of such Fund's average daily net assets. For the
fiscal year ended May 31, 1996, the MONEY MARKET FUND, INTERMEDIATE BOND FUND
and BOND FUND paid The Dreyfus Corporation a monthly management fee at the
annual rate of .50 of 1%, .48 of 1% and .60 of 1%, respectively, of the value
of such Fund's average daily net assets. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of a Fund, which would have the effect of lowering that Fund's
expense ratio and increasing yield to investors. No Fund will pay The Dreyfus
Corporation at a later time for any amounts it may waive, nor will a Fund
reimburse The Dreyfus Corporation for any amounts it may assume.
In allocating brokerage transactions for each Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus Corporation
may consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or administered by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.
The Dreyfus Corporation may pay the Funds' distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Funds. The
Funds' distributor may use part or all of such payments to pay Service Agents
in respect of these services.
DISTRIBUTOR -- Each Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Transfer and Dividend Disbursing
Agent (the "Transfer Agent") for each Fund. The Bank of New York, 90
Washington Street, New York, New York 10286, is Custodian for each Fund.
HOW TO BUY SHARES
Fund shares are sold through the Distributor or certain financial
institutions, securities dealers ("Selected Dealers") and other industry
professionals (collectively, "Service Agents") that have entered into service
agreements with the Distributor. Share certificates are issued only upon your
written request. No certificates are issued for fractional shares. It is not
recommended that any Fund be used as a vehicle for Keogh, IRA or other
qualified plans. Each Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at least
$100. The initial investment must be accompanied by the Account Application.
For full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of a
Fund's Board, or the spouse or minor child of any of the foregoing, the
mini-
Page 13
mum initial investment is $1,000. For full-time or part-time employees of
The Dreyfus Corporation or any of its affiliates or subsidiaries who elect to
have a portion of their pay directly deposited into their Fund account, the
minimum initial investment is $50. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at any
time. Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-AUTOMATIC Asset BuilderRegistration
Mark, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan pursuant to the Dreyfus Step Program described under "Shareholder
Services." These services enable you to make regularly scheduled investments
and may provide you with a convenient way to invest for long-term financial
goals. You should be aware, however, that periodic investment plans do not
guarantee a profit and will not protect an investor against loss in a
declining market.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments to open new accounts which are mailed
should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor
subsequent investments should be made by third party check. Purchase orders
may be delivered in person only to a Dreyfus Financial Center. THESE ORDERS
WILL BE FORWARDED TO THE RELEVANT FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York (DDA #8900052007/DREYFUS NEW YORK
TAX EXEMPT MONEY MARKET FUND; or DDA #8900052236/DREYFUS NEW YORK TAX EXEMPT
INTERMEDIATE BOND FUND; or DDA #8900052422/DREYFUS NEW YORK TAX EXEMPT BOND
FUND, INC.), for purchase of Fund shares in your name. The wire must include
your Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and dealer
number, if applicable. If your initial purchase of Fund shares is by wire,
please call 1-800-645-6561 after completing your wire payment to obtain your
Fund account number. Please include your Fund account number on the Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. Other purchase
procedures may be in effect for clients of certain Service Agents. Each Fund
makes available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration, and
your Fund account number PRECEDED BY THE DIGITS "1111."
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory
authorities, may charge their clients direct fees for Servicing which would
be in addition to any amounts which might be received under the Service Plan
of the INTERMEDIATE BOND FUND. You should consult your Service Agent in this
regard.
Page 14
Shares of the MONEY MARKET FUND are sold on a continuous basis at the
net asset value per share next determined after an order in proper form and
Federal Funds (monies of member banks within the Federal Reserve System which
are held on deposit at a Federal Reserve Bank) are received by the Transfer
Agent. If you do not remit Federal Funds, your payment must be converted into
Federal Funds. This usually occurs within one business day of receipt of a
bank wire or within two business days of receipt of a check drawn on a member
bank of the Federal Reserve System. Checks drawn on banks which are not
members of the Federal Reserve System may take considerably longer to convert
into Federal Funds. Prior to receipt of Federal Funds, your money will not be
invested.
The MONEY MARKET FUND'S net asset value per share is determined as of
12:00 Noon, New York time, on each day that the New York Stock Exchange is
open for business. Net asset value per share is computed by dividing the
value of the MONEY MARKET FUND'S net assets (i.e., the value of its assets
less liabilities) by the total number of shares outstanding. See
"Determination of Net Asset Value" in the Statement of Additional Information.
If your payments into the MONEY MARKET FUND are received in or
converted into Federal Funds by 12:00 Noon, New York time, by the Transfer
Agent, you will receive the dividend declared that day. If your payments are
received in or converted into Federal Funds after 12:00 Noon, New York time,
by the Transfer Agent, you will begin to accrue dividends on the following
business day.
Qualified institutions may telephone orders for purchase of MONEY
MARKET FUND shares. These orders will become effective at the price
determined at 12:00 Noon, New York time, and the shares purchased will
receive the dividend on Fund shares declared on that day if the telephone
order is placed by 12:00 Noon, New York time, and Federal Funds are received
by 4:00 p.m., New York time, on that day.
Shares of the LONGER TERM FUNDS are sold on a continuous basis at the
net asset value per share next determined after an order in proper form is
received by the Transfer Agent. Net asset value per share is determined as of
the close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), on each day that the New York Stock Exchange is
open for business. For purposes of determining the net asset value of each
LONGER TERM FUND, options and futures contracts will be valued 15 minutes
after the close of trading on the floor of the New York Stock Exchange. Net
asset value per share is computed by dividing the value of the specific Fund's
net assets (i.e., the value of its assets less liabilities) by the total
number of shares outstanding. The investments of each LONGER TERM FUND are
valued by an independent pricing service approved by such Fund's Board, and
are valued at fair value as determined by the pricing service. The pricing
service's procedures are reviewed under the general supervision of the Board.
For further information regarding the methods employed in valuing each LONGER
TERM FUND'S investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening a Fund account. See "Dividends, Distributions and Taxes"
and the Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between the bank account designated in one of these
documents and your Fund account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be so
designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
Page 15
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to shareholders who are clients of certain Service Agents, and some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus. You should consult your
Service Agent in this regard.
FUND EXCHANGES -- You may purchase, in exchange for shares of a Fund, shares
of certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have
a value of at least the minimum initial investment required for the fund into
which the exchange is being made. The ability to issue exchange instructions
by telephone is given to all Fund shareholders automatically, unless you
check the applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. The Telephone Exchange Privilege may be
established for an existing account by written request, signed by all
shareholders on the account, by a separate signed Shareholder Services Form,
available by calling 1-800-645-6561, or by oral request from any of the
authorized signatories on the account, by calling 1-800-645-6561. If you have
established the Telephone Exchange Privilege, you may telephone exchange
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) by calling 1-800-645-6561. If you are calling from
overseas, call 516-794-5452. See "How to Redeem Shares_Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund into which the exchange is made: Telephone Exchange
Privilege, Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege, and the
dividend/capital gain distribution option (except for Dreyfus Dividend Sweep)
selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the exchange you must notify the
Transfer Agent or your Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of your holdings through a check of
appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders directly
in connection with exchanges, although each Fund reserves the right, upon not
less than 60 days' written notice, to charge its shareholders a nominal fee
in accordance with rules promulgated by the Securities and Exchange
Commission. Each Fund reserves the right to reject any exchange request in
whole or in part. The availability of Fund Exchanges may be modified or
terminated by each Fund at any time upon notice to its shareholders. See
"Dividends, Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of a Fund, in shares of other funds in the
Dreyfus Family of Funds of which you are a shareholder. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged
Page 16
automatically on the first and/or fifteenth of the month according to the
schedule you have selected. Shares will be exchanged at the then-current net
asset value; however, a sales load may be charged with respect to exchanges
into funds sold with a sales load. See "Shareholder Services" in the
Statement of Additional Information. The right to exercise this Privilege may
be modified or cancelled by your Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode
Island 02940-9671. Each Fund may charge a service fee for this Privilege. No
such fee currently is contemplated. For more information concerning this
Privilege and the funds in the Dreyfus Family of Funds eligible to participate
in this Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form,
please call toll free 1-800-645-6561. See "Dividends, Distributions
and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark -- Dreyfus-AUTOMATIC Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671, and the
notification will be effective three business days following receipt. Each
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE -- Dreyfus Government Direct
Deposit Privilege enables you to purchase shares of a Fund (minimum of $100
and maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect. To enroll in Dreyfus Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained by calling 1-800-645-6561.
Death or legal incapacity will terminate your participation in this
Privilege. You may elect at any time to terminate your participation by
notifying in writing the appropriate Federal agency. Each Fund may terminate
your participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN -- Dreyfus Payroll Savings Plan permits you to
purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you may
have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the Automated Clearing House system at each
pay period. To establish a Dreyfus Payroll Savings Plan account, you must
file an authorization form with your employer's payroll department. Your
employer must complete the reverse side of the form and return it to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may change the amount of purchase or cancel the authorization only by
written notification to your employer. It is the sole responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the relevant Fund,
the Transfer Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. Each Fund may modify or terminate this
Privilege at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS STEP PROGRAM -- Dreyfus Step Program enables you to purchase Fund
shares without regard to the Fund's minimum initial investment requirements
through Dreyfus-AUTOMATIC Asset Builder,
Page 17
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan.
To establish a Dreyfus Step Program account, you must supply the necessary
information on the Account Application and file the required authorization
form(s) with the Transfer Agent. For more information concerning this Program,
or to request the necessary authorization form(s), please call toll free
1-800-782-6620. You may terminate your participation in this Program at any
time by discontinuing your participation in Dreyfus-AUTOMATIC Asset Builder,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan,
as the case may be, as provided under the terms of such Privilege(s). Each
Fund may modify or terminate this Program at any time.
DREYFUS DIVIDEND OPTIONS -- Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by a Fund in shares of another fund in the Dreyfus Family of Funds of
which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share prices
which do not include the sales load or which reflect a reduced sales load. If
you are investing in a fund that charges a contingent deferred sales charge,
the shares purchased will be subject on redemption to the contingent deferred
sales charge, if any, applicable to the purchased shares. See "Shareholder
Services" in the Statement of Additional Information. Dreyfus Dividend ACH
permits you to transfer electronically dividends or dividends and capital gain
distributions, if any, from a Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt of notification. These privileges are available only
for existing accounts and may not be used to open new accounts. Minimum
subsequent investments do not apply for Dreyfus Dividend Sweep. Each Fund may
modify or terminate these privileges at any time or charge a service fee. No
such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, your Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares in any of the Funds at any
time. Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, your Fund will
redeem the shares at the next determined net asset value.
No Fund imposes a charge when shares are redeemed. Service Agents may
charge their clients a nominal fee for effecting redemptions of Fund shares.
Any certificates representing Fund shares being redeemed must be submitted
with the redemption request. The value of the shares redeemed may be more or
less than their original cost, depending upon the respective Fund's
then-current net asset value.
Each Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY
Page 18
DREYFUS TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST
TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER
PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT
BUSINESS DAYS OR MORE. IN ADDITION, A FUND WILL NOT HONOR REDEMPTION CHECKS
UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM
SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE,
FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE DREYFUS-AUTOMATIC
ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE
PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT OR IF
YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
Each Fund reserves the right to redeem your account at its option
upon not less than 45 days' written notice if your account's net asset value
is $500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem INTERMEDIATE BOND FUND shares through the
Selected Dealer. Other redemption procedures may be in effect for clients or
certain Service Agents. Each Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. Each Fund reserves the right to refuse any request made
by wire or telephone, including requests made shortly after a change of
address, and may limit the amount involved or the number of such requests.
Each Fund may modify or terminate any redemption privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated. Shares for which certificates have been issued are not eligible
for Check Redemption, Wire Redemption, Telephone Redemption or Dreyfus
TELETRANSFER Privilege.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) from any person representing himself or herself to be you,
or a representative of your Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Each Fund will require the Transfer Agent to
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if it does not
follow such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither a Fund nor the
Transfer Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, a LONGER TERM FUND'S net asset value may
fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671.
Page 19
Redemption requests may be delivered in person only to a Dreyfus Financial
Center. THESE REQUESTS WILL BE FORWARDED TO THE RELEVANT FUND AND WILL BE
PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest Dreyfus
Financial Center, please call one of the telephone numbers listed under
"General Information." Redemption requests must be signed by the individual
shareholder, including each owner of a joint account, and each signature must
be guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. If you have any questions
with respect to signature-guarantees, please call one of the telephone numbers
listed under "General Information." Redemption proceeds of at least $1,000
will be wired to any member bank of the Federal Reserve System in accordance
with a written signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Potential fluctuations in the net
asset value of a LONGER TERM FUND'S shares should be considered in
determining the amount of any check drawn on such LONGER TERM FUND'S account.
Redemption Checks should not be used to close your account. Redemption Checks
are free, but the Transfer Agent will impose a fee for stopping payment of a
Redemption Check upon your request or if the Transfer Agent cannot honor the
Redemption Check due to insufficient funds or other valid reason. You should
date your Redemption Checks with the current date when you write them. Please
do not postdate your Redemption Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the check, all
postdated Redemption Checks which are dated within six months of presentment
for payment, if they are otherwise in good order. Shares for which
certificates have been issued may not be redeemed by Redemption Check. This
Privilege will be terminated immediately, without notice, with respect to any
LONGER TERM FUND account which is, or becomes, subject to backup withholding
on redemption (see "Dividends, Distributions and Taxes"). Any Redemption
Check written on a LONGER TERM FUND account which has become subject to
backup withholding on redemption will not be honored.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period.
Page 20
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a shareholder of the
INTERMEDIATE BOND FUND and a customer of a Selected Dealer, you may make
redemption requests to your Selected Dealer. If the Selected Dealer transmits
the redemption request so that it is received by the Transfer Agent by the
close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time) on a given day, the redemption request will be
effective on that day. If a redemption request is received by the Transfer
Agent after the close of trading on the floor of the New York Stock Exchange,
the redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited to
your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
SERVICE PLAN AND SHAREHOLDER SERVICES PLANS
INTERMEDIATE BOND FUND -- Under the Service Plan, adopted by the INTERMEDIATE
BOND FUND pursuant to Rule 12b-1 under the 1940 Act, the INTERMEDIATE BOND
FUND (a)reimburses the Distributor for payments to certain Service Agents for
distributing the Fund's shares and servicing shareholder accounts
("Servicing") and (b) pays The Dreyfus Corporation, Dreyfus Service
Corporation, a wholly-owned subsidiary of The Dreyfus Corporation, and any
affiliate of either of them (collectively, "Dreyfus") for advertising and
marketing relating to the Fund and for Servicing, at an aggregate annual rate
of .25 of 1% of the value of the INTERMEDIATE BOND FUND'S average daily net
assets. Each of the Distributor and Dreyfus may pay one or more Service
Agents a fee in respect of the INTERMEDIATE BOND FUND'S shares owned by
shareholders with whom the Service Agent has a Servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determine the amount, if any, to be paid to Service
Agents under the Service Plan and the basis on which such payments are made.
The fees payable under the Service Plan are payable without regard to actual
expenses incurred.
The INTERMEDIATE BOND FUND also bears the costs of preparing and
printing prospectuses and statements of additional information used for
regulatory purposes and for distribution to existing shareholders. Under the
Service Plan, the INTERMEDIATE BOND FUND bears (a) the costs of preparing,
printing and distributing prospectuses and statements of additional
information used for other purposes, and (b) the costs associated with
implementing and operating the Service Plan (such as costs of printing and
mailing service agreements), the aggregate of such amounts not to exceed in
any fiscal year of the INTERMEDIATE BOND FUND the greater of $100,000 or .005
of 1% of the value of its average daily net assets for such fiscal year.
MONEY MARKET FUND AND BOND FUND -- Each of the MONEY MARKET FUND and BOND
FUND has adopted a separate Shareholder Services Plan pursuant to which the
Fund reimburses Dreyfus Service Corporation, an amount not to exceed an
annual rate of .25 of 1% of the value of such Fund's average daily net assets
for certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily declares dividends from net investment income on
each day the New York Stock Exchange is open for business. Earnings for
Saturdays, Sundays and holidays for the MONEY MARKET FUNDS are declared as
dividends on the preceding business day and for the LONGER TERM
Page 21
FUNDS are declared on the next business day. With respect to the LONGER TERM
FUNDS, Fund shares begin earning income dividends on the day following the
date of purchase. Dividends usually are paid on the last business day
(calendar day in the case of the MONEY MARKET FUND) of each month, and are
automatically reinvested in additional Fund shares at net asset value or, at
your option, paid in cash. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be paid to
you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of
any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities gains,
if any, generally are declared and paid once a year, but each Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. No Fund will make distributions from net realized
securities gains unless capital loss carryovers, if any, have been utilized
or have expired. You may choose whether to receive distributions in cash or
to reinvest in additional Fund shares at net asset value. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Except for dividends from Taxable Investments, each Fund anticipates
that substantially all dividends paid by it will not be subject to Federal,
New York State or New York City personal income taxes. To the extent
investors are obligated to pay state or local taxes outside of New York State
and New York City, dividends earned by an investment in a Fund may represent
taxable income. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains and all or a
portion of any gain realized from the sale or other disposition of certain
market discount bonds, paid by a Fund are subject to Federal income tax as
ordinary income whether or not reinvested in additional shares. No dividend
paid by a Fund will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions from net realized long-term
securities gains of each Fund generally are taxable as long-term capital
gains for Federal income tax purposes if you are a citizen or resident of the
United States. Dividends and distributions attributable to income or gain
derived from securities transactions and from the use of certain of the
investment techniques described under "Appendix -- Investment Techniques"
will be subject to Federal income tax. The Code provides that the net capital
gain of an individual generally will not be subject to Federal income tax at
a rate in excess of 28%. Under the Code, interest on indebtedness incurred or
continued to purchase or carry Fund shares which is deemed to relate to
exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid by a Fund
may be excluded by shareholders from their gross income for Federal income
tax purposes, each Fund may purchase specified private activity bonds, the
interest from which may be (i) a preference item for purposes of the
alternative minimum tax, (ii) a component of the "adjusted current earnings"
preference item for purposes of the corporate alternative minimum tax as well
as a component in computing the corporate environmental tax or (iii) a factor
in determining the extent to which a shareholder's Social Security benefits
are taxable. If a Fund purchases such securities, the portion of its
dividends related thereto will not necessarily be tax exempt to an investor
who is subject to the alternative minimum tax and/or tax on Social Security
benefits and may cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in a Fund. If a Fund pays
dividends derived from taxable income, it intends to designate as taxable the
same percentage
Page 22
of the day's dividend as the actual taxable income earned on that day bears
to total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require that each Fund withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains of the Fund and,
in the case of a LONGER TERM FUND, the proceeds of a redemption, regardless
of the extent to which gain or loss may be realized, paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify a Fund to institute backup
withholding if the IRS determines that a shareholder's TIN is incorrect or if
a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of each Fund believes the Fund has qualified for the
fiscal year ended May 31, 1996 as a "regulated investment company" under the
Code. Each Fund intends to continue to so qualify as long as such
qualification is in the best interests of its respective shareholders. Such
qualification relieves a Fund of any liability for Federal income tax to the
extent its earnings are distributed in accordance with applicable provisions
of the Code. Each Fund is subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
MONEY MARKET FUND AND INTERMEDIATE BOND FUND. The MONEY MARKET FUND and
INTERMEDIATE BOND FUND were organized as unincorporated business trusts under
the laws of the Commonwealth of Massachusetts pursuant to a separate Agreement
and Declaration of Trust (collectively, the "Trust Agreements"), each dated
February 16, 1987. The MONEY MARKET FUND commenced operations on June 9,
1987, and the INTERMEDIATE BOND FUND commenced operations on June 12, 1987.
Each Fund is authorized to issue an unlimited number of shares of beneficial
interest, par value $.001 per share. Each share has one vote.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund of
which they are shareholders. However, the Trust Agreements disclaim
shareholder liability for acts or obligations of the Funds and require that
notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Fund or a Trustee. The Trust
Agreements provide for indemnification from the respective Fund's property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of a shareholder liability is limited to circumstances in
which the Fund itself would be unable to meet its obligations, a possibility
which management believes is remote. Upon payment of any liability incurred
by a Fund, the shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. Each of these Funds intends
to conduct its operations in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
discussed under "Management of the Funds" in
Page 23
the Statement of Additional Information, each Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Board members.
BOND FUND. The BOND FUND was incorporated under Maryland law on April 26,
1983, and commenced operations on July 26, 1983. The BOND FUND is authorized
to issue 300 million shares of Common Stock, par value $.01 per share. Each
share has one vote.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, pursuant to the Fund's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for purposes of
removing a Board member from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders for any
other purpose. Fund shareholders may remove a Board member by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Fund's Board will call a meeting of shareholders for the purpose of electing
Board members if, at any time, less than a majority of the Board members then
holding office have been elected by shareholders.
ALL FUNDS. Although each Fund is offering only its own shares, it is possible
that a Fund might become liable for any misstatement in this Prospectus about
another Fund. Each Fund's Board has considered this factor in approving the
use of this single combined Prospectus.
The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by writing
to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or by calling toll free 1-800-645-6561. In New York City, call
1-718-895-1206; outside the U.S. and Canada, call 516-794-5452.
Page 24
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- Each LONGER TERM FUND is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to borrow
in an amount up to 331/3% of the value of its total assets. Each LONGER TERM
FUND currently intends to, and the MONEY MARKET FUND may, borrow money only
for temporary or emergency (not leveraging)purposes, in an amount up to 15%
of the value of its total assets (including the amount borrowed) valued at
the lesser of cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While borrowings exceed 5% of a
Fund's total assets, such Fund will not make any additional investments.
USE OF DERIVATIVES -- Each LONGER TERM FUND may invest in the types of
Derivatives enumerated under "Description of the Funds -- Investment
Considerations and Risks -- Use of Derivatives." These instruments and
certain related risks are described more specifically under "Investment
Objective and Management Policies -- Management Policies -- Derivatives" in
the Statement of Additional Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If a LONGER TERM FUND invests in Derivatives at inappropriate times
or judges market conditions incorrectly, such investments may lower such
Fund's return or result in a loss. A LONGER TERM FUND also could experience
losses if its Derivatives were poorly correlated with its other investments,
or if the Fund were unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can become,
illiquid. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices for Derivatives.
Although neither LONGER TERM FUND will not be a commodity pool,
Derivatives subject the LONGER TERM FUNDS to the rules of the Commodity
Futures Trading Commission which limit the extent to which the Fund can
invest in certain Derivatives. Each LONGER TERM FUND may invest in futures
contracts and options with respect thereto for hedging purposes without
limit. However, neither LONGER TERM FUND may invest in such contracts and
options for other purposes if the sum of the amount of initial margin
deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceed 5% of the
liquidation value of such Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Each LONGER TERM FUND may invest up to 5% of its assets, represented
by the premium paid, in the purchase of call and put options. Each LONGER
TERM FUND may write (i.e., sell) covered call and put option contracts to the
extent of 20% of the value of its net assets at the time such option
contracts are written. When required by the Securities and Exchange
Commission, each LONGER TERM FUND will set aside permissible liquid assets in
a segregated account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, such Fund may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- Each LONGER TERM FUND may lend securities from
its portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. Each LONGER TERM FUND
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned securities which affords the LONGER
TERM FUNDS an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not
exceed 331/3% of the value of the Fund's total assets, and the Fund will
receive collateral consisting of cash, U.S. Government securities or
irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the
Page 25
loaned securities. Such loans are terminable at any time upon specified
notice. A LONGER TERM FUND might experience risk of loss if the institution
with which it has engaged in a portfolio loan transaction breaches its
agreement with such Fund.
FORWARD COMMITMENTS -- Each Fund may purchase Municipal Obligations and other
securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when the
Fund enters into the commitment, but the Fund does not make payment until it
receives delivery from the counterparty. A Fund will commit to purchase such
securities only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is deemed
advisable. A segregated account of the Fund consisting of permissible liquid
assets at least equal at all times to the amount of the commitments will be
established and maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- Each Fund may purchase floating and
variable rate demand notes and bonds, which are tax exempt obligations
ordinarily having stated maturities in excess of one year, but which permit
the holder to demand payment of principal at any time or at specified interval
s which for the MONEY MARKET FUND will not exceed 13 months, and in each case
will be upon not more than 30 days' notice. Variable rate demand notes
include master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower. These obligations
permit daily changes in the amount borrowed. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Changes in the credit quality of banks and other financial
institutions that provide such credit or liquidity enhancements to the Fund's
portfolio securities could cause losses to the Fund and affect its share
price. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally
will be traded, and there generally is no established secondary market for
these obligations, although they are redeemable at face value, plus accrued
interest. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased by the Fund will meet the quality criteria
established for the purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS -- Each Fund may purchase from financial
institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives a Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation interest bears to
the total principal amount of the Municipal Obligation. These instruments may
have fixed, floating or variable rates of interest and, in the case of the
MONEY MARKET FUND, will have remaining maturities of 13 months or less. If the
participation interest is unrated, it will be backed by an irrevocable letter
of credit or guarantee of a bank that the respective Fund's Board has
determined meets the prescribed quality standards for banks set forth below,
or the payment obligation otherwise will be collateralized by U.S. Government
securities. For certain participation interests, the Fund will have the right
to demand payment, on not more than seven days' notice, for all or any part
of the Fund's participation interest in the Municipal Obligation, plus
accrued interest. As to these instruments, each Fund intends to exercise its
right to demand payment only upon a default under the terms of the Municipal
Obligation, as needed to provide liquidity to meet redemptions, or to
maintain or improve the quality of its investment portfolio.
TENDER OPTION BONDS -- Each Fund may purchase tender option bonds. A tender
option bond is a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing interest at a
fixed rate substantially higher than prevailing short-term tax exempt rates,
Page 26
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing
or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of the Fund,
will consider on an ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligation, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in
payment of principal or interest on the underlying Municipal Obligation and
for other reasons.
CUSTODIAL RECEIPTS -- Each LONGER TERM FUND may purchase custodial receipts
representing the right to receive certain future principal and interest
payments on Municipal Obligations which underlie the custodial receipts. A
number of different arrangements are possible. In a typical custodial receipt
arrangement, an issuer or a third party owner of Municipal Obligations
deposits such obligations with a custodian in exchange for two classes of
custodial receipts. The two classes have different characteristics, but, in
each case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest rate
is adjusted, and ownership changes, based on an auction mechanism. This
class's interest rate generally is expected to be below the coupon rate of
the underlying Municipal Obligations and generally is at a level comparable
to that of a Municipal Obligation of similar quality and having a maturity
equal to the period between interest rate adjustments. The second class bears
interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but
in this case inversely to changes in the rate of interest of the first class.
If the interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate paid
on the second class. In no event will the aggregate interest paid with
respect to the two classes exceed the interest paid by the underlying
Municipal Obligations. The value of the second class and similar securities
should be expected to fluctuate more than the value of a Municipal Obligation
of comparable quality and maturity and their purchase by a LONGER TERM FUND
should increase the volatility of its net asset value and, thus, its price
per share. These custodial receipts are sold in private placements. Each
LONGER TERM FUND also may purchase directly from issuers, and not in a private
placement, Municipal Obligations having characteristics similar to custodial
receipts. These securities may be issued as part of a multi-class offering
and the interest rate on certain classes may be subject to a cap or floor.
STAND-BY COMMITMENTS -- Each Fund may acquire "stand-by commitments" with
respect to Municipal Obligations held in its portfolio. Under a stand-by
commitment, the Fund obligates a broker, dealer or bank to repurchase, at the
Fund's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of
a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. Each Fund will acquire stand-by commitments solely to
facilitate its portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. Each Fund may pay for stand-by commitments
if such action is deemed necessary, thus increasing to a degree the cost of
the underlying Municipal Obligation and similarly decreasing such security's
yield to investors. Gains realized in connection with stand-by commitments
will be taxable. The LONGER TERM FUNDS also may acquire call options on
specific Municipal
Page 27
Obligations. A LONGER TERM FUND generally would purchase these call options
to protect the Fund from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the Municipal
Obligation before maturity. The sale by a LONGER TERM FUND of a call option
that it owns on a specific Municipal Obligation could result in the receipt
of taxable income by the Fund.
ZERO COUPON SECURITIES -- Each LONGER TERM FUND may invest in zero coupon
securities which are debt securities issued or sold at a discount from their
face value which do not entitle the holder to any periodic payment of
interest prior to maturity or a specified redemption date (or cash payment
date). The amount of the discount varies depending on the time remaining
until maturity or cash payment date, prevailing interest rates, liquidity of
the security and perceived credit quality of the issuer. Zero coupon
securities also may take the form of debt securities that have been stripped
of their unmatured interest coupons, the coupons themselves and receipts or
certificates representing interest in such stripped debt obligations and
coupons. The market prices of zero coupon securities generally are more
volatile than the market prices of securities that pay interest periodically
and are likely to respond to a greater degree to changes in interest rates
than non-zero coupon securities having similar maturities and credit
qualities. Each LONGER TERM FUND may invest up to 5% of its assets in zero
coupon bonds which are rated below investment grade.
ILLIQUID SECURITIES -- Each Fund may invest up to 15% (10% in the case of the
MONEY MARKET FUND) of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments are
consistent with the Fund's investment objective. Such securities may include
securities that are not readily marketable, such as certain securities that
are subject to legal or contractual restrictions on resale, and repurchase
agreements providing for settlement in more than seven days after notice. As
to these securities, the Fund is subject to a risk that should the Fund desire
to sell them when a ready buyer is not available at a price that the Fund
deems representative of their value, the value of the Fund's net assets could
be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of the
Fund's net assets) or for temporary defensive purposes, a Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of: notes
of issuers having, at the time of purchase, a quality rating within the two
highest grades of Moody's, S&P or Fitch; obligations of the U.S. Government,
its agencies or instrumentalities; commercial paper rated not lower than P-2
by Moody's, A-2 by S&P or F-2 by Fitch; certificates of deposit of U.S.
domestic banks, including foreign branches of domestic banks, with assets of
one billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any of
the foregoing. Dividends paid by the Fund that are attributable to income
earned by the Fund from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets
be invested in Taxable Investments and Municipal Obligations the interest
from which gives rise to a preference item for the purpose of the alternative
minimum tax. If the MONEY MARKET FUND purchases Taxable Investments, it will
value them using the amortized cost method and comply with Rule 2a-7 relating
to purchases of taxable instruments. When a Fund has adopted a temporary
defensive position, including when acceptable New York Municipal Obligations
are unavailable for investment by the Fund, in excess of 35% of its net
assets may be invested in securities that are not exempt from New York State
and New York City income taxes. Under normal market conditions, each Fund
anticipates that not more than 5% of the value of its total assets will be
invested in any one category of Taxable Investments. Taxable Investments are
more fully described in the Statement of Additional Information to which
reference hereby is made.
RATINGS _ (LONGER TERM FUNDS ONLY) Bonds rated Ba by Moody's are judged to
have speculative elements; their future cannot be considered as well assured
and often the protection of interest and principal
Page 28
payments may be very moderate. Bonds rated BB by S&P are regarded as having
predominantly speculative characteristics and, while such obligations have
less near-term vulnerability to default than other speculative grade debt,
they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by Moody's
are regarded as having extremely poor prospects of ever attaining any real
investment standing. Bonds rated D by S&P are in default and the payment of
interest and/or repayment of principal is in arrears. Bonds rated DDD, DD or
D by Fitch are in actual or imminent default, are extremely speculative and
should be valued on the basis of their ultimate recovery value in liquidation
or reorganization of the issuer; DDD represents the highest potential for
recovery of such bonds; and D represents the lowest potential for recovery.
Such bonds, though high yielding, are characterized by great risk. See
"Appendix B" in the Statement of Additional Information for a general
description of Moody's, S&P and Fitch ratings of Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their opinions as to
the quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. Although these ratings may be an initial criterion for selection of
portfolio investments, The Dreyfus Corporation also will evaluate these
securities and the ability of the issuers of such securities to pay interest
and principal. A LONGER TERM FUND'S ability to achieve its investment
objective may be more dependent on The Dreyfus Corporation's credit analysis
than might be the case for a fund that invested in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN EACH
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY A FUND. AS TO EACH FUND, THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 29
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Page 30
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Page 31
New York
Tax Exempt
Funds
Combined Prospectus 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.
Registration Mark
Copy Rights 1996 Dreyfus Service Corporation
NYTEFP100196
Page 32
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.
OCTOBER 1, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Combined
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 October 1, 1996, 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:
Call Toll Free 1-800-645-6561
In New York City - Call 1-718-895-1206
Outside the U.S. and Canada - Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") 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-14
Management Agreements. . . . . . . . . . . . . . . . . . . . . . . B-18
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . B-20
Service Plan and Shareholder Services Plans. . . . . . . . . . . . B-21
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . B-23
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . B-25
Determination of Net Asset Value . . . . . . . . . . . . . . . . . B-28
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . B-29
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . B-30
Performance Information. . . . . . . . . . . . . . . . . . . . . . B-31
Information About the Funds. . . . . . . . . . . . . . . . . . . . B-33
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . . . B-33
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-47
Financial Statements and Reports of Independent Auditors
Money Market Fund . . . . . . . . . . . . . . . . . . . . . B-56
Intermediate Bond Fund. . . . . . . . . . . . . . . . . . . B-64
Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . B-78
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Prospectus entitled "Description of the Funds" and
"Appendix."
Portfolio Securities
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended May 31, 1996, computed on
a monthly basis, for each Fund was as follows:
<TABLE>
<CAPTION>
Fitch Moody's Standard & Percentage of Value
Investors Investors Poor's ------------------------------------------------
Service, L.P. Service, Inc. Ratings Group Money Intermediate
("Fitch") or ("Moody's") or ("S&P") Market Fund Bond Fund Bond Fund
- ------------ ------------ ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 0.8% 26.4% 26.7%
AA Aa AA N/A 13.1% 15.1%
A A A N/A 26.0% 32.9%
BBB Baa BBB N/A 28.4% 19.2%
BB Ba BB N/A - 2.0%
F-1 VMIG1/MIG1,P-1 SP-1,A-1 94.3% 2.6%* 4.0%*
Not Rated Not Rated Not Rated 4.9%** 3.5%*** .1%****
100.0% 100.0% 100.0%
</TABLE>
_______________
* Includes notes rated within the highest grades by Moody's, S&P or
Fitch, which, together with Municipal Obligations rated Baa/BBB, are
taken into account at the time of a purchase to ensure that the
portfolios of the Intermediate Bond Fund and Bond Fund (collectively,
the "Longer Term Funds") meet the 80% minimum quality standard
discussed in the Prospectus.
** Includes securities comprising 4.9% of the Money Market Fund's market
value which, while not rated, have been determined by the Manager to be
of comparable quality to securities rated MIG1.
*** Includes securities comprising 3.5% of the Intermediate Bond Fund's
market value which, while not rated, have been determined by the
Manager to be of comparable quality to securities in the following
rating categories: Aa/AA (.8%) and Baa/BBB (2.7%).
**** Includes securities comprising .1% of the Bond Fund's market value
which, while not rated, have been determined by the Manager to be of
comparable quality to securities rated Baa/BBB.
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
Plan, 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 invest 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
staff of the Securities and Exchange Commission currently considers certain
lease obligations to be illiquid. With regard to the Longer Term Funds,
determination as to the liquidity of such securities is made in accordance
with guidelines established by each Fund's Board. Pursuant to such
guidelines, each Board has directed the Manager to monitor carefully each
Fund's investment in such securities with particular regard to (1) the
frequency of trades and quotes for the lease obligation; (2) the number of
dealers willing to purchase or sell the lease obligation and the number of
other potential buyers; (3) the willingness of dealers to undertake to make
a market in the lease obligation; (4) the nature of the marketplace trades
including the time needed to dispose of the lease obligation, the method of
soliciting offers and the mechanics of transfer; and (5) such other factors
concerning the trading market for the lease obligation as the Manager may
deem relevant. In addition, in evaluating the liquidity and credit
quality of a lease obligation that is unrated, each Fund's Board has
directed the Manager to consider (a) whether the lease can be cancelled;
(b) what assurance there is that the assets represented by the lease can be
sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. No Fund will invest more than 15% (10% in the
case of the Money Market Fund) of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities. See each
Fund's "Investment Restriction No. 11" below.
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 under
the Investment Company Act of 1940, as amended (the "1940 Act"), in
connection with the purchase of tender option bonds, including, without
limitation, the requisite determination by the Money Market Fund's Board
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.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased
by a Fund pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is not
possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, each Fund's Board has directed the
Manager to monitor carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, a Fund's investing in such securities may
have the effect of increasing the level of illiquidity in its investment
portfolio during such period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities are supported by the full faith and credit
of the U.S. Treasury; others by the right of the issuer to borrow from the
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities bear
fixed, floating or variable rates of interest. While the U.S. Government
provides financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so,
since it is not so obligated by law.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by a Fund
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
In a repurchase agreement, the Fund buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian or sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of the
Securities and Exchange Commission to be loans by the 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 $1 billion or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the value of the
securities purchased should decrease below resale price. Repurchase
agreements could involve risks in the event of a default or insolvency of
the other party to the agreement, including possible delays or restrictions
upon the Fund's ability to dispose of the underlying securities.
Management Policies
Derivatives. (Longer Term Funds only). Each Longer Term Fund may
invest in Derivatives (as defined in the Funds' Combined Prospectus) for a
variety of reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker or more
specifically focused way for the Longer Term Fund to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. (Longer Term Funds only). Each Longer
Term Fund may enter into futures contracts in U.S. domestic markets, such
as the Chicago Board of Trade. Engaging in these transactions involves
risk of loss to the Fund which could adversely affect the value of the
Fund's net assets. Although the Longer Term Funds intend to purchase or
sell futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will exist for
any particular contract at any particular time. Many futures exchanges and
boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Fund to substantial losses.
Successful use of futures by each Longer Term Fund also is subject to
the Manager's ability to predict correctly movements in the direction of
the relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if a Fund uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, such Fund will lose part or all
of the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements.
The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Longer Term Funds may be required to segregate
permissible liquid assets in connection with its commodities transactions
in an amount generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting the Funds'
ability otherwise to invest those assets.
Specific Futures Transactions. (Longer Term Funds only). The Longer Term
Fund may purchase and sell interest rate futures contracts. An interest
rate future obligates a Fund to purchase or sell an amount of a specific
debt security at a future date at a specific price.
Options--In General. (Longer Term Funds only). The Longer Term Fund may
purchase and write (i.e., sell) call or put options with respect to
specific securities and interest rate futures contracts. A call option
gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security or securities at the exercise price
at any time during the option period, or at a specific date. Conversely, a
put option gives the purchaser of the option the right to sell, and
obligates the writer to buy, the underlying security or securities at the
exercise price at any time during the option period or at a specific date.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events, or events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options.
Successful use of options by the Longer Term Funds will be subject to
the Manager's ability to predict correctly movements in interest rates. To
the extent the Manager's predictions are incorrect, the Funds may incur
losses.
Future Developments. (Longer Term Funds only). The Longer Term Funds
may take advantage of opportunities in the area of options and futures
contracts and options on futures contracts and any other Derivatives which
are not presently contemplated for use by the Longer Term Funds or which
are not currently available but which may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions
or making any such investment, appropriate disclosure will be provided in
the Funds' Combined Prospectus or this Statement of Additional Information.
Lending Portfolio Securities. (Longer Term Funds only). In connection
with its securities lending transactions, each Longer Term Fund may return
to the borrower or a third party which is unaffiliated with the Funds, and
which is acting as a "placing broker," a part of the interest earned from
the investment of collateral received from securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan.
Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to
changes in value (generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates.
Securities purchased on a when-issued basis may expose the Fund to risks
because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. Purchasing securities on a when-issued basis when the Fund is
fully or almost fully invested may result in greater potential fluctuation
in the value of the Fund's net assets and its net asset value per share.
Investment Considerations and Risks
Investing in 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 national recession and the
significant slowdown in the New York and regional economies in the early
1990s added substantial uncertainty to estimates of the State's tax
revenues, which, in part, caused the State to incur cash-basis operating
deficits in the General Fund and issue deficit notes during the fiscal
periods 1989 through 1992. The State's financial operations have improved,
however, during recent fiscal years. For its fiscal periods 1993 through
1996, the State recorded balanced budgets on a cash basis, with substantial
fund balances in the General Fund in fiscal 1992-93 and 1993-94 and smaller
fund balances in fiscal 1994-95 and 1995-96. There can be no assurance
that New York will not face substantial potential budget gaps in future
years. In January 1992, Moody's lowered from A to Baa1 the ratings on
certain appropriation-backed debt of New York State and its agencies. The
State's general obligation, state guaranteed and New York State Local
Government Assistance Corporation bonds continue to be rated A by Moody's.
In January 1992, S&P lowered from A to A- the ratings of New York State
general obligation bonds and stated that it continued to assess the ratings
outlook as negative. The ratings of various agency debt, state moral
obligations, contractual obligations, lease purchase obligations and state
guarantees also were lowered. In February 1991, Moody's lowered its rating
on New York City's general obligation bonds from A to Baa1 and in July
1995, S&P lowered its rating on such bonds from A- to BBB+. The rating
changes reflected the rating agencies' concerns about the financial
condition of New York State and City, the heavy debt load of the State and
City, and economic uncertainties in the region. Investors should review
"Appendix A" which more fully sets forth these and other 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 Ba by Moody's or BB by S&P or Fitch and as low as the
lowest rating assigned by Moody's, S&P or Fitch. Such bonds, though higher
yielding, are characterized by risk. See "Description of the Funds--
Investment Considerations and Risks--Lower Rated Bonds" in the Prospectus
for a discussion of certain risks and "Appendix B" for a general
description of Moody's, S&P and Fitch ratings of Municipal Obligations.
Although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. Each Longer Term Fund will rely on the Manager's judgment, analysis
and experience in evaluating the creditworthiness of an issuer.
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 generally are considered by Moody's, S&P and Fitch
to be 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.
The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon bonds, in which each Longer Term Fund may invest
up to 5% of its respective total assets. 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."
Investment Restrictions
Money Market Fund. The Money Market Fund has adopted investment
restrictions numbered 1 through 9 as fundamental policies, which cannot be
changed without approval by the holders of a majority (as defined in the
1940 Act) of the Money Market Fund's outstanding voting shares. Investment
restrictions numbered 10 and 11 are not fundamental policies and may be
changed by a vote of a majority of the Money Market Fund's Board members at
any time. 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 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 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. Sell securities short or purchase securities on margin.
4. 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.
5. 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.
6. 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.
7. 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.
8. Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition
of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 10% of the value of the
Fund's net assets would be so invested.
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 (as defined in the 1940 Act) of such Fund's
outstanding voting shares. Investment restrictions numbered 8 through 12
are not 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 to the extent permitted under the 1940
Act (which currently limits borrowing to no more than 33-1/3% of
the value of the Fund's total assets). For purposes of this
investment restriction, the entry into options, forward contracts,
futures contracts, including those relating to indices, and options
on futures contracts or indices shall not constitute borrowing.
3. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from
investing in Municipal Obligations secured by real estate or
interests therein, or prevent the Fund from purchasing and selling
options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
4. Underwrite the securities of other issuers, except that the
Fund may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio
to take advantage of the lower purchase price available, and except
to the extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of
portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the
Fund may lend its portfolio securities in an amount not to exceed
33 1/3% of the value of its total assets. Any loans of portfolio
securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Board.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities
permitted in Investment Restrictions numbered 2, 3 and 10 may be
deemed to give rise to a senior security.
7. Sell securities short or purchase securities on margin, but
the Fund may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices.
8. Purchase securities other than Municipal Obligations and
Taxable Investments and those arising out of transactions in
futures and options or as otherwise provided in the Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and
to the extent related to the deposit of assets in escrow in
connection with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation
margin arrangements with respect to options, futures contracts,
including those related to indices, and options on futures
contracts or indices.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid (which securities could include participation interests
(including municipal lease/purchase agreements) that are not
subject to the demand feature described in the 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. 7 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
Board members and officers of each Fund, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Funds, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Funds
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of Noel Group, Inc., a venture capital
company; and a director of the Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads, specialty yarns, home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals and automotive and other
hardware, Simmons Outdoor Corporation and Staffing Resources, Inc.
For more than five years prior to January 1995, he was President, a
director and, until August 1994, Chief Operating Officer of the
Manager and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, each Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is 52 years old and his address is 200 Park Avenue, New York, New York
10166.
*DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 to August 1995, Mr. Burke
was a consultant to the Manager and, from October 1990 to August 1994,
he was Vice President and Chief Administrative Officer of the Manager.
From 1977 to 1990, Mr. Burke was involved in the management of
national television news, as Vice-President and Executive Vice
President of ABC News, and subsequently as President of CBS News. He
is 60 years old and his address is Box 654, Eastham, Massachusetts
02642.
SAMUEL CHASE, Board Member. Since 1982, President of Samuel Chase &
Company, Ltd., and from 1983 to 1990, Chairman of Chase, Brown &
Blaxall, Inc., economic consulting firms. He is 64 years old and his
address is 10380 Springhill Road, Belgrade, Montana 59714.
GORDON J. DAVIS, Board Member. Since October 1994, Mr. Davis has been a
senior partner with the law firm of LeBoeuf, Lamb, Greene & MacRae.
From 1983 to September 1994, Mr. Davis was a senior partner with the
law firm of Lord Day & Lord, Barrett Smith. From 1978 to 1983, he was
Commissioner of Parks and Recreation for the City of New York. He is
also a director of Consolidated Edison, a utility company, and Phoenix
Home Life Insurance Company and a member of various other corporate
and not-for-profit boards. He is 55 years old and his address is 241
Central Park West, New York, New York 10023.
JONI EVANS, Board Member. Senior Vice President of the William Morris
Agency since September 1993. 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; and from 1985 to 1987, President of Simon & Schuster--Trade
Division. She is 54 years old and her address is 1325 Avenue of the
Americas, 16th Floor, New York, New York 10019.
ARNOLD S. HIATT, Board Member. Chairman of the Stride Rite Foundation.
From 1969 to June 1992, Chairman of the Board, President or Chief
Executive Officer of The Stride Rite Corporation, a multidivisional
footwear manufacturing and retailing company. Mr. Hiatt is also a
Director of the Cabot Corporation. He is 69 years old and his address
is 400 Atlantic Avenue, Boston, Massachusetts 02110.
DAVID J. MAHONEY, Board Member. 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 Bionaire Inc. and Intercostal Health
Systems, Inc. He is 73 years old and his address is 745 Fifth Avenue,
Suite 700, New York, New York 10151.
BURTON N. WALLACK, Board Member. President and co-owner of Wallack
Management Company, a real estate management company managing real
estate in the New York City area. He is 45 years old and his address
is 18 East 64th Street, Suite 3D, New York, New York 10021.
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 the Fund, as defined in the 1940
Act, will be selected and nominated by the Board members who are not
"interested persons" of such Fund.
Ordinarily, meetings of shareholders for the purpose of electing Board
members will not be held unless and until such time as less than a majority
of the Board members holding office have been elected by shareholders, at
which time the Board members then in office will call a shareholders'
meeting for the election of Board members. Under the 1940 Act,
shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board members are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any such Board
member when requested in writing to do so by the shareholders of record of
not less than 10% of the Fund's outstanding shares.
Each Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by each Fund for the fiscal year
ended May 31, 1996, and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member (the number of which is set forth
in parenthesis next to each Board member's total compensation) for the year
ended December 31, 1995, were as follows:
Total Compensation
From Funds and
Name of Board Fund Complex
Member Aggregate Compensation From Fund* Paid to Board Member
Money Market Interm Bond Bond
Fund Fund Fund
Joseph S. DiMartino $3,428 $6,250 $8,750 $448,618 (94)
David W. Burke $2,750 $5,000 $7,000 $253,654 (52)
Samuel Chase $2,750 $5,000 $7,000 $ 54,250 (13)
Gordon J. Davis $2,750 $5,000 $7,000 $ 76,575 (24)
Joni Evans $2,500 $4,500 $6,500 $ 46,750 (13)
Arnold S. Hiatt $2,500 $4,500 $6,500 $ 50,500 (13)
David J. Mahoney $2,250 $4,000 $6,000 $ 47,250 (13)
Burton N. Wallack $2,750 $5,000 $7,000 $ 54,250 (13)
_____________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,412, $942 and $3,122 for the Money Market
Fund, Intermediate Bond Fund and Bond Fund, respectively, for all Board
members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. Prior to December 1991, she served as
Vice President and Controller, and later as Senior Vice President, of
The Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray. He is 32 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 year old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, Mr. Conroy was a Senior Fund
Accountant for Investors Bank and Trust Company. From December 1991 to
March 1993, Mr. Conroy was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, Mr. Ingram was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director - Mutual Funds of The
Boston Company, Inc. He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, Ms.
Nelson was an Assistant Vice President and Client Manager for The
Boston Company, Inc. She is 32 years old.
JOSEPH S. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 33 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Each Fund's Board members and officers, as a group, owned less than 1%
of such Fund's shares outstanding as of September 4, 1996.
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 dated
August 24, 1994. 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 1940 Act) of such Fund's 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 1940 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.
Each Agreement was approved by shareholders on August 2, 1994, and was last
approved by each Fund's Board, including a majority of the Board members
who are not "interested persons" of any party to the Agreement, at a
meeting held on April 17, 1996. As to each Fund, the 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
1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; Philip L. Toia, Vice
Chairman--Operations and Administration; William T. Sandalls, Jr., Senior
Vice President and Chief Financial Officer; Elie M. Genadry, Vice
President--Institutional Sales; William F. Glavin, Jr., Vice President--
Corporate Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President--Corporate Communications;
Jeffrey N. Nachman, Vice President--Mutual Fund Accounting; Andrew S.
Wasser, Vice President--Information Services; Mary Beth Leibig, Vice
President--Human Resources; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, directors.
The Manager manages each 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 portfolio managers who are authorized by its Board to
execute purchases and sales of securities. Each Fund's portfolio managers
are Richard J. Moynihan, Joseph P. Darcy, A. Paul Disdier, Douglas Gaylor, Karen
M. Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence Troutman, Samuel J.
Weinstock and Monica S. Wieboldt. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for 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 Board meeting subsequent to such transactions.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to each Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of 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 Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs
of preparing and printing prospectuses and statements of additional
information for regulatory purposes and distribution to existing
shareholders, 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. 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."
As compensation for 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:
Amount Paid by Amount Paid
Fiscal Year Money Market by Intermediate Amount Paid by
Ended May 31, Fund Bond Fund Bond Fund
1996 $ 1,564,732 $1,750,363* $10,848,601
1995 $ 1,636,701 $2,204,128 $10,933,374
1994 $ 1,769,463 $2,038,931* $12,540,757
* Reflects the reduction in management fees of $444,048 for fiscal
1996 and $303,115 for fiscal 1994, 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, the 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 on
a best efforts basis 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. In some states, certain financial institutions effecting
transactions in a Fund's shares may be required to register as dealers
pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., each Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York
Stock Exchange are open for business will be credited to the shareholder's
particular Fund account on the Transfer Agent's next business day following
such purchase order. Purchase orders made after 4:00 p.m., New York time,
on any business day the Transfer Agent and New York Stock Exchange are open
for business, or orders made on Saturday, Sunday or any Fund holiday (e.g.,
when the New York Stock Exchange is not open for business), will be
credited to the shareholder's Fund Account on the second business day
following such purchase order. To qualify to use the Dreyfus TeleTransfer
Privilege, the initial payment for purchase of Fund shares must be drawn
on, and redemption proceeds paid to, the same bank and account as are
designated on the Account Application or Shareholder Services Form on file.
If the proceeds of a particular redemption are to be wired to an account at
any other bank, the request must be in writing and signature-guaranteed.
See "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 1940 Act and the Money Market Fund and Bond Fund have
adopted separate Shareholder Services Plans.
Service Plan (Intermediate Bond Fund only). Rule l2b-1 (the "Rule")
adopted by the Securities and Exchange Commission under the 1940 Act
provides, among other things, that an investment company may bear expenses
of distributing its shares only pursuant to a plan adopted in accordance
with the Rule. The Intermediate Bond Fund's Board has adopted such a plan
(the "Service Plan"), pursuant to which the Intermediate Bond Fund (a)
reimburses the Distributor for payments to certain financial institutions
(which may include banks), securities dealers and other financial industry
professionals (collectively, "Service Agents") for distributing the
Intermediate Bond Fund's shares and servicing shareholder accounts
("Servicing") and (b) pays the Manager, Dreyfus Service Corporation and any
affiliates of either of them (collectively, "Dreyfus") for advertising and
marketing relating to the Intermediate Bond Fund and for Servicing. The
Intermediate Bond Fund's Board 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 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, and by the Board members who
are not "interested persons" (as defined in the 1940 Act) of the Fund or
the Manager and have no direct or indirect financial interest in the
operation of the Service Plan or in the related service agreements, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Service Plan and the related service agreements are
subject to annual approval by such vote of the Board members cast in person
at a meeting called for the purpose of voting on the Service Plan. The
Service Plan was last so approved at a meeting held on April 17, 1996. The
Service Plan is terminable at any time by vote of a majority of the
Intermediate Bond Fund's Board members who are not "interested persons" and
have no direct or indirect financial interest in the operation of the
Service Plan or in any of the related service agreements or by vote of 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 Board members
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 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
1940 Act).
For the fiscal year ended May 31, 1996, the total amount payable by
the Intermediate Bond Fund was $917,999, of which $18,126 was paid to the
Distributor as reimbursement for payments made by the Distributor to
Service Agents for distributing Intermediate Bond Fund shares, $896,212 was
paid to Dreyfus for advertising and marketing and for servicing shareholder
accounts, and $3,661 was payable by the Intermediate Bond Fund for
preparing, printing and distributing prospectuses and statements of
additional information and for costs associated with implementing and
operating the Service Plan. The Manager waived $1,064 of the total amount
payable for preparing, printing and distributing prospectuses and
statements of additional information and costs associated with implementing
and operating the Service Plan, resulting in a total amount paid by the
Intermediate Bond Fund, pursuant to the Service Plan of $916,935.
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 Dreyfus
Service Corporation for certain allocated expenses for the provision of
certain services to such Fund's shareholders. The services provided may
include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of
shareholder accounts.
A quarterly report of the amounts expended under the 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 material amendments of the Plan
must be approved by the Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan, 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 last so approved on April 17, 1996. 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.
For the fiscal year ended May 31, 1996, the Money Market Fund paid
$113,327, and the Bond Fund paid $841,756, pursuant to the Fund's
Shareholder Services 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, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the investor's Fund
account. Checks will be sent only to the registered owner(s) of the
account and only to the address of record. The Account Application,
Shareholder Services Form or later written request must be manually signed
by the registered owner(s). Checks may be made payable to the order of any
person in an amount of $500 or more. When a Check is presented to the
Transfer Agent for payment, the Transfer Agent, as the investor's agent,
will cause the Fund to redeem a sufficient number of full 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.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor or the investor's Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, the Money Market Fund will
initiate payment for shares redeemed pursuant to this Privilege on the same
business day if the Transfer Agent receives the redemption request in
proper form prior to Noon on such day; otherwise the Money Market Fund will
initiate payment on the next business day. The Longer Term Funds
ordinarily will initiate payment for shares redeemed pursuant to this
privilege on the next business day after receipt by the Transfer Agent of a
redemption request in proper form. Redemption proceeds ($1,000 minimum)
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or Shareholder
Services Form, or to a correspondent bank if the investor's bank is not a
member of the Federal Reserve System. Fees ordinarily are imposed by such
bank and usually are borne by the investor. Immediate notification by the
correspondent bank to the investor's bank is necessary to avoid a delay in
crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas 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 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 (which may include non-marketable securities) or other assets
in case of an emergency or any time a cash distribution would impair the
liquidity of the 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 might be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the 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."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
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 request an exchange, the investor, or the investor's Service Agent
acting on the investor's behalf, must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless the investor checks the applicable "No" box on the Account
Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions (including
over The Dreyfus TouchTrademark automated telephone system) 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 IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
personal retirement plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of 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 "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. An investor's
account will fall to zero unless additional investments are made in excess
of the designated amount prior to the next Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and
from regular accounts to IRA accounts, but not from IRA accounts to regular
accounts. With respect to all other retirement accounts, exchanges may be
made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Each Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges services or
the Dreyfus 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. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically 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.
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 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, 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. 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. If
such deviation exceeds 1/2 of 1%, the Board promptly will consider what
action, if any, will be initiated. In the event the Board 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 value 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 portfolio
managers of a 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.
The amount of transactions during the last fiscal year in newly issued
debt instruments in fixed price public offerings directed to an underwriter
in consideration of, among other things, research services provided was
$5,870,118 for the Intermediate Bond Fund and $36,120,245 for the Bond Fund.
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."
All Funds. Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However, all or
portion of any gain realized from the sale or other disposition of certain
market discount bonds will be treated as ordinary income under Section 1276
of the Internal Revenue Code of 1986, as amended (the "Code").
Longer Term Funds Only. The Code provides that if a shareholder has
not held his Fund shares for more than six months (or such shorter period
as the Internal Revenue Service may prescribe by regulation) and has
received an exempt-interest dividend with respect to such shares, any loss
incurred on the sale of such shares will be disallowed to the extent of the
exempt-interest dividend received. In addition, any dividend or
distribution paid shortly after an investor's purchase may have the effect
of reducing the net asset value of his shares below the cost of his
investment. Such a distribution would be a return on investment in an
economic sense although taxable as stated under "Dividends, Distributions
and Taxes" in the Prospectus.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures and options
as well as from closing transactions. In addition, any such futures or
options remaining unexercised at the end of the Fund's taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain financial
futures contracts or options transactions may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the Code,
which, in certain circumstances, overrides or modifies the provisions of
Section 1256 of the Code. As such, all or a portion of any short or long-
term capital gain from certain "straddle" and/or conversion transactions
may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
engaging in financial futures contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options comprising a part of such "straddles" were governed by Section 1256
of the Code. The Fund may make one or more elections with respect to
"mixed straddles." If no election is made, to the extent the straddle
rules apply to positions established by the Fund, losses realized by the
Fund will be deferred to the extent of unrealized gain in any offsetting
positions. Moreover, as a result of the straddle and the conversion
transaction rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gain may
be recharacterized as short-term capital gain or ordinary income.
Investment by the 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, 1996, the
Money Market Fund's yield was 2.93% and its effective yield was 2.97%. 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 1996 Federal, New York State and New York City
personal income tax rate of 46.60%, the Money Market Fund's tax equivalent
yield for the seven-day period ended May 31, 1996 was 5.49%.
Longer Term Funds. The Intermediate Bond Fund's yield for the 30-day
period ended May 31, 1996 was 4.66%. This yield reflects the waiver of the
management fee and the absorption of expenses by the Manager, without which
the Intermediate Bond Fund's yield for the 30 day period ended May 31, 1996
would have been 4.50%. The Bond Fund's yield for the 30-day period ended
May 31, 1996 was 5.06%. 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 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 distributions, and (b)
the net asset value per share on the last day of the period less any
undistributed earned income per share reasonably expected to be declared as
a dividend shortly thereafter. The quotient is then added to 1, and that
sum is raised to the 6th power, after which 1 is subtracted. The current
yield is then arrived at by multiplying the result by 2.
Based upon a combined 1996 Federal, New York State and New York City
personal income tax rate of 46.60%, the Intermediate Bond Fund's tax
equivalent yield for the 30-day period ended May 31, 1996 was 8.73%, and
the Bond Fund's tax equivalent yield for such period was 9.48%. The
Intermediate Bond Fund's tax equivalent yield for the 30-day period ended
May 31, 1996 reflects the waiver of the management fee and absorption of
expenses by the Manager, without which the Intermediate Bond Fund's tax
equivalent yield for such period would have been 8.43%.
The Intermediate Bond Fund's average annual total return for the one-
and five-year periods ended May 31, 1996 and for the period from June 12,
1987 (commencement of operations) through May 31, 1996 was 3.52%, 6.87%
and 7.06%, respectively. The Bond Fund's average annual total return for
the one-, five- and ten-year periods ended May 31, 1996 was 1.84%, 6.64%
and 6.94%, 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
(commencement of operations) to May 31, 1996 was 84.45%. The Bond Fund's
total return for the period July 26, 1983 (commencement of operations) to
May 31, 1996 was 187.31%. 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 39.6% 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 also may refer to
or discuss then-current or past economic conditions, developments, and/or
events, actual or proposed tax legislation, or to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute. From
time to time, advertising materials for the Longer Term Funds also may
refer to Morningstar ratings and related analyses supporting such ratings.
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 annual and semi-annual financial statements to all its
respective shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is each Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with each
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Funds during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995 (effective
date of transfer agency agreement) through May 31, 1996, the Money Market
Fund, Intermediate Bond Fund and Bond Fund paid the Transfer Agent $60,309,
$74,223 and $279,504, respectively.
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian of each Fund's investments.
Neither Dreyfus Transfer, Inc. nor The Bank of New York 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 LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of each Fund.
APPENDIX A
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 affect the market values and marketability of
New York Municipal Obligations which may be held by the Fund. The
following information constitutes only a brief summary, does not purport to
be a complete description, and is based on information drawn from official
statements relating to securities offerings of the State, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") available
as of the date of this Statement of Additional Information. While the Fund
has not independently verified such information, it has no reason to
believe that such information is not correct in all material respects.
A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economy expanded modestly during 1995. Although industries that export
goods and services abroad are expected to benefit from the lower dollar,
growth will be slowed by government cutbacks at all levels. On an average
annual basis, employment growth in 1995 was estimated to be about the same
as 1994. Both personal income and wages were estimated to have recorded
moderate gains in 1995. Employment growth is expected to slow
significantly in 1996 as the pace of national economic growth slackens,
entire industries experience consolidations, and governmental employment
continues to shrink. Personal income is estimated to increase by
approximately 5.0% in 1996.
The State's budget for the 1996-97 fiscal year was enacted by the
Legislature on July 13, 1996, more than three months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for the 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's budget as enacted
by the Legislature and signed into law by the Governor, as well as actual
results for the first quarter of the 1996-97 fiscal year.
After adjustments for comparability between fiscal years, the adopted
1996-97 budget projects a year-over-year increase in General Fund
disbursements of 0.2%. Adjusted State Funds (excluding federal grants)
disbursements are projected to increase by 1.6% from the prior fiscal year.
All Governmental Funds projected disbursements increase by 4.1% over the
prior fiscal year, after adjustments for comparability.
The 1996-97 State Financial Plan is projected to be balanced on a cash
basis. As compared to the Governor's proposed budget as revised on March
20, 1996, the State's adopted budget for 1996-97 increases General Fund
spending by $842 million, primarily from increases for education, special
education and higher education ($563 million). The balance represents
funding increases to a variety of other programs, including community
projects and increased assistance to fiscally distressed cities. Resources
used to fund these additional expenditures include $540 million in
increased revenues projected for 1996-97 based on higher-than-projected tax
collections during the first half of calendar 1996, $110 million in
projected receipts from a new State tax amnesty program, and other
resources including certain non-recurring resources. The total amount of
non-recurring resources included in the 1996-97 State budget is projected
to be $1.3 billion, or 3.9% of total General Fund receipts.
The State Financial Plan was based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward spending,
Federal financial and monetary policies, the availability of credit and the
condition of the world economy, which could have an adverse effect on the
State. There can be no assurance that the State economy will not
experience worse-than-predicted results, with corresponding material and
adverse effects on the State's projections of receipts and disbursements.
There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant
disparity between tax revenues projected from a lower recurring receipts
base and the spending required to maintain State programs at current
levels. To address any potential budgetary imbalance, the State may need
to take significant actions to align recurring receipts and disbursements
in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's outstanding
general obligation bonds from AA- to A and from A to A-, respectively. In
February 1991, Moody's lowered its rating on the City's general obligation
bonds from A to Baa1 and in July 1995, S&P lowered its rating on such bonds
from A- to BBB+. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New York
State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term notes
issued by the New York State Urban Development Corporation ("UDC") in
February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by some of its
municipalities and Agencies. For a time, in late 1975 and early 1976,
these difficulties resulted in a virtual closing of public credit markets
for State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92 million
that actually resulted was financed by issuing notes that were paid during
the first quarter of the State's 1978 fiscal year). In addition,
legislation was enacted limiting the occurrence of additional so-called
"moral obligation" and certain other Agency debt, which legislation does
not, however, apply to MAC debt.
GAAP-Basis Results--1995-96 Fiscal Year. The State completed its 1995-96
fiscal year with a combined Governmental Funds operating surplus of $432
million, which included an operating surplus in the General Fund of $380
million, in the Capital Projects Funds of $276 million and in the Debt
Service Funds of $185 million. There was an operating deficit of $409
million in the Special Revenue Funds. The State's Combined Balance Sheet
as of March 31, 1996 showed an accumulated deficit in its combined
Governmental Funds of $1.23 billion, reflecting liabilities of $14.59
billion and assets of $13.35 billion. This accumulated Governmental Funds
deficit includes a $2.93 billion accumulated deficit in the General Fund
and an accumulated deficit of $712 million in the Capital Projects Fund
type as partially offset by accumulated surpluses of $468 million and $1.94
billion in the Special Revenue and Debt Service fund types, respectively.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance
Sheet as of March 31, 1995 showed an accumulated deficit in its combined
governmental funds of $1.666 billion reflecting liabilities of $14.778
billion and assets of $13.112 billion. This accumulated governmental funds
deficit includes a $3.308 billion accumulated deficit in the General Fund,
as well as accumulated surpluses in the special Revenue and Debt Service
fund types of $877 million and $1.753 billion, respectively, and a $988
million accumulated deficit in the Capital Projects fund type.
The State completed its 1994-95 fiscal year with a combined
Governmental Funds operating deficit of $1.791 billion, which included
operating deficits in the General Fund of $1.426 billion, in the Capital
Projects Funds of $366 million, and in the Debt Service Funds of $38
million. There was an operating surplus in the Special Revenue Funds of
$39 million.
GAAP-Basis Results--1993-94 Fiscal Year. The State reported a General Fund
operating surplus of $914 million for the 1993-94 fiscal year, as compared
to an operating surplus of $2.065 billion for the prior fiscal year. The
1993-94 fiscal year surplus reflects several major factors, including the
cash basis surplus recorded in 1993-94, the use of $671 million of the
1992-93 surplus to fund operating expenses in 1993-94, net proceeds of $575
million in bonds issued by the New York Local Government Assistance
Corporation ("LGAC") and the accumulation of a $265 million balance in the
Contingency Reserve Fund ("CRF"). Revenues increased $543 million (1.7%)
over prior fiscal year revenues with the largest increase occurring in
personal income taxes. Expenditures increased $1.659 billion (5.6%) over
the prior fiscal year, with the largest increase occurring in State aid for
social services programs.
The Special Revenue fund and Debt Service fund ended 1993-94 with
operating surpluses of $149 million and $23 million, respectively. The
Capital Projects fund ended with an operating deficit of $35 million.
GAAP-Basis Results--1992-93 Fiscal Year. The State completed its 1992-93
fiscal year with a GAAP-basis operating surplus of $2.065 billion in the
General Fund and an accumulated deficit of $2.551 billion. The Combined
Statement of Revenues, Expenditures and Changes in Fund Balances reported
total revenues of $31.085 billion, total expenditures of $29.337 billion,
and net other financing sources and uses of $317 million. The surplus
primarily reflects the 1992-93 cash-basis surplus and the net proceeds of
$881 million in bonds issued by LGAC.
The Special Revenue, Debt Service and Capital Projects fund types
ended the 1992-93 fiscal year with GAAP-basis operating surpluses of $131
million, $381 million, and $57 million, respectively.
State Financial Plan--Cash-Basis Results--General Fund. The General
Fund is the principal operating fund of the State and is used to account
for all financial transactions, except those required to be accounted for
in another fund. It is the State's largest fund and receives almost all
State taxes and other resources not dedicated to particular purposes.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types.
In the State's 1996-97 fiscal year, the General Fund is expected to
account for approximately 47% of total Governmental Funds disbursements and
71% of total State Funds disbursements. The General Fund is projected to
be balanced on a cash basis for the 1996-97 fiscal year. Total receipts
and transfers from other funds are projected to be $33.17 billion, an
increase of $365 million from the prior fiscal year. Total General Fund
disbursements and transfers to other funds are projected to be $33.12
billion, an increase of $444 million from the total in the prior fiscal
year.
New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State
incurred General Fund operating deficits that were closed with receipts
from the issuance of tax and revenue anticipation notes ("TRANs"). First,
the national recession, and then the lingering economic slowdown in the New
York and regional economy, resulted in repeated shortfalls in receipts and
three budget deficits. During its last four fiscal years, however, the
State recorded balanced budgets on a cash basis, with positive fund
balances as described below.
The State ended its 1995-96 fiscal year on March 31, 1996 with a
General Fund cash surplus. The Division of the Budget reported that
revenues exceeded projections by $270 million, while spending for social
service programs was lower than forecast by $120 million and all other
spending was lower by $55 million. From the resulting benefit of $445
million, a $65 million voluntary deposit was made into the Tax
Stabilization Reserve Fund ("TSRF"), and $380 million was used to reduce
1996-97 Financial Plan liabilities by accelerating 1996-97 payments,
deferring 1995-96 revenues, and making a deposit to the tax refund reserve
account.
The General Fund closing fund balance was $287 million, an increase of
$129 million from 1994-95 levels. The $129 million change in fund balance
is attributable to the $65 million voluntary deposit to the TSRF, a $15
million required deposit to the TSRF, a $40 million deposit to the
Contingency Reserve Fund ("CRF"), and a $9 million deposit to the Revenue
Accumulation Fund. The closing fund balance includes $237 million on
deposit in the TSRF, to be used in the event of any future General Fund
deficit as provided under the State Constitution and State Finance Law. In
addition, $41 million is on deposit in the CRF. The CRF was established in
State fiscal year 1993-94 to assist the State in financing the costs of
extraordinary litigation. The remaining $9 million reflects amounts on
deposit in the Revenue Accumulation Fund. This fund was created to hold
certain tax receipts temporarily before their deposit to other accounts.
In addition, $678 million was on deposit in the tax refund reserve account,
of which $521 million was necessary to complete the restructuring of the
State's cash flow under the New York Local Government Assistance
Corporation ("LGAC") program.
General Fund receipts totaled $32.81 billion, a decrease of 1.1% from
1994-95 levels. This decrease reflects the impact of tax reductions
enacted and effective in both 1994 and 1995. General Fund disbursements
totaled $32.68 billion for the 1995-96 fiscal year, a decrease of 2.2% from
1994-95 levels.
The State ended its 1994-95 fiscal year with the General Fund in
balance. The $241 million decline in the fund balance reflects the planned
use of $264 million from the CRF, partially offset by the required deposit
of $23 million to the TSRF. In addition, $278 million was on deposit in
the tax refund reserve account, $250 million of which was deposited to
continue the process of restructuring the State's cash flow as part of the
LGAC program. The closing fund balance of $158 million reflects $157
million in the TSRF and $1 million in the CRF.
General Fund receipts totaled $33.16 billion, an increase of 2.9% from
1993-94 levels. General Fund disbursements totaled $33.40 billion for the
1994-95 fiscal year, an increase of 4.7% from the previous fiscal year.
The increase in disbursements was primarily the result of one-time
litigation costs for the State, funded by the use of the CRF, offset by
$188 million in spending reductions initiated in January 1995 to avert a
potential gap in the 1994-95 State Financial Plan. These actions included
savings from a hiring freeze, halting the development of certain services,
and the suspension of non-essential capital projects.
The State ended its 1993-94 fiscal year with a General Fund cash
surplus, primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. A deposit of $268 million was
made to the CRF, with a withdrawal during the year of $3 million, and a
deposit of $67 million was made to the TSRF. These three transactions
resulted in the change in fund balance of $332 million. In addition, a
deposit of $1.14 billion was made to the tax refund reserve account, of
which $1.03 billion was available for budgetary purposes in the 1994-95
fiscal year. The remaining $114 million was redeposited in the tax refund
reserve account at the end of the State's 1994-95 fiscal year to continue
the process of restructuring the State's cash flow as part of the LGAC
program. The General Fund closing balance was $399 million, of which $265
million was on deposit in the CRF and $134 million in the TSRF. The CRF
was initially funded with a transfer of $100 million attributable to a
positive margin recorded in the 1992-93 fiscal year.
General Fund receipts totaled $32.23 billion, an increase of 2.6% from
1992-93 levels. General Fund disbursements totaled $31.90 billion for the
1993-94 fiscal year, 3.5% higher than the previous fiscal year. Receipts
were higher in part due to improved tax collections from renewed State
economic growth, although the State continued to lag behind the national
economic recovery. Disbursements were higher due in part to increased
local assistance costs for school aid and social services, accelerated
payment of certain Medicaid expenses, and the cost of an additional payroll
for State employees.
Cash-Basis Results--Other Governmental Funds. Activity in the three other
governmental funds has remained relatively stable over the last three
fiscal years, with Federally-funded programs comprising approximately two-
thirds of these funds. The most significant change in the structure of
these funds has been the redirection, beginning in the 1993-94 fiscal year,
of a portion of transportation-related revenues from the General Fund to
two new dedicated funds in the Special Revenue and Capital Projects Fund
types. These revenues are used to support the capital programs of the
Department of Transportation and the Metropolitan Transportation Authority
("MTA").
The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and
include all moneys received from the Federal government. Revenues in
Special Revenue Funds in the State's 1995-96 fiscal year increased $1.45
billion over the prior fiscal year as a result of increases in federal
grants and lottery revenues. Disbursements from Special Revenue Funds in
the State's 1995-96 fiscal year increased $1.21 billion over the prior
fiscal year as a result of increased costs for social services programs and
an increase in the distribution of lottery proceeds to school districts.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Revenues in the Capital
Projects Funds in the State's 1995-96 fiscal year increased $260 million
primarily because a larger share of the petroleum business tax was shifted
from the General Fund to the Dedicated Highway and Bridge Trust Fund and by
an increase in federal grant revenues. Expenditures increased $194 million
because of increased expenditures for education and health and
environmental projects.
The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Revenues in the Debt Service
Funds in the State's 1995-96 fiscal year increased $10 million because of
increases in both dedicated taxes and mental hygiene patient fees.
Expenditures increased $201 million.
State Borrowing Plan. The State anticipates that its capital programs
will be financed, in part, through borrowings by the State and public
authorities in the 1996-97 fiscal year. The State expects to issue $411
million in general obligation bonds (including $153.6 million for purposes
of redeeming outstanding BANs) and $154 million in general obligation
commercial paper. The Legislature has also authorized the issuance of up
to $101 million in COPs during the State's 1996-97 fiscal year for
equipment purchases. The projection of the State regarding its borrowings
for the 1996-97 fiscal year may change if circumstances require.
State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1995, there were 17 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies was $73.45 billion as of September
30, 1995. As of March 31, 1995, aggregate Agency debt outstanding as
State-supported debt was $27.9 billion and as State-related was $36.1
billion. Debt service on the outstanding Agency obligations normally is
paid out of revenues generated by the Agencies' projects or programs, but
in recent years the State has provided special financial assistance, in
some cases on a recurring basis, to certain Agencies for operating and
other expenses and for debt service pursuant to moral obligation
indebtedness provisions or otherwise. Additional assistance is expected to
continue to be required in future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to
meet their obligations could result in a default by one or more of such
Agencies. If a default were to occur, it would likely have a significant
effect on the marketability of obligations of the State and the Agencies.
These Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and
nursing home development, and other programs. In general, HFA depends upon
mortgagors in the housing programs it finances to generate sufficient funds
from rental income, subsidies and other payments to meet their respective
mortgage repayment obligations to HFA, which provide the principal source
of funds for the payment of debt service on HFA bonds, as well as to meet
operating and maintenance costs of the projects financed. From January 1,
1976 through March 31, 1987, the State was called upon to appropriate a
total of $162.8 million to make up deficiencies in the debt service reserve
funds of HFA pursuant to moral obligation provisions. The State has not
been called upon to make such payments since the 1986-87 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable
to make full payments on their mortgage loans. Through a subsidiary, UDC
is currently attempting to increase its rate of collection by accelerating
its program of foreclosures and by entering into settlement agreements.
UDC has been, and will remain, dependent upon the State for appropriations
to meet its operating expenses. The State also has appropriated money to
assist in the curing of a default by UDC on notes which did not contain the
State's moral obligation provision.
The MTA oversees New York City's subway and bus lines by its
affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA"). Through
MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North
Commuter Railroad Company and the Metropolitan Suburban Bus Authority, the
MTA operates certain commuter rail and bus lines in the New York
metropolitan area. In addition, the Staten Island Rapid Transit Authority,
an MTA subsidiary, operates a rapid transit line on Staten Island. Through
its affiliated agency, the Triborough Bridge and Tunnel Authority (the
"TBTA"), the MTA operates certain toll bridges and tunnels. Because fare
revenues are not sufficient to finance the mass transit portion of these
operations, the MTA has depended and will continue to depend for operating
support upon a system of State, local government and TBTA support and, to
the extent available, Federal operating assistance, including loans, grants
and subsidies. If current revenue projections are not realized and/or
operating expenses exceed current projections, the TA or commuter railroads
may be required to seek additional State assistance, raise fares or take
other actions.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. In
addition, since 1987, State law has required that the proceeds of .25%
mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. Further, in 1993, the State dedicated a portion of
certain additional State petroleum business tax receipts to fund operating
or capital assistance to the MTA. For the 1996-97 State fiscal year, total
State assistance to the MTA is estimated at approximately $1.09 billion.
In 1981, the State Legislature authorized procedures for the adoption,
approval and amendment of a five-year plan for the capital program designed
to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabilitate facilities and equipment, and also
granted certain additional bonding authorization therefor.
State legislation accompanying the 1996-97 adopted State budget
authorized the MTA, TBTA and TA to issue an aggregate of $6.5 billion in
bonds to finance a portion of a new $11.98 billion MTA capital plan for the
1995 through 1999 calendar years (the "1995-99 Capital Program"), and
authorized the MTA to submit the 1995-99 Capital Program to the Capital
Program Review Board for approval. This plan will supersede the
overlapping portion of the MTA's 1992-96 Capital Program. This is the
fourth capital plan since the Legislature authorized procedures for the
adoption, approval and amendment of MTA capital programs and is designed to
upgrade the performance of the MTA's transportation systems by investing in
new rolling stock, maintaining replacement schedules for existing assets
and bringing the MTA system into a state of good repair. The 1995-99
Capital Program assumes the issuance of an estimated $5.1 billion in bonds
under this $6.5 billion aggregate bonding authority. The remainder of the
plan is projected to be financed through assistance from the State, the
federal government, and the City of New York, and from various other
revenues generated from actions taken by the MTA.
There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1995-1999 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad
powers and responsibilities with respect to the government, finances and
welfare of these political subdivisions, especially in education and social
services. In recent years the State has been called upon to provide added
financial assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the last several State fiscal years. The potential impact on the
State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1996-97 fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by
the State in 1984. That Board is charged with oversight of the fiscal
affairs of Yonkers. Future actions taken by the State to assist Yonkers
could result in increased State expenditures for extraordinary local
assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the
City of Troy in 1994. The Supervisory Board's powers were increased in
1995, when Troy MAC was created to help Troy avoid default on certain
obligations. The legislation creating Troy MAC prohibits the City of Troy
from seeking federal bankruptcy protection while Troy MAC bonds are
outstanding.
Seventeen municipalities received extraordinary assistance during the
1996 legislative session through $50 million in special appropriations
targeted for distressed cities.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1994, the total indebtedness of
all localities in the State, other than the City, was approximately $17.7
billion. A small portion (approximately $82.9 million) of this
indebtedness represented borrowing to finance budgetary deficits and was
issued pursuant to enabling State legislation. State law requires the
Comptroller to review and make recommendations concerning the budgets of
those local government units other than the City authorized by State law to
issue debt to finance deficits during the period that such deficit
financing is outstanding. Seventeen localities had outstanding
indebtedness for deficit financing at the close of their fiscal year ending
in 1994.
From time to time, Federal expenditure reductions could reduce, or in
some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued by
localities within the State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. The
longer-range, potential problems of declining city population, increasing
expenditures and other economic trends could adversely affect localities
and require increasing State assistance in the future.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession
of certain funds taken pursuant to the State's Abandoned Property law;
(vii) alleged responsibility of State officials to assist in remedying
racial segregation in the City of Yonkers; (viii) an action, in which the
State is a third party defendant, for injunctive or other appropriate
relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (ix) actions
challenging the constitutionality of legislation enacted during the 1990
legislative session which changed the actuarial funding methods for
determining contributions to State employee retirement systems; (x) an
action against State and City officials alleging that the present level of
shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (xi) an action challenging
legislation enacted in 1990 which had the effect of deferring certain
employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge
to the constitutionality of financing programs of the Thruway Authority
authorized by Chapters 166 and 410 of the Laws of 1991 (described below in
this Part); (xiii) a challenge to the constitutionality of financing
programs of the Metropolitan Transportation Authority and the Thruway
Authority authorized by Chapter 56 of the Laws of 1993 (described below in
this Part); (xiv) challenges to the delay by the State Department of Social
Services in making two one-week Medicaid payments to the service providers;
(xv) challenges by commercial insurers, employee welfare benefit plans, and
health maintenance organizations to provisions of Section 2807-c of the
Public Health Law which impose 13%, 11% and 9% surcharges on inpatient
hospital bills and a bad debt and charity care allowance on all hospital
bills paid by such entities; (xvi) challenges to the promulgation of the
State's proposed procedure to determine the eligibility for and nature of
home care services for Medicaid recipients; (xvii) a challenge to State
implementation of a program which reduces Medicaid benefits to certain
home-relief recipients; and (xviii) challenges to the rationality and
retroactive application of State regulations recelebrating nursing home
Medicaid rates.
(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax
and other ongoing revenues to cover expenses in each fiscal year. However,
the City has achieved balanced operating results for each of its fiscal
years since 1981 as reported in accordance with the then-applicable GAAP
standards. The City's ability to maintain balanced operating results in
future years is subject to numerous contingencies and future developments.
The City's economy, whose rate of growth slowed substantially over the
past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and increases
in social services costs, and has been required to take actions to close
substantial budget gaps in order to maintain balanced budgets in accordance
with the Financial Plan.
In 1975, the City became unable to market its securities and entered a
period of extraordinary financial difficulties. In response to this
crisis, the State created MAC to provide financing assistance to the City
and also enacted the New York State Financial Emergency Act for the City of
New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of approval
over the City Financial Plan were suspended pursuant to the Emergency Act.
However, the Control Board, MAC and OSDC continue to exercise various
monitoring functions relating to the City's financial condition. The City
prepares and operates under a four-year financial plan which is submitted
annually to the Control Board for review and which the City periodically
updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1995 show a General Fund surplus reported in
accordance with GAAP. The City has eliminated the cumulative deficit in
its net General Fund position.
According to a recent OSDC economic report, the City's economy was
slow to recover from the recession and is expected to experience a weak
employment situation, and moderate wage and income growth, during the 1995-
96 period. Also, Financial Plan reports of OSDC, the Control Board, and
the City Comptroller have variously indicated that many of the City's
balanced budgets have been accomplished, in part, through the use of non-
recurring resource, tax and fee increases, personnel reductions and
additional State assistance; that the City has not yet brought its long-
term expenditures in line with recurring revenues; that the City's proposed
gap-closing programs, if implemented, would narrow future budget gaps; that
these programs tend to rely heavily on actions outside the direct control
of the City; and that the City is therefore likely to continue to face
futures projected budget gaps requiring the City to reduce expenditures
and/or increase revenues. According to the most recent staff reports of
OSDC, the Control Board and the City Comptroller during the four-year
period covered by the current Financial Plan, the City is relying on
obtaining substantial resources from initiatives needing approval and
cooperation of its municipal labor unions, Covered Organizations, and City
Council, as well as the State and Federal governments, among others, and
there can be no assurance that such approval can be obtained.
The City requires certain amounts of financing for seasonal and
capital spending purposes. The City has issued $1.75 billion of notes for
seasonal financing purposes during the 1994 fiscal year. The City's
capital financing program projects long-term financing requirements of
approximately $17 billion for the City's fiscal years 1995 through 1998 for
the construction and rehabilitation of the City's infrastructure and other
fixed assets. The major capital requirement include expenditures for the
City's water supply system, and waste disposal systems, roads, bridges,
mass transit, schools and housing. In addition, the City and the Municipal
Water Finance Authority issued about $1.8 billion in refunding bonds in the
1994 fiscal year.
State Economic Trends. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its relative
economic position. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an
influx of generally less affluent residents. Regionally, the older
Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City
has also had to face greater competition as other major cities have
developed financial and business capabilities which make them less
dependent on the specialized services traditionally available almost
exclusively in the City.
During the 1982-83 recession, overall economic activity in the State
declined less than that of the nation as a whole. However, in the calendar
years 1984 through 1991, the State's rate of economic expansion was
somewhat slower than that of the nation. In the 1990-91 recession, the
economy of the State, and that of the rest of the Northeast, was more
heavily damaged than that of the nation as a whole and has been slower to
recover. The total employment growth rate in the State has been below the
national average since 1984. The unemployment rate in the State dipped
below the national rate in the second half of 1981 and remained lower until
1991; since then, it has been higher. According to data published by the
U.S. Bureau of Economic Analysis, during the past ten years, total personal
income in the State rose slightly faster than the national average only
from 1986 through 1988.
APPENDIX B
Description of S&P, Moody's & Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC 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 sign (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3
The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment some time in
the future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in categories below B. The modifier 1 indicates a ranking for the security
in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while other factors
of major importance in bond risk, long-term secular trends for example, may
be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and, although not
distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest potential
for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
NEW YORK-90.8%
Albany Parking Authority, Parking Revenue, Refunding:
6.50%, 11/1/2004........................................................ $ 1,000,000 $ 1,067,980
6.70%, 11/1/2006........................................................ 1,000,000 1,067,430
Board Cooperative Educational Services, COP
(Greenport Vocational Facility Project) 7.50%, 10/1/1996................ 100,000 101,209
Buffalo Municipal Water Finance Authority, Water System Revenue
5.50%, 7/1/2005 (Insured; FSA).......................................... 1,200,000 1,229,676
City University of New York, COP, Refunding (John Jay College)
5%, 8/15/2002........................................................... 9,345,000 9,091,844
Development Authority of the North Country,
Solid Waste Management System Revenue:
6.40%, 7/1/2000 (Prerefunded 7/1/1999) (a)............................ 605,000 647,816
6.40%, 7/1/2000....................................................... 510,000 521,694
Franklin Solid Waste Management Authority, Solid Waste System Revenue
6%, 6/1/2005 (Prerefunded 6/1/2003) (a)................................. 1,515,000 1,588,902
Metropolitan Transportation Authority:
Service Contract Transit Facilities
7.25%, 7/1/1998....................................................... 2,550,000 2,687,317
Transit Facilities Revenue, Refunding:
5.10%, 7/1/2004 (Insured; AMBAC)...................................... 1,255,000 1,259,480
5.30%, 7/1/2006 (Insured; AMBAC)...................................... 3,500,000 3,534,965
Municipal Assistance Corp. for the City of New York, Refunding:
6%, 7/1/2005............................................................ 9,000,000 9,559,080
6%, 7/1/2006............................................................ 7,000,000 7,415,030
Nassau County, Refunding (Combined Sewer Districts)
5.30%, 7/1/2006 (Insured; MBIA)......................................... 4,860,000 4,908,551
New York City:
5.75%, 2/15/2008........................................................ 10,500,000 10,025,715
Refunding:
4.75%, 8/15/1998...................................................... 5,000,000 5,018,350
5.75%, 8/1/2002 (Insured; MBIA)....................................... 4,200,000 4,395,678
6.25%, 8/1/2009....................................................... 3,225,000 3,183,462
New York City Industrial Development Agency, Revenue:
Civic Facility
(YMCA of Greater New York Project) 7.25%, 8/1/1999.................... 1,800,000 1,892,880
Industrial Development:
8%, Series I, 11/16/1998 (LOC; Algemene Bank Nederland) (b)........... 605,000 610,046
8%, Series J, 11/16/1998 (LOC; Algemene Bank Nederland) (b)........... 1,175,000 1,184,799
Special Facility
(Terminal One Group Association, L.P. Project) 5.60%, 1/1/2003........ 4,000,000 3,973,320
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York City Municipal Water Finance Authority, Water and Sewer System Revenue:
5.55%, 6/15/2001........................................................ $ 1,500,000 $ 1,544,385
6.60%, 6/15/2002........................................................ 1,495,000 1,613,389
6.60%, 6/15/2002 (Prerefunded 6/15/2001) (a)............................ 1,505,000 1,638,403
5.375%, 6/15/2007 (Insured; AMBAC)...................................... 7,895,000 7,888,289
New York State:
6.75%, 11/15/2000....................................................... 2,000,000 2,163,460
Refunding:
5.50%, 8/15/2006...................................................... 4,300,000 4,354,911
5.40%, 10/1/2008...................................................... 3,680,000 3,638,306
New York State Dormitory Authority, Revenue:
City University:
5.20%, 7/1/2005....................................................... 5,690,000 5,501,092
5.25%, 7/1/2006....................................................... 3,000,000 2,875,200
5.25%, 7/1/2006 (Insured; FGIC)....................................... 3,000,000 2,991,720
5.75%, 7/1/2009....................................................... 8,085,000 7,842,612
Refunding 6.25%, 7/1/2003............................................. 4,225,000 4,388,507
Columbia University 5.50%, 7/1/2005..................................... 3,045,000 3,142,592
Court Facilities Lease 5.50%, 5/15/2010................................. 4,000,000 3,744,400
Department of Health:
6%, 7/1/2005.......................................................... 2,500,000 2,556,025
6%, 7/1/2006.......................................................... 2,350,000 2,388,963
Refunding 5.50%, 7/1/2005............................................. 1,000,000 988,010
Highland Community Development Corp.
5.50%, 7/1/2001 (LOC; Marine Midland Bank) (b)........................ 3,500,000 3,512,110
State University Educational Facilities:
6.10%, 5/15/2005...................................................... 2,630,000 2,715,922
6.10%, 5/15/2008...................................................... 2,000,000 2,025,520
7.70%, 5/15/2012 (Prerefunded 5/15/2000) (a).......................... 3,850,000 4,335,523
New York State Energy Research and Development Authority,
State Service Contract Revenue (Western New York Nuclear Service Center Project):
5.25%, 4/1/2003....................................................... 5,345,000 5,438,163
5.375%, 4/1/2004...................................................... 1,500,000 1,531,590
5.40%, 4/1/2005....................................................... 2,000,000 2,032,840
New York State Environmental Facilities Corp.:
PCR
(State Water Revolving Fund):
3.90%, 2/15/2000.................................................. 10,000,000 9,696,200
7.30%, 6/15/2001.................................................. 4,000,000 4,423,680
6.30%, 6/15/2002.................................................. 3,000,000 3,221,250
6.20%, 3/15/2004.................................................. 1,700,000 1,829,557
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Environmental Facilities Corp. (continued):
PCR (continued)
(State Water Revolving Fund) (continued):
6.30%, 3/15/2005.................................................. $ 1,800,000 $ 1,940,310
6.60%, 6/15/2005.................................................. 3,120,000 3,369,350
7.20%, 6/15/2006.................................................. 3,000,000 3,308,220
(New York Municipal Water Finance Authority Project)
6.35%, 6/15/2006................................................ 2,000,000 2,164,540
Special Obligation:
(Riverbank State Park) 7.10%, 4/1/2002................................ 1,130,000 1,209,190
(State Park Infrastructure) 5.75%, 3/15/2008.......................... 2,475,000 2,459,086
New York State Housing Finance Agency:
Revenue
(Refunding- Health Facilities - New York City):
7.90%, 11/1/1999 (Prerefunded 11/1/1996) (a)...................... 245,000 249,332
7.90%, 11/1/1999.................................................. 1,770,000 1,924,061
6.375%, 11/1/2003................................................. 3,000,000 3,088,050
6%, 11/1/2006..................................................... 12,450,000 12,278,937
(Urban Rent) 5.90%, 11/1/2003........................................... 4,330,000 4,369,446
New York State Local Government Assistance Corp.:
6.70%, 4/1/2000......................................................... 2,490,000 2,659,021
6.75%, 4/1/2002......................................................... 2,500,000 2,739,950
5.70%, 4/1/2008......................................................... 3,000,000 3,027,750
New York State Medical Care Facilities Finance Agency, Revenue:
Hospital and Nursing Home 5.875%, 2/15/2008 (Insured; FHA).............. 2,215,000 2,244,880
Mental Health Services 5.25%, 2/15/2008 (Insured; FGIC)................. 6,160,000 6,009,696
(Mortgage Project) 5.40%, 8/15/2005 (Insured; FHA)...................... 2,115,000 2,137,588
New York State Mortgage Agency, Revenue, (Homeowner Mortgage)
6.15%, 10/1/2001........................................................ 1,225,000 1,270,019
New York State Power Authority,
General Purpose Revenue:
6.50%, 1/1/2004....................................................... 2,735,000 2,939,414
Refunding 5%, 1/1/2007................................................ 5,000,000 4,818,650
New York State Project Finance Agency 5%, 11/1/2007 (Insured; FHA).......... 2,650,000 2,553,858
New York State Thruway Authority:
(Emergency Highway Reconditioning and Preservation)
6%, 1/1/2002.......................................................... 2,000,000 2,110,720
General Revenue 5.70%, 1/1/2008 (Insured; FGIC)......................... 3,000,000 3,054,480
Local Highway and Bridge 5.75%, 4/1/2008................................ 3,200,000 3,140,576
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Thruway Authority (continued):
Service Contract Revenue (Local Highway and Bridge):
5.40%, 4/1/2003....................................................... $ 6,195,000 $ 6,174,247
5.50%, 4/1/2004....................................................... 1,130,000 1,124,938
5.125%, 4/1/2007 (Insured; MBIA)...................................... 4,295,000 4,200,811
5.90%, 4/1/2007....................................................... 7,000,000 7,027,160
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 2,670,810
Refunding, Project (Onondaga County Convention):
6.25%, 1/1/2007....................................................... 1,725,000 1,758,310
6.25%, 1/1/2008....................................................... 1,830,000 1,853,955
6.25%, 1/1/2009....................................................... 1,950,000 1,965,854
6.25%, 1/1/2010....................................................... 2,065,000 2,066,549
Revenue (Correctional Capital Facilities)
6%, 1/1/2005.......................................................... 5,165,000 5,240,719
(State Facilities) Refunding 5.50%, 4/1/2007............................ 3,000,000 2,904,690
Oneida-Herkimer Solid Waste Management Authority, Solid Waste System Revenue
6.60%, 4/1/2004......................................................... 1,150,000 1,193,953
Onondaga County Industrial Development Agency, PCR, Refunding
(Anheuser-Busch Co. Inc. Project) 6.625%, 8/1/2006...................... 4,000,000 4,302,280
Port Authority of New York and New Jersey
(Consolidated Bonds 73rd Series) 6.75%, 10/15/2006...................... 2,000,000 2,150,460
Rensselaer Industrial Development Agency, IDR (Albany International Corp.)
7.55%, 6/1/2007 (LOC; Norstar Bank) (b)................................. 2,000,000 2,243,240
Suffolk County Industrial Development Agency, IDR (Metavac Inc. Facilities)
7.25%, 12/1/1999 (LOC; Bank of Tokyo) (b)............................... 1,310,000 1,349,313
Suffolk County Water Authority, Waterworks Revenue Refunding:
5.10%, 6/1/2003 (Insured; MBIA)......................................... 3,545,000 3,575,097
5.10%, 6/1/2004 (Insured; MBIA)......................................... 4,500,000 4,513,185
Syracuse:
COP
(Syracuse Hancock International Airport):
6.50%, 1/1/2004................................................... 1,045,000 1,124,148
6.60%, 1/1/2005................................................... 1,105,000 1,191,477
6.70%, 1/1/2007................................................... 1,210,000 1,282,443
Public Improvement:
5.70%, 6/15/2004...................................................... 1,850,000 1,934,194
5.70%, 6/15/2005...................................................... 1,830,000 1,901,022
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
Syracuse Industrial Development Agency, Pilot Revenue, Refunding
5.125%, 10/15/2002 (LOC; ABN AMRO Bank) (b)............................. $ 3,000,000 $ 2,945,520
Ulster County Resource Recovery Agency, Solid Waste System Revenue 5.90%, 3/1/2007 1,235,000 1,203,359
Westchester County Industrial Development Agency, RRR, Refunding
(Resco Company Project) 5.50%, 7/1/2006................................. 2,850,000 2,881,720
U.S. RELATED-9.2%
Guam 5.625%, 9/1/2002....................................................... 5,000,000 4,959,350
Puerto Rico Aqueduct and Sewer Authority, Revenue, Refunding
5.20%, 7/1/2008......................................................... 10,000,000 9,496,700
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.25%, 7/1/2007 (Insured; MBIA)......................................... 3,500,000 3,789,555
Puerto Rico Public Buildings Authority,
Revenue Guaranteed Government Facilities
6.25%, 7/1/2008 (Insured; AMBAC)........................................ 3,730,000 4,048,244
Virgin Islands, Subordinated Special Tax
(Insurance Claims Fund Program, GO Matching Fund) 5.65%, 10/1/2003...... 5,075,000 5,169,040
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project)
7.875%, 10/1/1997....................................................... 1,020,000 1,059,811
Virgin Islands Public Finance Authority, Revenue, Refunding
Matching Fund Loan Notes 6.80%, 10/1/2000............................... 1,500,000 1,557,750
Virgin Islands Water and Power Authority, Electric System Revenue
6.90%, 7/1/1996......................................................... 2,595,000 2,601,384
__________
TOTAL INVESTMENTS
(cost $349,638,914)..................................................... $353,516,255
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
GO General Obligation RRR Resources Recovery Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ----------------- --------------------
<S> <C> <S> <C>
AAA Aaa AAA 27.6%
AA Aa AA 15.8
A A A 23.3
BBB Baa BBB 28.9
F1 MIG1/P1 SP1/A1 1.0
Not Rated (d) Not Rated (d) Not Rated (d) 3.4
_______
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letter of credit.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $349,638,914)-see statement..................................... $353,516,255
Receivable for investment securities sold............................... 7,216,579
Interest receivable..................................................... 6,399,174
Prepaid expenses........................................................ 7,500
__________
367,139,508
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 221,430
Due to Distributor...................................................... 7,890
Due to Custodian........................................................ 1,653,857
Accrued expenses........................................................ 108,725 1,991,902
___________ __________
NET ASSETS.................................................................. $365,147,606
=============
REPRESENTED BY:
Paid-in capital......................................................... $359,137,765
Accumulated undistributed net realized gain on investments.............. 2,132,500
Accumulated net unrealized appreciation on investments-Note 3........... 3,877,341
_________
NET ASSETS at value applicable to 20,476,885 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $365,147,606
=============
NET ASSET VALUE, offering and redemption price per share
($365,147,606 / 20,476,885 shares)...................................... $17.83
======
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $20,236,447
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,194,411
Shareholder servicing costs-Note 2(b)................................. 1,131,730
Professional fees..................................................... 46,954
Trustees' fees and expenses-Note 2(c)................................. 41,865
Custodian fees........................................................ 40,334
Prospectus and shareholders' reports-Note 2(b)........................ 27,523
Registration fees..................................................... 4,967
Miscellaneous......................................................... 38,486
___________
TOTAL EXPENSES.................................................. 3,526,270
Less-reduction in management fee and reimbursement of
prospectus costs due to undertaking-Note 2(a,b)................... 445,112
___________
NET EXPENSES.................................................... 3,081,158
__________
INVESTMENT INCOME-NET........................................... 17,155,289
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 3,319,729
Net unrealized (depreciation) on investments............................ (7,887,728)
___________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (4,567,999)
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 12,587,290
=============
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
----------------------------------------
1995 1996
-------- --------
OPERATIONS:
Investment income-net................................................... $ 18,034,151 $ 17,155,289
Net realized gain (loss) on investments................................. (316,185) 3,319,729
Net unrealized appreciation (depreciation) on investments for the year.. 5,287,113 (7,887,728)
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 23,005,079 12,587,290
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (18,034,151) (17,155,289)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 102,716,892 77,525,221
Dividends reinvested.................................................... 14,835,969 14,196,245
Cost of shares redeemed................................................. (155,468,249) (81,204,467)
_____________ _____________
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (37,915,388) 10,516,999
_____________ _____________
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (32,944,460) 5,949,000
NET ASSETS:
Beginning of year....................................................... 392,143,066 359,198,606
_____________ _____________
End of year............................................................. $ 359,198,606 $ 365,147,606
============== ==============
SHARES SHARES
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 5,899,261 4,275,135
Shares issued for dividends reinvested.................................. 851,555 783,299
Shares redeemed......................................................... (8,998,947) (4,479,706)
_____________ _____________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (2,248,131) 578,728
============== ==============
</TABLE>
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Prospectus dated October 1, 1996.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New York Tax Exempt Intermediate Bond Fund (the "Fund") is
registered under the Investment Company Act of 1940 ("Act") as a
non-diversified open-end management investment company. The Fund's investment
objective is to provide investors with as high a level of current income
exempt from Federal, New York State and New York City income taxes as is
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales load.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain 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 applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. The Manager has undertaken
from September 1, 1995 through June 30, 1996 to reduce the Management fee
paid by, or reimburse such excess expenses of the Fund, to the extent that
the Fund's aggregate annual expenses (exclusive of certain expenses as
described above) exceed an annual rate of .80 of 1% of the value of the
Fund's average daily net assets. The reduction in management fee, pursuant to
the undertaking, amounted to $444,048 for the year ended May 31, 1996.
(B) Under the Service Plan (the "Plan") adopted pursuant to rule 12b-1
under the Act, the Fund (a) reimburses the Distributor for payments to
certain Service Agents (a securities dealer, financial institution or other
industry professional) for distributing the Fund's shares and servicing
shareholder accounts ("Servicing") and (b) pays the Manager, Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, or any affiliate
(collectively "Dreyfus") for advertising and marketing relating to the Fund
and for Servicing, at an annual rate of .25 of 1% of the value of the Fund's
average daily net assets. Both the Distributor and Dreyfus may pay Service
Agents (a securities dealer, financial institution or other industry
professional) a fee in respect of the Fund's shares owned by shareholders
with whom the Service Agent has a servicing relationship or for whom the
Service Agent is the dealer or holder of record. Both the Distributor and
Dreyfus determine the amounts to be paid to Service Agents to which it will
make payments and the basis on which such payments are made. 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,
1996, $917,999 was charged to the Fund pursuant to the Plan of which $1,064
was waived by the Manager.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $74,223 for the period from
December 1, 1995, through May 31, 1996.
(C) Each trustee who is not an "affiliated person" as defined in the Act,
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended May 31, 1996 amounted
to $185,330,247 and $169,302,041, respectively.
At May 31, 1996, accumulated net unrealized appreciation on investments
was $3,877,341, consisting of $7,259,367 gross unrealized appreciation and
$3,382,026 gross unrealized depreciation.
At May 31, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
REPORT OF ERNST & YOUNG LLP, 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, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1996 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Tax Exempt Intermediate Bond Fund at May 31,
1996, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst & Young LLP signature logo]
New York, New York
July 2, 1996
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information
For the period June 12, 1987 (commencement of operations)
to May 31, 1988 and for each of the eight years in the
period ended May 31, 1996.
Included in Part B of the Registration Statement for the
Fund:
Statement of Investments--as of May 31, 1996.
Statement of Assets and Liabilities--as of May 31,
1996.
Statement of Operations--year ended May 31, 1996.
Statement of Changes in Net Assets--for the years
ended May 31, 1995 and 1996.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent Auditors,
dated July 2, 1996.
All Schedules and other financial statement information, for which
provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are
not required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Registrant's Agreement and Declaration of Trust.
(1)(b) Articles of Amendment.
(2) Registrant's By-Laws.
Incorporated by reference to Exhibit (2) of Post-Effective
Amendment No. 8 to the Registration Statement filed under the
Securities Act of 1933 on July 20, 1994.
(4) Registrant's Specimen share certificate.
Incorporated by reference to Exhibit (4) of Pre-Effective
Amendment No. 1 to the Registration Statement filed under the
Securities Act of 1933 on June 7, 1987.
(5) Management Agreement.
Incorporated by reference to Exhibit (5) of Post-Effective
Amendment No. 9 to the Registration Statement filed under the
Securities Act of 1933 on August 31, 1995.
(6) Distribution Agreement.
Incorporated by reference to Exhibit (6) of Post-Effective
Amendment No. 9 to the Registration Statement filed under the
Securities Act of 1933 on August 31, 1995.
(8)(a) Registrant's Amended and Restated Custody Agreement with The
Bank of New York.
(8)(b) Registrant's Forms of Sub-Custodian Agreements.
(10) Registrant's Opinion of Counsel of Stroock & Stroock & Lavan.
(11) Consent of Ernst & Young, Independent Auditors.
(15) Service Plan.
Incorporated by reference to Exhibit (15) of Post-Effective
Amendment No. 9 to the Registration Statement filed under the
Securities Act of 1933 on August 31, 1995.
(16) Registrant's Schedule of Calculation of Performance Data.
Incorporated by reference to Exhibit (16) of Post-Effective
Amendment No. 9 to the Registration Statement filed under the
Securities Act of 1933 on August 31, 1995.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
(a) Powers of Attorney of Board members.
(b) Power of Attorney of Officer.
(c) Registrant's Certificate of Assistant Secretary.
Item 25. Persons Controlled by or under Common Control with
Registrants
Not Applicable.
Item 26. Number of Holders of Securities of the Fund.
Number of Record
Title of Class Holders as of September 4, 1996
Shares of beneficial interest 8,325
(par value $.001 per share)
Item 27. Indemnification
Reference is made Article EIGHTH of the Agreement and Declaration
of Trust, as amended, for the Fund attached as Exhibit (1)
hereto. The application of these provisions is limited by
Article 10 of the By-Laws of the Fund which were filed as Exhibit
(2) to the Post-Effective Amendment No. 8 to the Registration
Statement filed under the Securities Act of 1933 on July 20, 1994
and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Item 27. Indemnification (continued)
Reference is also made to the Distribution Agreement filed as
Exhibit (6) of Post-Effective Amendment No. 9 to the Registration
Statement under the Securities Act of 1933 on August 31, 1995.
Item 28. Business and Other Connections of the Fund's Investment
Adviser
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for
sponsored investment companies registered under the Investment
Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other
investment companies. Dreyfus Service Corporation, a wholly-
owned subsidiary of Dreyfus, serves primarily as distributor
of shares of investment companies sponsored by Dreyfus and of
other investment companies for which Dreyfus acts as sub-
investment adviser and administrator. Dreyfus Management,
Inc., another wholly-owned subsidiary, provides investment
management services to various pension plans, institutions and
individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and Member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE None
Director
JULIAN M. SMERLING None
Director
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Executive Officer, The Boston Company*****;
Chief Operating Deputy Director:
Officer and a Mellon Trust****;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
Dreyfus America Fund
The Dreyfus Consumer Credit
Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit
Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
ELIE M. GENADRY President:
Vice President- Institutional Services Division of
Institutional Sales Dreyfus Service Corporation*;
Broker-Dealer Division of Dreyfus
Service Corporation*;
Group Retirement Plans Division of
Dreyfus Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street,
Lewes, Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place,
Boston, Massachusetts 02108.
+ The address of the business so indicated is Atrium Building,
80 Route 4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Equity Fund, Inc.
33) The Dreyfus/Laurel Funds, Inc.
34) The Dreyfus/Laurel Funds Trust
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus Stock Index Fund, Inc.
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus 100% U.S. Treasury Intermediate Term Fund
56) Dreyfus 100% U.S. Treasury Long Term Fund
57) Dreyfus 100% U.S. Treasury Money Market Fund
58) Dreyfus 100% U.S. Treasury Short Term Fund
59) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
60) Dreyfus Pennsylvania Municipal Money Market Fund
61) Dreyfus Short-Intermediate Government Fund
62) Dreyfus Short-Intermediate Municipal Bond Fund
63) Dreyfus Investment Grade Bond Funds, Inc.
64) The Dreyfus Socially Responsible Growth Fund, Inc.
65) Dreyfus Tax Exempt Cash Management
66) The Dreyfus Third Century Fund, Inc.
67) Dreyfus Treasury Cash Management
68) Dreyfus Treasury Prime Cash Management
69) Dreyfus Variable Investment Fund
70) Dreyfus Worldwide Dollar Money Market Fund, Inc.
71) General California Municipal Bond Fund, Inc.
72) General California Municipal Money Market Fund
73) General Government Securities Money Market Fund, Inc.
74) General Money Market Fund, Inc.
75) General Municipal Bond Fund, Inc.
76) General Municipal Money Market Fund, Inc.
77) General New York Municipal Bond Fund, Inc.
78) General New York Municipal Money Market Fund
79) Dreyfus S&P 500 Index Fund
80) Premier Insured Municipal Bond Fund
81) Premier California Municipal Bond Fund
82) Premier Equity Funds, Inc.
83) Premier Global Investing, Inc.
84) Premier GNMA Fund
85) Premier Growth Fund, Inc.
86) Premier Municipal Bond Fund
87) Premier New York Municipal Bond Fund
88) Premier State Municipal Bond Fund
89) Premier Strategic Growth Fund
90) Premier Value Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth A. Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 26th day of September, 1996.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
BY: /s/Marie E. Connolly*
__________________________________________
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ _______________________________ ________
/s/Marie E. Connolly* President and Treasurer 9/26/96
______________________________ (Principal Executive, Financial
Marie E. Connolly and Accounting Officer)
/s/Joseph S. DiMartino* Chairman of the Board 9/26/96
_____________________________
Joseph S. DiMartino
/s/David W. Burke* Board member 9/26/96
______________________________
David W. Burke
/s/Samuel Chase* Board member 9/26/96
_____________________________
Samuel Chase
/s/Gordon J. Davis* Board member 9/26/96
_____________________________
Gordon J. Davis
/s/Joni Evans* Board member 9/26/96
_____________________________
Joni Evans
/s/Arnold S. Hiatt* Board member 9/26/96
_____________________________
Arnold S. Hiatt
/s/David J. Mahoney* Board member 9/26/96
_____________________________
David J. Mahoney
/s/Burton N. Wallack* Board member 9/26/96
_____________________________
Burton N. Wallack
*BY: __________________________
Elizabeth A. Bachman,
Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
24(b)(1) Agreement and Declaration of Trust and Articles of
Amendment
24(b)(8)(a) Amended and Restated Custody Agreement with the Bank
of New York
24(b)(8)(b) Forms of Sub-Custodian Agreements
24(b((10) Opinion and Consent of Stroock & Stroock & Lavan
24(b)(11) Consent of Independent Auditors
OTHER EXHIBITS
(a) Power of Attorney of Board members
(b) Power of Attorney of Officers
(c) Certificate of Assistant Secretary
DREYFUS RICHMOND FUND
Declaration of Trust
Dated: February 16, 1987
THIS AGREEMENT AND DECLARATION OF TRUST
made at Springfield, Massachusetts, this 16th day of
February, 1987, by Daniel C. Maclean (hereinafter with
any additional and successor trustees referred to as
"the Trustees") and the holders of shares of beneficial
interest to be issued hereunder as hereinafter
provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to
manage all property coming into their hands as trustees
of a Massachusetts business trust in accordance with
the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby
declare that they will hold all cash, securities and
other assets, which they may from time to time acquire
in any manner as Trustees hereunder IN TRUST to manage
and dispose of the same upon the following terms and
conditions for the pro rata benefit of the holders from
time to time of Shares, whether or not certificated, in
this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be
known as "Dreyfus Richmond Fund."
Section 2. Definitions. Whenever used
herein, unless otherwise required by the context or
specifically provided:
(a) The term "Commission" shall have the
meaning provided in the 1940 Act;
(b) The "Trust" refers to the
Massachusetts business trust established by this
Agreement and Declaration of Trust, as amended from
time to time;
(c) "Shareholder" means a record owner of
Shares of the Trust;
(d) "Shares" means the equal
proportionate transferable units of interest into which
the beneficial interest in the Trust shall be divided
from time to time or, if more than one series of Shares
is authorized by the Trustees, the equal proportionate
transferable units into which each series of Shares
shall be divided from time to time, and includes a
fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Invest-
ment Company Act of 1940, and the Rules and Regulations
thereunder, all as amended from time to time;
(f) The term "Manager" is defined in
Article IV, Section 5; and
(g) The term "Person" shall mean an
individual or any corporation, partnership, joint
venture, trust or other enterprise.
ARTICLE II
Purposes of Trust
This Trust is formed for the following
purpose or purposes:
(a) to conduct, operate and carry on the
business of an investment company;
(b) to subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with
securities of every nature, kind, character, type and
form, including, without limitation of the generality
of the foregoing, all types of stocks, shares, futures
contracts, bonds, debentures, notes, bills and other
negotiable or non-negotiable instruments, obligations,
evidences of interest, certificates of interest,
certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options
or evidences of indebtedness issued or created by or
guaranteed as to principal and interest by any state or
local government or any agency or instrumentality
thereof, by the United States Government or any agency,
instrumentality, territory, district or possession
thereof, by any foreign government or any agency,
instrumentality, territory, district or possession
thereof, by any corporation organized under the laws of
any state, the United States or any territory or
possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper; to
pay for the same in cash or by the issue of stock,
including treasury stock, bonds or notes of the Trust
or otherwise; and to exercise any and all rights,
powers and privileges of ownership or interest in
respect of any and all such investments of every kind
and description, including, without limitation, the
right to consent and otherwise act with respect
thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any
said instruments;
(c) to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging
or otherwise subjecting as security the assets of the
Trust;
(d) to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose
of, transfer, and otherwise deal in, Shares including
Shares in fractional denominations, and to apply to any
such repurchase, redemption, retirement, cancellation
or acquisition of Shares of any funds or other assets
of the appropriate series of Shares, whether capital or
surplus or otherwise, to the full extent now or
hereafter permitted by the laws of The Commonwealth of
Massachusetts;
(e) to conduct its business, promote its
purposes, and carry on its operations in any and all of
its branches and maintain offices both within and
without The Commonwealth of Massachusetts, in any and
all States of the United States of America, in the
District of Columbia, and in any other parts of the
world; and
(f) to do all and everything necessary,
suitable, convenient, or proper for the conduct,
promotion, and attainment of any of the businesses and
purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in
or carried on by a Trust organized under the Massachu-
setts General Laws, and to have and exercise all of the
powers conferred by the laws of The Commonwealth of
Massachusetts upon a Massachusetts business trust.
The foregoing provisions of this
Article II shall be construed both as purposes and
powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest.
The Shares of the Trust shall be issued in one or more
series as the Trustees may, without Shareholder
approval, authorize. Each series shall be preferred
over all other series in respect of the assets
allocated to that series. The beneficial interest in
each series at all times shall be divided into Shares,
with or without par value as the Trustees may from time
to time determine, each of which shall represent an
equal proportionate interest in the series with each
other Share of the same series, none having priority or
preference over another. The number of Shares
authorized shall be unlimited, and the Shares so
authorized may be represented in part by fractional
shares. From time to time, the Trustees may divide or
combine the Shares of any series into a greater or
lesser number without thereby changing the
proportionate beneficial interests in the series.
Section 2. Ownership of Shares. The
ownership of Shares will be recorded in the books of
the Trust or a transfer agent. The record books of the
Trust or any transfer agent, as the case may be, shall
be conclusive as to who are the holders of Shares of
each series and as to the number of Shares of each
series held from time to time by each. No certificates
certifying the ownership of Shares need be issued
except as the Trustees may otherwise determine from
time to time.
Section 3. Issuance of Shares. The
Trustees are authorized, from time to time, to issue or
authorize the issuance of Shares at not less than the
par value thereof, if any, and to fix the price or the
minimum price or the consideration (in cash and/or such
other property, real or personal, tangible or
intangible, as from time to time they may determine) or
minimum consideration for such Shares. Anything herein
to the contrary notwithstanding, the Trustees may issue
Shares pro rata to the Shareholders at any time as a
stock dividend.
All consideration received by the Trust
for the issue or sale of Shares of each series,
together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall belong
irrevocably to the series of Shares with respect to
which the same were received by the Trust for all
purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the
Trust and are herein referred to as "assets of" such
series.
Shares may be issued in fractional
denominations to the same extent as whole Shares, and
Shares in fractional denominations shall be Shares
having proportionately to the respective fractions
represented thereby all the rights of whole Shares,
including, without limitation, the right to vote, the
right to receive dividends and distributions, and the
right to participate upon liquidation of the Trust or
of a particular series of Shares.
Section 4. No Preemptive Rights. Share-
holders shall have no preemptive or other right to
subscribe for any additional Shares or other securities
issued by the Trust.
Section 5. Status of Shares and
Limitation of Personal Liability. Shares shall be
deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by
virtue of having become a Shareholder shall be held to
have expressly assented and agreed to the terms hereof
and to have become a party hereto. The death of a
Shareholder during the continuance of the Trust shall
not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title
in or to the whole or any part of the Trust property or
right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the
Trust nor the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind any
Shareholder or Trustee personally or to call upon any
Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Share-
holder at any time personally may agree to pay by way
of subscription for any Shares or otherwise. Every
note, bond, contract or other undertaking issued by or
on behalf of the Trust shall include a recitation
limiting the obligation represented thereby to the
Trust and its assets (but the omission of such a
recitation shall not operate to bind any Shareholder or
Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be
elected either by the Trustees or the Shareholders.
The Trustees named herein shall serve until the first
meeting of the Shareholders or until the election and
qualification of their successors. Prior to the first
meeting of Shareholders the initial Trustees hereunder
may elect additional Trustees to serve until such
meeting and until their successors are elected and
qualified. The Trustees also at any time may elect
Trustees to fill vacancies in the number of Trustees.
The number of Trustees shall be fixed from time to time
by the Trustees and, at or after the commencement of
the business of the Trust, shall be not less than
three. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee during the
lifetime of this Trust, until such Trustee dies,
resigns, retires, or is removed, or, if sooner, until
the next meeting of Shareholders called for the purpose
of electing Trustees and the election and qualification
of his successor. Subject to Section 16(a) of the 1940
Act, the Trustees may elect their own successors and,
pursuant to this Section, may appoint Trustees to fill
vacancies.
Section 2. Powers. The Trustees shall
have all powers necessary or desirable to carry out the
purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without
limiting the generality of the foregoing, the Trustees
may adopt By-Laws not inconsistent with this Declar-
ation of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to
the extent that they do not reserve that right to the
Shareholders; they may fill vacancies in their number,
including vacancies resulting from increases in their
own number, and may elect and remove such officers and
employ, appoint and terminate such employees or agents
as they consider appropriate; they may appoint from
their own number and terminate any one or more
committees; they may employ one or more custodians of
the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all
or any part of such assets in a system or systems for
the central handling of securities, retain a transfer
agent and a Shareholder servicing agent, or both,
provide for the distribution of Shares through a
principal underwriter or otherwise, set record dates,
and in general delegate such authority as they consider
desirable (including, without limitation, the authority
to purchase and sell securities and to invest funds, to
determine the net income of the Trust for any period,
the value of the total assets of the Trust and the net
asset value of each Share, and to execute such deeds,
agreements or other instruments either in the name of
the Trust or the names of the Trustees or as their
attorney or attorneys or otherwise as the Trustees from
time to time may deem expedient) to any officer of the
Trust, committee of the Trustees, any such employee,
agent, custodian or underwriter or to any Manager.
Without limiting the generality of the
foregoing, the Trustees shall have full power and
authority:
(a) To invest and reinvest cash and to
hold cash uninvested;
(b) To vote or give assent, or exercise
any rights of ownership, with respect to stock or other
securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons
as the Trustees shall deem proper, granting to such
person or persons such power and discretion with
relation to securities or property as the Trustees
shall deem proper;
(c) To hold any security or property in a
form not indicating any trust whether in bearer,
unregistered or other negotiable form or in the name of
the Trust or a custodian, subcustodian or other
depository or a nominee or nominees or otherwise;
(d) To consent to or participate in any
plan for the reorganization, consolidation or merger of
any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such
corporation or concern, and to pay calls or
subscriptions with respect to any security held in the
Trust;
(e) To join with other security holders
in acting through a committee, depositary, voting
trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any
such committee, depositary or trustee, and to delegate
to them such power and authority with relation to any
security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay,
and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee
as the Trustees shall deem proper;
(f) To compromise, arbitrate, or
otherwise adjust claims in favor of or against the
Trust or any matter in controversy, including, but not
limited to, claims for taxes;
(g) To allocate assets, liabilities and
expenses of the Trust to a particular series of Shares
or to apportion the same among two or more series,
provided that any liabilities or expenses incurred by a
particular series of Shares shall be payable solely out
of the assets of that series;
(h) To enter into joint ventures, general
or limited partnerships and any other combinations or
associations;
(i) To purchase and pay for entirely out
of Trust property such insurance as they may deem
necessary or appropriate for the conduct of the
business, including, without limitation, insurance
policies insuring the assets of the Trust and payment
of distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
investment advisers or Managers, principal
underwriters, or independent contractors of the Trust
individually against all claims and liabilities of
every nature arising by reason of holding, being or
having held any such office or position, or by reason
of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or Manager,
principal underwriter, or independent contractor,
including any action taken or omitted that may be
determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person
against such liability; and
(j) To pay pensions for faithful service,
as deemed appropriate by the Trustees, and to adopt,
establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
Further, without limiting the generality
of the foregoing, the Trustees shall have full power
and authority to incur and pay out of the principal or
income of the Trust such expenses and liabilities as
may be deemed by the Trustees to be necessary or proper
for the purposes of the Trust; provided, however, that
all expenses and liabilities incurred or arising in
connection with a particular series of Shares, as
determined by the Trustees, shall be payable solely out
of the assets of that series.
Any determination made in good faith and,
so far as accounting matters are involved, in
accordance with generally accepted accounting
principles by or pursuant to the authority granted by
the Trustees, as to the amount of the assets, debts,
obligations or liabilities of the Trust; the amount of
any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or
cancellation of any reserves or charges (whether or not
any debt, obligation or liability for which such
reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter
required to be paid or discharged); the price or
closing bid or asked price of any investment owned or
held by the Trust; the market value of any investment
or fair value of any other asset of the Trust; the
number of Shares outstanding; the estimated expense to
the Trust in connection with purchases of its Shares;
the ability to liquidate investments in an orderly
fashion; the extent to which it is practicable to
deliver a cross-section of the portfolio of the Trust
in payment for any such Shares, or as to any other
matters relating to the issue, sale, purchase and/or
other acquisition or disposition of investments or
Shares of the Trust, shall be final and conclusive, and
shall be binding upon the Trust and its Shareholders,
past, present and future, and Shares are issued and
sold on the condition and understanding that any and
all such determinations shall be binding as aforesaid.
Section 3. Meetings. At any meeting of
the Trustees, a majority of the Trustees then in office
shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes
cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned
without further notice.
When a quorum is present at any meeting, a
majority of the Trustees present may take any action,
except when a larger vote is required by this Declar-
ation of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be
taken at any meeting of the Trustees or of any
committee thereof may be taken without a meeting, if a
written consent to such action is signed by a majority
of the Trustees or members of any such committee then
in office, as the case may be, and such written consent
is filed with the minutes of proceedings of the
Trustees or any such committee.
The Trustees or any committee designated
by the Trustees may participate in a meeting of the
Trustees or such committee by means of a conference
telephone or similar communications equipment by means
of which all persons participating in the meeting can
hear each other at the same time. Participation by
such means shall constitute presence in person at a
meeting.
Section 4. Ownership of Assets of the
Trust. Title to all of the assets of each series of
Shares of the Trust at all times shall be considered as
vested in the Trustees.
Section 5. Investment Advice and
Management Services. The Trustees shall not in any way
be bound or limited by any present or future law or
custom in regard to investments by trustees. The
Trustees from time to time may enter into a written
contract or contracts with any person or persons
(herein called the "Manager"), including any firm,
corporation, trust or association in which any Trustee
or Shareholder may be interested, to act as investment
advisers and/or managers of the Trust and to provide
such investment advice and/or management as the
Trustees from time to time may consider necessary for
the proper management of the assets of the Trust,
including, without limitation, authority to determine
from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to
make changes in the Trust's investments. Any such
contract shall be subject to the requirements of the
1940 Act with respect to its continuance in effect, its
termination and the method of authorization and
approval of such contract, or any amendment thereto or
renewal thereof.
Any Trustee or any organization with which
any Trustee may be associated also may act as broker
for the Trust in making purchases and sales of
securities for or to the Trust for its investment
portfolio, and may charge and receive from the Trust
the usual and customary commission for such service.
Any organization with which a Trustee may be associated
in acting as broker for the Trust shall be responsible
only for the proper execution of transactions in
accordance with the instructions of the Trust and shall
be subject to no further liability of any sort
whatever.
The Manager, or any affiliate thereof,
also may be a distributor for the sale of Shares by
separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a
person in which any Trustee or any distributor is
interested financially, subject only to applicable
provisions of law. Nothing herein contained shall
operate to prevent any Manager, who also acts as such a
distributor, from also receiving compensation for
services rendered as such distributor.
Section 6. Removal and Resignation of
Trustees. The Trustees or the Shareholders (by vote of
66-2/3% of the outstanding shares entitled to vote
thereon) may remove at any time any Trustee with or
without cause, and any Trustee may resign at any time
as Trustee, without penalty by written notice to the
Trust; provided that sixty days' advance written notice
shall be given in the event that there are only three
or less Trustees at the time a notice of resignation is
submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Share-
holders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Sec-
tion 1, of this Declaration of Trust; provided,
however, that no meeting of Shareholders is required to
be called for the purpose of electing Trustees unless
and until such time as less than a majority of the
Trustees have been elected by the Shareholders,
(ii) for the removal of Trustees as provided in
Article IV, Section 6, (iii) with respect to any
Manager as provided in Article IV, Section 5, (iv) with
respect to any amendment of this Declaration of Trust
as provided in Article IX, Section 8, (v) with respect
to a consolidation, merger or certain sales of assets
as provided in Article IX, Section 5, (vi) with respect
to the termination of the Trust or a series of Shares
as provided in Article IX, Section 5, (vii) to the same
extent as the stockholders of a Massachusetts business
corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the
Trust or the Shareholders, and (viii) with respect to
such additional matters relating to the Trust as may be
required by law, by this Declaration of Trust, or the
By-Laws of the Trust or any registration of the Trust
with the Commission or any state, or as the Trustees
may consider desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is
entitled to vote (except that in the election of
Trustees said vote may be cast for as many persons as
there are Trustees to be elected), and each fractional
Share shall be entitled to a proportionate fractional
vote. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote
of Shareholders, all Shares of the Trust then entitled
to vote shall be voted by individual series, except (i)
when required by the 1940 Act, Shares shall be voted in
the aggregate and not by individual series and (ii)
when the Trustees have determined that the matter
affects only the interests of one or more series, then
only Shareholders of such series shall be entitled to
vote thereon. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in
person or by proxy. A proxy with respect to Shares
held in the name of two or more persons shall be valid
if executed by any one of them, unless at or prior to
exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at
or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares
are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law,
this Declaration of Trust or any By-Laws of the Trust
to be taken by Shareholders.
Section 2. Meetings. Meetings of the
Shareholders may be called by the Trustees or such
other person or persons as may be specified in the By-
Laws and shall be called by the Trustees upon the
written request of Shareholders owning at least 30% of
the outstanding Shares entitled to vote. Shareholders
shall be entitled to at least ten days' prior notice of
any meeting.
Section 3. Quorum and Required Vote.
Thirty percent (30%) of the outstanding Shares shall be
a quorum for the transaction of business at a Share-
holders' meeting, except that where any provision of
law or of this Declaration of Trust permits or requires
that holders of any series shall vote as a series, then
thirty percent (30%) of the aggregate number of Shares
of that series entitled to vote shall be necessary to
constitute a quorum for the transaction of business by
that series. Any lesser number, however, shall be
sufficient for adjournment and any adjourned session or
sessions may be held within 90 days after the date set
for the original meeting without the necessity of
further notice. Except when a larger vote is required
by any provision of this Declaration of Trust or the
By-Laws of the Trust and subject to any applicable
requirements of law, a majority of the Shares voted
shall decide any question and a plurality shall elect a
Trustee, provided that where any provision of law or of
this Declaration of Trust permits or requires that the
holders of any series shall vote as a series, then a
majority of the Shares of that series voted on the
matter (or a plurality with respect to the election of
a Trustee) shall decide that matter insofar as that
series is concerned.
Section 4. Action by Written Consent.
Any action required or permitted to be taken at any
meeting may be taken without a meeting if a consent in
writing, setting forth such action, is signed by all
the Shareholders entitled to vote on the subject matter
thereof and such consent is filed with the records of
the Trust.
Section 5. Additional Provisions. The
By-Laws may include further provisions for Share-
holders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees
shall distribute periodically to the Shareholders of
each series of Shares an amount approximately equal to
the net income of that series, determined by the
Trustees or as they may authorize and as herein
provided. Distributions of income may be made in one
or more payments, which shall be in Shares, cash or
otherwise, and on a date or dates and as of a record
date or dates determined by the Trustees. At any time
and from time to time in their discretion, the Trustees
also may cause to be distributed to the Shareholders of
any one or more series as of a record date or dates
determined by the Trustees, in Shares, cash or
otherwise, all or part of any gains realized on the
sale or disposition of the assets of the series or all
or part of any other principal of the Trust
attributable to the series. Each distribution pursuant
to this Section 1 shall be made ratably according to
the number of Shares of the series held by the several
Shareholders on the record date for such distribution,
provided that no distribution need be made on Shares
purchased pursuant to orders received, or for which
payment is made, after such time or times as the
Trustees may determine.
Section 2. Determination of Net Income.
In determining the net income of each series of Shares
for any period, there shall be deducted from income for
that period (a) such portion of all charges, taxes,
expenses and liabilities due or accrued as the Trustees
shall consider properly chargeable and fairly
applicable to income for that period or any earlier
period and (b) whatever reasonable reserves the
Trustees shall consider advisable for possible future
charges, taxes, expenses and liabilities which the
Trustees shall consider properly chargeable and fairly
applicable to income for that period or any earlier
period. The net income of each series for any period
may be adjusted for amounts included on account of net
income in the net asset value of Shares issued or
redeemed or repurchased during that period. In
determining the net income of a series for a period
ending on a date other than the end of its fiscal year,
income may be estimated as the Trustees shall deem
fair. Gains on the sale or disposition of assets shall
not be treated as income, and losses shall not be
charged against income unless appropriate under
applicable accounting principles, except in the
exercise of the discretionary powers of the Trustees.
Any amount contributed to the Trust which is received
as income pursuant to a decree of any court of
competent jurisdiction shall be applied as required by
the said decree.
Section 3. Redemptions. Any Shareholder
shall be entitled to require the Trust to redeem and
the Trust shall be obligated to redeem at the option of
such Shareholder all or any part of the Shares owned by
said Shareholder, at the redemption price, pursuant to
the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued,
shall be presented for redemption in proper form for
transfer to the Trust or the agent of the Trust
appointed for such purpose, and these shall be
presented with a written request that the Trust redeem
all or any part of the Shares represented thereby.
(b) The redemption price per Share shall
be the net asset value per Share when next determined
by the Trust at such time or times as the Trustees
shall designate, following the time of presentation of
certificates for Shares, if issued, and an appropriate
request for redemption, or such other time as the
Trustees may designate in accordance with any provision
of the 1940 Act, or any rule or regulation made or
adopted by any securities association registered under
the Securities Exchange Act of 1934, as determined by
the Trustees.
(c) Net asset value of each series of
Shares (for the purpose of issuance of Shares as well
as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of
such series determined as provided in
paragraph (d) below less, to the extent
determined by or pursuant to the direction
of the Trustees in accordance with
generally accepted accounting principles,
all debts, obligations and liabilities of
such series (which debts, obligations and
liabilities shall include, without
limitation of the generality of the
foregoing, any and all debts, obligations,
liabilities, or claims, of any and every
kind and nature, fixed, accrued and
otherwise, including the estimated accrued
expenses of management and supervision,
administration and distribution and any
reserves or charges for any or all of the
foregoing, whether for taxes, expenses, or
otherwise, and the price of Shares
redeemed but not paid for) but excluding
the Trust's liability upon its Shares and
its surplus, by
(ii) the total number of Shares of
such series outstanding.
The Trustees are empowered, in their
absolute discretion, to establish other methods for
determining such net asset value whenever such other
methods are deemed by them to be necessary to enable
the Trust to comply with, or are deemed by them to be
desirable, provided they are not inconsistent with any
provision of the 1940 Act.
(d) In determining for the purposes of
this Declaration of Trust the total value of the assets
of each series of Shares at any time, investments and
any other assets of such series shall be valued in such
manner as may be determined from time to time by or
pursuant to the order of the Trustees.
(e) Payment of the redemption price by
the Trust may be made either in cash or in securities
or other assets at the time owned by the Trust or
partly in cash and partly in securities or other assets
at the time owned by the Trust. The value of any part
of such payment to be made in securities or other
assets of the Trust shall be the value employed in
determining the redemption price. Payment of the
redemption price shall be made on or before the seventh
day following the day on which the Shares are properly
presented for redemption hereunder, except that
delivery of any securities included in any such payment
shall be made as promptly as any necessary transfers on
the books of the issuers whose securities are to be
delivered may be made and, except as postponement of
the date of payment may be permissible under the 1940
Act.
Pursuant to resolution of the Trustees,
the Trust may deduct from the payment made for any
Shares redeemed a liquidating charge not in excess of
five percent (5%) of the redemption price of the Shares
so redeemed, and the Trustees may alter or suspend any
such liquidating charge from time to time.
(f) The right of any holder of Shares
redeemed by the Trust as provided in this Article VI to
receive dividends or distributions thereon and all
other rights of such Shareholder with respect to such
Shares shall terminate at the time as of which the
redemption price of such Shares is determined, except
the right of such Shareholder to receive (i) the
redemption price of such Shares from the Trust in
accordance with the provisions hereof, and (ii) any
dividend or distribution to which such Shareholder
previously had become entitled as the record holder of
such Shares on the record date for such dividend or
distribution.
(g) Redemption of Shares by the Trust is
conditional upon the Trust having funds or other assets
legally available therefor.
(h) The Trust, either directly or through
an agent, may repurchase its Shares, out of funds
legally available therefor, upon such terms and
conditions and for such consideration as the Trustees
shall deem advisable, by agreement with the owner at a
price not exceeding the net asset value per Share as
determined by or pursuant to the order of the Trustees
at such time or times as the Trustees shall designate,
less a charge not to exceed five percent (5%) of such
net asset value, if and as fixed by resolution of the
Trustees from time to time, and to take all other steps
deemed necessary or advisable in connection therewith.
(i) Shares purchased or redeemed by the
Trust shall be cancelled or held by the Trust for
reissue, as the Trustees from time to time may
determine.
(j) The obligations set forth in this
Article VI may be suspended or postponed, (1) for any
period (i) during which the New York Stock Exchange is
closed other than for customary weekend and holiday
closings, or (ii) during which trading on the New York
Stock Exchange is restricted, (2) for any period during
which an emergency exists as a result of which (i) the
disposal by the Trust of investments owned by it is not
reasonably practicable, or (ii) it is not reasonably
practicable for the Trust fairly to determine the value
of its net assets, or (3) for such other periods as the
Commission or any successor governmental authority by
order may permit.
Notwithstanding any other provision of
this Section 3 of Article VI, if certificates
representing such Shares have been issued, the
redemption or repurchase price need not be paid by the
Trust until such certificates are presented in proper
form for transfer to the Trust or the agent of the
Trust appointed for such purpose; however, the
redemption or repurchase shall be effective, in
accordance with the resolution of the Trustees,
regardless of whether or not such presentation has been
made.
Section 4. Redemptions at the Option of
the Trust. The Trust shall have the right at its
option and at any time to redeem Shares of any
Shareholder at the net asset value thereof as
determined in accordance with Section 3 of Article VI
of this Declaration of Trust: (i) if at such time such
Shareholder owns fewer Shares than, or Shares having an
aggregate net asset value of less than, an amount
determined from time to time by the Trustees; or (ii)
to the extent that such Shareholder owns Shares of a
particular series of Shares equal to or in excess of a
percentage of the outstanding Shares of that series
determined from time to time by the Trustees; or (iii)
to the extent that such Shareholder owns Shares of the
Trust representing a percentage equal to or in excess
of such percentage of the aggregate number of
outstanding Shares of the Trust or the aggregate net
asset value of the Trust determined from time to time
by the Trustees.
Section 5. Dividends, Distributions,
Redemptions and Repurchases. No dividend or
distribution (including, without limitation, any
distribution paid upon termination of the Trust or of
any series) with respect to, nor any redemption or
repurchase of, the Shares of any series shall be
effected by the Trust other than from the assets of
such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees
shall be entitled to reasonable compensation from the
Trust and may fix the amount of their compensation.
Section 2. Limitation of Liability. The
Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer,
agent, employee or Manager of the Trust, nor shall any
Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which he
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
Every note, bond, contract, instrument,
certificate, share, or undertaking and every other act
or thing whatsoever executed or done by or on behalf of
the Trust or the Trustees or any of them in connection
with the Trust, shall be deemed conclusively to have
been executed or done only in their or his capacity as
Trustees or Trustee, and such Trustees or Trustee shall
not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees,
Officers, Employees and Agents. Each person who is or
was a Trustee, officer, employee or agent of the Trust
shall be entitled to indemnification out of the assets
of the Trust to the extent provided in, and subject to
the provisions of, the By-Laws, provided that no
indemnification shall be granted by the Trust in
contravention of the 1940 Act.
Section 2. Merged Corporations. For the
purposes of this Article VIII references to "the Trust"
include any constituent corporation (including any
constituent of a constituent) absorbed in a
consolidation or merger which, if its separate
existence had continued, would have had power and
authority to indemnify its directors, officers,
employees or agents as well as the resulting or
surviving entity; so that any person who is or was a
director, officer, employee or agent of such a
constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee,
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the
provisions of this Article VIII with respect to the
resulting or surviving entity as he would have with
respect to such a constituent corporation if its
separate existence had continued.
Section 3. Shareholders. In case any
Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his being or
having been a Shareholder and not because of his acts
or omissions or for some other reason, the Shareholder
or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or
other general successor) shall be entitled out of the
assets of the Trust to be held harmless from and
indemnified against all losses and expenses arising
from such liability. Upon request, the Trust shall
cause its counsel to assume the defense of any claim
which, if successful, would result in an obligation of
the Trust to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It
is hereby expressly declared that a trust and not a
partnership is created hereby. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the
Trust shall have any power to bind personally either
the Trust's Trustees or officers or any Share- holders.
All persons extending credit to, contracting with or
having any claim against the Trust or a particular
series of Shares shall look only to the assets of the
Trust or the assets of that particular series for
payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such
Trustee otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action,
Expert Advice, No Bond or Surety. The exercise by the
Trustees of their powers and discretion hereunder under
the circumstances then prevailing, shall be binding
upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may
take advice of counsel or other experts with respect to
the meaning and operation of this Declaration of Trust,
and subject to the provisions of Section 1 of this
Article IX shall be under no liability for any act or
omission in accordance with such advice or for failing
to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a
bond is required.
Section 3. Liability of Third Persons
Dealing with Trustees. No person dealing with the
Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by
the Trustees pursuant hereto or to see to the
application of any payments made or property
transferred to the Trust or upon its order.
Section 4. Trustees, Shareholders, etc.
Not Personally Liable: Notice. All persons extending
credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look
only to the assets of the Trust or the assets of that
particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders
nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future,
shall be personally liable therefor.
Section 5. Consolidation, Merger, Sale of
Assets. The Trust may, in accordance with the
provisions of this Section:
(1) Consolidate with one or more
corporations or trusts to form a new consolidated
corporation or trust; or
(2) Merge into a corporation or trust, or
have merged into it one or more corporations or trusts;
or
(3) Sell, lease, exchange or transfer
all, or substantially all, its property and assets,
including its good will and franchises.
Any such consolidation, merger, sale,
lease, exchange or other transfer of all or
substantially all of the property and assets of the
Trust may be made only upon substantially the terms and
conditions set forth in a proposed form of articles of
consolidation, articles of merger or articles of sale,
lease, exchange or transfer, as the case may be, which
are approved by votes of the Trustees and Shareholders
holding a majority of the Shares entitled to vote
thereon, provided that in the case of a merger in which
the Trust is the surviving entity which effects no
reclassification or change of any outstanding shares of
the Trust or other amendment of this Declaration of
Trust, no vote of the Shareholders shall be necessary
(and in lieu thereof, the proposed articles of merger
shall be approved by a majority of the Trustees) if the
number of Shares, if any, of the Trust to be issued or
delivered in the merger does not exceed fifteen percent
of the number of Shares outstanding (before giving
effect to the merger) on the effective date of the
merger. Any articles of consolidation, merger, sale,
lease, exchange or transfer shall constitute a
supplemental Declaration of Trust, copies of which
shall be filed as specified in Section 7 of this
Article IX.
Section 6. Termination of Trust. Unless
terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be
terminated at any time by vote of Shareholders holding
at least a majority of the Shares of each series
entitled to vote or by the Trustees by written notice
to the Shareholders. Any series of Shares may be
terminated at any time by vote of Shareholders holding
at least a majority of the Shares of such series
entitled to vote or by the Trustees by written notice
to the Shareholders of such series.
Upon termination of the Trust or of any
one or more series of Shares, after paying or otherwise
providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated as
may be determined by the Trustees, the Trust shall
reduce, in accordance with such procedures as the
Trustees consider appropriate, the remaining assets to
distributable form in cash or shares or other
securities, or any combination thereof, and distribute
the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of
such series held by the several Shareholders of such
series on the date of termination.
Section 7. Filing of Copies, References,
Headings. The original or a copy of this instrument
and of each amendment hereto and of each Declaration of
Trust supplemental hereto shall be kept at the office
of the Trust where it may be inspected by any Share-
holder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall
be filed by the Trust with the Secretary of The
Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where
such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such
amendments or supplemental Declarations of Trust have
been made and as to matters in connection with the
Trust hereunder; and, with the same effect as if it
were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or
of any such amendment or supplemental Declaration of
Trust. In this instrument or in any such amendment or
supplemental Declaration of Trust, references to this
instrument, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such
amendment or supplemental Declaration of Trust.
Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this
instrument, rather than the headings, shall control.
This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 8. Applicable Law. The Trust set
forth in this instrument is made in The Commonwealth of
Massachusetts, and it is created under and is to be
governed by and construed and administered according to
the laws of said Commonwealth. The Trust shall be of
the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 9. Amendments. This Declaration
of Trust may be amended at any time by an instrument in
writing signed by a majority of the then Trustees when
authorized so to do by a vote of Shareholders holding a
majority of the Shares of each series entitled to vote,
except that an amendment which shall affect the holders
of one or more series of Shares but not the holders of
all outstanding series shall be authorized by vote of
the Shareholders holding a majority of the Shares
entitled to vote of each series affected and no vote of
Shareholders of a series not affected shall be
required. Amendments having the purpose of changing
the name of the Trust or of supplying any omission,
curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision
contained herein shall not require authorization by
Shareholder vote.
IN WITNESS WHEREOF, Daniel C. Maclean has
hereunto set his hand and seal in the City of
Springfield, Massachusetts, for himself and his assigns
as of the day and year first above written.
______________________________
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Then personally appeared the above-named
Daniel C. Maclean, and acknowledged the foregoing
instrument whick was duly executed in the Commonwealth
of Massachusetts, to be his free act and deed.
______________________________
Notary Public
My Commission
expires:
(Notarial Seal)
Sworn to before me this
17th day of February, 1987.
(Notarial Seal)
DREYFUS RICHMOND FUND
ARTICLES OF AMENDMENT
Dreyfus Richmond Fund, a business trust
formed by an Agreement and Declaration of Trust dated
February 16, 1987 pursuant to the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby
certifies to the Secretary of State of the Commonwealth
of Massachusetts and to the City Clerk of the City of
Boston that:
FIRST: The Agreement and Declaration of
Trust of the Trust is hereby amended by striking out
Article I, Section 1 and inserting in lieu thereof the
following:
"Section 1. Name. This Trust shall
be known as 'Dreyfus New York Tax Exempt
Intermediate Bond Fund.'"
SECOND: The amendment to the Agreement and
Declaration of Trust herein made was duly approved by a
majority of the Board of Trustees of the Trust as of
May 14, 1987 pursuant to Article IX, Section 9 of the
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, Dreyfus Richmond Fund has
caused these Articles to be signed in its name and on
its behalf by its Sole of Trustees.
DREYFUS RICHMOND FUND
By:
Daniel C. Maclean, Sole Trustee
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
Then personally appeared the above-named
Daniel C. Maclean and acknowledged the foregoing
instrument to be his free act and deed, before me.
_____________________________________
Notary Public
AMENDED AND RESTATED CUSTODY AGREEMENT
Amended and Restated Custody Agreement made
as of August 18, 1989 between DREYFUS NEW YORK TAX
EXEMPT INTERMEDIATE BOND FUND, a business trust
organized and existing under the laws of the
Commonwealth of Massachusetts, having its principal
office and place of business at 666 Old Country Road,
Garden City, New York 11530 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having
its principal office and place of business at 48 Wall
Street, New York, New York 10015 (hereinafter called
the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises
hereinafter set forth the Fund and the Custodian agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following
words and phrases, unless the context otherwise
requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include
the Treasurer, the Controller or any other person,
whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Trustees
of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from
time to time.
2. "Available Balance" shall mean for any given
day during a calendar year the aggregate amount of
Federal Funds held in the Fund's custody account(s) at
The Bank of New York, or its successors, as of the
close of such day or, if such day is not a business
day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a
party such party's making a general assignment,
arrangement or composition with or for the benefit of
its creditors, or instituting or having instituted
against it a proceeding seeking a judgment of
insolvency or bankruptcy or the entry of an order for
relief under the Federal bankruptcy law or any other
relief under any bankruptcy or insolvency law or other
similar law affecting creditors' rights, or if a
petition is presented for the winding up or liquidation
of the party or a resolution is passed for its winding
up or liquidation, or it seeks, or becomes subject to,
the appointment of an administrator, receiver, trustee,
custodian or other similar official for it or for all
or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to
approval of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/ Treasury book-entry system for United States
and Federal agency securities, its successor or
successors and its nominee or nominees.
5. "Call Option" shall mean an exchange traded
option with respect to Securities other than Stock
Index Options, Futures Contracts and Futures Contract
Options entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to
purchase from the writer thereof the specified
underlying Securities.
6. "Certificate" shall mean any notice,
instruction, or other instrument in writing, authorized
or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian
and signed on behalf of the Fund by any two Officers of
the Fund.
7. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the
rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as
security for, and in consideration of, the Custodian's
issuance of (a) any Put Option guarantee letter or
similar document described in paragraph 8 of Article V
herein, or (b) any receipt described in Article V or
VIII herein.
9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban
consumers, U.S. city average l982-84 equals l00, as
first published without seasonal adjustment by the
Bureau of Labor Statistics, the Department of Labor,
without regard to subsequent revisions or corrections
by such Bureau.
10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely
exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof
the specified Securities (excluding Futures Contracts)
which are owned by the writer thereof and subject to
appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or
successors and its nominee or nominees, provided the
Custodian has received a certified copy of a resolution
of the Fund's Trustees specifically approving deposits
in DTC. The term "Depository" shall further mean and
include any other person authorized to act as a
depository under the Investment Company Act of 1940,
its successor or successors and its nominee or
nominees, specifically identified in a certified copy
of a resolution of the Fund's Trustees specifically
approving deposits therein by the Custodian.
12. "Earnings Credit" shall mean for any given
day during a calendar year the product of (a) the
Federal Funds Rate for such date minus .25%, and
(b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately
available same day funds.
14. "Federal Funds Rate" shall mean, for any day,
the Federal Funds (Effective) interest rate so
denominated as published in Federal Reserve Statistical
Release H.15 (519) and applicable to such day and each
succeeding day which is not a business day.
15. "Financial Futures Contract" shall mean the
firm commitment to buy or sell fixed income securities,
including, without limitation, U.S. Treasury Bills,
U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank
certificates of deposit, and Eurodollar certificates of
deposit, during a specified month at an agreed upon
price.
16. "Futures Contract" shall mean a Financial
Futures Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an
option with respect to a Futures Contract.
18. "Margin Account" shall mean a segregated
account in the name of a broker, dealer, futures
commission merchant or Clearing Member, or in the name
of the Fund for the benefit of a broker, dealer,
futures commission merchant or Clearing Member, or
otherwise, in accordance with an agreement between the
Fund, the Custodian and a broker, dealer, futures
commission merchant or Clearing Member (a "Margin
Account Agreement"), separate and distinct from the
custody account, in which certain Securities and/or
money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as
the Fund may from time to time determine. Securities
held in the Book-Entry System or the Depository shall
be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
19. "Merger" shall mean (a) with respect to the
Fund, the consolidation or amalgamation with, merger
into, or transfer of all or substantially all of its
assets to, another entity, where the Fund is not the
surviving entity, and (b) with respect to the
Custodian, any consolidation or amalgamation with,
merger into, or transfer of all or substantially all of
its assets to, another entity, except for any such
consolidation, amalgamation, merger or transfer of
assets between the Custodian and The Bank of New York
Company, Inc. or any subsidiary thereof, or the Irving
Bank Corporation or any subsidiary thereof, provided
that the surviving entity agrees to be bound by the
terms of this Agreement.
20. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to principal and interest by the
government of the United States or agencies or
instrumentalities thereof, commercial paper,
certificates of deposit and bankers' acceptances,
repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the
purchase and sale of such securities normally requires
settlement in Federal funds on the same date as such
purchase or sale.
21. "O.C.C." shall mean Options Clearing
Corporation, a clearing agency registered under Sec-
tion 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the
Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly
authorized by the Trustees of the Fund to execute any
Certificate, instruction, notice or other instrument on
behalf of the Fund and listed in the Certificate
annexed hereto as Appendix B or such other Certificate
as may be received by the Custodian from time to time.
23. "Option" shall mean a Call Option, Covered
Call Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal
instructions actually received by the Custodian from an
Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded
option with respect to Securities other than Stock
Index Options, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and
tender of the specified underlying Securities, to sell
such Securities to the writer thereof for the exercise
price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities
and agrees to repurchase such Securities at a described
or specified date and price.
27. "Security" shall be deemed to include,
without limitation, Money Market Securities, Call
Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract
Options, Financial Futures Contracts, Financial Futures
Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having
characteristics similar to common stocks, preferred
stocks, debt obligations issued by state or municipal
governments and by public authorities (including,
without limitation, general obligation bonds, revenue
bonds and industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing
or representing any other rights or interest therein,
or any property or assets.
28. "Segregated Security Account" shall mean an
account maintained under the terms of this Agreement as
a segregated account, by recordation or otherwise,
within the custody account in which certain Securities
and/or other assets of the Fund shall be deposited and
withdrawn from time to time in accordance with
Certificates received by the Custodian in connection
with such transactions as the Fund may from time to
time determine.
29. "Shares" shall mean the shares of beneficial
interest of the Fund, each of which, in the case of a
Fund having Series, is allocated to a particular
Series.
30. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree
to take or make delivery of an amount of cash equal to
a specified dollar amount times the difference between
the value of a particular stock index at the close of
the last business day of the contract and the price at
which the futures contract is originally struck.
31. "Stock Index Option" shall mean an exchange
traded option entitling the holder, upon timely
exercise, to receive an amount of cash determined by
reference to the difference between the exercise price
and the value of the index on the date of exercise.
32. "Written Instructions" shall mean written
communications actually received by the Custodian from
an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by
telex or any other such system whereby the receiver of
such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys
at any time owned by the Fund during the period of this
Agreement, except that (a) if the Custodian fails to
provide for the custody of any of the Fund's Securities
and moneys located or to be located outside the United
States in a manner satisfactory to the Fund, the Fund
shall be permitted to arrange for the custody of such
Securities and moneys located or to be located outside
the United States other than through the Custodian at
rates to be negotiated and borne by the Fund and (b) if
the Custodian fails to continue any existing sub-
custodial or similar arrangements on substantially the
same terms as exist on the date of this Agreement, the
Fund shall be permitted to arrange for such or similar
services other than through the Custodian at rates to
be negotiated and borne by the Fund. The Custodian
shall not charge the Fund for any such terminated
services after the date of such termination.
2. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof
as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver
or cause to be delivered to the Custodian all
Securities and all moneys owned by it, including cash
received for the issuance of its shares, at any time
during the period of this Agreement. The Custodian
will not be responsible for such Securities and such
moneys until actually received by it. The Custodian
will be entitled to reverse any credits made on the
Fund's behalf where such credits have been previously
made and moneys are not finally collected. The Fund
shall deliver to the Custodian a certified resolution
of the Trustees of the Fund approving, authorizing and
instructing the Custodian on a continuous and on-going
basis to deposit in the Book-Entry System all
Securities eligible for deposit therein and to utilize
the Book-Entry System to the extent possible in
connection with its performance hereunder, including,
without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities,
and deliveries and returns of Securities collateral.
Prior to a deposit of Securities of the Fund in the
Depository the Fund shall deliver to the Custodian a
certified resolution of the Trustees of the Fund
approving, authorizing and instructing the Custodian on
a continuous and on-going basis until instructed to the
contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities
eligible for deposit therein and to utilize the
Depository to the extent possible in connection with
its performance hereunder, including, without
limitation, in connection with settlements of purchases
and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral.
Securities and moneys of the Fund deposited in either
the Book-Entry System or the Depository will be
represented in accounts which include only assets held
by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity. Prior to the
Custodian's accepting, utilizing and acting with
respect to Clearing Member confirmations for Options
and transactions in Options as provided in this
Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees
approving, authorizing and instructing the Custodian on
a continuous and on-going basis, until instructed to
the contrary by a Certificate actually received by the
Custodian, to accept, utilize and act in accordance
with such confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate
account in the name of the Fund all moneys received by
it for the account of the Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as
provided in Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes,
as provided in Article XII hereof;
(d) In payment for Shares redeemed by it, as
provided in Article XII hereof;
(e) Pursuant to Certificates setting forth the
name and address of the person to whom the payment is
to be made, and the purpose for which payment is to be
made; or
(f) In payment of the fees and in reimbursement
of the expenses and liabilities of the Custodian, as
provided in Article XV hereof.
3. Promptly after the close of business on each
day, the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where
Securities are transferred to the account of the Fund,
the Custodian shall also by book-entry or otherwise
identify as belonging to the Fund a quantity of
Securities in a fungible bulk of Securities registered
in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and
from time to time, the Custodian shall furnish the Fund
with a detailed statement of the Securities and moneys
held for the Fund under this Agreement.
4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held
for the Fund, which are issued or issuable only in
bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in
that form; all other Securities held for the Fund may
be registered in the name of the Fund, in the name of
any duly appointed registered nominee of the Custodian
as the Custodian may from time to time determine, or in
the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or
nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register
in the name of its registered nominee or in the name of
the Book-Entry System or the Depository, any Securities
which it may hold for the account of the Fund and which
may from time to time be registered in the name of the
Fund. The Custodian shall hold all such Securities
which are not held in the Book-Entry System or in the
Depository in a separate account in the name of the
Fund physically segregated at all times from those of
any other person or persons.
5. Except as otherwise provided in this Agreement
and unless otherwise instructed to the contrary by a
Certificate, the Custodian by itself, or through the
use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with
respect to all Securities held for the Fund in
accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from
the Fund specifying that an amount of income should
have been received by the Custodian within the last 90
days, the Custodian will provide a conditional payment
of income within 60 days from the date the Custodian
received such notice, unless the Custodian reasonably
concludes that such income was not due or payable to
the Fund, provided that the Custodian may reverse any
such conditional payment upon its reasonably concluding
that all or any portion of such income was not due or
payable, and provided further that the Custodian shall
not be liable for failing to collect on a timely basis
the full amount of income due or payable in respect of
a "floating rate instrument" or "variable rate
instrument" (as such terms are defined under Rule 2a-7
under the Investment Company Act of l940, as amended)
if it has acted in good faith, without negligence or
willful misconduct.
(b) Present for payment and collect the amount
payable upon such Securities which are called, but only
if either (i) the Custodian receives a written notice
of such call, or (ii) notice of such call appears in
one or more of the publications listed in Appendix C
annexed hereto, which may be amended at any time by the
Custodian upon five business days' prior notification
to the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary
declarations or certificates of ownership under the
Federal Income Tax Laws or the laws or regulations of
any other taxing authority now or hereafter in effect;
and
(f) Hold directly, or through the Book-Entry
System or the Depository with respect to Securities
therein deposited, for the account of the Fund all
rights and similar securities issued with respect to
any Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not
otherwise, the Custodian, directly or through the use
of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the
authority of the Fund as owner of any Securities may be
exercised;
(b) Deliver any Securities held for the Fund in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization
of any corporation, or the exercise of any conversion
privilege;
(c) Deliver any Securities held for the Fund to
any protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of
deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such
delivery;
(d) Make such transfers or exchanges of the
assets of the Fund and take such other steps as shall
be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount
payable upon Securities not described in preceding
paragraph 5(b) of this Article which may be called as
specified in the Certificate.
7. Notwithstanding any provision elsewhere
contained herein, the Custodian shall not be required
to obtain possession of any instrument or certificate
representing any Futures Contract, Option or Futures
Contract Option until after it shall have determined,
or shall have received a Certificate from the Fund
stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day
preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian
shall comply with Section 17(f) of the Investment
Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of
Futures Contracts, Options or Futures Contract Options
by making payments or deliveries specified in
Certificates received by the Custodian in connection
with any such purchase, sale, writing, settlement or
closing out upon its receipt from a broker, dealer or
futures commission merchant of a statement or
confirmation reasonably believed by the Custodian to be
in the form customarily used by brokers, dealers, or
futures commission merchants with respect to such
Futures Contracts, Options or Futures Contract Options,
as the case may be, confirming that such Security is
held by such broker, dealer or futures commission
merchant, in book-entry form or otherwise, in the name
of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that
payments to or deliveries from the Margin Account shall
be made in accordance with the terms and conditions of
the Margin Account Agreement. Whenever any such
instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this
Agreement to the contrary, make payment for any Futures
Contract, Option or Futures Contract Option for which
such instruments or such certificates are available
only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Futures
Contract, Option or Futures Contract Option for which
such instruments or such certificates are available
only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered
to the Custodian shall be held by the Custodian
hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS, FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND
REVERSE REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by
the Fund, other than a purchase of any Option, Futures
Contract, Futures Contract Option or Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i)
with respect to each purchase of Securities which are
not Money Market Securities, a Certificate, and (ii)
with respect to each purchase of Money Market
Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such
purchase: (a) the name of the issuer and the title of
the Securities; (b) the number of shares or the
principal amount purchased and accrued interest, if
any; (c) the date of purchase and settlement; (d) the
purchase price per unit; (e) the total amount payable
upon such purchase; (f) the name of the person from
whom or the broker through whom the purchase was made,
and the name of the clearing broker, if any; and
(g) the name of the broker to which payment is to be
made. The Custodian shall, upon receipt of Securities
purchased by or for the Fund, pay out of the moneys
held for the account of the Fund the total amount
payable to the person from whom, or the broker through
whom, the purchase was made, provided that the same
conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written
Instructions.
2. Promptly after each sale of Securities by the
Fund, other than a sale of any Option, Futures
Contract, Futures Contract Option or Reverse Repurchase
Agreement, the Fund shall deliver to the Custodian (i)
with respect to each sale of Securities which are not
Money Market Securities, a Certificate, and (ii) with
respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the
name of the issuer and the title of the Security; (b)
the number of shares or principal amount sold, and
accrued interest, if any; (c) the date of sale; (d) the
sale price per unit; (e) the total amount payable to
the Fund upon such sale; (f) the name of the broker
through whom or the person to whom the sale was made,
and the name of the clearing broker, if any; and
(g) the name of the broker to whom the Securities are
to be delivered. The Custodian shall deliver the
Securities upon receipt of the total amount payable to
the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written
Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs
prevailing among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by
the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each Option
purchased: (a) the type of Option (put or call);
(b) the name of the issuer and the title and number of
shares subject to such Option or, in the case of a
Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options
purchased; (c) the expiration date; (d) the exercise
price; (e) the dates of purchase and settlement;
(f) the total amount payable by the Fund in connection
with such purchase; (g) the name of the Clearing Member
through which such Option was purchased; and (h) the
name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such
Option held by such Clearing Member for the account of
the Custodian (or any duly appointed and registered
nominee of the Custodian) as custodian for the Fund,
out of moneys held for the account of the Fund, the
total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided
that the same conforms to the total amount payable as
set forth in such Certificate.
2. Promptly after the sale of any Option
purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the
type of Option (put or call); (b) the name of the
issuer and the title and number of shares subject to
such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the
number of Stock Index Options sold; (c) the date of
sale; (d) the sale price; (e) the date of settlement;
(f) the total amount payable to the Fund upon such
sale; and (g) the name of the Clearing Member through
which the sale was made. The Custodian shall consent
to the delivery of the Option sold by the Clearing
Member which previously supplied the confirmation
described in preceding paragraph 1 of this Article with
respect to such Option against payment to the Custodian
of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set
forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Call
Option: (a) the name of the issuer and the title and
number of shares subject to the Call Option; (b) the
expiration date; (c) the date of exercise and
settlement; (d) the exercise price per share; (e) the
total amount to be paid by the Fund upon such exercise;
and (f) the name of the Clearing Member through which
such Call Option was exercised. The Custodian shall,
upon receipt of the Securities underlying the Call
Option which was exercised, pay out of the moneys held
for the account of the Fund the total amount payable to
the Clearing Member through whom the Call Option was
exercised, provided that the same conforms to the total
amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any
Put Option purchased by the Fund pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Put Option:
(a) the name of the issuer and the title and number of
shares subject to the Put Option; (b) the expiration
date; (c) the date of exercise and settlement; (d) the
exercise price per share; (e) the total amount to be
paid to the Fund upon such exercise; and (f) the name
of the Clearing Member through which such Put Option
was exercised. The Custodian shall, upon receipt of
the amount payable upon the exercise of the Put Option,
deliver or direct the Depository to deliver the
Securities, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to
paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the type of Stock Index Option
(put or call); (b) the number of Options being
exercised; (c) the stock index to which such Option
relates; (d) the expiration date; (e) the exercise
price; (f) the total amount to be received by the Fund
in connection with such exercise; and (g) the Clearing
Member from which such payment is to be received.
6. Whenever the Fund writes a Covered Call
Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the name of the issuer and
the title and number of shares for which the Covered
Call Option was written and which underlie the same;
(b) the expiration date; (c) the exercise price;
(d) the premium to be received by the Fund; (e) the
date such Covered Call Option was written; and (f) the
name of the Clearing Member through which the premium
is to be received. The Custodian shall deliver or
cause to be delivered, in exchange for receipt of the
premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required
in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and
shall impose, or direct the Depository to impose, upon
the underlying Securities specified in the Certificate
such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at
any time to refuse to issue any receipts for Securities
in the possession of the Custodian and not deposited
with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the
Fund and described in the preceding paragraph of this
Article is exercised, the Fund shall promptly deliver
to the Custodian a Certificate instructing the
Custodian to deliver, or to direct the Depository to
deliver, the Securities subject to such Covered Call
Option and specifying: (a) the name of the issuer and
the title and number of shares subject to the Covered
Call Option; (b) the Clearing Member to whom the
underlying Securities are to be delivered; and (c) the
total amount payable to the Fund upon such delivery.
Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the
Custodian shall deliver, or direct the Depository to
deliver, the underlying Securities as specified in the
Certificate for the amount to be received as set forth
in such Certificate.
8. Whenever the Fund writes a Put Option, the
Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Put Option:
(a) the name of the issuer and the title and number of
shares for which the Put Option is written and which
underlie the same; (b) the expiration date; (c) the
exercise price; (d) the premium to be received by the
Fund; (e) the date such Put Option is written; (f) the
name of the Clearing Member through which the premium
is to be received and to whom a Put Option guarantee
letter is to be delivered; (g) the amount of cash,
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; and
(h) the amount of cash and/or the amount and kind of
Securities to be deposited into the Collateral Account.
The Custodian shall, after making the deposits into the
Collateral Account specified in the Certificate, issue
a Put Option guarantee letter substantially in the form
utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in
the Certificate against receipt of the premium
specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation
to issue any Put Option guarantee letter or similar
document if it is unable to make any of the represen-
tations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the
Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the name of the issuer and
title and number of shares subject to the Put Option;
(b) the Clearing Member from which the underlying
Securities are to be received; (c) the total amount
payable by the Fund upon such delivery; (d) the amount
of cash and/or the amount and kind of Securities to be
withdrawn from the Collateral Account; and (e) the
amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated
Security Account. Upon the return and/or cancellation
of any Put Option guarantee letter or similar document
issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held
for the account of the Fund the total amount payable to
the Clearing Member specified in the Certificate as set
forth in such Certificate, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index
Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such
Stock Index Option: (a) whether such Stock Index
Option is a put or a call; (b) the number of Options
written; (c) the stock index to which such Option
relates; (d) the expiration date; (e) the exercise
price; (f) the Clearing Member through which such
Option was written; (g) the premium to be received by
the Fund; (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the
Segregated Security Account; (i) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Collateral Account; and (j) the amount
of cash and/or the amount and kind of Securities, if
any, to be deposited in a Margin Account, and the name
in which such account is to be or has been established.
The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if
any, into the Segregated Security Account specified in
the Certificate, and either (1) deliver such receipts,
if any, which the Custodian has specifically agreed to
issue, which are in accordance with the customs
prevailing among Clearing Members in Stock Index
Options and make the deposits into the Collateral
Account specified in the Certificate, or (2) make the
deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock Index Option written by the
Fund and described in the preceding paragraph of this
Article is exercised, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect
to such Stock Index Option: (a) such information as may
be necessary to identify the Stock Index Option being
exercised; (b) the Clearing Member through which such
Stock Index Option is being exercised; (c) the total
amount payable upon such exercise, and whether such
amount is to be paid by or to the Fund; (d) the amount
of cash and/or amount and kind of Securities, if any,
to be withdrawn from the Margin Account; and (e) the
amount of cash and/or amount and kind of Securities, if
any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the
Collateral Account. Upon the return and/or
cancellation of the receipt, if any, delivered pursuant
to the preceding paragraph of this Article, the
Custodian shall pay to the Clearing Member specified in
the Certificate the total amount payable, if any, as
specified therein.
12. Whenever the Fund purchases any Option
identical to a previously written Option described in
paragraphs 6, 8 or 10 of this Article in a transaction
expressly designated as a "Closing Purchase
Transaction" in order to liquidate its position as a
writer of an Option, the Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to
the Option being purchased: (a) that the transaction
is a Closing Purchase Transaction; (b) the name of the
issuer and the title and number of shares subject to
the Option, or, in the case of a Stock Index Option,
the stock index to which such Option relates and the
number of Options held; (c) the exercise price; (d) the
premium to be paid by the Fund; (e) the expiration
date; (f) the type of Option (put or call); (g) the
date of such purchase; (h) the name of the Clearing
Member to which the premium is to be paid; and (i) the
amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account or the Segregated
Security Account. Upon the Custodian's payment of the
premium and the return and/or cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of
this Article with respect to the Option being
liquidated through the Closing Purchase Transaction,
the Custodian shall remove, or direct the Depository to
remove, the previously imposed restrictions on the
Securities underlying the Call Option.
13. Upon the expiration or exercise of, or
consummation of a Closing Purchase Transaction with
respect to, any Option purchased or written by the Fund
and described in this Article, the Custodian shall
delete such Option from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein, and
upon the return and/or cancellation of any receipts
issued by the Custodian, shall make such withdrawals
from the Collateral Account, the Margin Account and/or
the Segregated Security Account as may be specified in
a Certificate received in connection with such
expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures
Contract (or with respect to any number of identical
Futures Contract(s)): (a) the category of Futures
Contract (the name of the underlying stock index or
financial instrument); (b) the number of identical
Futures Contracts entered into; (c) the delivery or
settlement date of the Futures Contract(s); (d) the
date the Futures Contract(s) was (were) entered into
and the maturity date; (e) whether the Fund is buying
(going long) or selling (going short) on such Futures
Contract(s); (f) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in the
Segregated Security Account; (g) the name of the
broker, dealer or futures commission merchant through
which the Futures Contract was entered into; and (h)
the amount of fee or commission, if any, to be paid and
the name of the broker, dealer or futures commission
merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The
Custodian shall make payment of the fee or commission,
if any, specified in the Certificate and deposit in the
Segregated Security Account the amount of cash and/or
the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar
payment required to be made by the Fund to a broker,
dealer or futures commission merchant with respect to
an outstanding Futures Contract shall be made by the
Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
(b) Any variation margin payment or similar
payment from a broker, dealer or futures commission
merchant to the Fund with respect to an outstanding
Futures Contract shall be received and dealt with by
the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the
Custodian hereunder is retained by the Fund until
delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Futures Contract; (b)
with respect to a Stock Index Futures Contract, the
total cash settlement amount to be paid or received,
and with respect to a Financial Futures Contract, the
Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer or futures commission
merchant to or from which payment or delivery is to be
made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Segregated Security
Account. The Custodian shall make the payment or
delivery specified in the Certificate and delete such
Futures Contract from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the
Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of
information required in a Certificate described in
paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make
payment of the fee or commission, if any, specified in
the Certificate and delete the Futures Contract being
offset from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and make
such withdrawals from the Segregated Security Account
as may be specified in such Certificate. The
withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to
the Custodian a Certificate specifying with respect to
such Futures Contract Option: (a) the type of Futures
Contract Option (put or call); (b) the type of Futures
Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures
Contract Option purchased; (c) the expiration date; (d)
the exercise price; (e) the dates of purchase and
settlement; (f) the amount of premium to be paid by the
Fund upon such purchase; (g) the name of the broker or
futures commission merchant through which such option
was purchased; and (h) the name of the broker or
futures commission merchant to whom payment is to be
made. The Custodian shall pay the total amount to be
paid upon such purchase to the broker or futures
commission merchant through whom the purchase was made,
provided that the same conforms to the amount set forth
in such Certificate.
2. Promptly after the sale of any Futures
Contract Option purchased by the Fund pursuant to para-
graph 1 hereof, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each
such sale: (a) the type of Futures Contract Option
(put or call); (b) the type of Futures Contract and
such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract
Option; (c) the date of sale; (d) the sale price; (e)
the date of settlement; (f) the total amount payable to
the Fund upon such sale; and (g) the name of the broker
or futures commission merchant through which the sale
was made. The Custodian shall consent to the
cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total
amount payable to the Fund, provided the same conforms
to the total amount payable as set forth in such
Certificate.
3. Whenever a Futures Contract Option purchased
by the Fund pursuant to paragraph 1 is exercised by the
Fund, the Fund shall promptly deliver to the Custodian
a Certificate specifying: (a) the particular Futures
Contract Option (put or call) being exercised; (b) the
type of Futures Contract underlying the Futures
Contract Option; (c) the date of exercise; (d) the name
of the broker or futures commission merchant through
which the Futures Contract Option is exercised; (e) the
net total amount, if any, payable by the Fund; (f) the
amount, if any, to be received by the Fund; and (g) the
amount of cash and/or the amount and kind of Securities
to be deposited in the Segregated Security Account.
The Custodian shall make the payments, if any, and the
deposits, if any, into the Segregated Security Account
as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract
Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the type of Futures
Contract Option (put or call); (b) the type of Futures
Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures
Contract Option; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the
Fund; (f) the name of the broker or futures commission
merchant through which the premium is to be received;
and (g) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in the
Segregated Security Account. The Custodian shall, upon
receipt of the premium specified in the Certificate,
make the deposits into the Segregated Security Account,
if any, as specified in the Certificate. The deposits,
if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by
the Fund which is a call is exercised, the Fund shall
promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option
exercised; (b) the type of Futures Contract underlying
the Futures Contract Option; (c) the name of the broker
or futures commission merchant through which such
Futures Contract Option was exercised; (d) the net
total amount, if any, payable to the Fund upon such
exercise; (e) the net total amount, if any, payable by
the Fund upon such exercise; and (f) the amount of cash
and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The
Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the
deposits, if any, into the Segregated Security Account
as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is
exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the particular
Futures Contract Option exercised; (b) the type of
Futures Contract underlying such Futures Contract
Option; (c) the name of the broker or futures
commission merchant through which such Futures Contract
Option is exercised; (d) the net total amount, if any,
payable to the Fund upon such exercise; (e) the net
total amount, if any, payable by the Fund upon such
exercise; and (f) the amount and kind of Securities
and/or cash to be withdrawn from or deposited in the
Segregated Security Account, if any. The Custodian
shall, upon its receipt of the net total amount payable
to the Fund, if any, specified in the Certificate, make
the payments, if any, and the deposits, if any, into
the Segregated Security Account as specified in the
Certificate. The deposits to and/or withdrawals from
the Margin Account, if any, shall be made by the
Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures
Contract Option identical to a previously written
Futures Contract Option described in this Article in
order to liquidate its position as a writer of such
Futures Contract Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased:
(a) that the transaction is a closing transaction; (b)
the type of Futures Contract and such other information
as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (c) the
exercise price; (d) the premium to be paid by the Fund;
(e) the expiration date; (f) the name of the broker or
futures commission merchant to which the premium is to
be paid; and (g) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from
the Segregated Security Account. The Custodian shall
effect the withdrawals from the Segregated Security
Account specified in the Certificate. The withdrawals,
if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or
consummation of a closing transaction with respect to,
any Futures Contract Option written or purchased by the
Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the
statements delivered to the Fund pursuant to para-
graph 3 of Article III herein, and (b) make such
withdrawals from, and/or, in the case of an exercise,
such deposits into, the Segregated Security Account as
may be specified in a Certificate. The deposits to
and/or withdrawals from the Margin Account, if any,
shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through
the exercise of a Futures Contract Option described in
this Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a)
the name of the issuer and the title of the Security;
(b) the number of shares or principal amount sold, and
accrued interest or dividends, if any; (c) the dates of
the sale and settlement; (d) the sale price per unit;
(e) the total amount credited to the Fund upon such
sales, if any; (f) the amount of cash and/or the amount
and kind of Securities, if any, which are to be
deposited in a Margin Account and the name in which
such Margin Account has been or is to be established;
(g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in a Segregated
Security Account; and (h) the name of the broker
through which such short sale was made. The Custodian
shall upon its receipt of a statement from such broker
confirming such sale and that the total amount credited
to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of
the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Segregated
Security Account specified in the Certificate.
2. In connection with the closing-out of any
short sale, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the
title of the Security; (b) the number of shares or the
principal amount, and accrued interest or dividends, if
any, required to effect such closing-out to be
delivered to the broker; (c) the dates of the closing-
out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to the Fund upon such
closing-out; (f) the net total amount payable to the
broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities to be withdrawn,
if any, from the Margin Account; (h) the amount of cash
and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account; and (i)
the name of the broker through which the Fund is
effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund
upon such closing-out and the return and/or
cancellation of the receipts, if any, issued by the
custodian with respect to the short sale being closed-
out, pay out of the moneys held for the account of the
Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin
Account and the Segregated Security Account, as the
same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse
Repurchase Agreement with respect to Securities and
money held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate or in the event
such Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions or Written
Instructions specifying: (a) the total amount payable
to the Fund in connection with such Reverse Repurchase
Agreement; (b) the broker or dealer through or with
which the Reverse Repurchase Agreement is entered;
(c) the amount and kind of Securities to be delivered
by the Fund to such broker or dealer; (d) the date of
such Reverse Repurchase Agreement; and (e) the amount
of cash and/or the amount and kind of Securities, if
any, to be deposited in a Segregated Security Account
in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount
payable to the Fund specified in the Certificate, Oral
Instructions or Written Instructions make the delivery
to the broker or dealer, and the deposits, if any, to
the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the
Fund shall promptly deliver a Certificate or, in the
event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or
Written Instructions to the Custodian specifying: (a)
the Reverse Repurchase Agreement being terminated; (b)
the total amount payable by the Fund in connection with
such termination; (c) the amount and kind of Securities
to be received by the Fund in connection with such
termination; (d) the date of termination; (e) the name
of the broker or dealer with or through which the
Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Segregated Security
Account. The Custodian shall, upon receipt of the
amount and kind of Securities to be received by the
Fund specified in the Certificate, Oral Instructions or
Written Instructions, make the payment to the broker or
dealer, and the withdrawals, if any, from the
Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make
such deposits to, or withdrawals from, a Segregated
Security Account as specified in a Certificate received
by the Custodian. Such Certificate shall specify the
amount of cash and/or the amount and kind of Securities
to be deposited in, or withdrawn from, the Segregated
Security Account. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the
title and the number of shares or the principal amount
of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Segregated
Securities Account, the Custodian shall be under no
obligation to make any such deposit or withdrawal and
shall so notify the Fund.
2. The Custodian shall make deliveries or
payments from a Margin Account to the broker, dealer,
futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments
or distributions with respect to Securities deposited
in any Margin Account shall be dealt with in accordance
with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time
held by the Custodian in any Collateral Account
described herein. In accordance with applicable law,
the Custodian may enforce its lien and realize on any
such property whenever the Custodian has made payment
or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should
realize on any such property net proceeds which are
less than the Custodian's obligations under any Put
Option guarantee letter or similar document or any
receipt, such deficiency shall be a debt owed the
Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall
furnish the Fund with a statement with respect to each
Margin Account in which money or Securities are held
specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b)
the amount and kind of Securities held therein; and (c)
the amount of money held therein. The Custodian shall
make available upon request to any broker, dealer or
futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are
maintained in a Collateral Account, the Custodian shall
furnish the Fund with a Statement with respect to such
Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No
later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the
securities described in such statement. In the event
such then market value is indicated to be less than the
Custodian's obligation with respect to any outstanding
Put Option, guarantee letter or similar document, the
Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in
such Collateral Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy
of the resolution of the Trustees, certified by the
Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend
or distribution, the date of payment thereof, the
record date as of which shareholders entitled to
payment shall be determined, the amount payable per
share to the shareholders of record as of that date and
the total amount payable to the Dividend Agent of the
Fund on the payment date, or (ii) authorizing the
declaration of dividends and distributions on a daily
basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to
payment shall be determined, the amount payable per
share to the shareholders of record as of that date and
the total amount payable to the Dividend Agent on the
payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions, Written Instructions or
Certificate, as the case may be, the Custodian shall
pay out of the moneys held for the account of the Fund
the total amount payable to the Dividend Agent of the
Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF BENEFICIAL INTEREST
1. Whenever the Fund shall sell any of its
Shares, it shall deliver to the Custodian a Certificate
duly specifying:
(a) The number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the
account of the Fund.
3. Upon issuance of any of the Fund's Shares in
accordance with the foregoing provisions of this
Article, the Custodian shall pay, out of the money held
for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in
connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the
Fund shall hereafter redeem any of its Shares, it shall
furnish to the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares
redeemed.
5. Upon receipt from the Transfer Agent of an
advice setting forth the number of Shares received by
the Transfer Agent for redemption and that such Shares
are valid and in good form for redemption, the
Custodian shall make payment to the Transfer Agent out
of the moneys held for the account of the Fund of the
total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding
the redemption of any of the Fund's Shares, whenever
its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be
offered by the Fund, the Custodian, unless otherwise
instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its agent setting forth that
the redemption is in good form for redemption in
accordance with the check redemption procedure, honor
the check presented as part of such check redemption
privilege out of the money held in the account of the
Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of the Fund which results in an
overdraft because the moneys held by the Custodian for
the account of the Fund shall be insufficient to pay
the total amount payable upon a purchase of Securities
as set forth in a Certificate or Oral Instructions
issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is for
any other reason indebted to the Custodian (except a
borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of
paragraph 2 of this Article XIII), such overdraft or
indebtedness shall be deemed to be a loan made by the
Custodian to the Fund payable on demand and shall bear
interest from the date incurred at a rate per annum
(based on a 360-day year for the actual number of days
involved) equal to the Federal Funds Rate plus l/2%,
such rate to be adjusted on the effective date of any
change in such Federal Funds Rate but in no event to be
less than 6% per annum, except that any overdraft
resulting from an error by the Custodian shall bear no
interest. Any such overdraft or indebtedness shall be
reduced by an amount equal to the total of all amounts
due the Fund which have not been collected by the
Custodian on behalf of the Fund when due because of the
failure of the Custodian to make timely demand or
presentment for payment. In addition, the Fund hereby
agrees that the Custodian shall have a continuing lien
and security interest in and to any property at any
time held by it for the benefit of the Fund or in which
the Fund may have an interest which is then in the
Custodian's possession or control or in possession or
control of any third party acting in the Custodian's
behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against
any balance of account standing to the Fund's credit on
the Custodian's books. For purposes of this Section 1
of Article XIII, "overdraft" shall mean a negative
Available Balance.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is
pursuant to a separate agreement, the Custodian) from
which it borrows money for investment or for temporary
or emergency purposes using Securities as collateral
for such borrowings, a notice or undertaking in the
form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The
Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such
borrowing: (a) the name of the bank; (b) the amount
and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement; (c)
the time and date, if known, on which the loan is to be
entered into; (d) the date on which the loan becomes
due and payable; (e) the total amount payable to the
Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the
number of shares or the principal amount of any
particular Securities; and (g) a statement specifying
whether such loan is for investment purposes or for
temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver
on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note,
if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth
in the Certificate. The Custodian may, at the option
of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver such Securities as additional collateral as may
be specified in a Certificate to collateralize further
any transaction described in this paragraph. The Fund
shall cause all Securities released from collateral
status to be returned directly to the Custodian, and
the Custodian shall receive from time to time such
return of collateral as may be tendered to it. In the
event that the Fund fails to specify in a Certificate
the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to
be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver
any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
Declaration of Trust and as disclosed in its most
recent and currently effective prospectus to lend its
portfolio Securities, within 24 hours after each loan
of portfolio Securities the Fund shall deliver or cause
to be delivered to the Custodian a Certificate
specifying with respect to each such loan: (a) the
name of the issuer and the title of the Securities;
(b) the number of shares or the principal amount
loaned; (c) the date of loan and delivery; (d) the
total amount to be delivered to the Custodian against
the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or
financial institution to which the loan was made. The
Custodian shall deliver the Securities thus designated
to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount
designated as to be delivered against the loan of
Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the
Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order
of the Fund or the Custodian drawn on New York Clearing
House funds and may deliver Securities in accordance
with the customs prevailing among dealers in
securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause
to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination
and return of Securities: (a) the name of the issuer
and the title of the Securities to be returned; (b) the
number of shares or the principal amount to be
returned; (c) the date of termination; (d) the total
amount to be delivered by the Custodian (including the
cash collateral for such Securities minus any
offsetting credits as described in said Certificate);
and (e) the name of the broker, dealer or financial
institution from which the Securities will be returned.
The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the
account of the Fund, the total amount payable upon such
return of Securities as set forth in the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss
or damage, including counsel fees, resulting from its
action or omission to act or otherwise, either
hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may,
with respect to questions of law arising hereunder or
under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or
of its own counsel, at the expense of the Fund, and
shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such
advice or opinion. The Custodian shall be liable to
the Fund for any loss or damage resulting from the use
of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful
misconduct on the part of the Custodian or any of its
employees or agents.
2. Without limiting the generality of the
foregoing, the Custodian shall be under no obligation
to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the
legality of the purchase, sale or writing thereof, or
the propriety of the amount paid or received therefor;
(b) The legality of the issue or sale of any of
the Fund's Shares, or the sufficiency of the amount to
be received therefor;
(c) The legality of the redemption of any of the
Fund's Shares, or the propriety of the amount to be
paid therefor;
(d) The legality of the declaration or payment of
any dividend by the Fund;
(e) The legality of any borrowing by the Fund
using Securities as collateral;
(f) The legality of any loan of portfolio
Securities pursuant to Article XIV of this Agreement,
nor shall the Custodian be under any duty or obligation
to see to it that any cash collateral delivered to it
by a broker, dealer or financial institution or held by
it at any time as a result of such loan of portfolio
Securities of the Fund is adequate collateral for the
Fund against any loss it might sustain as a result of
such loan. The Custodian specifically, but not by way
of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for
the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any
broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to
Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for
the account of the Fund during the period of such loan
or at the termination of such loan, provided, however,
that the Custodian shall promptly notify the Fund in
the event that such dividends or interest are not paid
and received when due; or
(g) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account,
Segregated Security Account or Collateral Account in
connection with transactions by the Fund. In addition,
the Custodian shall be under no duty or obligation to
see that any broker, dealer, futures commission
merchant or Clearing Member makes payment to the Fund
of any variation margin payment or similar payment
which the Fund may be entitled to receive from such
broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission
merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the
Custodian's receipt or non-receipt of any such payment;
provided however that the Custodian, upon the Fund's
written request, shall, as Custodian, demand from any
broker, dealer, futures commission merchant or Clearing
Member identified by the Fund the payment of any
variation margin payment or similar payment that the
Fund asserts it is entitled to receive pursuant to the
terms of a Margin Account Agreement or otherwise from
such broker, dealer, futures commission merchant or
Clearing Member.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether
or not represented by any check, draft or other
instrument for the payment of money, received by it on
behalf of the Fund until the Custodian actually
receives and collects such money directly or by the
final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any
calls, conversions, exchange, offers, tenders, interest
rate changes or similar matters relating to Securities
held in the Depository, unless the Custodian shall have
actually received timely notice from the Depository.
In no event shall the Custodian have any responsibility
or liability for the failure of the Depository to
collect, or for the late collection or late crediting
by the Depository of any amount payable upon Securities
deposited in the Depository which may mature or be
redeemed, retired, called or otherwise become payable.
However, upon receipt of a Certificate from the Fund of
an overdue amount on Securities held in the Depository,
the Custodian shall make a claim against the Depository
on behalf of the Fund, except that the Custodian shall
not be under any obligation to appear in, prosecute or
defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion
may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any
amount due to the Fund from the Transfer Agent of the
Fund nor to take any action to effect payment or
distribution by the Transfer Agent of the Fund of any
amount paid by the Custodian to the Transfer Agent of
the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any
amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after
due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection
with any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-
Custodian or Sub-Custodians, including, but not limited
to, banking institutions located in foreign countries,
of Securities and moneys at any time owned by the Fund,
upon terms and conditions approved in a Certificate,
which shall, if requested by the Custodian, be
accompanied by an approving resolution of the Fund's
Board of Trustees adopted in accordance with Rule 17f-5
under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any
time delivered to or held by it for the account of the
Fund are such as properly may be held by the Fund under
the provisions of its Declaration of Trust.
9. (a) The Custodian shall be entitled to
receive and the Fund agrees to pay to the Custodian all
reasonable out-of-pocket expenses and such compensation
and fees as are specified on Schedule A hereto. The
Custodian shall not deem amounts payable in respect of
foreign custodial services to be out-of-pocket
expenses, it being the parties' intention that all fees
for such services shall be as set forth on Schedule B
hereto and shall be provided for the term of this
Agreement without any automatic or unilateral increase.
The Custodian shall have the right to unilaterally
increase the figures on Schedule A on or after March 1,
1991 and on or after each succeeding March 1 thereafter
by an amount equal to 50% of the increase in the
Consumer Price Index for the calendar year ending on
the December 31 immediately preceding the calendar year
in which such March 1 occurs, provided, however, that
during each such annual period commencing on a March 1,
the aggregate increase during such period shall not be
in excess of 10%. Any increase by the Custodian shall
be specified in a written notice delivered to the Fund
at least thirty days prior to the effective date of the
increase. The Custodian may charge such compensation
and any expenses incurred by the Custodian in the
performance of its duties pursuant to such agreement
against any money held by it for the account of the
Fund. The Custodian shall also be entitled to charge
against any money held by it for the account of the
Fund the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this
Agreement. The expenses which the Custodian may charge
against the account of the Fund include, but are not
limited to, the expenses of Sub-Custodians and foreign
branches of the Custodian incurred in settling outside
of New York City transactions involving the purchase
and sale of Securities of the Fund.
(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of
the Custodian as may be payable by the Fund with
respect to such calendar month in an amount equal to
the aggregate of its Earnings Credit for such calendar
month. In no event may any Earnings Credits be carried
forward to any fiscal year other than the fiscal year
in which it was earned, or, unless permitted by
applicable law, transferred to, or utilized by, any
other person or entity, provided that any such
transferred Earnings Credit can be used only to offset
compensation and fees of the Custodian for services
rendered to such transferee and cannot be used to pay
the Custodian's out-of-pocket expenses. For purposes
of this sub-section (b), the Fund is permitted to
transfer Earnings Credits only to The Dreyfus
Corporation, its affiliates and/or any investment
company now or in the future sponsored by The Dreyfus
Corporation or any of its affiliates or for which The
Dreyfus Corporation or any of its affiliates acts as
the sole investment adviser or as the principal
distributor, and Daiwa Money Fund Inc. For purposes of
this sub-section (b), a fiscal year shall mean the
twelve-month period commencing on the effective date of
this Agreement and on each anniversary thereof.
10. The Custodian shall be entitled to rely upon
any Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by
the Custodian to be a Certificate. The Custodian shall
be entitled to rely upon any Oral Instructions and any
Written Instructions actually received by the Custodian
pursuant to Article IV or XI hereof. The Fund agrees
to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether
by hand delivery, telex or otherwise, by the close of
business of the same day that such Oral Instructions or
Written Instructions are given to the Custodian. The
Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in
no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by
the Fund. The Fund agrees that the Custodian shall
incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder
concerning such transactions, provided such
instructions reasonably appear to have been received
from an Authorized Person.
11. The Custodian shall be entitled to rely upon
any instrument, instruction or notice received by the
Custodian and reasonably believed by the Custodian to
be given in accordance with the terms and conditions of
any Margin Account Agreement. Without limiting the
generality of the foregoing, the Custodian shall be
under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations
contained in any such instrument or other notice
including, without limitation, any specification of any
amount to be paid to a broker, dealer, futures
commission merchant or Clearing Member.
12. The books and records pertaining to the Fund
which are in the possession of the Custodian shall be
the property of the Fund. Such books and records shall
be prepared and maintained as required by the
Investment Company Act of 1940, as amended, and other
applicable securities laws and rules and regulations.
The Fund, or the Fund's authorized representatives,
shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund
or the Fund's authorized representative at the Fund's
expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of
internal accounting control of the Book-Entry System or
the Depository, or O.C.C., and with such reports on its
own systems of internal accounting control as the Fund
may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian
against and save the Custodian harmless from all
liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or
incurred because of or in connection with the
Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article XII as part of any check
redemption privilege program of the Fund, except for
any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive
Securities, and receipts with respect to such
Securities, and arrange for payments to be made and
received by the Custodian in accordance with the
customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Except as provided in subparagraphs (b),
(c) and (d) herein, neither party may terminate this
Agreement until the earlier of the following:
(i) August 31, 1993, and (ii) the third anniversary of
the earliest date on which none of the companies listed
on Schedule C hereto is a transfer agency customer of
the Custodian. Any such termination may be effected
only by the terminating party giving to the other party
a notice in writing specifying the date of such
termination, which shall be not less than two hundred
seventy (270) days after the date of giving of such
notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under this Agreement and such breach has
remained uncured for a period of thirty days after the
Custodian's receipt from the Fund of written notice
specifying such breach.
(c) Either party, immediately upon written
notice to the other party, may terminate this Agreement
upon the Merger or Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under the "Amendment to Transfer Agency
Agreements" dated August 18, 1989 and has not cured
such breach as promptly as practicable and in any event
within seven days of its receipt of written notice of
such breach, provided that the Custodian shall not be
permitted to cure any such material breach arising from
the willful misconduct of the Custodian.
In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution
of the Trustees of the Fund, certified by the Secretary
or any Assistant Secretary, electing to terminate this
Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event
notice of termination is given by the Custodian, the
Fund shall, on or before the termination date, deliver
to the Custodian a copy of a resolution of its
Trustees, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or
custodians. In the absence of such designation by the
Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less
than $2,000,000 aggregate capital, surplus and
undivided profits. Upon the date set forth in such
notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on that date deliver
directly to the successor custodian all Securities and
moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it
shall then be entitled.
2. If a successor custodian is not designated by
the Fund or the Custodian in accordance with the
preceding paragraph, the Fund shall, upon the date
specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all
Securities (other than Securities held in the Book-
Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved
of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to
Securities held in the Book-Entry System, in any
Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities
hereunder in accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under
its seal, setting forth the names and the signatures of
the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar
form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the
event that other or additional Authorized Persons are
elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund under
its seal, setting forth the names and the signatures of
the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar
form in the event any such present Officer ceases to be
an Officer of the Fund, or in the event that other or
additional Officers are elected or appointed. Until
such new Certificate shall be received, the Custodian
shall be fully protected in acting under the provisions
of this Agreement upon the signatures of the Officers
as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to
the Custodian, shall be sufficiently given if addressed
to the Custodian and mailed or delivered to it at its
offices at 90 Washington Street, New York, New York
10015, or at such other place as the Custodian may from
time to time designate in writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to
the Fund, shall be sufficiently given if addressed to
the Fund and mailed or delivered to it at its office at
666 Old Country Road, Garden City, New York 11530, or
at such other place as the Fund may from time to time
designate in writing.
5. This Agreement may not be amended or modified
in any manner except by a written agreement executed by
both parties with the same formality as this Agreement
and approved by a resolution of the Trustees of the
Fund.
6. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective
successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the
Custodian without the written consent of the Fund,
authorized or approved by a resolution of its Trustees.
7. This Agreement shall be construed in
accordance with the laws of the State of New York.
8. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together,
constitute only one instrument.
9. This Agreement shall not be effective on the
date hereof and instead shall become effective on
January 1, 1990. When effective, this Agreement shall
supercede the then-existing Custody Agreement between
the parties hereto.
10. This Agreement has been executed on behalf of
the Fund by the undersigned Officer of the Fund in his
capacity as an Officer of the Fund. The obligations of
this Agreement shall only be binding upon the assets
and property of the Fund and shall not be binding upon
any Trustee, Officer or shareholder of the Fund
individually.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective
Officers, thereunto duly authorized, and their
respective corporate seals to be hereunto affixed, as
of the day and year first above written.
DREYFUS NEW YORK TAX
EXEMPT INTERMEDIATE
BOND FUND
By:
John Pyburn,
Treasurer
Attest:
Robert I. Frenkel
THE BANK OF NEW YORK
By:
Donald L. Colby
Attest:
Robert W. Viets Appendix A
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II All current Fund Officers,
Frank Greene, John Bale,
Michael Condon, Richard
Cassaro and Steven Powanda Paul Casti, Jr.
Jeffrey Nachman
John Pyburn
Joseph DiMartino
Robert Dubuss
Joseph Connolly
Gregory Gruber
Alan Eisner
Lawrence Greene
Julian Smerling
Thomas Durante
James Windels
Paul Molloy
Cash Account
1. Fees payable to The Bank of New York pursuant to
written agreement with the Fund for services
rendered in its capacity as Custodian or agent of
the Fund, or to The Shareholder Services Group,
Inc. in its capacity as Transfer Agent or agent of
the Fund:
Two (2) signatures required, one of
which must be from Group II, except that
an officer of the Fund who also is
listed in Group II shall sign only once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures
from either Group I or Group II, or both
such Groups, except that an officer of
the Fund who also is listed in Group II
shall sign only once.
3. Other expenses of the Fund, over $5,000 and under
$25,000:
Two (2) signatures required, one of
which must be from Group II, except that
an officer of the Fund who also is
listed in Group II shall sign only once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from
Group I or Group II, including any one
of the following: Paul Casti, Jr.,
James Windels, Jeffrey Nachman, John
Pyburn or Alan Eisner, except that no
individual shall be authorized to sign
more than once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the
following:
All current Fund officers, and Joseph
DiMartino, Robert Dubuss, Alan Eisner,
Lawrence Greene, Julian Smerling, Alan
Brown, Richard Cassaro, Paul Disdier,
Alfonso Fulgieri, Gregory Gruber,
Michael Condon, Steven Powanda, Ann
Weintraub, Linda Raffinello, Michael
Charash, Theresa Viviano and Paul Casti,
Jr.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
AMENDED AND RESTATED CUSTODY AGREEMENT
APPENDIX B
The undersigned Officers of the Fund do
hereby certify that the following individuals, whose
specimen signatures are on file with The Bank of New
York, have been duly elected or appointed by the Fund's
Board to the position set forth opposite their names
and have qualified therefor:
Name Position
Richard J. Moynihan President and Investment Officer
A. Paul Disdier Vice President and Investment Officer
Karen M. Hand Vice President and Investment Officer
Stephen C. Kris Vice President and Investment Officer
L. Lawrence Troutman Vice President and Investment Officer
Samuel J. Weinstock Vice President and Investment Officer
Monica S. Wieboldt Vice President and Investment Officer
Daniel C. Maclean Vice President
John J. Pyburn Treasurer
Mark N. Jacobs Secretary
Christine Pavalos Assistant Secretary
Jeffrey N. Nachman Controller
__________________________ __________________________
Title: Secretary Title: Treasurer
AMENDED AND RESTATED CUSTODY AGREEMENT
APPENDIX C
The following are designated publications
for purposes of paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
Schedule A
The fees payable to the Custodian with
respect to securities held in domestic custody are
annexed hereto.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
Domestic Custody Fees
Basic Fee: 1/100th of 1% per annum of the total
market value of domestic securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of DTC
book entry securities (excluding sub-custodian book entry).
$40.00 for any receipt, delivery or redemption
of a Euro Dollar CD for which BNY's London
branch is utilized for settlement and
safekeeping.
$20.00 for physical, same-day funds, physical
puts, and sub-custodian book entry.
$200.00 for the collection of interest on
securities held in "street name."
Schedule B
The fees payable to the Custodian with respect to
securities held in foreign custody are as set forth in
a letter dated August 10, 1989 from Masao Yamaguchi of
The Bank of New York to Kevin Flood of Dreyfus Service
Corporation, a copy of which is annexed hereto.
The above foreign custody fees apply to the
following Global Custody Network countries:
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malasia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
August 10, 1989
Mr. Kevin Flood
Senior Vice President
The Dreyfus Corporation
222 Broadway, 7th Floor
New York, NY
Re: Global Custodian Fees
Dear Kevin:
This letter is to confirm our discussion regarding
our Global Custody fee schedule. The fees will be
calculated on a relationship basis with no annual
minimum.
- Safekeeping/Income Collection/Capital Changes/Tax
Reclamation/Daily Reporting/Monthly Summary
- 16 basis points per annum on the market value of
securities held for all of your funds in our
sub-custodian network, up to $250 MM.
- 15 basis points on the next $250 MM.
- 14 basis points on the next $250 MM.
- 12 basis points on the excess.
- Securities Settlements
$35 per transaction - includes our processing and
the sub-custodians.
- Out-of-Pocket Expenses
Telex, swift, telephone, securities registration,
etc., are in addition to the above.
- We can provide centralized foreign exchange
services.
Mr. Kevin Flood
August 10, 1989
Page 2
The above fee schedule is applicable to the 22
countries listed on Attachment I. Please note that
expansion into other more emerging markets/countries is
possible, but would be covered under a separate
agreement.
If you are in agreement with this fee schedule,
please sign and return the enclosed copy of this
letter.
Sincerely,
Approved by:
Kevin Flood
Date :
MY:to
cc: The Bank of New York Dreyfus
F. Ricciardi J. Nachman
Item 24(b)
Exhibit 8(b)
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment company identified below (the "Fund") hereby appoints
on the following terms and conditions Bankers Trust Company as
subcustodian (the "Subcustodian") for it and the Subcustodian
hereby accepts such appointment on the following terms and
conditions as of the date set forth below.
1. Qualification. The Custodian and the
Subcustodian each represents to the other and to the Fund that
it is qualified to act as a custodian for a registered
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act").
2. Subcustody. The Subcustodian agrees to maintain
a separate account and to hold segregated at all times from the
Subcustodian's securities and from all other customers'
securities held by the Subcustodian, all the Fund's securities
and evidence of rights thereto ("Fund Securities") deposited,
from time to time by the Custodian with the Subcustodian. The
Subcustodian will accept, hold or dispose of and take other
actions with respect to Fund Securities in accordance with the
Instructions of the Custodian given in the manner set forth in
Section 4 and will take certain other actions as specified in
Section 3. The Subcustodian hereby waives any claim against or
lien on any Fund Securities. The Subcustodian may take steps to
register and continue to hold Fund Securities in the name of
the Subcustodian's nominee and shall take such other steps as
the Subcustodian believes necessary or appropriate to carry out
efficiently the terms of this Agreement. To the extent that
ownership of Fund Securities may be recorded by a book entry
system maintained by any transfer agent or registrar for such
Fund Securities or by Depository Trust Company, the Subcustodian
may hold Fund Securities as a book entry reflecting the
ownership of such Fund Securities by its nominee and need not
possess certificates or any other evidence of Ownership of Fund
Securities.
3. Subcustodian's Acts Without Instructions. Except
as otherwise instructed pursuant to Section 4, the Subcustodian
will (i) present all Fund Securities requiring presentation for
any payment thereon, (ii) distribute to the Custodian cash
received thereon, (iii) collect and distribute to the Custodian
interest and any dividends and distributions on Fund Securities,
(iv) at the request of the Custodian, or on its behalf, execute
any necessary declarations or certificates of ownership
(provided by the Custodian or on its behalf) under any tax law
now or hereafter in effect, (v) forward to the Custodian, or
notify it by telephone of, confirmations, notices, proxies or
proxy soliciting materials relating to the Fund Securities
received by it as registered holder (and the Custodian agrees to
forward same to the Fund), and (vi) promptly report to the
Custodian any missed payment or other default upon any Fund
Securities known to it as Subcustodian hereunder (the
Subcustodian shall be deemed to have knowledge of any payment
default on any Fund Securities in respect of which it acts as
paying agent). All cash distributions from the Subcustodian to
the Custodian will be in same day funds, on the same day that
same day funds are received by the Subcustodian unless such
distribution required instructions from the Custodian which were
not timely received. Promptly after the Subcustodian is
furnished with any report of its independent public accountants
on an examination of its internal accounting controls and
procedures for safeguarding securities held in its custody as
subcustodian under this Agreement or under similar agreements,
the Subcustodian will furnish a copy thereof to the Custodian.
4. Instructions, Other Communications. Any officer
of the Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President and
any Assistant Vice President, Assistant Secretary or Assistant
Treasurer of the Custodian, as an officer of the Custodian
authorized to give instructions to the Subcustodian with respect
to Fund Securities (an "Authorized Officer"), shall be
authorized to instruct the Subcustodian as to the acceptance,
holding, presentation, disposition or any other action with
respect to Fund Securities from time to time by telephone, or in
writing signed by such Authorized Officer and delivered by
telex, tested computer printout or such other reasonable method
as the Custodian and Subcustodian shall agree is designed to
prevent unauthorized officer's instructions; provided, however,
the Subcustodian is authorized to accept and act upon orders
from the Custodian, whether given orally, by telephone or
otherwise, which the Subcustodian reasonably believes to be
given by an authorized person. The Subcustodian will promptly
transmit to the Custodian all receipts and transaction
confirmations in respect of Fund Securities as to which the
Subcustodian has received any instructions. The Authorized
Officers shall be as set forth on Exhibit A attached hereto and,
as amended from time to time, made a part hereof.
5. Liabilities. (i) The Subcustodian shall not be
liable for any action taken or omitted to be taken in carrying
out the terms and provision of this Agreement if done without
willful malfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under this Agreement.
Except as otherwise set forth herein, the Subcustodian shall
have no responsibility for ascertaining or acting upon any
calls, conversions, exchange offers, tenders, interest rate
changes or similar matters relating to the Fund Securities
(except at the instructions of the Custodian), nor for informing
the Custodian with respect thereto, whether or not the
Subcustodian has, or is deemed to have, knowledge of the
aforesaid. The Subcustodian is under no duty to supervise or to
provide investment counseling or advice to the Custodian or to
the Fund relative to the purchase, sale, retention or other
disposition of any Fund Securities held hereunder. The
Subcustodian shall for the benefit of the Custodian and the Fund
use the same care with respect to receiving, safekeeping,
handling and delivery of Fund Securities as it uses in respect
of its own securities.
(ii) The Subcustodian will indemnify, defend and save
harmless the Custodian and the Fund from and against all loss,
liability, claims and demands incurred by the Custodian or the
Fund arising out of or in connection with the Subcustodian's
willful malfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under this Agreement.
(iii) The Custodian agrees to be responsible for and
indemnify the Subcustodian and any nominee in whose name the
Fund Securities are registered, from and against all loss,
liability, claims and demands incurred by the Subcustodian and
the nominee in connection with the performance of any activity
pursuant to this Agreement, done in good faith and without
negligence, including any expenses, taxes or other charges which
the Subcustodian is required to pay in connection therewith.
6. Each party may terminate this Agreement at any
time by not less than ten (10) business days' prior written
notice. In the event that such notice is given, the
Subcustodian shall make delivery of the Fund Securities held in
the Subcustodian account to the Custodian or to any third party
within the Borough of Manhattan, specified by the Custodian in
writing within ten (10) days of receipt of the termination
notice, at the Custodian's expense.
7. All communications required or permitted to be
given under this Agreement, unless otherwise agreed by the
parties, shall be addressed as follows:
(i) to the Subcustodian:
Bankers Trust Company
1 Bankers Trust Plaza
l4th Floor
New York, NY 10015
Attention: Barbara Walter
RMD Safekeeping Unit
(ii) to Custodian:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
8. Miscellaneous: This Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each of
which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended by the
parties hereto in writing.
IN WITNESS WHERE0F, the undersigned have executed this
Agreement as of the date set forth below.
Dated: __________________________
________________________________
As Custodian
By:_____________________________
Title:__________________________
________________________________
(The Fund)
By:_____________________________
Title:__________________________
By:_____________________________
Title:__________________________
BANKERS TRUST COMPANY
As Subcustodian
By:______________________________
Title:___________________________
EXHIBIT A
TO SUBCUSTODIAN AGREEMENT
DATED____________, 1986
The Authorized Officers pursuant to Section 4 of the
Agreement shall be:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
__________ ___________________ _____________________________
_____________________________ _____________________________
Dated:_______________________________
______________________________
As Custodian
By:___________________________
Title:________________________
Item 24(b)
Exhibit 8(c)
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment companies identified in Schedule A attached
(collectively, the "Funds") hereby appoints on the following
terms and conditions Chemical Bank its subcustodian (the
"Subcustodian") for it and the Subcustodian hereby accepts such
appointment on the following terms and conditions as of the date
set forth below.
1. Qualification. The Custodian and the Subcustodian
each represent to the other and to each Fund that it is
qualified to act as a custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "l940 Act").
2. Subcustody. The Subcustodian agrees to hold in a
separate account, segregated at all times from all other
accounts maintained by the Subcustodian, all securities and
evidence of rights thereto of each of the Funds (collectively,
"Fund Securities") deposited, from time to time by the Custodian
with the Subcustodian. The Subcustodian will accept, hold or
dispose of and take such other reasonable actions with respect
to Fund Securities, in addition to those specified in Section 3,
in accordance with the instructions of the Custodian relating to
Fund Securities given in the manner set forth in Section 4
("Instructions"). The Subcustodian hereby waives any claim
against, or lien on, any Fund Securities for any claim
hereunder. Registered Fund Securities may be held in the name
of the Subcustodian or its nominee. To the extent that
ownership of Fund Securities may be recorded by a book entry
system maintained by any transfer agent or registrar for such
Fund Securities (including, but not limited to, any such
operated by the Subcustodian) or by Depository Trust Company,
the Subcustodian may hold Fund Securities as a book entry
reflecting the ownership of such Fund Securities by it or its
nominee and need not possess certificates or any other evidence
of ownership.
3. Subcustodian's Acts Without Instructions. Except
as otherwise instructed pursuant to Section 4, the Subcustodian
will (i) present all Fund Securities requiring presentation for
any payment thereon, (ii) distribute to the Custodian cash
received thereupon, (iii) collect and distribute to the
Custodian interest and any dividends and distributions on Fund
Securities, (iv) forward to the Custodian all confirmations,
notices, proxies or proxy soliciting materials relating to the
Fund Securities received by it (and the Custodian agrees to
forward same to the Fund), (v) report to the Custodian any
missed payment or other default upon any Fund Securities known
to it as Subcustodian hereunder, (the Subcustodian shall be
deemed to have knowledge of any payment default on any Fund
Securities in respect of which it acts as paying agent); all
cash distributions from the Subcustodian to the Custodian will
be in same day funds, on the same day that same day funds are
received by the Subcustodian unless such distribution required
instructions from the Custodian which were not timely received,
and (vi) at the request of the Custodian, or on its behalf,
execute any necessary declarations or certificates of ownership
(provided by the Custodian or on its behalf) under any tax law
now or hereafter in effect. The Subcustodian will furnish to
the Custodian, upon the Custodian's request, any report of the
Subcustodian's independent public accountants on an examination
of its internal accounting controls and procedures for
safeguarding securities held in its custody for the account of
others.
4. Instructions, Other Communications. Any officer
of the Custodian designated from time to time, by letter to the
Subcustodian, signed by the President or any Vice President and
any Assistant Vice President, Assistant Secretary or Assistant
Treasurer of the Custodian or any other officer or employee
designated by the Custodian in writing, as an officer of the
Custodian authorized to give Instructions to the Subcustodian
with respect to Fund Securities (an "Authorized Officer") shall
be authorized to instruct the Subcustodian as to the acceptance,
holding, voting, presentation, disposition or any other action
with respect to Fund Securities from time to time in writing
signed by such Authorized Officer and delivered by hand, mail,
telecopier, tested telex, tested computer printout or such other
reasonable method as the Custodian and Subcustodian shall agree
is designed to present unauthorized officer's instructions. The
Subcustodian is also authorized to accept and act upon
Instructions regardless of the manner in which given (whether
orally, by telephone or otherwise) if the Subcustodian
reasonably believes such Instructions are given by an Authorized
Officer. The Subcustodian will promptly transmit to the
Custodian all receipts, confirmations or other transactional
evidence received by it in respect of Fund Securities as to
which the Subcustodian has received any Instructions.
Instructions and other communications to the Subcustodian shall
be given to Chemical Bank, 55 Water Street, Room 504, New York,
New York, Attention: Debt Securities Administration, Phone
(212) 820-5616 Telex: (212) 269-8510 (or to such other address
as the Subcustodian shall specify by notice to the Custodian and
each of the Funds). Communications to the Custodian and the
Funds shall be made at the addresses set forth below (or to such
other address as the Custodian or the Fund or Funds giving such
notice, shall specify by notice to the Subcustodian).
5. The Subcustodian. The Subcustodian shall not be
liable for any action taken or omitted to be taken in carrying
out the terms and provision of this Agreement if done without
willful malfeasance, bad faith, negligence or reckless disregard
of its obligations and duties under this Agreement.
The Subcustodian shall not have any responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities, except upon Instructions from
the Custodian, nor for informing the Custodian with respect
thereto, unless the Subcustodian has knowledge or is deemed to
have knowledge of the aforesaid. The Subcustodian shall be
deemed to have knowledge in circumstances where it is acting as
tender agent or paying agent for the Fund Securities. The
Subcustodian shall not be under a duty to supervise or to
provide advice (other than notice) to the Custodian or any of
the Funds relative to any purchase, sale, retention or other
disposition of any Fund Securities held hereunder. The
Subcustodian shall for the benefit of the Custodian and the
Funds be required to exercise the same care with respect to the
receiving, safekeeping, handling and delivery of Fund Securities
than it customarily exercises in respect of its own securities.
The Subcustodian will indemnify, defend and save
harmless the Custodian and the Funds from any loss or liability
incurred by the Custodian arising out of or in connection with
the Subcustodian's willful malfeasance, bad faith, negligence or
reckless disregard of its obligations and duties under this
Agreement; provided, however, that the Subcustodian shall in no
event be liable for any special, indirect or consequential
damages.
The Custodian agrees to be responsible for, and will
indemnify, defend and save harmless the Subcustodian (or any
nominee in whose name any Fund Securities are registered) for,
any loss or liability incurred by the Subcustodian (or such
nominee) arising out of or in connection with any action taken
by the Subcustodian (or such nominee) in accordance with any
Instructions or any other action taken by the Subcustodian (or
such nominee) in good faith and without negligence pursuant to
this Agreement, including any expenses, taxes or other charges
which the Subcustodian (or such nominee) is required to incur or
pay in connection therewith.
6. Resignation. The Subcustodian may resign as such
at any time upon not less than five business days' prior written
notice to the Custodian. In the event of such resignation or
any other termination of this Agreement, the Subcustodian shall
deliver all Fund Securities then held by it to the Custodian, or
as otherwise directed by the Custodian pursuant to Instructions
received by the Subcustodian, at the Custodian's expense;
provided, however, that the Subcustodian shall not be required
to effect any such delivery outside the Borough of Manhattan.
7. Miscellaneous. This Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each of
which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended only by
written agreement executed by the parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated:
By
[Address] 90 Washington St.
New York, N.Y.
Telephone: (212) 530-8475
Telex: 363-8005
As Custodian for the Funds
Listed in Schedule A attached
Chemical Bank
By:
Item 24(b)
Exhibit 8(e)
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment company identified below (the "Fund") hereby appoints
on the following terms and conditions Morgan Guaranty Trust
Company of New York as subcustodian (the "Subcustodian") for it
and the Subcustodian hereby accepts such appointment on the
following terms and conditions as of the date set forth below.
1. Qualification. The Custodian and the Subcustodian each
represent to the other and to the Fund that it is a bank
qualified to act as a custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. Subcustody. The Subcustodian agrees to hold in a
separate account, segregated at all times from all other
accounts maintained by the Subcustodian, all securities and
rights thereto of the Fund ("Fund Securities") deposited from
time to time by the Custodian with the Subcustodian. The
Subcustodian hereby waives any claim against or lien on any Fund
Securities. The Subcustodian will accept, hold or dispose of
and take such other actions with respect to Fund Securities in
addition to those specified in Section 3 in accordance with the
Instructions of the Custodian given in the manner set forth in
Section 4. Registered Fund Securities may be held in the name
of the Subcustodian's nominee. To the extent that ownership of
Fund Securities may be recorded by & book entry system
maintained by any transfer agent or registrar for such Fund
Securities or Depositary Trust Company, the Subcustodian may
hold Fund Securities as a book entry reflecting the ownership of
such Fund Securities by its nominee and need not possess
certificates or any other evidence of ownership.
3. Subcustodian's Acts Without Instructions. Except as
otherwise instructed pursuant to Section 4, the Subcustodian
will (i) present all Fund Securities requiring presentation for
any payment thereon, (ii) distribute to the Custodian cash
received thereupon, (iii) collect and distribute to the
Custodian interest and any dividends and distributions on Fund
Securities, (iv) execute any necessary declarations or
certificates of ownership under any tax law now or hereafter in
effect, (v) forward to the Custodian all confirmations, notices,
proxies or proxy soliciting materials relating to the Fund
Securities received by it (and the Custodian agrees to forward
same to the Fund), (vi) promptly report to the Custodian any
missed payment or other default upon any Fund Securities known
to it as Subcustodian hereunder and (vii) make no free delivery
of Fund Securities to anyone other than the Custodian. All cash
distributions from the Subcustodian to the Custodian will be in
same day funds on the same day same day funds are received by
the Subcustodian unless such distribution required instructions
from the Custodian which were not timely received. The
Subcustodian shall be deemed to have knowledge of any payment
default on any Fund Securities in respect of which it acts as
the paying agent. Promptly after the Subcustodian is furnished
with any report of its independent public accountants on an
examination of its internal accounting controls and procedures
for safeguarding securities held in its custody for the account
of others, the Subcustodian will furnish a copy thereof to the
Custodian.
4. Instructions, Other Communications. Any officer of the
Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President and
any Assistant Vice President, Assistant Secretary or Assistant
Treasurer of the Custodian, as an officer of the Custodian
authorized to give Instructions to the Subcustodian with respect
to Fund Securities (an "Authorized Officer") shall be authorized
to instruct the Subcustodian as to the acceptance, holding,
voting, presentation, disposition or any other action with
respect to Fund Securities from time to time by telephone (if
recorded) or in writing signed by such Authorized Officer and
delivered by hand, mail, telecopier, tested telex, tested
computer printout or such other reasonable method as the
Custodian and Subcustodian shall agree is designed to prevent
unauthorized officer's instructions. The Subcustodian will
promptly transmit to the Custodian all receipts, confirmations
or other transactional evidence received by it in respect of
Fund Securities as to which the Subcustodian has received any
Instructions. Instructions to the Subcustodian shall be given
to Morgan Guaranty Trust Company of New York, 15 Broad Street
(16th Floor), New York, New York 10015, Attention: Corporate
Trust & Securities Department; Phone 212-483-4140.
Communications to the Custodian and the Fund shall be made at
the addresses set forth below.
5. Liabilities. Neither the Custodian nor the
Subcustodian shall be liable for any action taken or omitted to
be taken in carrying out the terms and provisions of this
Agreement if done without its own respective negligence or
willful misconduct. The Custodian will indemnify, defend and
save harmless the Subcustodian for any loss or liability
incurred by the Subcustodian (without negligence or willful
misconduct on the part of the Subcustodian) arising out of or in
connection with the performance of this Agreement. The
Subcustodian will indemnify, defend and save harmless the
Custodian and the Fund for any loss or liability incurred by the
Custodian or the Fund as a result of the negligence or willful
misconduct of the Subcustodian arising out of or in connection
with the performance of this Agreement. The Subcustodian shall
for the benefit of the Custodian and the Fund use the same care
with respect to receiving, safekeeping, handling and delivery of
Fund securities as it uses in respect of its own securities.
6. Miscellaneous. This Agreement (i) shall be governed by
and construed in accordance with the laws of the State of New
York, (ii) may be executed in counterparts each of which shall
be deemed an original but all of which shall constitute the same
instrument, (iii) may be amended by the parties hereto in
writing, and (iv) may be terminated by either party hereto upon
10 days' written notice to the other.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated: 1985 Bank of New York
Custodian
By__________________________
90 Washington Street
New York, New York 10006
As Custodian for
____________________________
Fund
[Address]
Morgan Guaranty Trust Company
of New York
By__________________________
EXHIBIT 10
May 28, 1996
Dreyfus New York Tax Exempt
Intermediate Bond Fund
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Dreyfus New York Tax
Exempt Intermediate Bond Fund (the "Fund") in connection with
the preparation of a Registration Statement on Form N-1A,
Registration No. 33-14295 (the "Registration Statement"),
covering shares of beneficial interest (the "Shares") of the
Fund.
We have examined copies of the Agreement and
Declaration of Trust and By-Laws of the Fund, the Registration
Statement and such other documents, records, papers, statutes
and authorities as we deemed necessary to form a basis for the
opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to
us. As to various questions of fact material to such opinion,
we have relied upon statements and certificates of officers and
representatives of the Fund and others.
Attorneys involved in the preparation of this opinion
are admitted only to the bar of the State of New York. As to
various questions arising under the laws of the Commonwealth of
Massachusetts, we have relied on the opinion of Messrs. Ropes &
Gray, a copy of which is attached hereto. Qualifications set
forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that
the shares of the Fund to be issued in accordance with the terms
of the offering as set forth in the Prospectus included as part
of the Registration Statement, when so issued and paid for, will
constitute validly authorized and issued Shares, fully paid and
non-assessable by the Fund.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to us
in the Prospectus included in the Registration Statement, and to
the filing of this opinion as an exhibit to any application made
by or on behalf of the Fund or any Distributor or dealer in
connection with the registration and qualification of the Fund
or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our report
dated July 2, 1996, in this Registration Statement (Form N-1A 33-14295)
of Dreyfus New York Tax Exempt Intermediate Bond Fund.
ERNST & YOUNG LLP
New York, New York
September 24, 1996
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Bachman, Marie
E. Connolly, Richard W. Ingram and John E. Pelletier and each of them, with
full power to act without the other, his or her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the Registration
Statement of Dreyfus New York Tax Exempt Intermediate Bond Fund (including
post-effective amendments and amendments thereto), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
_______________________________________
July 24, 1996
/s/David W. Burke
David W. Burke
/s/Samuel Chase
Samuel Chase
/s/Gordon J. Davis
Gordon J. Davis
/s/Joseph S. DiMartino
Joseph S. DiMartino
/s/Joni Evans
Joni Evans
/s/Arnold S. Hiatt
Arnold S. Hiatt
/s/David J. Mahoney
David J. Mahoney
/s/Burton Wallack
Burton Wallack
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Bachman,
Richard W. Ingram and John E. Pelletier and each of them, with full power to
act without the other, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to the Registration Statement of
Dreyfus New York Tax Exempt Intermediate Bond Fund (including post-effective
amendments and amendments thereto), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
August 2, 1996.
_________________________________
Marie E. Connolly, President
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
Certificate of Assistant Secretary
The undersigned, Elizabeth A. Bachman, Assistant Secretary of Dreyfus New
York Tax Exempt Intermediate Bond Fund (the "Fund"), hereby certifies that set
forth below is a copy of the resolution adopted by the Fund's Board authorizing
the signing by Elizabeth A. Bachman, Marie E. Connolly, Richard W. Ingram and
John E. Pelletier on behalf of the proper officers of the Fund pursuant to a
power of attorney.
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto, may be signed by any one of
Elizabeth A. Bachman, Marie E. Connolly, Richard W. Ingram and
John E. Pelletier as the attorney-in-fact for the proper officers
of the Fund, with full power of substitution and resubstitution;
and that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and supplements
thereto, as fully to all intents and purposes as the officer, for
whom he or she is acting as attorney-in-fact, might or could do
in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
Seal of the Fund on August 2, 1996.
_________________________________
Elizabeth A. Bachman
Assistant Secretary
(SEAL)
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